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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q

|   |  |                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the quarterly period ended
    September 30, 2002                                           
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                                 

Commission file number 1-8972

IndyMac Bancorp, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 95-3983415                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|155 North Lake Avenue,                                             |  | 91101-7211                              
|Pasadena, California                                               |  | (Zip Code)                              
|(Address of principal executive
    offices)                       |  |                                         

Registrants telephone number, including
area code:

(800) 669-2300


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such requirements for the past
90 days.     Yes þ          No o

Indicate the number of shares outstanding of each
of the issuers classes of common stock, as of the latest
practicable date.

Common stock outstanding as of October 18,
2002: 55,216,225 shares



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TABLE OF CONTENTS



|                           |                                                                                               |                                                                          |  |  |  |  |  | 
|-------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  |  |  |  |  | 
|                           | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                           | Forward-Looking Statements                                                                   
|                           |                                                                                               | Highlights for the Quarter                                              
|                           |                                                                                               | Loan Production and Sales                                               
|                           |                                                                                               | Construction Lending                                                    
|                           |                                                                                               | Investment Portfolio Activities                                         
|                           |                                                                                               | Overall Interest Rate Risk Management                                   
|                           |                                                                                               | Credit Risk and Reserves                                                
|                           |                                                                                               | Operating Expenses                                                      
|                           |                                                                                               | Share Repurchase Activities                                             
|                           |                                                                                               | Future Outlook                                                          
|                           |                                                                                               | Cumulative Effect of a Change in Accounting Principle                   
|                           | Liquidity and Capital Resources                                                              
|                           |                                                                                               | Principal Sources of Cash                                               
|                           |                                                                                               | Principal Uses of Cash                                                  
|                           |                                                                                               | Accumulated Other Comprehensive Income                                  
|                           |                                                                                               | Regulatory Capital Requirements                                         
|                           | Business Model                                                                               
|                           | Key Operating Risks                                                                          
|                           | Critical Accounting Policies                                                                 
|                           | Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|                           |                                                                                               | CONSOLIDATED BALANCE SHEETS                                             
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF EARNINGS                                     
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|                           |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
|                           | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION
|                           | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                
|EXHIBIT 10.2              
|EXHIBIT 99.1              
|EXHIBIT 99.2              



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##### Table of Contents



INDYMAC BANCORP, INC.

FORM 10-Q QUARTERLY REPORT

For the Period Ended September 30,
2002


TABLE OF CONTENTS

|                                   |  |                                                                                           |  |      |    | 
|---------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                   |  |                                                                                           |  | Page
|                                   |  |                                                                                           |  |     
|PART I.  FINANCIAL
    INFORMATION
|Item 2.                            |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |      | 2  | 
|1.                                 |  | Forward-looking Statements                                                                |  |      | 2  | 
|2.                                 |  | Financial Condition and Results of Operations                                             |  |      |    | 
|                                   |  | (a)  Highlights for the Quarter                                                           |  |      | 3  | 
|                                   |  | (b)  Loan Production and Sales                                                            |  |      | 5  | 
|                                   |  | (c)  Construction Lending                                                                 |  |      | 9  | 
|                                   |  | (d)  Investment Portfolio Activities                                                      |  |      | 10 | 
|                                   |  | (e)  Net Interest Income                                                                  |  |      | 16 | 
|                                   |  | (f)  Overall Interest Rate Risk
    Management                                            |  |      | 19 | 
|                                   |  | (g)  Credit Risk and Reserves                                                             |  |      | 20 | 
|                                   |  | (h)  Operating Expenses                                                                   |  |      | 24 | 
|                                   |  | (i)  Share Repurchase Activities                                                          |  |      | 24 | 
|                                   |  | (j)  Future Outlook                                                                       |  |      | 25 | 
|                                   |  | (k) Cumulative Effect of a Change in
    Accounting Principle                             |  |      | 25 | 
|3.                                 |  | Liquidity and Capital Resources                                                           |  |      | 25 | 
|                                   |  | (a)  Overview                                                                             |  |      | 25 | 
|                                   |  | (b)  Principal Sources of Cash                                                            |  |      | 25 | 
|                                   |  | (c)  Principal Uses of Cash                                                               |  |      | 27 | 
|                                   |  | (d)  Cash Flows                                                                           |  |      | 27 | 
|                                   |  | (e)  Regulatory Capital Requirements                                                      |  |      | 28 | 
|4.                                 |  | Business Model                                                                            |  |      | 29 | 
|5.                                 |  | Key Operating Risks                                                                       |  |      | 30 | 
|6.                                 |  | Critical Accounting Policies                                                              |  |      | 32 | 
|Item 3.                            |  | Quantitative and Qualitative Disclosure about
    Market Risk                             |  |      | 32 | 
|Item 1.                            |  | Financial Statements (Unaudited)                                                          |  |      |    | 
|                                   |  | Consolidated Balance Sheets                                                               |  |      | 33 | 
|                                   |  | Consolidated Statements of Earnings                                                       |  |      | 34 | 
|                                   |  | Consolidated Statements of Shareholders
    Equity and Comprehensive Income              |  |      | 35 | 
|                                   |  | Consolidated Statements of Cash Flows                                                     |  |      | 36 | 
|                                   |  | Notes to Consolidated Financial Statements                                                |  |      | 37 | 
|                                   |  | Note 1  Basis of
    Presentation                                                        |  |      | 37 | 
|                                   |  | Note 2  Recently
    Adopted Accounting Pronouncement                                    |  |      | 37 | 
|                                   |  | Note 3  Segment
    Reporting                                                            |  |      | 37 | 
|Item 4.                            |  | Controls and Procedures                                                                   |  |      | 39 | 
|PART II.  OTHER
    INFORMATION   
|Item 6.                            |  | Exhibits and Reports on Form 8-K                                                          |  |      | 39 | 

1



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations






Forward-Looking Statements


This Form 10-Q contains statements that may
be deemed to be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include statements regarding our
financial condition, results of operations, plans, objectives,
future performance and business. Forward-looking statements
typically include the words anticipate,
believe, estimate, expect,
project, plan, forecast,
intend and other similar expressions. These
statements reflect our current views with respect to future
events and financial performance. They are subject to risks and
uncertainties, which could cause future results to differ
materially from historical results or from the results
anticipated. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of
their dates or as of the date hereof if no other date is
identified. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise. For further information
on our key operating risks, refer to IndyMacs annual
report on Form 10-K for the year ended December 31,
2001.

References to IndyMac Bancorp or
the Parent Company refer to the parent company alone
while references to IndyMac, the Company
or we refer to IndyMac Bancorp, Inc. and its
consolidated subsidiaries. The following discussion is intended
to address the Companys financial condition and results of
operations for the quarter and nine months ended
September 30, 2002. For further information on the
Companys business model and risk profile, see discussion
commencing on page 29, Business Model.

2



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Highlights
for the Quarter

Highlights for the quarter and nine months ended
September 30, 2002 were as follows (our quarterly financial
statements prepared in accordance with accounting principles
generally accepted in the United States of America (US
GAAP) can be found beginning on page 33):

|                           |                                                         |                                              |   |                   |   |          |   |               |   |               |   |       |   |  |   |        |   |  |   |        |  
|-------------------------- | ------------------------------------------------------- | -------------------------------------------- | - | ----------------- | - | -------- | - | ------------- | - | ------------- | - | ----- | - |  | - | ------ | - |  | - | ------ | -
|                           |                                                         |                                              |   |                  
|                           |                                                         | Three Months Ended                           |   | Nine Months Ended
|                           |                                                         |                                              |   |                  
|                           |                                                         | September 30,                                |   | September 30,     |   | June 30, |   | September 30, |   | September 30,
|                           |                                                         | 2002                                         |   | 2001              |   | 2002     |   | 2002          |   | 2001         
|                           |                                                         |                                              |   |                   |   |          |   |               |   |              
|                           |                                                         |                                             
|                           |                                                         | (Dollars in millions, except per share data)
|Income statement           |                                                         |                                              |   |                   |   |          |   |               |   |               |   |       |   |  |   |        |   |  |   |       
|                           | Net revenues                                            |                                              | $ | 151               |   |          | $ | 133           |   |               | $ | 139   |   |  | $ | 431    |   |  | $ | 356    |  
|                           | Net recurring earnings(1)                               |                                              | $ | 37                |   |          | $ | 34            |   |               | $ | 35    |   |  | $ | 108    |   |  | $ | 90     |  
|                           | Recurring earnings per share on a diluted basis(1)      |                                              | $ | 0.64              |   |          | $ | 0.55          |   |               | $ | 0.56  |   |  | $ | 1.78   |   |  | $ | 1.42   |  
|                           | Return on average equity(2)                             |                                              |   | 17.24             | % |          |   | 18.19         | % |               |   | 15.74 | % |  |   | 16.62  | % |  |   | 16.24  | %
|                           | Return on average assets(2)                             |                                              |   | 1.82              | % |          |   | 1.81          | % |               |   | 1.93  | % |  |   | 1.90   | % |  |   | 1.72   | %
|                           | Efficiency ratio(3)                                     |                                              |   | 58                | % |          |   | 53            | % |               |   | 57    | % |  |   | 57     | % |  |   | 54     | %
|                           | Capital used to generate a dollar of net
    revenue(4) |                                              | $ | 1.40              |   |          | $ | 1.36          |   |               | $ | 1.55  |   |  | $ | 1.47   |   |  | $ | 1.50   |  
|                           | Capital adjusted efficiency ratio(5)                    |                                              |   | 81                | % |          |   | 72            | % |               |   | 88    | % |  |   | 84     | % |  |   | 80     | %
|Balance sheet (period end) |                                                         |                                              |   |                   |   |          |   |               |   |               |   |       |   |  |   |        |   |  |   |       
|                           | Total assets                                            |                                              | $ | 7,893             |   |          | $ | 7,049         |   |               | $ | 7,435 |   |  | $ | 7,893  |   |  | $ | 7,049  |  
|                           | Total equity                                            |                                              | $ | 838               |   |          | $ | 773           |   |               | $ | 892   |   |  | $ | 838    |   |  | $ | 773    |  
|                           | Debt to equity ratio                                    |                                              |   | 8.4:1             |   |          |   | 8.1:1         |   |               |   | 7.3:1 |   |  |   | 8.4:1  |   |  |   | 8.1:1  |  
|                           | Book value per share                                    |                                              | $ | 14.97             |   |          | $ | 12.73         |   |               | $ | 15.06 |   |  | $ | 14.97  |   |  | $ | 12.73  |  
|                           | Shares repurchased during the
    period (000s)        |                                              |   | 3,468             |   |          |   |              |   |               |   | 1,537 |   |  |   | 5,013  |   |  |   | 2,802  |  
|                           | Average repurchase price per share                      |                                              | $ | 21.33             |   |          |   |              |   |               | $ | 23.74 |   |  | $ | 22.08  |   |  | $ | 23.67  |  
|                           | Remaining share repurchase authorization                |                                              | $ | 83                |   |          |   |               |   |               |   |       |   |  |   |        |   |  |   |        |  
|                           | Core capital ratio(6)                                   |                                              |   | 10.15             | % |          |   | 9.22          | % |               |   | 10.26 | % |  |   | 10.15  | % |  |   | 9.22   | %
|                           | Risk-based capital ratio(6)                             |                                              |   | 15.80             | % |          |   | 12.96         | % |               |   | 15.10 | % |  |   | 15.80  | % |  |   | 12.96  | %
|                           | Loan production(7)                                      |                                              | $ | 5,312             |   |          | $ | 4,643         |   |               | $ | 4,790 |   |  | $ | 14,304 |   |  | $ | 12,846 |  
|                           | Loans sold                                              |                                              | $ | 4,474             |   |          | $ | 4,525         |   |               | $ | 3,707 |   |  | $ | 12,447 |   |  | $ | 10,045 |  
|                           | Gain on sale of loans                                   |                                              |   | 1.73              | % |          |   | 1.32          | % |               |   | 1.93  | % |  |   | 1.82   | % |  |   | 1.60   | %



---



|    |                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net recurring earnings and EPS primarily exclude
    a cumulative change in accounting principle of
    $10.2 million or $0.16 per share in 2001.         
|   
|(2) | Using recurring earnings, which excludes the
    impact of the cumulative change in accounting principle in 2001.                                         
|   
|(3) | Defined as non-interest expenses, excluding
    amortization of goodwill and other intangible assets, divided by
    net interest income and other income.
|   
|(4) | Average equity divided by net interest income and
    other income.                                                                                       
|   
|(5) | Efficiency ratio multiplied by the capital
    required to generate a dollar of net revenue.                                                              
|   
|(6) | IndyMac Bank, F.S.B. (excludes excess capital at
    holding company).                                                                                    
|   
|(7) | Includes newly originated commitments on
    construction loans.                                                                                          

The Company reported an increase of 16% in
earnings per share for the third quarter of 2002 in comparison
to the third quarter of 2001 as a result of an increase of 14%
in net revenues and a 7% reduction in

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average diluted shares outstanding due to the
share repurchase program, offset by a 21% increase in
expenses. Return on equity (ROE) of 17.2% decreased
from 18.2% during the third quarter of 2001 due principally to
the substantial excess capital carried during the quarter.
Excess regulatory capital averaged approximately
$218 million throughout the third quarter of 2002, compared
to an average of approximately $89 million during the third
quarter of 2001. We define excess capital as capital held in
IndyMac Bank, F.S.B. (the Bank) in excess of
regulatory requirements for well-capitalized
institutions plus unencumbered cash at the Parent Company.
Reducing average equity for average capital held during the
period, and reducing earnings for interest expense on borrowings
obtained to replace excess capital, we estimate that our ROE
would have been 25% in the third quarter of 2002, compared to
21% in 2001, had we not carried the excess capital during those
periods. The Company has excess capital as a result of growth in
retained earnings and the Parent Companys offering of
trust preferred securities and warrants during the fourth
quarter of 2001. Current plans for deployment of capital include
growth in the Companys core mortgage banking operations,
investment portfolio growth and repurchases of the
Companys shares.


For the first nine months of 2002, IndyMac
reported an increase of 25% in earnings per share (before the
cumulative effect of a change in accounting principle that
reduced 2001 earnings) over the first nine months of 2001 with a
21% growth in net revenues and a 4% reduction in average
diluted shares outstanding, offset by a 24% increase in
expenses. Return on equity for the nine months of 16.6% improved
over the 16.2% return on equity in the first nine months of
2001. Including the impact of the cumulative effect of a change
in accounting principle in 2001, earnings per share increased
41% during the nine months ended September 30, 2002
compared to the same period in 2001.

IndyMacs earnings per share and
mortgage loan production were at record levels in the third
quarter of this year, helped by historically low interest rates
triggering record industry production. The key to achieving
strong results this quarter was the exemplary performance by our
investment portfolio group in effectively managing the interest
rate risk inherent in our mortgage servicing and servicing
related assets. Impairment on our servicing related assets of
$118.0 million during the third quarter of 2002 due to
accelerated prepayments was offset by $118.6 million in
hedge gains, commented Michael W. Perry,
IndyMacs Chief Executive Officer. The mortgage
industry is a complex industry in that it has a lot of moving
parts. The companies that succeed in this industry will be the
ones that can effectively manage risks throughout the cycles
both in falling interest rates and in rising interest rates. I
am pleased with our performance this quarter and proud of the
tremendous effort put forth by our employees across the
organization.

Looking forward to 2003, the Mortgage
Bankers Association has forecast a relatively smooth
transition year with a decline of 27% in industry-wide loan
volumes from $2.4 trillion to $1.8 trillion. We cannot
wait to get past the current refinance boom environment so that
we can demonstrate our belief that, over the long term, we can
continue to grow our business successfully and profitably in a
more normal mortgage lending environment, continued
Mr. Perry. While it is difficult to forecast with
precision, we have run multiple scenarios of what our projected
results will be for next year assuming the 27% industry decline.
These projections include production volumes ranging from a
decline of 15% to an increase of 10%, with mortgage banking
profit margins ranging from flat to down 15% from current
levels. Other factors taken into account are expected
improvement in our net interest margin, improved servicing fee
income as interest rates begin to return to more normal levels
as indicated by the current forward curve, balance sheet growth,
and share repurchases. These projections range from flat
relative to the current year projected earnings per share of
$2.40 to an increase of 15% to $2.75 per share. As the market
normalizes we will begin to refine these projections. Bottom
line, we feel very good about our business model, our ability to
navigate successfully through the market transition and our
ability to grow earnings per share over the long-term at our
projected 15% annual growth rate, concluded Mr. Perry.



| |         
| | --------
| | Revenues

IndyMacs revenues are derived from its core
focus on single-family residential lending, and are diversified
among its mortgage banking operations and investment portfolio
activities. Mortgage banking operations are characterized by
high asset turn (the production and sale of mortgage loans) and
efficient utilization of capital but can be cyclical in nature
depending on interest rates. Revenues generated by

4



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mortgage banking operations include gain on sale
of mortgage loans, fee income and net spread
(interest) income during the period loans are held pending
sale. Investment portfolio activities consist primarily of
investments in single-family residential loans, also referred to
as SFRs, mortgage securities and mortgage servicing rights, also
referred to as MSRs. IndyMac also provides loans to subdivision
developers to construct single-family residential homes. The
portfolio activities tend to provide a more stable source of
revenues, comprised primarily of net interest income and
servicing fees. The increase in net revenues during the third
quarter was primarily the result of increased mortgage banking
revenues resulting from the historically low interest rate
environment, which led to record refinance activity and mortgage
production volume.





Loan
Production and Sales

During the third quarter of 2002, the Company
produced $5.3 billion of loans, which was a 14% increase
over the $4.6 billion of loans produced during the third
quarter of 2001. Total production by product type and channel
was as follows:

|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |     |    |  
|------------------------------------------- | -------------------- | ---------------------------- | --- | ------------- | ----- | -------- | --- | -------- | ----- | -------- | --- | -- | -- | - | --- | ----- | ----- |  | --- | --- | -- | -
|                                            |                      |                              |     |              
|                                            |                      | Three Months Ended           |     |              
|                                            |                      |                              |     |              
|                                            |                      | September 30,                |     | September 30, |       | Variance |     | June 30, |       | Variance
|                                            |                      | 2002                         |     | 2001          |       | Percent  |     | 2002     |       | Percent 
|                                            |                      |                              |     |               |       |          |     |          |       |         
|                                            |                      |                              |     |              
|                                            |                      | (Dollars in millions)        |     |              
|Volume by Product                           |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|Prime(1)                                    |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            | Agency conforming    |                              | $   | 902           |       |          | $   | 608      |       |          |     | 48 | %  |   | $   | 738   |       |  |     | 22  | % 
|                                            | Alt-A and jumbo      |                              |     | 3,365         |       |          |     | 3,144    |       |          |     | 7  | %  |   |     | 2,924 |       |  |     | 15  | % 
|                                            | Government  FHA/ VA |                              |     | 33            |       |          |     | 35       |       |          |     | (6 | )% |   |     | 48    |       |  |     | (31 | )%
|Subprime(1)                                 |                      |                              | 380 |               |       |          | 295 |          |       |          | 29  | %  |    |   | 392 |       |       |  | (3  | )% 
|Home Equity Lines Of Credit(2)              |                      |                              | 119 |               |       |          | 24  |          |       |          | 396 | %  |    |   | 82  |       |       |  | 45  | %  
|Consumer construction(2)                    |                      |                              | 409 |               |       |          | 335 |          |       |          | 22  | %  |    |   | 416 |       |       |  | (2  | )% 
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            |                      | Subtotal mortgage production |     |               | 5,208 |          |     |          | 4,441 |          |     |    | 17 | % |     |       | 4,600 |  |     |     | 13 | %
|Subdivision construction commitments        |                      |                              | 104 |               |       |          | 202 |          |       |          | (49 | )% |    |   | 190 |       |       |  | (45 | )% 
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            |                      | Total production volume      |     | $             | 5,312 |          |     | $        | 4,643 |          |     |    | 14 | % |     | $     | 4,790 |  |     |     | 11 | %
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|Mortgage Production  Volume by
    Channel |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            | B2B                  |                              | $   | 4,069         |       |          | $   | 3,860    |       |          |     | 5  | %  |   | $   | 3,893 |       |  |     | 5   | % 
|                                            | B2C                  |                              |     | 975           |       |          |     | 503      |       |          |     | 94 | %  |   |     | 600   |       |  |     | 63  | % 
|                                            | B2R                  |                              |     | 138           |       |          |     | 78       |       |          |     | 77 | %  |   |     | 92    |       |  |     | 50  | % 
|                                            | Homebuilder Division |                              |     | 26            |       |          |     |         |       |          |     | nm |    |   |     | 15    |       |  |     | 73  | % 
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            |                      | Total mortgage production    |     | $             | 5,208 |          |     | $        | 4,441 |          |     |    | 17 | % |     | $     | 4,600 |  |     |     | 13 | %
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|Mortgage  Web-based
    production         |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            | B2B                  |                              | $   | 3,436         |       |          | $   | 3,408    |       |          |     | 1  | %  |   | $   | 2,826 |       |  |     | 22  | % 
|                                            | B2C                  |                              |     | 319           |       |          |     | 211      |       |          |     | 51 | %  |   |     | 209   |       |  |     | 53  | % 
|                                            | B2R                  |                              |     | 138           |       |          |     | 77       |       |          |     | 79 | %  |   |     | 91    |       |  |     | 52  | % 
|                                            | Homebuilder Division |                              |     | 25            |       |          |     |         |       |          |     | nm |    |   |     | 15    |       |  |     | 67  | % 
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    
|                                            |                      | Total web-based production   |     | $             | 3,918 |          |     | $        | 3,696 |          |     |    | 6  | % |     | $     | 3,141 |  |     |     | 25 | %
|                                            |                      |                              |     |               |       |          |     |          |       |          |     |    |    |   |     |       |       |  |     |    

5



---



##### Table of Contents



|                                     |                                                                        |                       |       |               |   |          |       |          |   |          |    |     |    |   |       |    |   |  |    |    |   
|------------------------------------ | ---------------------------------------------------------------------- | --------------------- | ----- | ------------- | - | -------- | ----- | -------- | - | -------- | -- | --- | -- | - | ----- | -- | - |  | -- | -- | --
|                                     |                                                                        |                       |       |              
|                                     |                                                                        | Three Months Ended    |       |              
|                                     |                                                                        |                       |       |              
|                                     |                                                                        | September 30,         |       | September 30, |   | Variance |       | June 30, |   | Variance
|                                     |                                                                        | 2002                  |       | 2001          |   | Percent  |       | 2002     |   | Percent 
|                                     |                                                                        |                       |       |               |   |          |       |          |   |         
|                                     |                                                                        |                       |       |              
|                                     |                                                                        | (Dollars in millions) |       |              
|Refinances as a % of total fundings: |                                                                        |                       |       |               |   |          |       |          |   |          |    |     |    |   |       |    |   |  |    |   
|                                     | B2B                                                                    |                       |       | 66            | % |          |       | 53       | % |          |    | 24  | %  |   |       | 59 | % |  |    | 12 | % 
|                                     | B2C                                                                    |                       |       | 90            | % |          |       | 86       | % |          |    | 5   | %  |   |       | 85 | % |  |    | 6  | % 
|                                     | B2R                                                                    |                       |       | 56            | % |          |       | 46       | % |          |    | 22  | %  |   |       | 45 | % |  |    | 24 | % 
|                                     | Total refinanced loans as a % of total prime and
    subprime fundings |                       |       | 70            | % |          |       | 57       | % |          |    | 24  | %  |   |       | 63 | % |  |    | 12 | % 
|                                     | Cash-out refinanced loans as a % of total
    refinanced loans         |                       |       | 55            | % |          |       | 63       | % |          |    | (13 | )% |   |       | 59 | % |  |    | (7 | )%
|Mortgage Pipeline at period end      |                                                                        | $                     | 5,011 |               |   | $        | 3,925 |          |   |          | 28 | %   |    | $ | 3,722 |    |   |  | 35 | % 

|                  |                                      |                              |   |          |        |         |   |        |        |  |  |     |    |  
|----------------- | ------------------------------------ | ---------------------------- | - | -------- | ------ | ------- | - | ------ | ------ |  |  | --- | -- | -
|                  |                                      |                             
|                  |                                      | Nine Months Ended           
|                  |                                      |                             
|                  |                                      |                              |   |         
|                  |                                      | September 30,                |   |         
|                  |                                      |                              |   | Variance
|                  |                                      | 2002                         |   | 2001     |        | Percent
|                  |                                      |                              |   |          |        |        
|Volume by Channel |                                      |                              |   |          |        |         |   |        |        |  |  |    
|                  | B2B                                  |                              | $ | 11,334   |        |         | $ | 10,378 |        |  |  | 9   | % 
|                  | B2C                                  |                              |   | 2,165    |        |         |   | 1,518  |        |  |  | 43  | % 
|                  | B2R                                  |                              |   | 323      |        |         |   | 184    |        |  |  | 76  | % 
|                  | Homebuilder Division                 |                              |   | 45       |        |         |   |       |        |  |  | nm  |   
|                  |                                      |                              |   |          |        |         |   |        |        |  |  |    
|                  |                                      | Subtotal mortgage production |   |          | 13,867 |         |   |        | 12,080 |  |  |     | 15 | %
|                  | Subdivision construction commitments |                              |   | 437      |        |         |   | 766    |        |  |  | (43 | )%
|                  |                                      |                              |   |          |        |         |   |        |        |  |  |    
|                  |                                      | Total production volume      |   | $        | 14,304 |         |   | $      | 12,846 |  |  |     | 11 | %
|                  |                                      |                              |   |          |        |         |   |        |        |  |  |    



---



|    |                
|--- | ---------------
|(1) | Fundings       
|   
|(2) | New commitments

The Company sold $4.5 billion of loans
during each of the third quarters of 2002 and 2001. The gain on
sale increased 29% in the third quarter of 2002 to
$77.3 million, from $59.9 million in the third quarter
of 2001. The increase in the gain was a result of an increase in
the profit margin on loan sales to 1.73% in the third quarter of
2002 from 1.32% in the third quarter of 2001. The increase in
profit margin was primarily related to the mix of loan products
sold. During the third quarter of 2001, the Company retained
substantially all of its relatively higher margin subprime
mortgage loans and sold them in the fourth quarter of 2001,
whereas during the third quarter of 2002 the Company sold
$385 million of subprime loans and completed the
securitization of $135 million of consumer lot loans at
relatively higher margins. The consumer lot loan transaction
represented IndyMacs first securitization of this asset
class.

The Company hedges the interest rate risk
inherent in its pipeline of mortgage loans held for sale. In a
period of declining interest rates, hedging has the effect of
reducing the gain on sale of the Companys mortgage loans.
However, in a period of rising rates, hedging protects the
Company from deterioration in the net margin. The table below
illustrates the impact of the Companys pipeline hedging
activities.

|                                  |  |                       |      |               |  |          |      |          |  |          |     |  |  |   |      |   |  |  |     |   
|--------------------------------- |  | --------------------- | ---- | ------------- |  | -------- | ---- | -------- |  | -------- | --- |  |  | - | ---- | - |  |  | --- | --
|                                  |  |                      
|                                  |  | Three Months Ended   
|                                  |  |                      
|                                  |  | September 30,         |      | September 30, |  |          |      | June 30, |  |         
|                                  |  | 2002                  |      | 2001          |  | % Change |      | 2002     |  | % Change
|                                  |  |                       |      |               |  |          |      |          |  |         
|                                  |  |                      
|                                  |  | (Dollars in millions)
|Gross gain on mortgage loan sales |  | $                     | 155  |               |  | $        | 137  |          |  |          | 13% |  |  | $ | 133  |   |  |  | 17  | % 
|Gross margin before hedging       |  |                       | 3.48 | %             |  |          | 3.02 | %        |  |          | 15% |  |  |   | 3.59 | % |  |  | (3  | )%
|Hedging (losses)                  |  | $                     | (78  | )             |  | $        | (77  | )        |  |          | 2%  |  |  | $ | (61  | ) |  |  | 27  | % 
|Net gains on sale                 |  | $                     | 77   |               |  | $        | 60   |          |  |          | 29% |  |  | $ | 72   |   |  |  | 8   | % 
|Net margin after hedging          |  |                       | 1.73 | %             |  |          | 1.32 | %        |  |          | 31% |  |  |   | 1.93 | % |  |  | (10 | )%

6



---



##### Table of Contents



In addition to the gain on sale, IndyMac earns
spread and fee income on its mortgage loans held for sale. It is
important to look at the entire mortgage banking revenue stream
in evaluating performance as these components may vary in
differing interest rate environments and sale strategies. The
following table depicts the total revenue margin on mortgage
loans sold, which is calculated by dividing the sum of gain on
the sale of loans, net interest income (refer to
Note 3: Segment Reporting on page 37 for
further information on the Companys method of allocating
interest expense to the operating segments), and fee income by
the amount of loans sold:

|                      |  |                        |           |               |  |          |           |   |  |   |           |  
|--------------------- |  | ---------------------- | --------- | ------------- |  | -------- | --------- | - |  | - | --------- | -
|                      |  |                       
|                      |  | Three Months Ended    
|                      |  |                       
|                      |  | September 30,          |           | September 30, |  | June 30,
|                      |  | 2002                   |           | 2001          |  | 2002    
|                      |  |                        |           |               |  |         
|                      |  |                       
|                      |  | (Dollars in thousands)
|Gain on sale of loans |  | $                      | 77,279    |               |  | $        | 59,866    |   |  | $ | 71,280    |  
|Net interest income   |  |                        | 31,175    |               |  |          | 39,749    |   |  |   | 27,034    |  
|Fee income            |  |                        | 11,153    |               |  |          | 10,059    |   |  |   | 8,619     |  
|Loans sold            |  |                        | 4,473,620 |               |  |          | 4,525,425 |   |  |   | 3,707,070 |  
|Total revenue margin  |  |                        | 2.67      | %             |  |          | 2.42      | % |  |   | 2.88      | %
|                      |  |                        |           |               |  |          |           |   |  |   |           |  

The following table shows the distribution
channels through which loans were sold.

|                                  |                         |                       |       |               |  |          |       |          |  |          |     |    |    |   |       |       |  |  |     |    |  
|--------------------------------- | ----------------------- | --------------------- | ----- | ------------- |  | -------- | ----- | -------- |  | -------- | --- | -- | -- | - | ----- | ----- |  |  | --- | -- | -
|                                  |                         |                      
|                                  |                         | Three Months Ended   
|                                  |                         |                      
|                                  |                         | September 30,         |       | September 30, |  | Variance |       | June 30, |  | Variance
|                                  |                         | 2002                  |       | 2001          |  | Percent  |       | 2002     |  | Percent 
|                                  |                         |                       |       |               |  |          |       |          |  |         
|                                  |                         |                      
|                                  |                         | (Dollars in millions)
|Sales to the GSEs(1)              |                         | $                     | 1,885 |               |  | $        | 2,892 |          |  |          | (35 | )% |    | $ | 2,031 |       |  |  | (7  | )%
|Private-label securitizations     |                         |                       | 1,947 |               |  |          | 742   |          |  |          | 162 | %  |    |   | 1,278 |       |  |  | 52  | % 
|Whole loan sales                  |                         |                       | 642   |               |  |          | 891   |          |  |          | (28 | )% |    |   | 398   |       |  |  | 61  | % 
|                                  |                         |                       |       |               |  |          |       |          |  |          |     |    |    |   |       |       |  |  |     |   
|                                  | Subtotal sales          |                       |       | 4,474         |  |          |       | 4,525    |  |          |     | (1 | )% |   |       | 3,707 |  |  |     | 21 | %
|Investment Portfolio acquisitions |                         |                       | 315   |               |  |          | 216   |          |  |          | 46  | %  |    |   | 685   |       |  |  | (54 | )%
|                                  |                         |                       |       |               |  |          |       |          |  |          |     |    |    |   |       |       |  |  |     |   
|                                  | Total loan distribution |                       | $     | 4,789         |  |          | $     | 4,741    |  |          |     | 1  | %  |   | $     | 4,392 |  |  |     | 9  | %
|                                  |                         |                       |       |               |  |          |       |          |  |          |     |    |    |   |       |       |  |  |     |   



---



|    |                                 
|--- | --------------------------------
|(1) | Government-sponsored enterprises

In conjunction with the sale of mortgage loans in
private-label securitization and GSE transactions, the Company
generally retains certain assets. The primary assets retained
include MSRs and, to a lesser degree, AAA-rated and agency
interest-only securities, non-investment grade securities and
residual securities. The allocated cost of the retained assets
at the time of sale is recorded as an asset with an offsetting
increase to the gain on sale of loans (or a reduction in the
cost basis of the loans sold). The calculation of the
$77.3 million in gain on sale of loans earned during the
three months ended September 30, 2002 included the
retention of $107.8 million of servicing-related assets.
Included in the retained servicing-related assets during the
quarter ended September 30, 2002 is the allocated basis of
a residual totaling $20.1 million. After the end of the
quarter, the Company resecuritized this asset for cash,
retaining only a $5.0 million investment in the residual
security. Although retained assets make up a significant portion
of our gain on sale of loans, the Companys cash earnings
from operations still exceed our net earnings calculated in
accordance with US GAAP. See a more detailed analysis of
our cash flows beginning on page 27.



| |                               
| | ------------------------------
| | Mortgage Production by Channel

IndyMac generates its mortgage production through
multiple channels on a nationwide basis with a concentration in
those regions of the country where we have regional offices or
where there are higher home prices, including California,
Florida, New Jersey and New York. Our highest concentration of
mortgage loans relates to properties in California. Mortgages
secured by California properties accounted for 51% of the
mortgage loans produced in the third quarter of 2002 based on
dollar value, and 41% based on loan counts.

7



---



##### Table of Contents



IndyMacs primary mortgage production
channel is our business-to-business (B2B) channel through which
we purchase loans from mortgage brokers, mortgage bankers and
community financial institutions. The next largest channel is
our direct-to-consumer channel (B2C), which markets to consumers
on a decentralized basis through our Web site at
IndyMacMortgage.com, links to other Web-based marketers and
direct mail and telemarketing. In addition to these two key
channels, IndyMac produces mortgage loans through Realtors
(B2R-LoanWorks®), through its retail branch network, and
through relationships with homebuilders. Following is a more
detailed breakdown of the production in IndyMacs two
largest channels.



| |            
| | -----------
| | B2B Channel

|                                                          |                          |                                             |       |               |       |          |       |          |       |          |    |     |    |    |       |       |       |  |     |     |    |  
|--------------------------------------------------------- | ------------------------ | ------------------------------------------- | ----- | ------------- | ----- | -------- | ----- | -------- | ----- | -------- | -- | --- | -- | -- | ----- | ----- | ----- |  | --- | --- | -- | -
|                                                          |                          |                                            
|                                                          |                          | Three Months Ended                         
|                                                          |                          |                                            
|                                                          |                          | September 30,                               |       | September 30, |       | Variance |       | June 30, |       | Variance
|                                                          |                          | 2002                                        |       | 2001          |       | Percent  |       | 2002     |       | Percent 
|                                                          |                          |                                             |       |               |       |          |       |          |       |         
|Production (dollars in millions)                          |                          |                                             |       |               |       |          |       |          |       |          |    |     |    |    |       |       |       |  |     |    
|                                                          | Wholesale                |                                             | $     | 2,451         |       |          | $     | 2,343    |       |          |    | 5   | %  |    | $     | 1,914 |       |  |     | 28  | % 
|                                                          | Correspondent            |                                             |       | 839           |       |          |       | 1,171    |       |          |    | (28 | )% |    |       | 802   |       |  |     | 5   | % 
|                                                          | HELOC                    |                                             |       | 61            |       |          |       | 11       |       |          |    | 436 | %  |    |       | 52    |       |  |     | 18  | % 
|                                                          | Consumer Construction    |                                             |       | 409           |       |          |       | 335      |       |          |    | 22  | %  |    |       | 416   |       |  |     | (2  | )%
|                                                          |                          |                                             |       |               |       |          |       |          |       |          |    |     |    |    |       |       |       |  |     |    
|                                                          |                          | Subtotal wholesale/correspondent operations |       |               | 3,760 |          |       |          | 3,860 |          |    |     | (3 | )% |       |       | 3,184 |  |     |     | 18 | %
|                                                          | B2B  Conduit operations |                                             |       | 309           |       |          |       |         |       |          |    | nm  |    |    |       | 709   |       |  |     | (56 | )%
|                                                          |                          |                                             |       |               |       |          |       |          |       |          |    |     |    |    |       |       |       |  |     |    
|                                                          |                          | Total B2B                                   |       | $             | 4,069 |          |       | $        | 3,860 |          |    |     | 5  | %  |       | $     | 3,893 |  |     |     | 5  | %
|                                                          |                          |                                             |       |               |       |          |       |          |       |          |    |     |    |    |       |       |       |  |     |    
|Percent of wholesale/correspondent operations via
    Web |                          |                                             | 91    | %             |       |          | 88    | %        |       |          | 4  | %   |    |    | 89    | %     |       |  | 3   | %  
|Key drivers of growth and
    profitability               |                          |                                             |       |               |       |          |       |          |       |          |    |     |    |    |       |       |       |  |     |    
|Active Customers                                          |                          |                                             | 3,571 |               |       |          | 3,477 |          |       |          | 3  | %   |    |    | 3,832 |       |       |  | (7  | )% 
|Sales and Marketing Personnel                             |                          |                                             | 233   |               |       |          | 212   |          |       |          | 10 | %   |    |    | 232   |       |       |  | 0   | %  
|Cost per funded loan  prime/subprime
    (bps)           |                          |                                             | 75    |               |       |          | 76    |          |       |          | (1 | )%  |    |    | 99    |       |       |  | (24 | )% 



| |            
| | -----------
| | B2C Channel

|                                                |                                   |                    |       |               |  |          |       |          |  |          |      |     |    |   |       |     |  |  |     |    |  
|----------------------------------------------- | --------------------------------- | ------------------ | ----- | ------------- |  | -------- | ----- | -------- |  | -------- | ---- | --- | -- | - | ----- | --- |  |  | --- | -- | -
|                                                |                                   |                   
|                                                |                                   | Three Months Ended
|                                                |                                   |                   
|                                                |                                   | September 30,      |       | September 30, |  | Variance |       | June 30, |  | Variance
|                                                |                                   | 2002               |       | 2001          |  | Percent  |       | 2002     |  | Percent 
|                                                |                                   |                    |       |               |  |          |       |          |  |         
|Production (dollars in millions)                |                                   |                    |       |               |  |          |       |          |  |          |      |     |    |   |       |     |  |  |     |   
|Web-based Production                            |                                   |                    |       |               |  |          |       |          |  |          |      |     |    |   |       |     |  |  |     |   
|                                                | Direct at www.indymacmortgage.com |                    | $     | 219           |  |          | $     | 117      |  |          |      | 87  | %  |   | $     | 117 |  |  |     | 87 | %
|                                                | Indirect web-based leads          |                    |       | 70            |  |          |       | 94       |  |          |      | (26 | )% |   |       | 68  |  |  |     | 3  | %
|Cross-marketing and Portfolio Refinancing       |                                   |                    | 523   |               |  |          | 248   |          |  |          | 111  | %   |    |   | 321   |     |  |  | 63  | % 
|Direct Telemarketing and Affinity Relationships |                                   |                    | 124   |               |  |          | 43    |          |  |          | 188  | %   |    |   | 66    |     |  |  | 88  | % 
|Retail branches                                 |                                   |                    | 39    |               |  |          | 1     |          |  |          | 3800 | %   |    |   | 28    |     |  |  | 39  | % 
|                                                |                                   |                    |       |               |  |          |       |          |  |          |      |     |    |   |       |     |  |  |     |   
|                                                | Total                             |                    | $     | 975           |  |          | $     | 503      |  |          |      | 94  | %  |   | $     | 600 |  |  |     | 63 | %
|                                                |                                   |                    |       |               |  |          |       |          |  |          |      |     |    |   |       |     |  |  |     |   
|Key drivers of growth and
    profitability     |                                   |                    |       |               |  |          |       |          |  |          |      |     |    |   |       |     |  |  |     |   
|Marketing costs (in thousands)                  |                                   | $                  | 2,188 |               |  | $        | 1,349 |          |  |          | 62   | %   |    | $ | 1,725 |     |  |  | 27  | % 
|Marketing cost per funded loan (dollars)        |                                   | $                  | 437   |               |  | $        | 492   |          |  |          | (11  | )%  |    | $ | 543   |     |  |  | (20 | )%
|Cost per funded loan (bps)                      |                                   |                    | 167   |               |  |          | 202   |          |  |          | (17  | )%  |    |   | 202   |     |  |  | (17 | )%

The strong increase in the B2C channel
production this quarter is attributed to the strong mortgage
refinance environment, with mortgage interest rates at
historically low levels. At this time, the B2C channel is

8



---



##### Table of Contents



more closely associated with the refinance
environment, both from the perspective of refinancing the
customers of IndyMacs servicing portfolio and because
consumers are more willing to refinance an existing mortgage
over the Web. Our experience to date has been that consumers
that are in the process of purchasing a new home are more
influenced in their mortgage decision by their realtor.
IndyMacs B2B channel is more closely aligned to the
purchase market as these lenders tend to have established
relationships with realtors. IndyMacs B2R and
homebuilder channels, while still relatively small, are also
expected to align IndyMacs production more closely with
consumers seeking a mortgage to finance the purchase of a home
and are expected to help to mitigate the cyclicality of the B2C
channel should interest rates rise.







| |                     
| | --------------------
| | Construction Lending

IndyMac provides construction financing for
individual consumers who are in the process of building their
own home (consumer construction) and for residential subdivision
developers (builder construction).

With respect to consumer construction, the
primary product is a construction-to-permanent mortgage loan.
This product provides financing for the 9-12 month term of
construction and automatically rolls to a permanent mortgage
loan at the end of construction. As a result, this product
represents a hybrid activity between the portfolio lending
activities and mortgage banking activities. The Company earns
net interest income during the construction phase and when the
loan converts to permanent status the loan is transferred into
the Companys pipeline of mortgage loans held for sale.
These loans are typically fixed-rate loans. Consumer
construction loans outstanding at September 30, 2002 were
$786 million, up 8% compared to the amount at
December 31, 2001.

With respect to builder construction loans, our
focus has been narrowed in the past year to those homebuilders
that provide our mortgage loans to their customers when they
sell the completed residence. We have also narrowed our
geographic market in this product to 8 states for new
commitments (California, Illinois, Nevada, Utah, Arizona,
Colorado, Washington, Oregon). Builder construction loans are
typically based on prime rates. Builder construction loans
outstanding at September 30, 2002 were $502 million,
down 16% compared to December 31, 2001, due to the narrower
focus for this product. A substantial portion of our builder
construction loans also carry the guarantee of the builder.

The following table shows the geographic
distribution and credit quality of the Companys
construction loans outstanding at September 30, 2002.

|                            |                     |              |     |     |     |   |  |                             |                     |       |     |     |      | 
|--------------------------- | ------------------- | ------------ | --- | --- | --- | - |  | --------------------------- | ------------------- | ----- | --- | --- | ---- | 
|                            |                     | Consumer     |     |     |     |   |  | Builder                    
|                            |                     | Construction |     |     |     |   |  | Construction               
|                            |                     | Loans        |     |     |     |   |  | Loans                      
|                            |                     |              |     |     |     |   |  |                            
|Geographic distribution:    |                     |              |     |     |     |   |  | Geographic distribution(1): |                     |       |     |    
|                            | Southern California |              |     | 36  | %   |   |  |                             | Southern California |       |     | 40% |     
|                            | Northern California |              |     | 24  | %   |   |  |                             | Northern California |       |     | 28% |     
|                            | New York            |              |     | 7   | %   |   |  |                             | Illinois            |       |     | 13% |     
|                            | Hawaii              |              |     | 3   | %   |   |  |                             | Utah                |       |     | 3%  |     
|                            | Florida             |              |     | 2   | %   |   |  |                             | Texas               |       |     | 2%  |     
|                            | Colorado            |              |     | 2   | %   |   |  |                             | Georgia             |       |     | 2%  |     
|                            | Other               |              |     | 26  | %   |   |  |                             | Other               |       |     | 12% |     
|                            |                     |              |     |     |     |   |  |                             |                     |       |     |    
|                            |                     | Total        |     |     | 100 | % |  |                             |                     | Total |     |     | 100% | 
|                            |                     |              |     |     |     |   |  |                             |                     |       |     |    
|Average FICO score          |                     |              | 710 | (2) |     |   |  |                             |                     |       |     |    
|Average loan to value ratio |                     |              | 70  | %   |     |   |  | Average loan to value ratio |                     |       | 69% |    



---



|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Geographic distribution is based on outstanding
    balances. Some projects are continuing to be built out in states
    in which we no longer actively solicit new loans.
|   
|(2) | FICO scores are not calculated for corporate
    entities and are therefore not applicable for builder
    construction portfolio.                                        

9



---



##### Table of Contents



For information related to the Companys
balance of non-performing assets and related credit reserves,
see discussion below in Credit Risk and Reserves.



| |           
| | ----------
| | HELOC Unit

IndyMac recently established a business unit to
focus on the production of prime quality home equity lines of
credit, or HELOCs. The HELOC product was incorporated into our
e-MITS platform late in 2001. Using IndyMacs B2B and
B2C customer base, this unit generated $255 million in
new production in the first nine months of 2002, with 396%
growth in the third quarter of 2002 over the third quarter of
2001. The HELOC product is a variable rate product indexed to
the prime interest rate and is offered to consumers with a
minimum FICO score of 620. The average FICO score on the
HELOC portfolio at September 30, 2002 is 705 and
average spread over prime was 2.11%.

In addition to marketing through IndyMacs
B2B and B2C customer base, the HELOC Division is expanding
its marketing reach through cross-marketing to IndyMacs
existing mortgage and banking consumer customers and will begin
a direct mail marketing campaign to the general public in the
fourth quarter.




Investment
Portfolio Activities

The composition of the Investment Portfolio
includes mortgage loans held for investment, mortgage-backed
securities and MSRs. The following table sets forth the balances
associated with each of these portfolios.

|                                                              |                               |                                               |                                                    |              |           |           |           |   |           |           | 
|------------------------------------------------------------- | ----------------------------- | --------------------------------------------- | -------------------------------------------------- | ------------ | --------- | --------- | --------- | - | --------- | --------- | 
|                                                              |                               | September 30,                                 |                                                    | December 31,
|                                                              |                               | 2002                                          |                                                    | 2001        
|                                                              |                               |                                               |                                                    |             
|                                                              |                               |                                              
|                                                              |                               | (Dollars in thousands)                       
|Mortgage loans held for investment                            |                               | $                                             | 1,609,844                                          |              |           | $         | 1,531,757 |  
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|Mortgage-backed and U.S. Treasury
    securities:             |                               |                                               |                                                    |              |           |           |           |  
|                                                              | Trading securities            |                                               |                                                    |              |           |           |           |   |          
|                                                              |                               | AAA-rated and agency interest-only securities |                                                    |              | 189,524   |           |           |   | 211,104   |          
|                                                              |                               | AAA-rated principal-only securities           |                                                    |              | 32,861    |           |           |   | 4,096     |          
|                                                              |                               | AAA-rated non-agency securities               |                                                    |              | 143,614   |           |           |   |          |          
|                                                              |                               | U.S. Treasury securities                      |                                                    |              | 299,481   |           |           |   |          |          
|                                                              |                               | Other investment grade securities             |                                                    |              | 7,953     |           |           |   |          |          
|                                                              |                               | Non-investment grade residual securities      |                                                    |              | 94,232    |           |           |   |          |          
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Subtotal  trading securities                      |              |           | 767,665   |           |   |           | 215,200   | 
|                                                              | Available for sale securities |                                               |                                                    |              |           |           |           |   |          
|                                                              |                               | AAA-rated agency securities                   |                                                    |              | 146,066   |           |           |   | 89,752    |          
|                                                              |                               | AAA-rated non-agency securities               |                                                    |              | 1,320,684 |           |           |   | 1,170,960 |          
|                                                              |                               | Other investment grade securities             |                                                    |              | 40,388    |           |           |   | 40,042    |          
|                                                              |                               | Non-investment grade residual securities      |                                                    |              |          |           |           |   | 43,123    |          
|                                                              |                               | Other non-investment grade securities         |                                                    |              | 7,764     |           |           |   | 5,282     |          
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Subtotal  available for sale securities           |              |           | 1,514,902 |           |   |           | 1,349,159 | 
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Total mortgage-backed and U.S. Treasury securities |              |           | 2,282,567 |           |   |           | 1,564,359 | 
|Mortgage servicing rights                                     |                               |                                               | 278,041                                            |              |           |           | 321,316   |  
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Total                                              |              | $         | 4,170,452 |           |   | $         | 3,417,432 | 
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|Percentage of securities portfolio rated
    investment grade |                               |                                               | 96                                                 | %            |           |           | 97        | %
|Percentage of securities portfolio rated AAA                  |                               |                                               | 93                                                 | %            |           |           | 94        | %

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##### Table of Contents



Securities that the Company considers as hedges
of its AAA-rated and agency interest-only securities, prime
residual securities and MSRs are carried as trading securities
in order to reflect changes in their fair values in current
income. In addition, AAA-rated and agency interest-only
securities and non-investment grade residual securities are
classified as trading to allow the economic hedging activities
to mirror the accounting. All other mortgage-backed securities
are classified as available for sale.

The following table shows the Investment
Portfolio groups average annualized net returns, which is
calculated by dividing the sum of net interest income after
interest expense and provision for loan losses, service fee
income and related net gains or losses by the average balance of
Investment Portfolios assets. Service fee income includes
reinvestment income, prepayment and late fee income, net of
compensating interest paid to borrowers and investors, and net
hedging gains and losses.

|                                                                                                    |  |                        |           |               |  |          |           |   |  |   |           |  
|--------------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | ------------- |  | -------- | --------- | - |  | - | --------- | -
|                                                                                                    |  |                       
|                                                                                                    |  | Three Months Ended    
|                                                                                                    |  |                       
|                                                                                                    |  | September 30,          |           | September 30, |  | June 30,
|                                                                                                    |  | 2002                   |           | 2001          |  | 2002    
|                                                                                                    |  |                        |           |               |  |         
|                                                                                                    |  |                       
|                                                                                                    |  | (Dollars in thousands)
|Net interest income after provision for loan
    losses                                             |  | $                      | 16,641    |               |  | $        | 21,337    |   |  | $ | 17,782    |  
|Service fee income                                                                                  |  |                        | 3,593     |               |  |          | 7,304     |   |  |   | 6,405     |  
|Gain on mortgage-backed securities, net                                                             |  |                        | 7,674     |               |  |          | 1,695     |   |  |   | 2,701     |  
|Average balance of Investment Portfolios
    interest-earning assets and mortgage servicing rights |  |                        | 3,874,581 |               |  |          | 3,202,250 |   |  |   | 3,423,834 |  
|Investment Portfolios return on
    interest-earning assets and mortgage servicing rights          |  |                        | 2.88      | %             |  |          | 3.79      | % |  |   | 3.14      | %
|                                                                                                    |  |                        |           |               |  |          |           |   |  |   |           |  

The Companys portfolio of mortgage loans
held for investment is comprised of single-family residential
mortgage loans, with a concentration of adjustable-rate loans to
manage interest rate risk in funding these assets. The following
table shows the composition of this portfolio and relevant
credit quality characteristics at September 30, 2002.



| |                                   
| | ----------------------------------
| | Mortgage Loans Held for Investment

|                            |                                  |       |     |    |     |  
|--------------------------- | -------------------------------- | ----- | --- | -- | --- | -
|                            | Fixed-rate mortgages             |       |     | 13 | %  
|                            | Adjustable-rate mortgages        |       |     | 38 | %  
|                            | Hybrid adjustable-rate mortgages |       |     | 49 | %  
|                            |                                  |       |     |   
|                            |                                  | Total |     |    | 100 | %
|                            |                                  |       |     |   
|Average FICO score          |                                  |       | 713 |   
|Average loan to value ratio |                                  |       | 69  | % 



| |                                                            
| | -----------------------------------------------------------
| | Mortgage-backed Securities and U.S. Treasury
    Securities

The Companys portfolio of mortgage-backed
securities and U.S. Treasury securities totaled
$2.3 billion and $1.6 billion at September 30,
2002 and December 31, 2001, respectively. The Company
invests in high quality mortgage-backed securities to provide a
stable source of net spread income. At September 30, 2002,
93% of the portfolio was AAA-rated with expected average lives
ranging from 2-5 years. Treasury securities and AAA-rated
principal-only securities in the trading portfolio are purchased
to hedge the interest rate risk associated with servicing
related assets. All securities are recorded at fair value.

Non-investment grade residual securities related
to subprime collateral increased by $21.8 million during
the third quarter of 2002 as the Company retained a
$20.1 million residual security related to the
securitization of subprime loans. See further discussion above
on page 7.

During the third quarter of 2002, the Company
reclassified its portfolio of non-investment grade residual
securities from available for sale classification to trading.
This reclassification was done to allow our accounting results
to more closely match our economic hedging activities. Due to
enhancements in our valuation process we believe we can
effectively hedge the prepayment risk associated primarily with
the

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##### Table of Contents



residuals collateralized by prime mortgage loans,
which are more sensitive to changes in interest rates than
residual securities collateralized by subprime mortgage loans.
The Company also transferred to trading from the available for
sale classification certain AAA-rated non-agency securities that
are intended to hedge the interest rate risk associated with
prime residual securities. The transfer of residual securities
from available for sale to trading resulted in a
$4.0 million reclassification from other comprehensive
income to gain on mortgage-backed securities, net. The Company
no longer intends to hold any residual securities as available
for sale. All new residuals will be recorded as trading
securities.




| |                                                     
| | ----------------------------------------------------
| | Mortgage Servicing and Mortgage Servicing
    Rights

In addition to its own loans, IndyMac serviced
$25 billion of mortgage loans at September 30, 2002
with a weighted average coupon of 7.74% and was the master
servicer on $6.1 billion of mortgage loans. IndyMacs
overall mortgage servicing portfolio increased relative to the
December 31, 2001 balances of $19.9 billion and
$9.6 billion of primary servicing and master servicing,
respectively. MSRs related to these servicing portfolios totaled
$278.0 million as of September 30, 2002 and
$321.3 million as of December 31, 2001, reflecting a
decrease of $43.3 million primarily due to the fact that
impairment and amortization related to these assets exceeded the
value of new additions. The decrease in MSRs was also impacted
by the transfer of $60.0 million in mortgage servicing to
AAA-rated and agency interest-only securities effective
June 30, 2002. The table below shows the activity in
mortgage servicing rights.

|                                                |  |                        |         |                   |  |          |         |               |  |               |         |   |  |   |          |   |  |   |         |  
|----------------------------------------------- |  | ---------------------- | ------- | ----------------- |  | -------- | ------- | ------------- |  | ------------- | ------- | - |  | - | -------- | - |  | - | ------- | -
|                                                |  |                        |         |                  
|                                                |  | Three Months Ended     |         | Nine Months Ended
|                                                |  |                        |         |                  
|                                                |  | September 30,          |         | September 30,     |  | June 30, |         | September 30, |  | September 30,
|                                                |  | 2002                   |         | 2001              |  | 2002     |         | 2002          |  | 2001         
|                                                |  |                        |         |                   |  |          |         |               |  |              
|                                                |  |                       
|                                                |  | (Dollars in thousands)
|Balance at beginning of period                  |  | $                      | 316,780 |                   |  | $        | 279,990 |               |  | $             | 390,131 |   |  | $ | 321,316  |   |  | $ | 211,127 |  
|Net additions                                   |  |                        | 53,099  |                   |  |          | 75,527  |               |  |               | 48,881  |   |  |   | 172,755  |   |  |   | 169,666 |  
|Transfers to AAA-rated interest-only securities |  |                        |        |                   |  |          |        |               |  |               | (60,017 | ) |  |   | (60,017  | ) |  |   |        |  
|Scheduled amortization                          |  |                        | (15,657 | )                 |  |          | (17,821 | )             |  |               | (17,039 | ) |  |   | (51,400  | ) |  |   | (47,232 | )
|Provision for valuation/impairment              |  |                        | (76,181 | )                 |  |          | (52,522 | )             |  |               | (45,176 | ) |  |   | (104,613 | ) |  |   | (48,387 | )
|                                                |  |                        |         |                   |  |          |         |               |  |               |         |   |  |   |          |   |  |   |         |  
|Balance at end of period                        |  | $                      | 278,041 |                   |  | $        | 285,174 |               |  | $             | 316,780 |   |  | $ | 278,041  |   |  | $ | 285,174 |  
|                                                |  |                        |         |                   |  |          |         |               |  |               |         |   |  |   |          |   |  |   |         |  

At September 30, 2002, the valuation
allowance related to MSRs totaled $179.1 million.

12



---



##### Table of Contents





| |                                          
| | -----------------------------------------
| | Valuation of Servicing Related
    Assets

MSRs, AAA-rated and agency interest-only
securities and residual securities are recorded at fair market
value; mortgage servicing rights are further subject to lower of
cost or market limitations. The assumptions used to value the
Companys servicing related assets and residual securities
at September 30, 2002 and December 31, 2001 are shown
below.

|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |   | 
|--------------------------------------------- | ---------------------------------------------- | ---------------------- | ------- | --------------------- |  | --------- | ---------- | ------------ |  | ---------- | ------ | -------- |  | ---------- | ----- | --------- |  | ------------ | ----- |  |  |  | ---- |  |  |  | ----- |  |  |  | ----- |  |  |  | --- | - | 
|                                              |                                                |                        |         |                      
|                                              |                                                | Actual                 |         | Valuation Assumptions
|                                              |                                                |                        |         |                      
|                                              |                                                |                        |         | Gross Wtd.            |  | Servicing |            | 3-Month      |  | Weighted   |        | Lifetime |  |            |       | Remaining
|                                              |                                                | Book                   |         | Collateral            |  | Average   |            | Fee/Interest |  | Prepayment |        | Average  |  | Prepayment |       | Discount  |  | Cumulative  
|                                              |                                                | Value                  |         | Balance               |  | Coupon    |            | Strip        |  | Speeds     |        | Multiple |  | Speeds(1)  |       | Yield     |  | Loss Rate(2)
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |             
|                                              |                                                |                       
|                                              |                                                | (Dollars in thousands)
|September 30, 2002                            |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|AAA-rated and agency interest-only securities |                                                | $                      | 189,524 |                       |  | $         | 13,397,874 |              |  |            | 8.03%  |          |  |            | 0.57% |           |  |              | 34.5% |  |  |  | 2.48 |  |  |  | 23.7% |  |  |  | 7.9%  |  |  |  | N/A |  
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|Prime residual securities                     |                                                | $                      | 43,251  |                       |  | $         | 2,734,589  |              |  |            | 7.62%  |          |  |            | 1.74% |           |  |              | 18.9% |  |  |  | 0.91 |  |  |  | 18.6% |  |  |  | 15.2% |  |  |  | 0.7 | %
|Sub-prime residual securities                 |                                                |                        | 50,981  |                       |  | $         | 2,141,822  |              |  |            | 9.72%  |          |  |            | 4.28% |           |  |              | 31.3% |  |  |  | 0.56 |  |  |  | 34.4% |  |  |  | 27.2% |  |  |  | 2.9 | %
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|                                              | Total non-investment grade residual securities |                        | $       | 94,232                |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |   | 
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|Master servicing(3)                           |                                                | $                      | 16,185  |                       |  | $         | 6,075,684  |              |  |            | 8.26%  |          |  |            | 0.10% |           |  |              | 45.0% |  |  |  | 2.75 |  |  |  | 22.2% |  |  |  | 11.1% |  |  |  | N/A |  
|Primary servicing(4)                          |                                                |                        | 261,856 |                       |  | $         | 25,123,876 |              |  |            | 7.74%  |          |  |            | 0.35% |           |  |              | 35.2% |  |  |  | 3.06 |  |  |  | 23.1% |  |  |  | 9.4%  |  |  |  | N/A |  
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|                                              | Total mortgage servicing rights                |                        | $       | 278,041               |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |   | 
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|December 31, 2001                             |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|AAA-rated interest-only securities            |                                                | $                      | 211,104 |                       |  | $         | 8,943,350  |              |  |            | 7.55%  |          |  |            | 0.81% |           |  |              | 31.9% |  |  |  | 2.91 |  |  |  | 16.9% |  |  |  | 11.6% |  |  |  | N/A |  
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|Prime residual securities                     |                                                | $                      | 16,887  |                       |  | $         | 850,311    |              |  |            | 8.08%  |          |  |            | 1.98% |           |  |              | 17.8% |  |  |  | 1.00 |  |  |  | 20.7% |  |  |  | 18.0% |  |  |  | 0.8 | %
|Sub-prime residual securities                 |                                                |                        | 26,236  |                       |  | $         | 1,995,668  |              |  |            | 10.28% |          |  |            | 4.17% |           |  |              | 32.5% |  |  |  | 0.32 |  |  |  | 34.5% |  |  |  | 28.3% |  |  |  | 2.3 | %
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|                                              | Total non-investment grade residual securities |                        | $       | 43,123                |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |   | 
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|Master servicing(3)                           |                                                | $                      | 27,218  |                       |  | $         | 9,581,919  |              |  |            | 8.36%  |          |  |            | 0.10% |           |  |              | 40.9% |  |  |  | 2.84 |  |  |  | 18.8% |  |  |  | 17.3% |  |  |  | N/A |  
|Primary servicing(4)                          |                                                |                        | 294,098 |                       |  | $         | 19,889,540 |              |  |            | 8.28%  |          |  |            | 0.45% |           |  |              | 29.2% |  |  |  | 3.28 |  |  |  | 19.9% |  |  |  | 12.6% |  |  |  | N/A |  
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  
|                                              | Total mortgage servicing rights                |                        | $       | 321,316               |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |   | 
|                                              |                                                |                        |         |                       |  |           |            |              |  |            |        |          |  |            |       |           |  |              |       |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |     |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Speeds are higher in the short term and lower in
    the long term based on the forward curve for mortgage rates
    rising over the average life of the asset. The assumed 3-month
    prepayment speeds at September 30, 2002 were 40.5%, 21.7%,
    and 27.7% for AAA-rated and agency interest-only securities,
    prime residual securities, and subprime residuals, respectively,
    and 35.3% and 35.1% for master and primary servicing,
    respectively.
|   
|(2) | Actual cumulative loss rate totaled 0.09% and
    1.00% for prime and subprime residuals, respectively, at
    September 30, 2002.                                                                                                                                                                                                                                                                                                                                  
|   
|(3) | Included in the master servicing portfolio are
    loans included in the primary servicing portfolio with an unpaid
    principal balance of $3.1 billion at September 30,
    2002.                                                                                                                                                                                                                                                                                
|   
|(4) | Loans sold with servicing retained only; does not
    include a total of $1.8 billion in IndyMac-owned loans and
    loans subserviced for others on an interim basis at
    September 30, 2002.                                                                                                                                                                                                                                                                    

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##### Table of Contents



The lifetime prepayment speeds represent the
annualized constant prepayment rate (CPR) we
estimate for the remaining life of the collateral supporting the
asset. For MSRs and AAA-rated and agency interest-only
securities, we project prepayment rates using four-factor
prepayment models which incorporate relative weighted average
note rate, seasoning, seasonality and burn out of the pool of
loans relative to expectations of future rates implied by the
forward LIBOR/swap curve.

The weighted average multiple for MSRs, AAA-rated
and agency interest-only and residual securities represents the
book value divided by the product of collateral balance and
interest strip. While the weighted average life of such assets
is a function of the undiscounted cash flows, the multiple is a
function of the discounted cash flows. With regard to AAA-rated
and agency interest-only securities, the marketplace frequently
uses calculated multiples to assess the overall impact valuation
assumptions have on value. Collateral type, coupon, loan age and
the size of the interest strip must be considered when comparing
multiples.

The decrease in discount yields for AAA-rated and
agency interest-only securities, prime residual securities and
MSRs is due to the lower rate environment in existence at
September 30, 2002. In addition, the significant increase
in estimated lifetime prepayment speeds shortens the average
life of the asset cash flow, also reducing the discount yield.
This effect serves to somewhat offset the impact of volatile
prepayment speeds caused by interest rate changes.



| |                                                           
| | ----------------------------------------------------------
| | Hedging Interest Rate Risk on Servicing
    Related Assets

With respect to the investment in
servicing-related assets (AAA-rated and agency interest-only
securities, non-investment grade residual securities and MSRs),
the Company is exposed to interest rate risk as a result of
other than predicted prepayment of loans. Our Investment
Portfolio group is responsible for the management of interest
rate and prepayment risks, subject to policies and procedures
established by our management level Asset and Liability
Committee (ALCO) and board of directors level ALCO.
To hedge our investments in servicing-related assets, we use
several strategies, including investing in AAA-rated
principal-only securities, buying and/or selling mortgage-backed
or U.S. Treasury securities, futures, floors, swaps, or
options, depending on several factors. We utilize hedging
instruments to reduce our exposure to interest rate risk, not to
speculate on the direction of market interest rates.

Impairment as a result of accelerated prepayments
on the servicing related assets totaled $118.0 million in
the third quarter of 2002. These losses were offset by
$118.6 million of gains on trading securities and
derivative instruments utilized to hedge the interest rate risk
on the servicing related assets and residual securities.

14



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##### Table of Contents



The following breaks out the components of
service fee income and the gain on mortgage-backed securities,
net.

|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |      |     |   
|----------------------------- | ------------------------------------------------------------------------------------------------------- | --------------------------------------------- | - | ------------- | ----- | -------- | - | -------- | ----- | -------- |  | ---- | --- | -- | - | ------- | ----- |  |  | ---- | --- | --
|                              |                                                                                                         |                                              
|                              |                                                                                                         | Three Months Ended                           
|                              |                                                                                                         |                                              
|                              |                                                                                                         | September 30,                                 |   | September 30, |       | Variance |   | June 30, |       | Variance
|                              |                                                                                                         | 2002                                          |   | 2001          |       | Percent  |   | 2002     |       | Percent 
|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |         
|                              |                                                                                                         |                                              
|                              |                                                                                                         | (Dollars in thousands)                       
|Service fee income            |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     
|                              | Gross service fee income                                                                                |                                               | $ | 21,181        |       |          | $ | 26,285   |       |          |  | (19  | )%  |    | $ | 25,908  |       |  |  | (18  | )% 
|                              | Amortization                                                                                            |                                               |   | (15,657       | )     |          |   | (17,818  | )     |          |  | (12  | )%  |    |   | (16,959 | )     |  |  | (8   | )% 
|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     
|                              | Service fee income net of amortization                                                                  |                                               |   | 5,524         |       |          |   | 8,467    |       |          |  | (35  | )%  |    |   | 8,949   |       |  |  | (38  | )% 
|                              | Valuation adjustments on mortgage servicing rights                                                      |                                               |   | (76,181       | )     |          |   | (52,522  | )     |          |  | 45   | %   |    |   | (45,177 | )     |  |  | 69   | %  
|                              | Hedges on mortgage servicing rights                                                                     |                                               |   | 74,250        |       |          |   | 51,359   |       |          |  | 45   | %   |    |   | 42,633  |       |  |  | 74   | %  
|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     
|                              |                                                                                                         | Total service fee income                      |   | $             | 3,593 |          |   | $        | 7,304 |          |  |      | (51 | )% |   | $       | 6,405 |  |  |      | (44 | )%
|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     
|Net gain (loss) on securities |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     
|                              | Realized gain on AFS securities                                                                         |                                               | $ |              |       |          | $ | 5,369    |       |          |  | (100 | )%  |    | $ | 4,857   |       |  |  | (100 | )% 
|                              | Impairment on AFS securities                                                                            |                                               |   |              |       |          |   | (3,058   | )     |          |  | (100 | )%  |    |   | (1,931  | )     |  |  | (100 | )% 
|                              | Unrealized loss on AAA IOs and residual securities                                                      |                                               |   | (41,824       | )     |          |   | (47,870  | )     |          |  | (13  | )%  |    |   | (15,291 | )     |  |  | 174  | %  
|                              | Transfer of residual securities to trading
    classification                                           |                                               |   | 4,029         |       |          |   |         |       |          |  | nm   |     |    |   |        |       |  |  | nm   |    
|                              | Transfer of instruments used to hedge AAA IOs and
    residual securities to trading                    |                                               |   | 1,127         |       |          |   |         |       |          |  | nm   |     |    |   |        |       |  |  | nm   |    
|                              | Net gains on trading securities and other
    instruments used to hedge AAA IOs and residual securities |                                               |   | 44,342        |       |          |   | 47,254   |       |          |  | (6   | )%  |    |   | 15,066  |       |  |  | 194  | %  
|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     
|                              |                                                                                                         | Total gain on mortgage-backed securities, net |   | $             | 7,674 |          |   | $        | 1,695 |          |  |      | 353 | %  |   | $       | 2,701 |  |  |      | 184 | % 
|                              |                                                                                                         |                                               |   |               |       |          |   |          |       |          |  |      |     |    |   |         |       |  |  |     

The decrease in gross service fee income and
amortization during the quarter ended September 30, 2002
compared to the quarter ended June 30, 2002 was primarily
due to the transfer of $60.0 million in MSRs to AAA-rated
and agency interest-only securities effective June 30, 2002.

15



---



##### Table of Contents





| |                    
| | -------------------
| | Net Interest Income

The following table sets forth information
regarding our consolidated average balance sheets (Mortgage
Banking group and Investment Portfolio group are combined),
along with the total dollar amounts of interest income and
interest expense and the weighted average interest rates for the
periods presented. Average balances are calculated on a daily
basis. Non-performing loans are included in the average balances
for the periods presented. The allowance for loan losses is
excluded from the average loan balances.

|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |      |  
|-------------------------------------------------------- | ------------------------------------------ | -------------------------------- | --------- | --------------------------- |  | ----- | ------ | ------- |  | -------- | ---- | ----- | - | ------- | --------- | --------- |  | ----- | ------ | ------- |  |  | ---- | ---- | - | - | --------- | --------- |  | - | ------ | ------- |  |  | ---- | ---- | -
|                                                         |                                            |                                  |           |                            
|                                                         |                                            | Three Months Ended September 30, |           | Three Months Ended June 30,
|                                                         |                                            |                                  |           |                            
|                                                         |                                            |                                  |           |                             |  |      
|                                                         |                                            | 2002                             |           | 2001                        |  | 2002 
|                                                         |                                            |                                  |           |                             |  |      
|                                                         |                                            | Average                          |           |                             |  | Yield |        | Average |  |          |      | Yield |   | Average |           |           |  | Yield
|                                                         |                                            | Balance                          |           | Interest                    |  | Rate  |        | Balance |  | Interest |      | Rate  |   | Balance |           | Interest  |  | Rate 
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |      
|                                                         |                                            |                                 
|                                                         |                                            | (Dollars in thousands)          
|Securities                                               |                                            | $                                | 2,004,520 |                             |  | $     | 29,246 |         |  |          | 5.79 | %     |   | $       | 1,460,547 |           |  | $     | 31,489 |         |  |  | 8.55 | %    |   | $ | 1,620,863 |           |  | $ | 27,933 |         |  |  | 6.91 | %   
|Loans held for sale                                      |                                            |                                  | 2,425,306 |                             |  |       | 40,395 |         |  |          | 6.61 | %     |   |         | 2,542,204 |           |  |       | 49,854 |         |  |  | 7.78 | %    |   |   | 1,640,629 |           |  |   | 28,373 |         |  |  | 6.94 | %   
|Mortgage loans held for investment                       |                                            |                                  | 1,521,289 |                             |  |       | 23,318 |         |  |          | 6.08 | %     |   |         | 1,689,311 |           |  |       | 34,921 |         |  |  | 8.20 | %    |   |   | 1,810,660 |           |  |   | 30,795 |         |  |  | 6.82 | %   
|Builder construction and income property                 |                                            |                                  | 522,539   |                             |  |       | 10,110 |         |  |          | 7.68 | %     |   |         | 600,684   |           |  |       | 14,573 |         |  |  | 9.63 | %    |   |   | 555,027   |           |  |   | 10,925 |         |  |  | 7.90 | %   
|Consumer construction                                    |                                            |                                  | 760,955   |                             |  |       | 13,568 |         |  |          | 7.07 | %     |   |         | 562,221   |           |  |       | 11,019 |         |  |  | 7.78 | %    |   |   | 723,301   |           |  |   | 13,949 |         |  |  | 7.74 | %   
|Investment in Federal Home Loan Bank stock and
    other |                                            |                                  | 142,763   |                             |  |       | 1,537  |         |  |          | 4.27 | %     |   |         | 101,317   |           |  |       | 1,254  |         |  |  | 4.91 | %    |   |   | 138,650   |           |  |   | 1,585  |         |  |  | 4.59 | %   
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|                                                         | Total interest-earning assets              |                                  |           | 7,377,372                   |  |       |        | 118,174 |  |          |      | 6.36  | % |         |           | 6,956,284 |  |       |        | 143,110 |  |  |      | 8.16 | % |   |           | 6,489,130 |  |   |        | 113,560 |  |  |      | 7.02 | %
|Other                                                    |                                            |                                  | 715,530   |                             |  |       |        |         |  |          |      |       |   |         | 622,550   |           |  |       |        |         |  |  |      |      |   |   | 699,058   |           |  |   |        |         |  |  |      |     
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|                                                         | Total assets                               |                                  | $         | 8,092,902                   |  |       |        |         |  |          |      |       |   |         | $         | 7,578,834 |  |       |        |         |  |  |      |      |   |   | $         | 7,188,188 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|Interest-bearing deposits                                |                                            | $                                | 2,476,147 |                             |  |       | 23,989 |         |  |          | 3.84 | %     |   | $       | 2,314,676 |           |  |       | 29,744 |         |  |  | 5.10 | %    |   | $ | 2,652,629 |           |  |   | 26,828 |         |  |  | 4.06 | %   
|Advances from Federal Home Loan Bank                     |                                            |                                  | 2,068,865 |                             |  |       | 26,635 |         |  |          | 5.11 | %     |   |         | 1,732,919 |           |  |       | 24,736 |         |  |  | 5.66 | %    |   |   | 1,922,567 |           |  |   | 25,004 |         |  |  | 5.22 | %   
|Other borrowings                                         |                                            |                                  | 1,915,952 |                             |  |       | 14,417 |         |  |          | 2.99 | %     |   |         | 2,626,194 |           |  |       | 32,440 |         |  |  | 4.90 | %    |   |   | 1,089,202 |           |  |   | 9,768  |         |  |  | 3.60 | %   
|Trust preferred securities                               |                                            |                                  | 116,595   |                             |  |       | 2,758  |         |  |          | 9.38 | %     |   |         |          |           |  |       |       |         |  |  |     |      |   |   | 116,463   |           |  |   | 2,757  |         |  |  | 9.49 | %   
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|                                                         | Total interest-bearing liabilities         |                                  |           | 6,577,559                   |  |       |        | 67,799  |  |          |      | 4.09  | % |         |           | 6,673,789 |  |       |        | 86,920  |  |  |      | 5.17 | % |   |           | 5,780,861 |  |   |        | 64,357  |  |  |      | 4.47 | %
|Other                                                    |                                            |                                  | 659,115   |                             |  |       |        |         |  |          |      |       |   |         | 152,203   |           |  |       |        |         |  |  |      |      |   |   | 526,226   |           |  |   |        |         |  |  |      |     
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|                                                         | Total liabilities                          |                                  |           | 7,236,674                   |  |       |        |         |  |          |      |       |   |         |           | 6,825,992 |  |       |        |         |  |  |      |      |   |   |           | 6,307,087 |  |   |        |         |  |  |      |      |  
|                                                         | Shareholders equity                       |                                  |           | 856,228                     |  |       |        |         |  |          |      |       |   |         |           | 752,842   |  |       |        |         |  |  |      |      |   |   |           | 881,101   |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|                                                         | Total liabilities and shareholders equity |                                  | $         | 8,092,902                   |  |       |        |         |  |          |      |       |   |         | $         | 7,578,834 |  |       |        |         |  |  |      |      |   |   | $         | 7,188,188 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|Net interest spread                                      |                                            |                                  |           |                             |  |       |        |         |  |          | 2.27 | %     |   |         |           |           |  |       |        |         |  |  | 2.99 | %    |   |   |           |           |  |   |        |         |  |  | 2.55 | %   
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     
|Net interest margin                                      |                                            |                                  |           |                             |  |       |        |         |  |          | 2.71 | %     |   |         |           |           |  |       |        |         |  |  | 3.20 | %    |   |   |           |           |  |   |        |         |  |  | 3.04 | %   
|                                                         |                                            |                                  |           |                             |  |       |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |           |  |   |        |         |  |  |      |     

16



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##### Table of Contents



|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |      |  
|-------------------------------------------------------- | ------------------------------------------ | ------------------------------- | --------- | --------- |  | ----- | ------- | ------- |  | -------- | ---- | ----- | - | - | --------- | --------- |  | - | ------- | ------- |  |  | ----- | ---- | -
|                                                         |                                            |                                
|                                                         |                                            | Nine Months Ended September 30,
|                                                         |                                            |                                
|                                                         |                                            |                                 |           |          
|                                                         |                                            | 2002                            |           | 2001     
|                                                         |                                            |                                 |           |          
|                                                         |                                            | Average                         |           |           |  | Yield |         | Average |  |          |      | Yield
|                                                         |                                            | Balance                         |           | Interest  |  | Rate  |         | Balance |  | Interest |      | Rate 
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |      
|                                                         |                                            |                                
|                                                         |                                            | (Dollars in thousands)         
|Securities                                               |                                            | $                               | 1,727,136 |           |  | $     | 86,061  |         |  |          | 6.66 | %     |   | $ | 1,399,112 |           |  | $ | 93,515  |         |  |  | 8.94  | %   
|Loans held for sale                                      |                                            |                                 | 2,043,010 |           |  |       | 105,511 |         |  |          | 6.90 | %     |   |   | 2,286,173 |           |  |   | 137,453 |         |  |  | 8.04  | %   
|Mortgage loans held for investment                       |                                            |                                 | 1,688,024 |           |  |       | 85,012  |         |  |          | 6.73 | %     |   |   | 1,673,371 |           |  |   | 105,960 |         |  |  | 8.47  | %   
|Builder construction and income property                 |                                            |                                 | 555,700   |           |  |       | 32,434  |         |  |          | 7.80 | %     |   |   | 594,528   |           |  |   | 46,283  |         |  |  | 10.41 | %   
|Consumer construction                                    |                                            |                                 | 733,493   |           |  |       | 41,494  |         |  |          | 7.56 | %     |   |   | 478,801   |           |  |   | 29,496  |         |  |  | 8.24  | %   
|Investment in Federal Home Loan Bank stock and
    other |                                            |                                 | 140,248   |           |  |       | 4,904   |         |  |          | 4.68 | %     |   |   | 93,185    |           |  |   | 4,366   |         |  |  | 6.26  | %   
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|                                                         | Total interest-earning assets              |                                 |           | 6,887,611 |  |       |         | 355,416 |  |          |      | 6.90  | % |   |           | 6,525,170 |  |   |         | 417,073 |  |  |       | 8.55 | %
|Other                                                    |                                            |                                 | 695,588   |           |  |       |         |         |  |          |      |       |   |   | 531,140   |           |  |   |         |         |  |  |       |     
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|                                                         | Total assets                               |                                 | $         | 7,583,199 |  |       |         |         |  |          |      |       |   |   | $         | 7,056,310 |  |   |         |         |  |  |       |      |  
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|Interest-bearing deposits                                |                                            | $                               | 2,697,174 |           |  |       | 82,125  |         |  |          | 4.07 | %     |   | $ | 1,565,064 |           |  |   | 64,520  |         |  |  | 5.51  | %   
|Advances from Federal Home Loan Bank                     |                                            |                                 | 1,982,686 |           |  |       | 76,028  |         |  |          | 5.13 | %     |   |   | 1,591,739 |           |  |   | 70,894  |         |  |  | 5.95  | %   
|Other borrowings                                         |                                            |                                 | 1,367,733 |           |  |       | 35,660  |         |  |          | 3.49 | %     |   |   | 3,028,403 |           |  |   | 130,173 |         |  |  | 5.75  | %   
|Trust preferred securities                               |                                            |                                 | 116,464   |           |  |       | 8,271   |         |  |          | 9.50 | %     |   |   |          |           |  |   |        |         |  |  |      |     
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|                                                         | Total interest-bearing liabilities         |                                 |           | 6,164,057 |  |       |         | 202,084 |  |          |      | 4.38  | % |   |           | 6,185,206 |  |   |         | 265,587 |  |  |       | 5.74 | %
|Other                                                    |                                            |                                 | 551,814   |           |  |       |         |         |  |          |      |       |   |   | 125,676   |           |  |   |         |         |  |  |       |     
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|                                                         | Total liabilities                          |                                 |           | 6,715,871 |  |       |         |         |  |          |      |       |   |   |           | 6,310,882 |  |   |         |         |  |  |       |      |  
|                                                         | Shareholders equity                       |                                 |           | 867,328   |  |       |         |         |  |          |      |       |   |   |           | 745,428   |  |   |         |         |  |  |       |      |  
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|                                                         | Total liabilities and shareholders equity |                                 | $         | 7,583,199 |  |       |         |         |  |          |      |       |   |   | $         | 7,056,310 |  |   |         |         |  |  |       |      |  
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|Net interest spread                                      |                                            |                                 |           |           |  |       |         |         |  |          | 2.52 | %     |   |   |           |           |  |   |         |         |  |  | 2.81  | %   
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     
|Net interest margin                                      |                                            |                                 |           |           |  |       |         |         |  |          | 2.98 | %     |   |   |           |           |  |   |         |         |  |  | 3.10  | %   
|                                                         |                                            |                                 |           |           |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |       |     

Due to the high level of prepayments and sales of
higher yielding assets during the third quarter of 2002, the
purchase of loans in the investment portfolio at lower interest
rates, longer duration funding by certain FHLB advances and
increased leverage, the Company experienced compression of the
net interest margin relative to the second quarter of 2002. The
Company expects this spread compression will continue into the
fourth quarter, but will begin to abate as $430 million of
higher cost, term FHLB advances and $344 million of higher
cost certificates of deposits mature in the fourth quarter of
2002 and incremental asset purchases are made at favorable
margins. Assuming that the relative mix of assets and
liabilities stays approximately the same, and interest rates
begin to gradually increase as indicated by the forward yield
curve, IndyMac would expect to see the net interest margin
decline to 2.50% to 2.60% in the fourth quarter of this year and
then increase to 2.70% to 2.80% in the first quarter of next
year.

The dollar amounts of interest income and
interest expense fluctuate depending upon changes in the average
balances and interest rates of interest-earning assets and
interest-bearing liabilities. The following table details
changes attributable to (i) changes in volume (changes in
average outstanding balances multiplied by the prior
periods rate), (ii) changes in the rate (changes in
the average interest rate multiplied

17



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##### Table of Contents



by the prior periods volume), and
(iii) changes in rate/volume (mix) (changes in
rates times the changes in volume).


|                                                         |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |         |  
|-------------------------------------------------------- | ---------------------- | -------------------------------- | ------ | ----- |  | --- | ------- | ------------ | - | - | ------ | ------ | - | - | ------- | ------- | -
|                                                         |                        |                                 
|                                                         |                        | Three Months Ended September 30,
|                                                         |                        | 2002 vs 2001                    
|                                                         |                        |                                 
|                                                         |                        |                                 
|                                                         |                        | Increase/(Decrease) Due to      
|                                                         |                        |                                 
|                                                         |                        | Volume                           |        | Rate  |  | Mix |         | Total Change
|                                                         |                        |                                  |        |       |  |     |         |             
|                                                         |                        |                                 
|                                                         |                        | (Dollars in thousands)          
|Interest income                                          |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |        
|Mortgage-backed securities                               |                        | $                                | 11,728 |       |  | $   | (10,179 | )            |   | $ | (3,792 | )      |   | $ | (2,243  | )      
|Loans held for sale                                      |                        |                                  | (2,292 | )     |  |     | (7,512  | )            |   |   | 345    |        |   |   | (9,459  | )      
|Mortgage loans held for investment                       |                        |                                  | (3,473 | )     |  |     | (9,028  | )            |   |   | 898    |        |   |   | (11,603 | )      
|Builder construction and income property                 |                        |                                  | (1,896 | )     |  |     | (2,951  | )            |   |   | 384    |        |   |   | (4,463  | )      
|Consumer construction                                    |                        |                                  | 3,895  |       |  |     | (994    | )            |   |   | (352   | )      |   |   | 2,549   |        
|Investment in Federal Home Loan Bank stock and
    other |                        |                                  | 513    |       |  |     | (163    | )            |   |   | (67    | )      |   |   | 283     |        
|                                                         |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |        
|                                                         | Total interest income  |                                  |        | 8,475 |  |     |         | (30,827      | ) |   |        | (2,584 | ) |   |         | (24,936 | )
|Interest expense                                         |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |        
|Interest-bearing deposits                                |                        |                                  | 2,075  |       |  |     | (7,319  | )            |   |   | (511   | )      |   |   | (5,755  | )      
|Advances from Federal Home Loan Bank                     |                        |                                  | 4,795  |       |  |     | (2,426  | )            |   |   | (470   | )      |   |   | 1,899   |        
|Trust preferred securities                               |                        |                                  | 2,758  |       |  |     |        |              |   |   |       |        |   |   | 2,758   |        
|Other borrowings                                         |                        |                                  | (8,773 | )     |  |     | (12,679 | )            |   |   | 3,429  |        |   |   | (18,023 | )      
|                                                         |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |        
|                                                         | Total interest expense |                                  |        | 855   |  |     |         | (22,424      | ) |   |        | 2,448  |   |   |         | (19,121 | )
|                                                         |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |        
|                                                         | Net interest income    |                                  | $      | 7,620 |  |     | $       | (8,403       | ) |   | $      | (5,032 | ) |   | $       | (5,815  | )
|                                                         |                        |                                  |        |       |  |     |         |              |   |   |        |        |   |   |         |        

|                                                         |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |         |  
|-------------------------------------------------------- | ---------------------- | ------------------------------- | ------- | ------ |  | --- | ------- | ------------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                         |                        |                                
|                                                         |                        | Nine Months Ended September 30,
|                                                         |                        | 2002 vs 2001                   
|                                                         |                        |                                
|                                                         |                        |                                
|                                                         |                        | Increase/(Decrease) Due to     
|                                                         |                        |                                
|                                                         |                        | Volume                          |         | Rate   |  | Mix |         | Total Change
|                                                         |                        |                                 |         |        |  |     |         |             
|                                                         |                        |                                
|                                                         |                        | (Dollars in thousands)         
|Interest income                                          |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |        
|Mortgage-backed securities                               |                        | $                               | 21,923  |        |  | $   | (23,799 | )            |   | $ | (5,578  | )       |   | $ | (7,454  | )      
|Loans held for sale                                      |                        |                                 | (14,620 | )      |  |     | (19,384 | )            |   |   | 2,062   |         |   |   | (31,942 | )      
|Mortgage loans held for investment                       |                        |                                 | 928     |        |  |     | (21,686 | )            |   |   | (190    | )       |   |   | (20,948 | )      
|Builder construction and income property                 |                        |                                 | (3,023  | )      |  |     | (11,583 | )            |   |   | 757     |         |   |   | (13,849 | )      
|Consumer construction                                    |                        |                                 | 15,690  |        |  |     | (2,410  | )            |   |   | (1,282  | )       |   |   | 11,998  |        
|Investment in Federal Home Loan Bank stock and
    other |                        |                                 | 2,205   |        |  |     | (1,108  | )            |   |   | (559    | )       |   |   | 538     |        
|                                                         |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |        
|                                                         | Total interest income  |                                 |         | 23,103 |  |     |         | (79,970      | ) |   |         | (4,790  | ) |   |         | (61,657 | )
|Interest expense                                         |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |        
|Interest-bearing deposits                                |                        |                                 | 46,671  |        |  |     | (16,866 | )            |   |   | (12,200 | )       |   |   | 17,605  |        
|Advances from Federal Home Loan Bank                     |                        |                                 | 17,412  |        |  |     | (9,857  | )            |   |   | (2,421  | )       |   |   | 5,134   |        
|Trust preferred securities                               |                        |                                 | 8,271   |        |  |     |        |              |   |   |        |         |   |   | 8,271   |        
|Other borrowings                                         |                        |                                 | (71,382 | )      |  |     | (51,215 | )            |   |   | 28,084  |         |   |   | (94,513 | )      
|                                                         |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |        
|                                                         | Total interest expense |                                 |         | 972    |  |     |         | (77,938      | ) |   |         | 13,463  |   |   |         | (63,503 | )
|                                                         |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |        
|                                                         | Net interest income    |                                 | $       | 22,131 |  |     | $       | (2,032       | ) |   | $       | (18,253 | ) |   | $       | 1,846   |  
|                                                         |                        |                                 |         |        |  |     |         |              |   |   |         |         |   |   |         |        

18



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##### Table of Contents








| |                                          
| | -----------------------------------------
| | Overall Interest Rate Risk
    Management

In addition to the hedging activities to mitigate
the interest rate risk in its pipeline of mortgage loans held
for sale and its investment in servicing related assets
discussed previously on pages 6 and 14, respectively, the
Company performs extensive overall interest rate risk analysis.
The primary measurement tool used to evaluate overall risk is a
net portfolio value (NPV) analysis. An NPV analysis
simulates the effects on shareholders equity of a change
in interest rates.

The following table sets forth the NPV and change
in NPV of the Bank associated with a 100 basis point change
in interest rates as of September 30, 2002 and
December 31, 2001. IndyMacs NPV model has been built
to focus on the Bank alone as the $126.5 million of assets
at the holding company have very little interest rate risk
exposure.

|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |           |  |   |           |           |  |   |           |           |  |   |           |           | 
|-------------------------------------------- | ----------------- | ---------------------- | --------- | ------------------- |  | -------- | --------- | ------------------- |  | -------- | --------- | --------- |  | - | --------- | --------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|                                             |                   |                        |           |                    
|                                             |                   | September 30, 2002     |           | December 31, 2001  
|                                             |                   |                        |           |                    
|                                             |                   |                        |           |                     |  |          |           |                    
|                                             |                   |                        |           | Effect of Change in |  |          |           | Effect of Change in
|                                             |                   |                        |           | Interest Rates      |  |          |           | Interest Rates     
|                                             |                   |                        |           |                     |  |          |           |                    
|                                             |                   | Carrying               |           | Decrease            |  | Increase |           | Carrying            |  | Decrease |           | Increase 
|                                             |                   | Basis                  |           | 100 bp              |  | 100 bp   |           | Basis               |  | 100 bp   |           | 100 bp   
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |          
|                                             |                   |                       
|                                             |                   | (Dollars in thousands)
|Cash and cash equivalents                    |                   | $                      | 164,708   |                     |  | $        | 164,708   |                     |  | $        | 164,708   |           |  | $ | 153,295   |           |  | $ | 153,296   |           |  | $ | 153,284   |          
|Mortgage-backed and U.S. Treasury securities |                   |                        | 2,251,397 |                     |  |          | 2,255,050 |                     |  |          | 2,236,051 |           |  |   | 1,538,293 |           |  |   | 1,537,313 |           |  |   | 1,519,105 |          
|Loans receivable                             |                   |                        | 4,610,645 |                     |  |          | 4,668,991 |                     |  |          | 4,541,731 |           |  |   | 5,017,874 |           |  |   | 5,110,233 |           |  |   | 4,910,704 |          
|Mortgage servicing rights                    |                   |                        | 278,041   |                     |  |          | 210,097   |                     |  |          | 344,723   |           |  |   | 321,120   |           |  |   | 271,475   |           |  |   | 360,577   |          
|Other assets                                 |                   |                        | 363,716   |                     |  |          | 368,615   |                     |  |          | 358,818   |           |  |   | 337,419   |           |  |   | 341,924   |           |  |   | 332,924   |          
|Derivatives                                  |                   |                        | 97,142    |                     |  |          | 149,272   |                     |  |          | 66,074    |           |  |   | 82,020    |           |  |   | 89,601    |           |  |   | 104,951   |          
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |           |  |   |           |           |  |   |           |           |  |   |           |          
|                                             | Total assets      |                        | $         | 7,765,649           |  |          | $         | 7,816,733           |  |          | $         | 7,712,105 |  |   | $         | 7,450,021 |  |   | $         | 7,503,842 |  |   | $         | 7,381,545 | 
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |           |  |   |           |           |  |   |           |           |  |   |           |          
|Deposits                                     |                   | $                      | 2,922,560 |                     |  | $        | 2,960,903 |                     |  | $        | 2,885,148 |           |  | $ | 3,375,301 |           |  | $ | 3,415,664 |           |  | $ | 3,335,849 |          
|Advances from Federal Home Loan Bank         |                   |                        | 2,012,874 |                     |  |          | 2,032,039 |                     |  |          | 1,994,086 |           |  |   | 2,051,984 |           |  |   | 2,070,372 |           |  |   | 2,033,960 |          
|Borrowings                                   |                   |                        | 1,845,737 |                     |  |          | 1,847,679 |                     |  |          | 1,843,684 |           |  |   | 1,080,991 |           |  |   | 1,082,107 |           |  |   | 1,079,848 |          
|Other liabilities                            |                   |                        | 163,012   |                     |  |          | 163,114   |                     |  |          | 162,881   |           |  |   | 122,476   |           |  |   | 122,476   |           |  |   | 122,477   |          
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |           |  |   |           |           |  |   |           |           |  |   |           |          
|                                             | Total liabilities |                        |           | 6,944,183           |  |          |           | 7,003,735           |  |          |           | 6,885,799 |  |   |           | 6,630,752 |  |   |           | 6,690,619 |  |   |           | 6,572,134 | 
|Shareholders equity (NPV)                   |                   | $                      | 821,466   |                     |  | $        | 812,998   |                     |  | $        | 826,306   |           |  | $ | 819,269   |           |  | $ | 813,223   |           |  | $ | 809,411   |          
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |           |  |   |           |           |  |   |           |           |  |   |           |          
|% Change from base case                      |                   |                        |           |                     |  |          | (1.03     | )%                  |  |          | 0.59      | %         |  |   |           |           |  |   | (0.74     | )%        |  |   | (1.20     | )%       
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |           |  |   |           |           |  |   |           |           |  |   |           |          

The decrease in the fair value of equity from
December 31, 2001 to September 30, 2002 is primarily
caused by the historically low interest rate environment during
the third quarter of 2002. The fair value of our mortgage
related assets has not increased as much as the fair value of
our term liabilities has decreased. It should be noted that this
analysis does not reflect the increase in volumes and profits
from our Mortgage Banking operations that result from the
interest rate environment.

The assumptions inherent in our interest rate
shock models include valuation changes in an instantaneous and
parallel rate shock and assumptions as to the degree of
correlation between the hedges and hedged assets and
liabilities. These assumptions may not adequately reflect
factors such as the spread-widening or spread-tightening risk
among the changes in rates on Treasury, LIBOR/swap curve and
mortgages. In addition, the sensitivity analysis described in
the prior paragraph is limited by the fact that it is performed
at a particular point in time and does not incorporate other
factors that would impact our financial performance in these
scenarios, such as increases in income associated with the
increase in production volume that could result from a decrease
in interest rates. Consequently, the preceding estimates should
not be viewed as a forecast, and it is reasonable to expect that
actual results could vary significantly from the analyses
discussed above.

The Companys Asset and Liability Committees
monitor our hedging activities to ensure that the value of
hedges, their correlation to the balance sheet item being
hedged, and the amounts being hedged, continue to

19



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##### Table of Contents



provide effective protection against interest
rate risk. While there can be no assurances that our interest
rate management strategies will be effective, we believe we have
adequate internal controls to monitor and manage our interest
rate risk within reasonable levels.







| |                         
| | ------------------------
| | Credit Risk and Reserves



| |        
| | -------
| | General

The following table summarizes the Companys
allowance for loan losses/ credit discounts and non-performing
assets as of September 30, 2002.

|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |        |        |  
|--------------------------------------------------------------- | ------------------------------------ | ----------------------------------- | --------- | ------------- | --------- | --------------- | ------ | -------------- | ------ | ---------------- | ----- | ----- | ---- | - | ------- | ------ | ------ | - | ----- | ------ | ------ | - | ----- | ------ | ------ | -
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                 
|                                                                |                                      |                                     |           | Allowance     |           |                 |        |                |        | Net Charge Offs/
|                                                                |                                      |                                     |           | for Loan      |           | Total Reserves  |        |                |        | Net REO (Gains) 
|                                                                |                                      |                                     |           | Losses/Credit |           | as a Percentage |        | Non-Performing |        |                 
|Type of Loan                                                    |                                      | Book Value                          |           | Discounts     |           | of Book Value   |        | Assets         |        | QTD              |       | YTD  
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |      
|                                                                |                                      |                                    
|                                                                |                                      | (Dollars in thousands)             
|Held for investment portfolio                                   |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|Mortgage loans                                                  |                                      | $                                   | 1,506,405 |               |           | $               | 16,614 |                |        |                  | 1.10  | %     |      | $ | 30,554  |        |        | $ | 2,173 |        |        | $ | 3,916 |       
|Builder construction and income property                        |                                      |                                     | 571,532   |               |           |                 | 15,956 |                |        |                  | 2.79  | %     |      |   | 12,997  |        |        |   |      |        |        |   | 973   |       
|Consumer construction                                           |                                      |                                     | 786,126   |               |           |                 | 9,719  |                |        |                  | 1.24  | %     |      |   | 10,075  |        |        |   | 46    |        |        |   | 148   |       
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|                                                                | Total core held for investment loans |                                     |           | 2,864,063     |           |                 |        | 42,289         |        |                  |       | 1.48  | %    |   |         | 53,626 |        |   |       | 2,219  |        |   |       | 5,037  |       
|                                                                | Discontinued product lines(1)        |                                     |           | 103,439       |           |                 |        | 11,582         |        |                  |       | 11.20 | %    |   |         | 12,415 |        |   |       | 2,746  |        |   |       | 9,246  |       
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|                                                                |                                      | Total held for investment portfolio |           |               | 2,967,502 |                 |        |                | 53,871 |                  |       |       | 1.82 | % |         |        | 66,041 |   |       |        | 4,965  |   |       |        | 14,283 |  
|Held for sale portfolio                                         |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|SFR held for sale                                               |                                      |                                     | 1,676,421 |               |           |                 | 475    |                |        |                  | 0.03  | %     |      |   | 2,369   |        |        |   |      |        |        |   |      |       
|SFR credit risk portfolio                                       |                                      |                                     | 31,599    |               |           |                 | 8,878  |                |        |                  | 28.10 | %     |      |   | 8,301   |        |        |   |      |        |        |   |      |       
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|                                                                |                                      | Total held for sale portfolio       |           |               | 1,708,020 |                 |        |                | 9,353  |                  |       |       | 0.55 | % |         |        | 10,670 |   |       |        |       |   |       |        |       |  
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|                                                                |                                      | Total loans                         |           | $             | 4,675,522 |                 |        | $              | 63,224 |                  |       |       | 1.35 | % |         |        | 76,711 |   |       | $      | 4,965  |   |       | $      | 14,283 |  
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|Foreclosed assets                                               |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|                                                                | Portfolio loans                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         | 24,658 |        |   | $     | (1,900 | )      |   | $     | (2,210 | )     
|                                                                | Discontinued product lines           |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         | 2,160  |        |   |       | (423   | )      |   |       | (1,077 | )     
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|                                                                |                                      | Total foreclosed assets             |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        | 26,818 |   |       | $      | (2,323 | ) |       | $      | (3,287 | )
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|Total non-performing assets                                     |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      | $ | 103,529 |        |        |   |       |        |        |   |       |       
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       
|Total non-performing assets as a percentage of
    total assets |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   | 1.31    | %      |        |   |       |        |        |   |       |       
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |                  |       |       |      |   |         |        |        |   |       |        |        |   |       |       



---



|    |                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------
|(1) | Discontinued product lines include manufactured
    home loans, home improvement and warehouse lending.

The allowance for loan losses of
$53.9 million at September 30, 2002 represented 1.8%
of total loans held for investment. This compares to an
allowance for loan losses of $56.1 million, or 2.0% of
total loans held for investment, at June 30, 2002 and
$65.7 million, or 2.2% of total loans held for investment,
at September 30, 2001. The decrease in the allowance for
loan losses of $11.8 million from September 30, 2001 to

20



---



##### Table of Contents



September 30, 2002 was primarily due to the
sale of a majority of the home improvement loans during the
fourth quarter of 2001. At the time of sale, $8.3 million
of the allowance for loan losses was charged off.


Non-performing assets (NPAs)
increased 6% during the third quarter consistent with
managements expectations. The growth in these balances,
however, was consistent with the balance sheet growth and, as a
result, the ratio of NPAs to total assets of 1.3% remained
relatively constant in comparison to the second quarter of 2002
and improved relative to the 1.6% level at September 30,
2001.

Our determination of the level of the allowance
for loan losses and, correspondingly, the provision for loan
losses, is based on managements judgments and assumptions
regarding various matters, including general economic
conditions, loan portfolio composition, delinquency trends and
prior loan loss experience. In assessing the adequacy of the
allowance for loan losses, management reviews the performance in
the portfolios of loans held for investment and the non-core
portfolio of discontinued product lines which consist primarily
of manufactured housing loans and home improvement loans.

With respect to the portfolio of loans held for
investment in IndyMacs core businesses, the allowance for
loan losses at September 30, 2002 were $42.3 million
or 1.5% of loan balances, comparable to the 1.6% at
June 30, 2002 and September 30, 2001. Net charge-offs
on these core portfolios during the third quarter of 2002 were
$2.2 million, up from $1.1 million during the second
quarter and lower than the $3.6 million in the third
quarter of 2001. The charge-offs in the second quarter of this
year were low relative to expected annual charge-offs. The
charge-offs in the third quarter are in line with
managements expectations.

With respect to IndyMacs non-core
liquidating portfolios, consisting primarily of manufactured
housing and home improvement loans, net charge-offs totaled
$2.7 million during the third quarter of 2002, down from
the $3.3 million of charge-offs on these portfolios during
the second quarter of 2002. After provision for losses of
$1.4 million, the allowance for loan losses was
$11.6 million, or 11.2% of the remaining principal balance,
relatively constant with the 11.9% reserve coverage at
June 30, 2002 and 11.1% coverage at September 30, 2001.

With respect to mortgage loans held for sale,
IndyMac does not provide an allowance for loan losses,
pursuant to the applicable accounting rules. Embedded in the
lower of cost or market valuation is a component for credit risk
related to originations. The discount credit reserve on loans
held for sale totaled $9.4 million at September 30,
2002. Total credit related reserves, including the allowance for
loan losses and lower of cost or market valuations, were
$63.2 million at September 30, 2002.

Management believes that the allowance for loan
losses was adequate at September 30, 2002. The following
tables provide more comparative data on non-performing assets
and the allowance for loan losses.

Comparison of non-performing assets:

|                                            |                            |                             |                                      |          |         |              |        |        |        |        |        |        |         |        | 
|------------------------------------------- | -------------------------- | --------------------------- | ------------------------------------ | -------- | ------- | ------------ | ------ | ------ | ------ | ------ | ------ | ------ | ------- | ------ | 
|                                            |                            | September 30,               |                                      | June 30, |         | December 31,
|                                            |                            | 2002                        |                                      | 2002     |         | 2001        
|                                            |                            |                             |                                      |          |         |             
|                                            |                            |                            
|                                            |                            | (Dollars in thousands)     
|Loans held for investment                   |                            |                             |                                      |          |         |              |        |        |        |        |        |       
|                                            | Portfolio loans            |                             |                                      |          |         |              |        |        |        |        |        |        |        
|                                            |                            | Mortgage loans              |                                      | $        | 30,554  |              |        | $      | 31,093 |        |        | $      | 28,868  |       
|                                            |                            | Builder construction        |                                      |          | 12,997  |              |        |        | 13,363 |        |        |        | 21,347  |       
|                                            |                            | Consumer construction       |                                      |          | 10,075  |              |        |        | 9,426  |        |        |        | 6,722   |       
|                                            |                            |                             |                                      |          |         |              |        |        |        |        |        |       
|                                            |                            |                             | Total portfolio non-performing loans |          |         | 53,626       |        |        |        | 53,882 |        |        |         | 56,937 | 
|                                            | Discontinued product lines |                             |                                      | 12,415   |         |              |        | 11,669 |        |        |        | 15,894 |        
|Loans held for sale                         |                            |                             | 10,670                               |          |         |              | 10,889 |        |        |        | 24,036 |       
|                                            |                            |                             |                                      |          |         |              |        |        |        |        |        |       
|                                            |                            |                             | Total non-performing loans           |          |         | 76,711       |        |        |        | 76,440 |        |        |         | 96,867 | 
|Foreclosed assets                           |                            |                             | 26,818                               |          |         |              | 21,569 |        |        |        | 19,372 |       
|                                            |                            |                             |                                      |          |         |              |        |        |        |        |        |       
|                                            |                            | Total non-performing assets |                                      | $        | 103,529 |              |        | $      | 98,009 |        |        | $      | 116,239 |       
|                                            |                            |                             |                                      |          |         |              |        |        |        |        |        |       
|Total non-performing assets to total assets |                            |                             | 1.31                                 | %        |         |              | 1.32   | %      |        |        | 1.55   | %     
|                                            |                            |                             |                                      |          |         |              |        |        |        |        |        |       

21



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The following shows the activity in the allowance
for loan losses during the indicated periods:

|                             |                                                     |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |        |        |  
|---------------------------- | --------------------------------------------------- | ---------------------- | ------ | ----------------- | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | -
|                             |                                                     |                        |        |                  
|                             |                                                     | Three Months Ended     |        | Nine Months Ended
|                             |                                                     | September 30,          |        | September 30,    
|                             |                                                     |                        |        |                  
|                             |                                                     | 2002                   |        | 2001              |        | 2002 |        | 2001  
|                             |                                                     |                        |        |                   |        |      |        |       
|                             |                                                     |                       
|                             |                                                     | (Dollars in thousands)
|Balance, beginning of period |                                                     | $                      | 56,136 |                   |        | $    | 64,016 |        |        | $ | 57,700 |        |        | $ | 58,962 |       
|Provision for loan losses    |                                                     |                        | 2,700  |                   |        |      | 5,700  |        |        |   | 10,454 |        |        |   | 17,726 |       
|Portfolio Loans:             |                                                     |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |       
|                             | Charge-offs net of recoveries:                      |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |        |       
|                             |                                                     | Mortgage loans         |        |                   | (2,173 | )    |        |        | (1,194 | ) |        |        | (3,916 | ) |        |        | (2,317 | )
|                             |                                                     | Consumer construction  |        |                   | (46    | )    |        |        | (6     | ) |        |        | (148   | ) |        |        | (498   | )
|                             |                                                     | Builder construction   |        |                   |       |      |        |        | (2,391 | ) |        |        | (973   | ) |        |        | (3,704 | )
|                             |                                                     |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |       
|                             | Charge-offs net of recoveries 
    portfolio loans |                        |        | (2,219            | )      |      |        | (3,591 | )      |   |        | (5,037 | )      |   |        | (6,519 | )     
|Discontinued Product Lines:  |                                                     |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |       
|                             | Charge-offs net of recoveries                       |                        |        | (2,746            | )      |      |        | (455   | )      |   |        | (9,246 | )      |   |        | (4,499 | )     
|                             |                                                     |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |       
|Balance, end of period       |                                                     | $                      | 53,871 |                   |        | $    | 65,670 |        |        | $ | 53,871 |        |        | $ | 65,670 |       
|                             |                                                     |                        |        |                   |        |      |        |        |        |   |        |        |        |   |        |       

The balance of the allowance for loan losses of
$56.1 million as of June 30, 2002 was previously
reported at $53.0 million. During the third quarter of
2002, the Company reclassified a second quarter transfer of
$3.2 million from loan loss reserves to discounts on loans,
back to the allowance for loan losses. The original transfer was
related to loans that were transferred to held for sale from
held for investment, and originally was recorded as a discount
to the cost basis of the loans held for sale during the second
quarter of 2002.

Allocation of the allowance for loan losses to
each category, and the corresponding percentage of the total
allowance, at the dates indicated are as follows:

|                           |                       |                                 |        |                   |        |         |    |            |     |   |        |        |        |  |    |    |     |  
|-------------------------- | --------------------- | ------------------------------- | ------ | ----------------- | ------ | ------- | -- | ---------- | --- | - | ------ | ------ | ------ |  | -- | -- | --- | -
|                           |                       |                                 |        |                  
|                           |                       | September 30, 2002              |        | December 31, 2001
|                           |                       |                                 |        |                  
|                           |                       |                                 |        | % of Total        |        |         |    | % of Total
|                           |                       | Balance                         |        | Allowance         |        | Balance |    | Allowance 
|                           |                       |                                 |        |                   |        |         |    |           
|                           |                       |                                
|                           |                       | (Dollars in thousands)         
|Portfolio Loans:           |                       |                                 |        |                   |        |         |    |            |     |   |        |        |        |  |    |   
|                           | Mortgage loans        |                                 | $      | 16,614            |        |         |    | 31         | %   |   | $      | 16,201 |        |  |    | 28 | %  
|                           | Consumer construction |                                 |        | 9,719             |        |         |    | 18         | %   |   |        | 7,415  |        |  |    | 13 | %  
|                           | Builder construction  |                                 |        | 14,898            |        |         |    | 28         | %   |   |        | 17,097 |        |  |    | 29 | %  
|                           | Income property       |                                 |        | 1,058             |        |         |    | 2          | %   |   |        | 1,058  |        |  |    | 2  | %  
|                           |                       |                                 |        |                   |        |         |    |            |     |   |        |        |        |  |    |   
|                           |                       | Total portfolio loans           |        |                   | 42,289 |         |    |            | 79  | % |        |        | 41,771 |  |    |    | 72  | %
|Discontinued product lines |                       |                                 | 11,582 |                   |        |         | 21 | %          |     |   | 15,929 |        |        |  | 28 | % 
|                           |                       |                                 |        |                   |        |         |    |            |     |   |        |        |        |  |    |   
|                           |                       | Total allowance for loan losses |        | $                 | 53,871 |         |    |            | 100 | % |        | $      | 57,700 |  |    |    | 100 | %
|                           |                       |                                 |        |                   |        |         |    |            |     |   |        |        |        |  |    |   

Allocation of the allowance is only an analytical
tool as the allowance is available for losses in the entire
portfolio.

While we consider the allowance for loan losses
to be adequate based on information currently available, future
adjustments to the allowance may be necessary due to changes in
economic conditions, delinquency levels, foreclosure rates, or
loss rates. The level of our allowance for loan losses is also
subject to review by our federal regulators, the OTS and the
Federal Deposit Insurance Corporation (FDIC). These
agencies may require that our allowance for loan losses be
increased based on their evaluation of the information available
to them at the time of their examination of the Bank. The OTS
and FDIC completed an examination of IndyMac Bank during the
third quarter of 2002.

22



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##### Table of Contents





| |                         
| | ------------------------
| | Secondary Market Reserve

The Company does not sell loans with recourse in
its loan sale activities. However, we can be required to
repurchase loans from investors when our loan sales contain
individual loans that are not in conformity with the
representations and warranties we make at the time of sale. We
have made significant investments in our post-production quality
control processes to identify potential systemic issues that
could cause repurchases. We believe that these efforts have
improved our production quality. However, increases in default
rates due to an economic slowdown could cause the overall rate
of repurchases to remain constant or even increase. Since
inception in 1993, the Company has repurchased only a very small
amount of loans from its securitization trusts. The increase in
repurchase activity in recent years has been primarily a
function of IndyMacs diversification of its loan sale
channels to whole loan and GSE sales. While sales through these
channels generate enhanced cash flows, they tend to have a
greater level of representation and warranty risk. The following
table shows the amount of loans we have repurchased from each
channel, inception-to-date.

|            |                       |                       |   |            |      |             |   |        |        |  |  |       |       | 
|----------- | --------------------- | --------------------- | - | ---------- | ---- | ----------- | - | ------ | ------ |  |  | ----- | ----- | 
|            |                       | Amount                |   |            |      | Percentage 
|            |                       | Repurchased           |   | Total Sold |      | Repurchased
|            |                       |                       |   |            |      |            
|            |                       |                      
|            |                       | (Dollars in millions)
|Loans sold: |                       |                       |   |            |      |             |   |        |        |  |  |      
|            | GSEs and whole loans  |                       | $ | 49.4       |      |             | $ | 33,623 |        |  |  | 0.15% |      
|            | Securitization trusts |                       |   | 6.6        |      |             |   | 36,845 |        |  |  | 0.02% |      
|            |                       |                       |   |            |      |             |   |        |        |  |  |      
|            |                       | Total                 |   | $          | 56.0 |             |   | $      | 70,468 |  |  |       | 0.08% | 
|            |                       |                       |   |            |      |             |   |        |        |  |  |      

The Company maintains a secondary market reserve
for losses that arise in connection with loans that we are
required to repurchase from whole loan sales or securitization
transactions. This reserve, which totaled $31.6 million at
September 30, 2002, has two components: a reserve for
repurchases arising from representation and warranty claims, and
a reserve for disputes with investors and vendors with respect
to contractual obligations pertaining to mortgage operations.
The table below shows the activity in the secondary market
reserve during the nine months ended September 30, 2002.

|                                                                        |  |                        |         |  
|----------------------------------------------------------------------- |  | ---------------------- | ------- | -
|                                                                        |  | (Dollars in thousands)
|Balance, January 1, 2002                                                |  | $                      | 31,680  |  
|Additions                                                               |  |                        | 15,304  |  
|Claims reimbursement and estimated discounts on
    loans held for sale |  |                        | (15,342 | )
|                                                                        |  |                        |         |  
|Balance, September 30, 2002                                             |  | $                      | 31,642  |  
|                                                                        |  |                        |         |  

During the quarter ended September 30, 2002,
we added $10.2 million to the secondary market reserve,
which was offset in part by $9.5 million in claims
reimbursement and estimated discounts on loans held for sale.
The reserve level is a function of expected losses based on
actual pending claims and repurchase requests, historical
experience, loan volume and loan sales distribution channels and
the assessment of probable vendor or investor claims.

While the ultimate amount of repurchases and
claims is uncertain, management believes that the reserve is
adequate. The Company will continue to evaluate the adequacy of
this reserve and likely will continue to allocate a portion of
its gain on sale proceeds to the reserve going forward. The
entire balance of the secondary market reserve is included on
the consolidated balance sheet as a component of other
liabilities.

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##### Table of Contents






Operating
Expenses



| |        
| | -------
| | General

A summary of operating expenses follows:

|                                         |  |                        |        |                   |  |          |        |               |  |               |        |  |  |   |         |  |  |   |         | 
|---------------------------------------- |  | ---------------------- | ------ | ----------------- |  | -------- | ------ | ------------- |  | ------------- | ------ |  |  | - | ------- |  |  | - | ------- | 
|                                         |  |                        |        |                  
|                                         |  | Three Months Ended     |        | Nine Months Ended
|                                         |  |                        |        |                  
|                                         |  | September 30,          |        | September 30,     |  | June 30, |        | September 30, |  | September 30,
|                                         |  | 2002                   |        | 2001              |  | 2002     |        | 2002          |  | 2001         
|                                         |  |                        |        |                   |  |          |        |               |  |              
|                                         |  |                       
|                                         |  | (Dollars in thousands)
|Salaries and related                     |  | $                      | 51,963 |                   |  | $        | 44,768 |               |  | $             | 47,188 |  |  | $ | 148,686 |  |  | $ | 122,766 | 
|Premises and equipment                   |  |                        | 8,137  |                   |  |          | 6,632  |               |  |               | 7,741  |  |  |   | 22,731  |  |  |   | 16,882  | 
|Loan purchase costs                      |  |                        | 6,063  |                   |  |          | 4,533  |               |  |               | 5,622  |  |  |   | 16,294  |  |  |   | 11,369  | 
|Professional services                    |  |                        | 6,402  |                   |  |          | 3,219  |               |  |               | 5,017  |  |  |   | 16,213  |  |  |   | 10,306  | 
|Data processing                          |  |                        | 5,554  |                   |  |          | 4,640  |               |  |               | 4,803  |  |  |   | 14,919  |  |  |   | 11,495  | 
|Office                                   |  |                        | 4,845  |                   |  |          | 3,853  |               |  |               | 4,248  |  |  |   | 13,026  |  |  |   | 11,040  | 
|Advertising and promotion                |  |                        | 3,839  |                   |  |          | 2,750  |               |  |               | 2,772  |  |  |   | 9,220   |  |  |   | 7,785   | 
|Operations and sale of foreclosed assets |  |                        | (812   | )                 |  |          | 898    |               |  |               | 968    |  |  |   | 164     |  |  |   | 2,216   | 
|Other                                    |  |                        | 3,004  |                   |  |          | 1,931  |               |  |               | 2,343  |  |  |   | 7,998   |  |  |   | 5,300   | 
|                                         |  |                        |        |                   |  |          |        |               |  |               |        |  |  |   |         |  |  |   |         | 
|                                         |  | $                      | 88,995 |                   |  | $        | 73,224 |               |  | $             | 80,702 |  |  | $ | 249,251 |  |  | $ | 199,159 | 
|                                         |  |                        |        |                   |  |          |        |               |  |               |        |  |  |   |         |  |  |   |         | 

General and administrative expenses, including
salaries, increased during the nine months ended
September 30, 2002 to $249.3 million, compared to
$199.2 million during the same period in 2001, as the Company
has continued to build new product lines and channels and
infrastructure and open new locations to support its projections
for continued growth in its operations. This is evident in the
15% increase in the Companys average full-time equivalent
employees from 1,923 during the nine months ended
September 30, 2001 to 2,217 during the nine months ended
September 30, 2002. The Company has also made investments
to (1) enhance and strengthen its quality controls and
compliance structure to ensure continued improvement in asset
quality and support the growth of higher margin products;
(2) strengthen its technology platform; (3) expand its
sales force infrastructure with dedicated resources focused on
new customer activation, customer training and support, and
pull-through of loan submissions, and (4) enhance its
customer service response performance.



| |             
| | ------------
| | Income Taxes

Income tax provisions of $24.3 million and
$73.0 million for the three and nine months ended
September 30, 2002, represented an effective tax rate
of 39.5% and 40.4%, respectively. Income tax
provisions of $24.5 million and $64.1 million for the
same periods in 2001 represented an effective tax rate
of 41.6%. The decrease in the effective tax rate during
2002 is due to the diversification of the Companys
operations into states other than California.




Share
Repurchase Activities

The Company repurchased 3.5 million shares,
or 6% of its common stock outstanding, during the third quarter
of 2002 at an average price of $21.33 per share, for a total
investment of $74.0 million during the quarter. Year to
date, the Company has repurchased 5.0 million shares at an
average price of $22.08 per share, for a total investment of
$110.7 million. Since the inception of its share repurchase
program in 1999, the Company has purchased 26.9 million
shares, or 34% of its outstanding shares at that time, at an
average price of $18.05 per share for an aggregate of
$484.8 million.

At September 30, 2002, the Company had
$83 million of remaining authorization to repurchase shares
under its current plan. The Company plans to continue to
repurchase shares from time to time at prevailing market prices.

24



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##### Table of Contents






Future
Outlook

The Company expects over the long-term that
earnings per share will grow at a rate of approximately 15% per
year. On average, mortgage debt outstanding has grown
approximately 7% to 8% per year over the last twenty years and
is projected, based on economic demographics, to continue this
level of growth over the next decade. At this rate, mortgage
debt outstanding roughly doubles every decade. Since the
inception of its operating business plan in 1993 (nearly
10 year history) IndyMac has grown earnings at a compounded
annual growth rate of 41% and EPS at a compounded annual growth
rate of 28%. We believe, as a result of our business model,
management team, current small market share, capital strength
and historic performance, that we can achieve growth at
approximately two times the industry rate, or 15% over the
long-term. Our results are nonetheless subject to a variety of
factors that are not within our control, including those
referred to under Forward-Looking Statements and
elsewhere in this report.

The mortgage banking industry is cyclical in
nature and can fluctuate on a near-term basis. The current
environment of historically low interest rates has been very
favorable for mortgage bankers such as IndyMac. We expect
earnings in the fourth quarter of this year to range between
$0.60 and $0.64 per share. The earnings in the third quarter of
2002 of $0.64 included a $0.04 gain on the sale of consumer lot
loans, which was delayed from the second quarter of this year
due to timing of the securitization transaction. On a comparable
basis our projected fourth quarter earnings per share ranges
from flat to up $0.04 per share. Given this range, earnings per
share for the year 2002 would reflect approximately 20% growth
in earnings per share over 2001 and compounded annual growth in
earnings per share over the last 2 years of 35%, well ahead
of both the Companys historic results and long-range
expectations. It is possible that as the industry transitions to
a higher interest rate environment, the Company could see lower
levels of growth, or even a reduction in earnings per share in
the near term, given the volatility of the industry. The Company
expects, however, that the long-term growth rate would normalize
at around 15%.




Cumulative
Effect of a Change in Accounting Principle

During January of 2001, we recognized a
$10.2 million charge to earnings, net of taxes, which was
recorded as a cumulative effect of a change in accounting
principle in connection with the adoption of Emerging Issues
Task Force Issue No. 99-20 Recognition of Interest
Income and Impairment on Certain Investments
(EITF 99-20). This charge was primarily
attributable to the non-investment grade and residual securities
portfolio associated with the discontinued manufactured housing
product line. We discontinued the manufactured housing product
line with dealers during 1999, but the portfolio investments
that were retained from this product line continued to be
impacted by declining trends in the industry. These securities
had previously been marked-to-market through other comprehensive
income, a separate component of shareholders equity. This
change resulted in a $2.1 million reduction to total
shareholders equity. The Companys remaining
investment in manufactured housing securities was
$4.5 million at September 30, 2002.




Liquidity and Capital Resources

Overview

At September 30, 2002, we had operating
liquidity of $1.2 billion, which is represented by
unpledged liquid assets on hand plus amounts that may be
immediately raised through the pledging of other available
assets as collateral pursuant to committed lines of credit. We
currently believe that our liquidity level is in excess of that
necessary to satisfy our operating requirements and meet our
obligations and commitments in a timely and cost effective
manner. It is our intent to reduce our level of operating
liquidity in the near future.




Principal
Sources of Cash

Our principal financing needs are to fund
acquisitions of mortgage loans and our investment in mortgage
loans, mortgage-backed securities and MSRs. Our primary sources
of funds used to meet these financing needs include loan sales
and securitizations, deposits, advances from the Federal Home
Loan Bank (FHLB), borrowings and retained earnings.
The sources used vary depending on such factors as rates paid,
maturities and the impact on capital.

25



---



##### Table of Contents





| |                               
| | ------------------------------
| | Loan Sales and Securitizations

Our business model relies heavily upon selling
the majority of our mortgage loans shortly after acquisition.
The proceeds of these sales are a critical component of the
liquidity necessary for our ongoing operations. We sold
approximately 42% of our loans to the GSEs during the quarter
ended September 30, 2002. If this sales channel were
disrupted, our liquidity would be negatively impacted.
Disruptions in the whole loan and mortgage securitization
markets can occur as a result of economic events or other
factors beyond our control.



| |         
| | --------
| | Deposits

Consistent with our funding needs, we solicit
deposits from the general public and institutions by offering a
variety of accounts and rates. We offer regular savings
accounts, demand deposit accounts, money market accounts,
certificates of deposit accounts and individual retirement
accounts. Deposits totaled $2.9 billion at
September 30, 2002 and $3.2 billion at
December 31, 2001.

Included in deposits at September 30, 2002
and December 31, 2001 were non-interest bearing custodial
accounts, primarily related to our GSE servicing portfolio,
totaling $385.7 million and $178.3 million,
respectively.



| |                                     
| | ------------------------------------
| | Advances from Federal Home Loan Bank

The Federal Home Loan Bank system functions as a
borrowing source and in a reserve capacity for savings
institutions. As a member of the FHLB, we are required to own
capital stock of the FHLB and are authorized to apply for
advances from the FHLB, generally on a secured basis, in amounts
determined by reference to available collateral. FHLB stock,
one-to-four family mortgage loans and AAA-rated agency
mortgage-backed securities are the principal collateral that may
be used to secure these borrowings, although certain other types
of loans and other assets may also be accepted pursuant to FHLB
policies and statutory requirements. The Bank has been
pre-approved for advances up to $2.2 billion, of which
$1.9 billion were outstanding at September 30, 2002.
The FHLB offers several credit programs, each with its own fixed
or floating interest rate, and a range of maturities.



| |                                            
| | -------------------------------------------
| | Trust Preferred Securities and
    Warrants

On November 14, 2001, we completed an
offering of Warrants and Income Redeemable Equity Securities to
investors. Gross proceeds of the transaction were
$175 million. The securities were offered as units
consisting of a trust preferred security, issued by a trust
formed by us, and a warrant to purchase IndyMac Bancorps
common stock. The proceeds from the offering are used in ongoing
operations and will fund future growth and/or repurchases of
IndyMac Bancorp stock under its share repurchase program (see
Share Repurchase Activities above). The balance of
trust preferred securities at December 31, 2001 was
reclassified from mezzanine debt to liabilities to conform to
the current period presentation.



| |                 
| | ----------------
| | Other Borrowings

Other borrowings primarily consist of loans and
securities sold under committed agreements to repurchase and
syndicated bank lines. Other borrowings increased to
$1.8 billion at September 30, 2002, from
$1.1 billion at December 31, 2001. The increase of
$0.7 billion was used primarily to fund the purchase of
U.S. Treasury securities and mortgage-backed securities
during the year.

As of September 30, 2002, we had
$3.1 billion in committed financing. Decisions by our
lenders and investors to make additional funds available to us
in the future will depend upon a number of factors. These
include our compliance with the terms of existing credit
arrangements, our financial performance, changes in our credit
rating, industry and market trends in our various businesses,
the general availability and rates applicable to financing and
investments, these lenders and/or investors own
resources and policies concerning loans and investments and the
relative attractiveness of alternative investment or lending
opportunities. Due to

26



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##### Table of Contents



the availability of deposits and FHLB advances,
we are reducing our unused committed financing facilities in
order to reduce the amount of commitment fees we pay.





Principal
Uses of Cash

In addition to the financing sources discussed
above, cash uses are funded by net cash flows from operations,
sales of mortgage-backed securities and principal and interest
payments on loans and securities.

Our most significant use of cash is for the
acquisition of mortgage loans. During the nine months ended
September 30, 2002, we acquired $12.1 billion of
mortgage loans, compared to $11.3 billion during the nine
months ended September 30, 2001. Purchases of mortgage
securities required cash resources of $1.8 billion and
$1.0 billion during the nine months ended
September 30, 2002 and 2001, respectively.



| |           
| | ----------
| | Cash Flows

As a financial institution, the lending and
borrowing functions are an integral part of our business.
Management believes that in order to more accurately depict the
actual cash generation in our business, lending and borrowing
activities must be analyzed together. The consolidated
statements of cash flows shown on page 36, which are
prepared in accordance with US GAAP, require certain
activities to be classified as operating, investing or
financing. We believe that the US GAAP presentation is more
applicable to a commercial or industrial concern. The following
analysis, when reviewed in conjunction with the consolidated
cash flow statements, provides additional meaningful analysis of
the cash flow activities of the Company.

|                                                         |                                                                  |                                                    |          |          |         |   |            |          |         |  
|-------------------------------------------------------- | ---------------------------------------------------------------- | -------------------------------------------------- | -------- | -------- | ------- | - | ---------- | -------- | ------- | -
|                                                         |                                                                  |                                                   
|                                                         |                                                                  | Nine Months Ended                                 
|                                                         |                                                                  | September 30,                                     
|                                                         |                                                                  |                                                   
|                                                         |                                                                  | 2002                                               |          | 2001    
|                                                         |                                                                  |                                                    |          |         
|                                                         |                                                                  |                                                   
|                                                         |                                                                  | (Dollars in thousands)                            
|Operating Activities:                                    |                                                                  |                                                    |          |          |         |   |            |         
|Net earnings                                             |                                                                  | $                                                  | 107,797  |          |         | $ | 79,938     |         
|Adjustments                                              |                                                                  |                                                    |          |          |         |   |            |         
|                                                         | Provision for loan losses                                        |                                                    |          | 10,454   |         |   |            | 17,726   |        
|                                                         | Net charge-offs                                                  |                                                    |          | (14,283  | )       |   |            | (11,018  | )      
|                                                         | Depreciation and amortization of fixed and
    intangible assets |                                                    |          | 15,214   |         |   |            | 13,585   |        
|                                                         | Amortization and valuation of servicing-related
    assets       |                                                    |          | 95,879   |         |   |            | 92,235   |        
|                                                         | Impairment of securities                                         |                                                    |          | 2,513    |         |   |            | 10,058   |        
|                                                         | Capitalization of retained assets                                |                                                    |          | (283,224 | )       |   |            | (214,270 | )      
|                                                         | Allocated financing to retained assets(1)                        |                                                    |          | 176,731  |         |   |            | 141,615  |        
|                                                         |                                                                  |                                                    |          |          |         |   |            |         
|                                                         |                                                                  | Total adjustments                                  |          |          | 3,284   |   |            |          | 49,931  |  
|                                                         | Change in deferred tax liability from retained
    MSRs(2)       |                                                    |          | 49,675   |         |   |            | 48,373   |        
|                                                         |                                                                  |                                                    |          |          |         |   |            |         
|                                                         |                                                                  | Net cash earnings provided by operating activities |          |          | 160,756 |   |            |          | 178,242 |  
|                                                         |                                                                  |                                                    |          |          |         |   |            |         
|Balance Sheet Financing:                                 |                                                                  |                                                    |          |          |         |   |            |         
|Net change in loans held for sale                        |                                                                  |                                                    | 558,357  |          |         |   | (1,072,842 | )       
|Net change in loans held for investment                  |                                                                  |                                                    | (147,404 | )        |         |   | 181,222    |         
|Net change in mortgage securities available for
    sale |                                                                  |                                                    | (290,702 | )        |         |   | (218,157   | )       
|Net change in trading securities                         |                                                                  |                                                    | (307,825 | )        |         |   |           |         
|Net change in deposits and advances from FHLB            |                                                                  |                                                    | (450,122 | )        |         |   | 2,409,397  |         
|Net change in borrowings                                 |                                                                  |                                                    | 628,368  |          |         |   | (1,380,961 | )       
|                                                         |                                                                  |                                                    |          |          |         |   |            |         
|                                                         |                                                                  | Net cash used in balance sheet financing           |          |          | (9,328  | ) |            |          | (81,341 | )
|                                                         |                                                                  |                                                    |          |          |         |   |            |         

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|                                                                              |                                             |                        |          |          |   |   |         |          |  
|----------------------------------------------------------------------------- | ------------------------------------------- | ---------------------- | -------- | -------- | - | - | ------- | -------- | -
|                                                                              |                                             |                       
|                                                                              |                                             | Nine Months Ended     
|                                                                              |                                             | September 30,         
|                                                                              |                                             |                       
|                                                                              |                                             | 2002                   |          | 2001    
|                                                                              |                                             |                        |          |         
|                                                                              |                                             |                       
|                                                                              |                                             | (Dollars in thousands)
|Other Corporate Activities:                                                   |                                             |                        |          |          |   |   |         |         
|Net proceeds from issuance of common stock and
    exercise of stock options  |                                             |                        | 10,284   |          |   |   | 19,984  |         
|Purchases of common stock                                                     |                                             |                        | (110,669 | )        |   |   | (66,343 | )       
|Purchases, net of sales and retirements, of
    plant, property and equipment |                                             |                        | (33,247  | )        |   |   | (22,565 | )       
|Other, net                                                                    |                                             |                        | (6,383   | )        |   |   | (42,482 | )       
|                                                                              |                                             |                        |          |          |   |   |         |         
|                                                                              | Net cash used in other corporate activities |                        |          | (140,015 | ) |   |         | (111,406 | )
|                                                                              |                                             |                        |          |          |   |   |         |         
|Net change in cash and cash equivalents                                       |                                             |                        | 11,413   |          |   |   | (14,505 | )       
|Cash and cash equivalents at beginning of period                              |                                             |                        | 153,295  |          |   |   | 67,867  |         
|                                                                              |                                             |                        |          |          |   |   |         |         
|Cash and cash equivalents at end of period                                    |                                             | $                      | 164,708  |          |   | $ | 53,362  |         
|                                                                              |                                             |                        |          |          |   |   |         |         



---



|    |                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the maximum leverage available under
    current regulatory capital rules.                                                                                                                      
|   
|(2) | The change in deferred tax liabilities related to
    retained MSRs represents a current operating cash flow because
    such non-cash gains and amortization do not give rise to current
    tax payments.

As presented above, net cash earnings provided by
operating activities was $160.8 million during the nine
months ended September 30, 2002, compared to
$178.2 million during the same period in 2001. Included in
this amount is a reduction to earnings related to retained
assets, net of available related financing. As the retention of
securities and servicing assets is a non-cash component of our
gain on sale of loans, this amount, net of the cash that can be
provided by financing these assets, is shown as an adjustment to
net cash earnings provided by operations. The ability to finance
the assets is a key element in managements decision to
retain these assets.

When evaluating the various sources and uses of
cash, we consider cash used to grow our investments, and
offsetting borrowings used to finance those investments,
separate from the earnings of the Company. These cash flow uses
are summarized in the Balance Sheet Financing section of the
above analysis. As noted above, the primary use of cash during
the nine months ended September 30, 2002 was the growth in
our balance of loans held for sale and additional investments in
trading securities.

All transactions not relating to earnings or
balance sheet growth are included in Other Corporate Activities.
The primary use of cash in Other Corporate Activities in both
2002 and 2001 was the repurchase of the Companys common
stock.






| |                                           
| | ------------------------------------------
| | Accumulated Other Comprehensive
    Income

Accumulated other comprehensive (loss) income
(AOCI) was $(14.2) million at
September 30, 2002, compared to $0.6 million at
December 31, 2002. This change was a result of 1) the
previously described transfer of securities classified as
available for sale and 2) the decline in fair value of
certain interest rate swaps designated as cash flow hedges of
floating rate borrowings. AOCI is not a component of the
determination of regulatory capital.






| |                                    
| | -----------------------------------
| | Regulatory Capital
    Requirements

The Bank is subject to various regulatory capital
regulations administered by the federal banking agencies. In
addition, as a condition to its approval of the acquisition of
SGV Bancorp, Inc. in July 2000, the OTS mandated that the Bank
hold Tier 1 (core) capital at 8% of adjusted assets for
three years following the consummation of the transaction and
maintain a risk-based capital position of 10% of risk-weighted
assets. Additionally, Tier 1 risk-based capital (core
capital plus supplementary capital less allowance for loan
losses)

28



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must be equal to at least 6% of risk-weighted
assets. The Bank currently meets all of the requirements of a
well-capitalized institution under the general
regulatory capital regulations and also meets the additional
requirements of the OTS approval condition.


During 2001, the OTS issued guidance for subprime
lending programs, which requires a lender to quantify the
additional risks in its subprime lending activities and
determine the appropriate amounts of allowances for loan losses
and capital it needs to offset those risks. The OTS guidance
suggests that subprime portfolios be supported by capital equal
to one and one-half to three times greater than what is
appropriate for similar prime assets. The OTS has accepted the
Banks approach to conform to this guidance, which is based
on the secondary market and rating agency securitization models.
We segment the subprime loans into categories based on
quantifiable, increasing risk levels. Category I includes
all subprime loans with 1.0% to 1.5% estimated lifetime loss;
Category II includes all subprime loans with 1.5% to 2.0%
estimated lifetime loss; and Category III includes all
subprime loans with greater than 2.0% estimated lifetime loss.
These categories are risk-weighted for capital purposes at 150%,
200%, and 300%, respectively. We report our subprime loan
calculation in an addendum to the Thrift Financial Report that
we file with the OTS. The levels and balances within each level
were as follows at September 30, 2002:

|             |                |         |         |           |  |               |         |              |  |              |         |             |  |  |     |     |  |   |        |        |  |  |     |     | 
|------------ | -------------- | ------- | ------- | --------- |  | ------------- | ------- | ------------ |  | ------------ | ------- | ----------- |  |  | --- | --- |  | - | ------ | ------ |  |  | --- | --- | 
|             |                | 9/30/02 |         | Risk      |  | Risk-Weighted |         | % Risk-Based |  | $ Risk-Based |         | % of Actual
|             |                | Balance |         | Weighting |  | Balances      |         | Capital Req. |  | Capital Req. |         | Balances   
|             |                |         |         |           |  |               |         |              |  |              |         |            
|Category I   |                | $       | 144,868 |           |  |               | 150.00% |              |  | $            | 217,302 |             |  |  | 10% |     |  | $ | 21,730 |        |  |  | 15% |    
|Category II  |                |         | 11,272  |           |  |               | 200.00% |              |  |              | 22,544  |             |  |  | 10% |     |  |   | 2,254  |        |  |  | 20% |    
|Category III |                |         | 64,669  |           |  |               | 300.00% |              |  |              | 194,007 |             |  |  | 10% |     |  |   | 19,401 |        |  |  | 30% |    
|             |                |         |         |           |  |               |         |              |  |              |         |             |  |  |     |     |  |   |        |        |  |  |     |    
|             | Total subprime |         | $       | 220,809   |  |               |         |              |  |              | $       | 433,853     |  |  |     | 10% |  |   | $      | 43,385 |  |  |     | 20% | 
|             |                |         |         |           |  |               |         |              |  |              |         |             |  |  |     |     |  |   |        |        |  |  |     |    

The following table presents the Banks
actual and required capital ratios and the minimum required
capital ratios to be categorized as well-capitalized at
September 30, 2002.

|                |                   |                |  |                     |  |                  |  |                  |  |  |  |        |  |  |  |        | 
|--------------- | ----------------- | -------------- |  | ------------------- |  | ---------------- |  | ---------------- |  |  |  | ------ |  |  |  | ------ | 
|                |                   | As Reported    |  | Adjusted for        |  |                  |  | IndyMac         
|                |                   | Pre-Subprime   |  | Additional Subprime |  | Well-Capitalized |  | Required Capital
|                |                   | Risk-Weighting |  | Risk-Weighting      |  | Minimum          |  | First 3 Years   
|                |                   |                |  |                     |  |                  |  |                 
|Capital Ratios: |                   |                |  |                     |  |                  |  |                  |  |  |  |        |  |  |  |       
|                | Tangible          |                |  | 10.15%              |  |                  |  | 10.15%           |  |  |  | 2.00%  |  |  |  | 2.00%  | 
|                | Tier 1 core       |                |  | 10.15%              |  |                  |  | 10.15%           |  |  |  | 5.00%  |  |  |  | 8.00%  | 
|                | Tier 1 risk-based |                |  | 16.02%              |  |                  |  | 15.02%           |  |  |  | 6.00%  |  |  |  | 6.00%  | 
|                | Total risk-based  |                |  | 16.85%              |  |                  |  | 15.80%           |  |  |  | 10.00% |  |  |  | 10.00% | 

The ratios above do not include
$54.7 million of unencumbered cash at IndyMac Bancorp that
is available for contribution to the Banks regulatory
capital. Including the excess capital held by the Bank and such
cash, we had $221.7 million of total excess capital at
September 30, 2002. Excess capital would increase to
$333.4 million using the well-capitalized minimums that we
will be subject to upon the expiration of our capital
requirement described above.

We believe that, under current regulations, the
Bank will continue to meet its well-capitalized
minimum capital requirements in the foreseeable future. The
Banks regulatory capital compliance could be impacted,
however, by a number of factors, such as changes to applicable
regulations, adverse action by our regulators, changes in the
Banks mix of assets, interest rate fluctuations or
significant changes in the economy in areas where the Bank has
most of its loans. Any of these factors could cause our actual
future results to vary from anticipated future results and
consequently could have an adverse impact on the ability of the
Bank to meet its future minimum capital requirements.




Business Model

We are a savings and loan holding company. Our
strategy is to be a leading provider and servicer of home
mortgage loans. We offer a wide array of home mortgage products
using a technology-based approach, leveraged across multiple
products, channels and customers. We serve a wide range of
customers, including

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consumers, mortgage brokers, mortgage bankers,
community financial institutions, homebuilders and real estate
professionals. To manage our various operations, we have aligned
our business into two reportable operating segments: Mortgage
Banking and Investment Portfolio.




| |                       
| | ----------------------
| | Mortgage Banking Group

The Mortgage Banking group is our core business.
The Mortgage Banking groups operations include the
acquisition (purchase and origination), sale and securitization
of mortgage loans secured by one-to-four family
(single-family) residences. The Company acquires
loans through four channels: business-to-business
(B2B), business-to-consumer (B2C), and
the business-to-realtor group (B2R) and homebuilder
division (HBD). It also provides construction
financing for single-family residences directly to individual
consumers and builder construction financing activities for
larger residential subdivision loans. The Mortgage Banking group
derives its revenue primarily from gain on the sale of loans,
net interest income, and fee income associated with the loans
held for sale portfolio. The Company sells its loans through
four distribution channels: government-sponsored enterprises
(GSEs) (which then securitize or place the loans in
their portfolios), whole loan sales, private-label
securitizations, and sales internally to the Investment
Portfolio group. One of our strategies is to reduce the period
of time we hold loans before they are sold. We believe that the
reduction in net interest income caused by a faster loan
turnover rate should be more than offset by increases in gain on
sale of loans.



| |                           
| | --------------------------
| | Investment Portfolio Group

The strategy of our Investment Portfolio group
is: 1) to provide support for the Mortgage Banking group
through its ability to invest in whole loans and retain assets
from loan sales and securitizations, 2) to acquire loans,
servicing and securities in the secondary market, and 3) to
hedge the interest rate risk attendant with servicing related
assets. Whether assets are retained from the Mortgage Banking
group or purchased in the secondary market, assets must meet or
exceed minimum targeted return requirements.

The composition of the Investment Portfolio
includes mortgage loans held for investment, mortgage-backed
securities and MSRs. Mortgage-backed securities include agency
and non-agency investment grade securities, non-investment grade
securities and residuals. Mortgage loans held for investment are
typically originated by and acquired from the Mortgage Banking
group and transferred to the Investment Portfolio group for
long-term investment, although the group may purchase loans in
bulk from third party sellers. Such loans are typically prime
quality adjustable-rate mortgage loans as the majority of fixed
rate loans and subprime loans are securitized and sold. A
limited portion of the loan portfolio may contain fixed rate
mortgages, which are funded with liabilities that have
maturities generally consistent with the expected average life
of the loans.

Mortgage-backed securities retained by the
Investment Portfolio group are generated in connection with the
Mortgage Banking groups issuance of private-label
securities and agency loan sales. Retained assets typically
include MSRs, and to a lesser degree, AAA-rated and agency
interest-only securities, non-investment grade securities and
residuals. Senior securities created in connection with the
Mortgage Banking groups securitization activities are not
usually retained in the Investment Portfolio group, however, the
Investment Portfolio group may invest in such securities from
time to time. In addition to retaining assets from
IndyMacs private-label securitizations and agency loan
sales, the Investment Portfolio also purchases mortgage-backed
securities issued by other lenders in the secondary mortgage
market.

The primary source of revenue for the Investment
Portfolio is net interest income on loans and securities and
service fee income from MSRs. Valuation changes related to MSRs
(subject to lower of amortized cost or fair value limitations),
AAA-rated and agency interest-only securities and the related
hedges, including principal-only securities, are also recognized
through earnings.




Key Operating Risks

Like all businesses, we assume a certain amount
of risk in order to earn our targeted returns on capital. The
following is a summary of what we believe to be our current key
operating risks. For further information

30



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on our key operating risks, refer to
IndyMacs annual report on Form 10-K for the year
ended December 31, 2001.




| |                   
| | ------------------
| | Interest Rate Risk

Due to the characteristics of our financial
assets and liabilities and the nature of our business
activities, our financial position and results of operations may
be materially affected by changes in interest rates in various
ways. While we have devised and implemented a comprehensive
asset/liability management strategy that seeks, on an economic
and an accounting basis, to mitigate significant fluctuations in
our financial position and results of operations likely to be
caused by market interest rate changes, there can be no
assurance that this strategy (including assumptions concerning
the correlation thought to exist among different types of
assets, liabilities and hedge instruments) or its implementation
will be successful in any particular interest rate environment.



| |               
| | --------------
| | Valuation Risk

In connection with the loan sale process, we
retain certain assets for which the secondary market is highly
illiquid. As a result, valuations are derived using complex
modeling, assumptions and judgments. These assets include, but
are not limited to, AAA-rated and agency interest-only
securities, MSRs, non-investment grade securities and residuals.
Although AAA-rated, interest-only securities are subject to
valuation declines due to collateral prepayments. In addition,
from time to time, we may acquire these types of securities from
third party issuers. The fair value of these assets could vary
significantly as market conditions change.



| |            
| | -----------
| | Credit Risk

We have invested in various assets that contain
elements of credit risk. These assets include loans, investment
and non-investment grade securities and residuals. The
investment and non-investment grade securities and residuals are
collateralized by mortgage loans. While the majority of our loan
collateral is secured by residential property, there is no
guarantee that, in the event of borrower default, we will be
able to recoup the full principal amount and interest earned on
the loan. In addition, while we have discontinued our home
improvement and manufactured housing lending programs, we
continue to liquidate portfolios of these loans, which have
greater credit risk than that of our mortgage loan portfolios.
At September 30, 2002, the net balance of our home
improvement and manufactured housing portfolios was
$91.9 million. Further, we provide construction lending to
consumers and developers to develop and build residential
properties. Such asset types also have a higher risk profile
than permanent mortgage loans.

We also sell loans to GSEs and to outside
investors. In these instances, we are subject to repurchase risk
if representations and warranties made at the time of sale are
violated. While we believe that our allowance for loan losses is
adequate, there can be no guarantee that the amount reserved is
sufficient to cover all potential losses resulting from such
repurchases.



| |                                             
| | --------------------------------------------
| | Liquidity Risk/Access to Capital
    Markets

We finance a substantial portion of our assets
through consumer deposits and borrowings from the FHLB. We also
obtain financing from investment and commercial banks. There is
no guarantee that these sources of funds will continue to be
available to us, or that borrowings can be refinanced upon
maturity.

We utilize four sales channels to sell loans to
the secondary market: whole loan sales, sales to the GSEs,
private-label securitizations, and sales internally to the
Investment Portfolio group. A disruption in the demand for
mortgage-backed securities (either agency or private label)
could adversely impact our ability to fund mortgage loans and
our gains on sale, leading to a corresponding decrease in
revenues and earnings. Likewise, a deterioration in the
performance of our private-label securities could adversely
impact the availability and pricing of future transactions.

31



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| |            
| | -----------
| | Other Risks

We are subject to various other risks including
the fluctuating demand for mortgage loans. The demand for
mortgage loans, historically, tends to decrease as interest
rates increase. In addition, the banking industry, in general,
is subject to various supervisory, monetary and fiscal policies
and regulations, which include those determined by the OTS, the
FDIC and the Federal Reserve Board. Depending on the nature of
any new policies, such policies and regulations can have a
negative impact on operations. Additionally, we are required to
maintain minimum capital levels determined by the OTS. While
historically we have been able to access the capital markets
when necessary and currently have, on a consolidated basis,
$221.7 million of capital in excess of our minimum
regulatory requirement, there is no guarantee that we will be
able to access the capital markets when or if a need for
additional capital arises in the future. Also, a majority of our
loan acquisitions are geographically concentrated in certain
states, including California, New York, Florida and
New Jersey. Any adverse economic conditions in these
markets could cause the number of loans acquired to decrease and
delinquencies to increase, causing a corresponding decline in
revenues. There are no guarantees as to our degree of success in
managing loan portfolio concentrations, anticipating and taking
advantage of technological advances, or executing upon our
growth plans for our mortgage banking operations. Lastly, we
could be adversely affected by economic downturns or business
disruptions triggered by natural disasters, acts of war or
terrorism.




Critical Accounting Policies

Various elements of our accounting policies, by
their nature, are inherently subject to estimation techniques,
valuation assumptions and other subjective assessments. In
particular, we have identified five policies, that, due to the
judgments, estimates and assumptions inherent in those policies,
are critical to an understanding of our financial statements.
These policies relate to (a) the valuation of AAA-rated and
agency interest-only securities, (b) the valuation of MSRs,
(c) the valuation of non-investment grade securities and
residuals, (d) the methodology for determining our
allowance for loan losses, and (e) the valuation of our
secondary market reserve. Management discusses these critical
accounting policies and related judgments with IndyMacs
audit committee and external auditors on a quarterly basis. We
believe that the judgments, estimates and assumptions used in
the preparation of our consolidated financial statements are
appropriate given the factual circumstances at the time.
However, given the sensitivity of our consolidated financial
statements to these critical accounting policies, the use of
other judgments, estimates and assumptions could result in
material differences in our results of operations or financial
condition. For further information on the Companys
critical accounting policies, refer to IndyMacs annual
report on Form 10-K for the year ended December 31,
2001.






|        |                                                              
|------- | -------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosure
    About Market Risk

See Overall Interest Rate Risk
Management above for quantitative and qualitative
disclosure about market risk on page 19.

32



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##### Table of Contents



Item 1.     Financial
Statements (Unaudited)

INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |           |           |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------ | --------- | --------- | --------- | --------- | --------- | --------- | 
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | September 30,                                                                                                                                                                |                                            | December 31,
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | 2002                                                                                                                                                                         |                                            | 2001        
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |             
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | (Unaudited)                                                                                                                                                                  |                                            |             
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                             
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | (Dollars in thousands)                                                                                                                                                      
|ASSETS                                                                                                                                                                                                                                                                   
|Cash and cash equivalents                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                  | $                                                                                                                                                                            | 164,708                                    |              |           | $         | 153,295   |          
|Securities classified as trading
    ($511.6 million and $182.5 million pledged as
    collateral for repurchase agreements at September 30, 2002
    and December 31, 2001, respectively)                                                                                |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 767,665                                    |              |           |           | 215,200   |          
|Mortgage-backed securities available for sale,
    amortized cost of $1.5 billion and $1.4 billion,
    respectively ($591.7 million and $81.6 million pledged
    as collateral for repurchase agreements at September 30,
    2002 and December 31, 2001, respectively) |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 1,514,902                                  |              |           |           | 1,349,159 |          
|Loans receivable:                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          | Loans held for sale                                                                                                                                                                                                              |                                                                                                                                                                              |                                            |              |           |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Prime                                                                                                                                                                        |                                            |              | 1,346,954 |           |           |           | 1,940,213 |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Subprime                                                                                                                                                                     |                                            |              | 66,241    |           |           |           | 140,550   |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | HELOC                                                                                                                                                                        |                                            |              | 239,861   |           |           |           |          |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Consumer lot loans                                                                                                                                                           |                                            |              | 45,611    |           |           |           |          |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              | Total loans held for sale                  |              |           | 1,698,667 |           |           |           | 2,080,763 | 
|                                                                                                                                                                                                                                                                          | Loans held for investment                                                                                                                                                                                                        |                                                                                                                                                                              |                                            |              |           |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Mortgage                                                                                                                                                                     |                                            |              | 1,609,844 |           |           |           | 1,531,757 |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Builder construction                                                                                                                                                         |                                            |              | 502,041   |           |           |           | 596,273   |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Consumer construction                                                                                                                                                        |                                            |              | 786,126   |           |           |           | 725,200   |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Income property                                                                                                                                                              |                                            |              | 69,491    |           |           |           | 58,616    |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | HELOC                                                                                                                                                                        |                                            |              |          |           |           |           | 84,511    |          
|                                                                                                                                                                                                                                                                          | Allowance for loan losses                                                                                                                                                                                                        |                                                                                                                                                                              |                                            | (53,871      | )         |           |           | (57,700   | )        
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              | Total loans held for investment            |              |           | 2,913,631 |           |           |           | 2,938,657 | 
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Total loans receivable ($1.4 billion and
    $2.0 billion pledged as collateral for repurchase
    agreements at September 30, 2002 and December 31,
    2001, respectively) |                                            |              | 4,612,298 |           |           |           | 5,019,420 |          
|Mortgage servicing rights                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 278,041                                    |              |           |           | 321,316   |          
|Investment in Federal Home Loan Bank stock, at
    cost                                                                                                                                                                                                                   |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 108,856                                    |              |           |           | 99,996    |          
|Interest receivable                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 39,216                                     |              |           |           | 52,172    |          
|Goodwill and other intangible assets                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 34,795                                     |              |           |           | 35,637    |          
|Foreclosed assets                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 26,818                                     |              |           |           | 19,372    |          
|Other assets                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 345,673                                    |              |           |           | 231,744   |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  | Total assets                                                                                                                                                                 |                                            | $            | 7,892,972 |           |           | $         | 7,497,311 |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|LIABILITIES AND SHAREHOLDERS
    EQUITY                                                                                                                                                                                                                                 
|Deposits                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  | $                                                                                                                                                                            | 2,855,334                                  |              |           | $         | 3,238,864 |          
|Advances from Federal Home Loan Bank                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 1,949,753                                  |              |           |           | 1,999,378 |          
|Other borrowings                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 1,843,306                                  |              |           |           | 1,053,670 |          
|Trust preferred securities                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 116,683                                    |              |           |           | 116,287   |          
|Other liabilities                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                  |                                                                                                                                                                              | 290,095                                    |              |           |           | 243,974   |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          | Total liabilities                                                                                                                                                                                                                |                                                                                                                                                                              |                                            | 7,055,171    |           |           |           | 6,652,173 |          
|Shareholders Equity                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          | Preferred Stock  authorized,
    10,000,000 shares of $0.01 par value; none issued                                                                                                                                              |                                                                                                                                                                              |                                            |             |           |           |           |          |          
|                                                                                                                                                                                                                                                                          | Common stock  authorized, 200,000,000
    shares of $0.01 par value; issued 83,918,882 shares (55,959,469
    outstanding) at September 30, 2002 and issued 83,312,516
    shares (60,366,266 outstanding) at December 31, 2001 |                                                                                                                                                                              |                                            | 839          |           |           |           | 833       |          
|                                                                                                                                                                                                                                                                          | Additional paid-in-capital                                                                                                                                                                                                       |                                                                                                                                                                              |                                            | 1,006,927    |           |           |           | 996,649   |          
|                                                                                                                                                                                                                                                                          | Accumulated other comprehensive (loss) income                                                                                                                                                                                    |                                                                                                                                                                              |                                            | (14,179      | )         |           |           | 570       |          
|                                                                                                                                                                                                                                                                          | Retained earnings                                                                                                                                                                                                                |                                                                                                                                                                              |                                            | 342,111      |           |           |           | 234,314   |          
|                                                                                                                                                                                                                                                                          | Treasury stock, 27,959,413 shares and 22,946,250
    shares at September 30, 2002 and December 31, 2001,
    respectively                                                                                                        |                                                                                                                                                                              |                                            | (497,897     | )         |           |           | (387,228  | )        
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              | Total shareholders equity                 |              |           | 837,801   |           |           |           | 845,138   | 
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              | Total liabilities and shareholders equity |              | $         | 7,892,972 |           |           | $         | 7,497,311 | 
|                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                  |                                                                                                                                                                              |                                            |              |           |           |           |          

The accompanying notes are an integral part of
these statements.

33



---



##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF EARNINGS


|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |         |         | 
|-------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------------------------------------- | ------ | ------------------- | ------- | ---- | ------ | ------ | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                                         |                                                           |                                                                           |        |                    
|                                                                                                         |                                                           | For the Three Months                                                      |        | For the Nine Months
|                                                                                                         |                                                           | Ended September 30,                                                       |        | Ended September 30,
|                                                                                                         |                                                           |                                                                           |        |                    
|                                                                                                         |                                                           | 2002                                                                      |        | 2001                |         | 2002 |        | 2001  
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |       
|                                                                                                         |                                                           |                                                                          
|                                                                                                         |                                                           | (Unaudited)                                                              
|                                                                                                         |                                                           |                                                                          
|                                                                                                         |                                                           | (Dollars in thousands, except per share data)                            
|Interest income                                                                                          |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|Mortgage-backed and other securities                                                                     |                                                           | $                                                                         | 29,246 |                     |         | $    | 31,489 |        |         | $ | 86,061  |         |         | $ | 93,515  |        
|Loans held for sale                                                                                      |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Prime                                                     |                                                                           |        | 32,660              |         |      |        | 43,791 |         |   |         | 92,089  |         |   |         | 120,305 |        
|                                                                                                         | Subprime                                                  |                                                                           |        | 4,327               |         |      |        | 5,262  |         |   |         | 10,014  |         |   |         | 15,197  |        
|                                                                                                         | HELOC                                                     |                                                                           |        | 3,004               |         |      |        | 801    |         |   |         | 3,004   |         |   |         | 1,951   |        
|                                                                                                         | Consumer lot loans                                        |                                                                           |        | 404                 |         |      |        |       |         |   |         | 404     |         |   |         |        |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Total loans held for sale                                                 |        |                     | 40,395  |      |        |        | 49,854  |   |         |         | 105,511 |   |         |         | 137,453 | 
|Loans held for investment                                                                                |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Mortgage                                                  |                                                                           |        | 23,318              |         |      |        | 34,900 |         |   |         | 81,888  |         |   |         | 105,939 |        
|                                                                                                         | Builder construction                                      |                                                                           |        | 8,743               |         |      |        | 13,419 |         |   |         | 28,474  |         |   |         | 42,542  |        
|                                                                                                         | Consumer construction                                     |                                                                           |        | 13,568              |         |      |        | 11,019 |         |   |         | 41,494  |         |   |         | 29,496  |        
|                                                                                                         | Income property                                           |                                                                           |        | 1,367               |         |      |        | 1,154  |         |   |         | 3,960   |         |   |         | 3,741   |        
|                                                                                                         | HELOC                                                     |                                                                           |        |                    |         |      |        | 21     |         |   |         | 3,124   |         |   |         | 21      |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Total loans held for investment                                           |        |                     | 46,996  |      |        |        | 60,513  |   |         |         | 158,940 |   |         |         | 181,739 | 
|Other                                                                                                    |                                                           |                                                                           | 1,537  |                     |         |      | 1,254  |        |         |   | 4,904   |         |         |   | 4,366   |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Total interest income                                                     |        |                     | 118,174 |      |        |        | 143,110 |   |         |         | 355,416 |   |         |         | 417,073 | 
|Interest expense                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|Deposits                                                                                                 |                                                           |                                                                           | 23,989 |                     |         |      | 29,744 |        |         |   | 82,125  |         |         |   | 64,520  |        
|Advances from Federal Home Loan Bank                                                                     |                                                           |                                                                           | 26,635 |                     |         |      | 24,736 |        |         |   | 76,028  |         |         |   | 70,894  |        
|Borrowings                                                                                               |                                                           |                                                                           | 14,417 |                     |         |      | 32,440 |        |         |   | 35,660  |         |         |   | 130,173 |        
|Trust preferred securities                                                                               |                                                           |                                                                           | 2,758  |                     |         |      |       |        |         |   | 8,271   |         |         |   |        |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Total interest expense                                                    |        |                     | 67,799  |      |        |        | 86,920  |   |         |         | 202,084 |   |         |         | 265,587 | 
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Net interest income                                                       |        |                     | 50,375  |      |        |        | 56,190  |   |         |         | 153,332 |   |         |         | 151,486 | 
|Provision for loan losses                                                                                |                                                           |                                                                           | 2,700  |                     |         |      | 5,700  |        |         |   | 10,454  |         |         |   | 17,726  |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Net interest income after provision for loan
    losses                   |        |                     | 47,675  |      |        |        | 50,490  |   |         |         | 142,878 |   |         |         | 133,760 | 
|Other income                                                                                             |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Gain on sale of loans                                     |                                                                           |        | 77,279              |         |      |        | 59,866 |         |   |         | 226,025 |         |   |         | 161,779 |        
|                                                                                                         | Service fee income                                        |                                                                           |        | 3,593               |         |      |        | 7,304  |         |   |         | 17,820  |         |   |         | 21,672  |        
|                                                                                                         | Gain on mortgage-backed securities, net                   |                                                                           |        | 7,674               |         |      |        | 1,695  |         |   |         | 3,387   |         |   |         | 780     |        
|                                                                                                         | Fee and other income                                      |                                                                           |        | 14,531              |         |      |        | 13,651 |         |   |         | 40,820  |         |   |         | 38,011  |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Total other income                                                        |        |                     | 103,077 |      |        |        | 82,516  |   |         |         | 288,052 |   |         |         | 222,242 | 
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Net revenues                                                              |        |                     | 150,752 |      |        |        | 133,006 |   |         |         | 430,930 |   |         |         | 356,002 | 
|Other expense                                                                                            |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Operating expenses                                        |                                                                           |        | 88,995              |         |      |        | 73,224 |         |   |         | 249,251 |         |   |         | 199,159 |        
|                                                                                                         | Amortization of goodwill and other intangible
    assets  |                                                                           |        | 263                 |         |      |        | 760    |         |   |         | 842     |         |   |         | 2,655   |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Total other expense                                                       |        |                     | 89,258  |      |        |        | 73,984  |   |         |         | 250,093 |   |         |         | 201,814 | 
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|Earnings before provision for income taxes and
    cumulative effect of a change in accounting principle |                                                           |                                                                           | 61,494 |                     |         |      | 59,022 |        |         |   | 180,837 |         |         |   | 154,188 |        
|                                                                                                         | Provision for income taxes                                |                                                                           |        | 24,290              |         |      |        | 24,524 |         |   |         | 73,040  |         |   |         | 64,065  |        
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Earnings before cumulative effect of a change in
    accounting principle |        |                     | 37,204  |      |        |        | 34,498  |   |         |         | 107,797 |   |         |         | 90,123  | 
|                                                                                                         | Cumulative effect of a change in accounting
    principle |                                                                           |        |                    |         |      |        |       |         |   |         |        |         |   |         | (10,185 | )      
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         |                                                           | Net earnings                                                              |        | $                   | 37,204  |      |        | $      | 34,498  |   |         | $       | 107,797 |   |         | $       | 79,938  | 
|                                                                                                         |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|Earnings per share before cumulative effect of
    a change in accounting principle                      |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Basic                                                     |                                                                           | $      | 0.65                |         |      | $      | 0.57   |         |   | $       | 1.83    |         |   | $       | 1.47    |        
|                                                                                                         | Diluted                                                   |                                                                           | $      | 0.64                |         |      | $      | 0.55   |         |   | $       | 1.78    |         |   | $       | 1.42    |        
|Earnings per share from cumulative effect of a
    change in accounting principle                        |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Basic                                                     |                                                                           | $      |                    |         |      | $      |       |         |   | $       |        |         |   | $       | (0.16   | )      
|                                                                                                         | Diluted                                                   |                                                                           | $      |                    |         |      | $      |       |         |   | $       |        |         |   | $       | (0.16   | )      
|Earnings per share                                                                                       |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Basic                                                     |                                                                           | $      | 0.65                |         |      | $      | 0.57   |         |   | $       | 1.83    |         |   | $       | 1.31    |        
|                                                                                                         | Diluted                                                   |                                                                           | $      | 0.64                |         |      | $      | 0.55   |         |   | $       | 1.78    |         |   | $       | 1.26    |        
|Weighted average shares outstanding                                                                      |                                                           |                                                                           |        |                     |         |      |        |        |         |   |         |         |         |   |         |        
|                                                                                                         | Basic                                                     |                                                                           |        | 56,879              |         |      |        | 60,271 |         |   |         | 59,040  |         |   |         | 61,101  |        
|                                                                                                         | Diluted                                                   |                                                                           |        | 58,375              |         |      |        | 62,543 |         |   |         | 60,727  |         |   |         | 63,458  |        

The accompanying notes are an integral part of
these statements.

34



---



##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY AND COMPREHENSIVE INCOME


|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  
|--------------------------------------------------------------- |  | ---------------------- | ---------- | ------ |  | ---------- | --- | ------------- |  | -------- | --------- | ------------- |  | -------- | ------- | ------------- |  | - | ------- |  |  | - | ------- | - |  | - | -------- | - |  | - | -------- | -
|                                                                |  |                        |            |        |  |            |     | Accumulated   |  |          |           |               |  |          |         |              
|                                                                |  |                        |            |        |  |            |     | Other         |  |          |           |               |  |          |         |              
|                                                                |  |                        |            |        |  | Additional |     | Comprehensive |  |          |           | Total         |  |          |         | Total        
|                                                                |  | Shares                 |            | Common |  | Paid-in    |     | Income        |  | Retained |           | Comprehensive |  | Treasury |         | Shareholders
|                                                                |  | Outstanding            |            | Stock  |  | Capital    |     | (Loss)        |  | Earnings |           | Income        |  | Stock    |         | Equity       
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |              
|                                                                |  |                       
|                                                                |  | (Unaudited)           
|                                                                |  |                       
|                                                                |  | (Dollars in thousands)
|Balance at December 31, 2000                                    |  |                        | 62,176,316 |        |  | $          | 818 |               |  | $        | 920,205   |               |  | $        | (2,603  | )             |  | $ | 117,926 |  |  |   |         |   |  | $ | (308,453 | ) |  | $ | 727,893  |  
|Common stock options exercised                                  |  |                        | 1,215,213  |        |  |            | 13  |               |  |          | 17,503    |               |  |          |        |               |  |   |        |  |  | $ |        |   |  |   |         |   |  |   | 17,516   |  
|Directors and officers notes
    receivable                   |  |                        |           |        |  |            |    |               |  |          | (756      | )             |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | (756     | )
|Deferred compensation, restricted stock                         |  |                        | 41,750     |        |  |            |    |               |  |          | 1,590     |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | 1,590    |  
|401(k) contribution                                             |  |                        | 55,622     |        |  |            |    |               |  |          | 1,450     |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | 1,450    |  
|Net gain on mortgage securities available for sale              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | 16,113  |               |  |   |        |  |  |   | 16,113  |   |  |   |         |   |  |   | 16,113   |  
|Net unrealized loss on derivatives used in cash
    flow hedges |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (4,799  | )             |  |   |        |  |  |   | (4,799  | ) |  |   |         |   |  |   | (4,799   | )
|Dividend reinvestment plan                                      |  |                        | 1,217      |        |  |            |    |               |  |          | 31        |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | 31       |  
|Purchases of common stock                                       |  |                        | (2,802,271 | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   | (66,343  | ) |  |   | (66,343  | )
|Net earnings                                                    |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 79,938  |  |  |   | 79,938  |   |  |   |         |   |  |   | 79,938   |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  
|Net change                                                      |  |                        | (1,488,469 | )      |  |            | 13  |               |  |          | 19,818    |               |  |          | 11,314  |               |  |   | 79,938  |  |  | $ | 91,252  |   |  |   | (66,343  | ) |  |   | 44,740   |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  
|Balance at September 30, 2001                                   |  |                        | 60,687,847 |        |  | $          | 831 |               |  | $        | 940,023   |               |  | $        | 8,711   |               |  | $ | 197,864 |  |  |   |         |   |  | $ | (374,796 | ) |  | $ | 772,633  |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  
|Balance at December 31, 2001                                    |  |                        | 60,366,266 |        |  | $          | 833 |               |  | $        | 996,649   |               |  | $        | 570     |               |  | $ | 234,314 |  |  |   |         |   |  | $ | (387,228 | ) |  | $ | 845,138  |  
|Common stock options exercised                                  |  |                        | 583,669    |        |  |            | 6   |               |  |          | 9,397     |               |  |          |        |               |  |   |        |  |  | $ |        |   |  |   |         |   |  |   | 9,403    |  
|Directors and officers notes
    receivable                   |  |                        |           |        |  |            |    |               |  |          | (379      | )             |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | (379     | )
|Deferred compensation, restricted stock                         |  |                        | 21,356     |        |  |            |    |               |  |          | 1,227     |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | 1,227    |  
|Net gain on mortgage securities available for sale              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | 1,456   |               |  |   |        |  |  |   | 1,456   |   |  |   |         |   |  |   | 1,456    |  
|Net unrealized loss on derivatives used in cash
    flow hedges |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (16,205 | )             |  |   |        |  |  |   | (16,205 | ) |  |   |         |   |  |   | (16,205  | )
|Dividend reinvestment plan                                      |  |                        | 1,341      |        |  |            |    |               |  |          | 33        |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   |         |   |  |   | 33       |  
|Purchases of common stock                                       |  |                        | (5,013,163 | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |  |  |   |        |   |  |   | (110,669 | ) |  |   | (110,669 | )
|Net earnings                                                    |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 107,797 |  |  |   | 107,797 |   |  |   |         |   |  |   | 107,797  |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  
|Net change                                                      |  |                        | (4,406,797 | )      |  |            | 6   |               |  |          | 10,278    |               |  |          | (14,749 | )             |  |   | 107,797 |  |  | $ | 93,048  |   |  |   | (110,669 | ) |  |   | (7,337   | )
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  
|Balance at September 30, 2002                                   |  |                        | 55,959,469 |        |  | $          | 839 |               |  | $        | 1,006,927 |               |  | $        | (14,179 | )             |  | $ | 342,111 |  |  |   |         |   |  | $ | (497,897 | ) |  | $ | 837,801  |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |  |  |   |         |   |  |   |          |   |  |   |          |  

The accompanying notes are an integral part of
these statements.

35



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |            |            |            |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ | -------- | -------- | -------- | ------- | ---------- | ---------- | ---------- | -
|                                                         |                                                                                                   |                                                                   
|                                                         |                                                                                                   | For the Nine Months                                               
|                                                         |                                                                                                   | Ended September 30,                                               
|                                                         |                                                                                                   |                                                                   
|                                                         |                                                                                                   | 2002                                                               |                                                                                                              | 2001    
|                                                         |                                                                                                   |                                                                    |                                                                                                              |         
|                                                         |                                                                                                   |                                                                   
|                                                         |                                                                                                   | (Unaudited)                                                       
|                                                         |                                                                                                   |                                                                   
|                                                         |                                                                                                   | (Dollars in thousands)                                            
|Cash flows from operating
    activities:                |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         | Net earnings                                                                                      |                                                                    | $                                                                                                            | 107,797  |          |          | $       | 79,938     |           
|                                                         | Adjustments to reconcile net earnings to net cash
    provided by (used in) operating activities: |                                                                    |                                                                                                              |          |          |          |         |            |           
|                                                         |                                                                                                   | Total amortization and depreciation                                |                                                                                                              |          | 202,488  |          |         |            | 149,106    |           
|                                                         |                                                                                                   | Gain on sale of loans                                              |                                                                                                              |          | (226,025 | )        |         |            | (161,779   | )         
|                                                         |                                                                                                   | Gain on mortgage-backed securities, net                            |                                                                                                              |          | (3,387   | )        |         |            | (780       | )         
|                                                         |                                                                                                   | Provision for loan losses                                          |                                                                                                              |          | 10,454   |          |         |            | 17,726     |           
|                                                         |                                                                                                   | Cumulative effect of a change in accounting
    principle          |                                                                                                              |          |         |          |         |            | 10,185     |           
|                                                         |                                                                                                   | Net decrease in deferred tax                                       |                                                                                                              |          | 3,229    |          |         |            | 73,765     |           
|                                                         |                                                                                                   | Net increase in other assets and liabilities                       |                                                                                                              |          | (60,123  | )        |         |            | (124,909   | )         
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         |                                                                                                   |                                                                    | Net cash provided by operating activities before
    activity for trading securities and held for sale loans |          |          | 34,433   |         |            |            | 43,252     |  
|                                                         |                                                                                                   | Purchases of trading securities                                    |                                                                                                              |          | (280,535 | )        |         |            |           |           
|                                                         |                                                                                                   | Net (purchases) sales of and payments from
    loans held for sale |                                                                                                              |          | 478,140  |          |         |            | (1,122,400 | )         
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         |                                                                                                   |                                                                    | Net cash provided by (used in) operating
    activities                                                      |          |          | 232,038  |         |            |            | (1,079,148 | )
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|Cash flows from investing
    activities:                |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         | Net (purchases) sales of and payments from
    loans held for investment                          |                                                                    |                                                                                                              | (172,055 | )        |          |         | 179,180    |           
|                                                         | Net (purchases) and payments from mortgage
    securities available for sale                      |                                                                    |                                                                                                              | (294,302 | )        |          |         | (210,884   | )         
|                                                         | Net increase in investment in Federal Home Loan
    Bank stock, at cost                           |                                                                    |                                                                                                              | (8,861   | )        |          |         | (27,345    | )         
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         |                                                                                                   |                                                                    | Net cash used in investing activities                                                                        |          |          | (475,218 | )       |            |            | (59,049    | )
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|Cash flows from financing
    activities:                |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         | Net (decrease) increase in deposits                                                               |                                                                    |                                                                                                              | (383,536 | )        |          |         | 2,003,084  |           
|                                                         | Net (decrease) increase in advances from
    Federal Home Loan Bank                               |                                                                    |                                                                                                              | (49,799  | )        |          |         | 416,891    |           
|                                                         | Net increase (decrease) in borrowings                                                             |                                                                    |                                                                                                              | 788,313  |          |          |         | (1,249,924 | )         
|                                                         | Net proceeds from issuance of common stock and
    exercise of stock options                      |                                                                    |                                                                                                              | 10,284   |          |          |         | 19,984     |           
|                                                         | Purchases of common stock                                                                         |                                                                    |                                                                                                              | (110,669 | )        |          |         | (66,343    | )         
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         |                                                                                                   |                                                                    | Net cash provided by financing activities                                                                    |          |          | 254,593  |         |            |            | 1,123,692  |  
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|Net increase (decrease) in cash and cash
    equivalents |                                                                                                   |                                                                    | 11,413                                                                                                       |          |          |          | (14,505 | )         
|Cash and cash equivalents at beginning of period         |                                                                                                   |                                                                    | 153,295                                                                                                      |          |          |          | 67,867  |           
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|Cash and cash equivalents at end of period               |                                                                                                   | $                                                                  | 164,708                                                                                                      |          |          | $        | 53,362  |           
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         | Supplemental cash flow information:                                                               |                                                                    |                                                                                                              |          |          |          |         |            |           
|                                                         |                                                                                                   |                                                                    | Cash paid for interest                                                                                       |          | $        | 195,412  |         |            | $          | 271,960    |  
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         |                                                                                                   |                                                                    | Cash paid for income taxes                                                                                   |          | $        | 25,341   |         |            | $          | 2,309      |  
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         | Supplemental disclosure of noncash investing
    and financing activities:                        |                                                                    |                                                                                                              |          |          |          |         |            |           
|                                                         |                                                                                                   |                                                                    | Net transfer of loans held for sale to loans held
    for investment                                         |          | $        | (176,261 | )       |            | $          | 531,526    |  
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           
|                                                         |                                                                                                   |                                                                    | Net transfer of mortgage-backed securities
    available for sale to trading                                 |          | $        | 215,050  |         |            | $          | 263,274    |  
|                                                         |                                                                                                   |                                                                    |                                                                                                              |          |          |          |         |           

The accompanying notes are an integral part of
these statements.

36



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


September 30, 2002


(Unaudited)


Note 1  Basis of
Presentation

IndyMac Bancorp, Inc. is a savings and loan
holding company. References to IndyMac Bancorp refer
to the parent company alone while references to
IndyMac or we refer to IndyMac Bancorp
and its consolidated subsidiaries. Our primary business is
mortgage banking. We offer a wide array of home mortgage
products using a technology-based approach, leveraged across
multiple products, channels and customers.

The consolidated financial statements include the
accounts of IndyMac Bancorp and its subsidiaries, including
IndyMac Bank®, F.S.B. (IndyMac Bank). All
significant intercompany balances and transactions with
IndyMacs consolidated subsidiaries have been eliminated in
consolidation. The consolidated financial statements of IndyMac
are prepared in conformity with accounting principles generally
accepted in the United States of America
(US GAAP). The balance of trust preferred
securities at December 31, 2001 was reclassified from
mezzanine debt to liabilities to conform to the current period
presentation. Operating results for the nine months ended
September 30, 2002 are not necessarily indicative of the
results that may be expected for the year ending
December 31, 2002. For further information, refer to the
consolidated financial statements and footnotes thereto included
in IndyMacs annual report on Form 10-K for the year
ended December 31, 2001.

Note 2  Recently Adopted
Accounting Pronouncement

Effective January 1, 2002, goodwill is no
longer amortized, but rather is assessed for impairment annually
in accordance with Statement of Financial Accounting Standards
No. 142, Goodwill and Other Intangible Assets
(SFAS 142). Upon adoption of SFAS 142 on
January 1, 2002, the Company assessed its goodwill for
impairment. The Company determined that no impairment was
required to be recognized on its goodwill assets. IndyMac
Banks core deposit intangible asset continues to be
amortized using an accelerated method of amortization over a
period of 10 years, which is the estimated life of the
deposit relationships acquired.

Accumulated amortization of $3.1 million as
of September 30, 2002 and $2.3 million as of
December 31, 2001 was netted against our gross core deposit
intangible asset of $7.7 million. Estimated amortization
expense for our core deposit intangible asset is as follows for
the years ended December 31, 2002 
$1.1 million; 2003  $852 thousand;
2004  $701 thousand; 2005  $591 thousand;
2006  $498 thousand; and 2007  $469
thousand.

Goodwill of $30.3 million as of
January 1, 2002 was allocated to our segments as follows:
Mortgage Banking  $1.5 million; Investment
Portfolio  $0.3 million; and $28.5 million
is included in Other, which includes our retail
banking operations.

Had goodwill amortization not been recognized
during the nine months ended September 30, 2001, net
earnings would have been $732 thousand higher than historically
reported, and basic and diluted earnings per share would have
been $0.01 higher than historically reported.

Note 3  Segment Reporting

Our reportable operating segments are Mortgage
Banking, Investment Portfolio and Other. Prior to 2002, we also
had a Builder Finance segment. Commencing in 2002, the Builder
Finance segment was combined with the Mortgage Banking segment
to align our builder-oriented business more closely with our
mortgage banking activities by focusing our builder construction
lending efforts on those homebuilders that have the highest
likelihood of utilizing our technology to provide the related
permanent mortgage loans to their customers. Segment information
for 2001, including a change in the allocation method of
interest expense to the operating segments, has been restated to
conform to the current year presentation.

37



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Mortgage Banking segment purchases
conforming, jumbo and other non-conforming mortgage loans from
business-to-business (B2B) customers, and funds
loans directly to consumers (B2C). These loans are
then either securitized through the issuance of mortgage-backed
securities, sold to government-sponsored enterprises
(GSEs), resold in bulk whole loan sales to
investors, or transferred to and retained by our Investment
Portfolio segment. The Mortgage Banking segment also administers
the related construction advances for construction-to-permanent
mortgage loans originated by or sourced through our B2B sellers
and direct customers, as well as residential development and
construction loans to builders. Additionally, Mortgage Banking
operates a business-to-realtor (B2R) channel,
LoanWorks.com®, which allows real estate professionals to
utilize our technology to facilitate the mortgage loan process
for their customers in the process of purchasing a home.

The Investment Portfolio segment invests in
single-family residential loans, mortgage securities and MSRs.
The Investment Portfolio segment also actively hedges its MSRs
and performs mortgage servicing activities.

The profitability of each operating segment is
measured on a fully-leveraged basis after allocating capital
based on regulatory capital rules. Corporate costs such as
corporate salaries and related expenses, excess capital, and
non-recurring corporate items are unallocated and included in
Other below. Other also includes our retail banking operations.

Segment information for the three and nine months
ended September 30, 2002 and 2001 was as follows:

|                                      |                                                                                  |                        |   |            |  |       |   |              |   |  |   |         |   |  |   |           |  
|------------------------------------- | -------------------------------------------------------------------------------- | ---------------------- | - | ---------- |  | ----- | - | ------------ | - |  | - | ------- | - |  | - | --------- | -
|                                      |                                                                                  | Mortgage               |   | Investment |  |       |   |             
|                                      |                                                                                  | Banking                |   | Portfolio  |  | Other |   | Consolidated
|                                      |                                                                                  |                        |   |            |  |       |   |             
|                                      |                                                                                  |                       
|                                      |                                                                                  | (Dollars in thousands)
|Three months ended September 30, 2002 |                                                                                  |                        |   |            |  |       |   |              |   |  |   |         |   |  |   |          
|                                      | Net interest income (expense)                                                    |                        | $ | 42,142     |  |       | $ | 19,338       |   |  | $ | (11,105 | ) |  | $ | 50,375    |  
|                                      | Net revenues (loss)                                                              |                        |   | 130,729    |  |       |   | 32,138       |   |  |   | (12,115 | ) |  |   | 150,752   |  
|                                      | Net earnings (loss)                                                              |                        |   | 44,609     |  |       |   | 14,114       |   |  |   | (21,519 | ) |  |   | 37,204    |  
|Three months ended September 30, 2001 |                                                                                  |                        |   |            |  |       |   |              |   |  |   |         |   |  |   |          
|                                      | Net interest income (expense)                                                    |                        | $ | 50,046     |  |       | $ | 25,105       |   |  | $ | (18,961 | ) |  | $ | 56,190    |  
|                                      | Net revenues (loss)                                                              |                        |   | 123,947    |  |       |   | 29,972       |   |  |   | (20,913 | ) |  |   | 133,006   |  
|                                      | Net earnings (loss)                                                              |                        |   | 47,274     |  |       |   | 15,470       |   |  |   | (28,246 | ) |  |   | 34,498    |  
|Nine months ended September 30, 2002  |                                                                                  |                        |   |            |  |       |   |              |   |  |   |         |   |  |   |          
|                                      | Net interest income (expense)                                                    |                        | $ | 126,671    |  |       | $ | 63,223       |   |  | $ | (36,562 | ) |  | $ | 153,332   |  
|                                      | Net revenues (loss)                                                              |                        |   | 390,370    |  |       |   | 81,868       |   |  |   | (41,308 | ) |  |   | 430,930   |  
|                                      | Net earnings (loss)                                                              |                        |   | 139,457    |  |       |   | 32,708       |   |  |   | (64,368 | ) |  |   | 107,797   |  
|Nine months ended September 30, 2001  |                                                                                  |                        |   |            |  |       |   |              |   |  |   |         |   |  |   |          
|                                      | Net interest income (expense)                                                    |                        | $ | 127,413    |  |       | $ | 67,953       |   |  | $ | (43,880 | ) |  | $ | 151,486   |  
|                                      | Net revenues (loss)                                                              |                        |   | 329,905    |  |       |   | 76,036       |   |  |   | (49,939 | ) |  |   | 356,002   |  
|                                      | Earnings (loss) before cumulative effect of
    a change in accounting principle |                        |   | 122,390    |  |       |   | 38,745       |   |  |   | (71,012 | ) |  |   | 90,123    |  
|                                      | Cumulative effect of a change in accounting
    principle                        |                        |   | 21         |  |       |   | (10,206      | ) |  |   |        |   |  |   | (10,185   | )
|                                      | Net earnings (loss)                                                              |                        |   | 122,411    |  |       |   | 28,539       |   |  |   | (71,012 | ) |  |   | 79,938    |  
|                                      | Assets as of September 30, 2002                                                  |                        | $ | 3,337,040  |  |       | $ | 4,332,761    |   |  | $ | 223,171 |   |  | $ | 7,892,972 |  

38



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##### Table of Contents








|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

As of September 30, 2002, an evaluation was
performed under the supervision and with the participation of
the Companys management, including the Chief Executive
Officer (CEO) and Chief Financial Officer
(CFO), of the effectiveness of the design and
operation of the Companys disclosure controls and
procedures. Based on that evaluation, the Companys
management, including the CEO and CFO, concluded that the
Companys disclosure controls and procedures were effective
as of September 30, 2002. There have been no significant
changes in the Companys internal controls or in other
factors that could significantly affect internal controls
subsequent to September 30, 2002.




PART II.     OTHER
INFORMATION






|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

(a) Exhibits

|     |  |                                                                                                                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Option Cancellation Agreement dated as of
    August 8, 2002 between IndyMac Bancorp and Michael W. Perry
    (incorporated by reference to Exhibit 99.1 to IndyMac
    Bancorps Form 8-K Current Report filed with the SEC
    on August 8, 2002).
|10.2 |  | Employment Agreement dated September 1, 2002
    between IndyMac Bank and S. Blair Abernathy.                                                                                                                                                       
|99.1 |  | Chief Executive Officers Certification
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes  Oxley
    Act of 2002.                                                                                     
|99.2 |  | Chief Financial Officers Certification
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes  Oxley
    Act of 2002.                                                                                     

(b) Reports on Form 8-K

None.

39



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Pasadena,
State of California, on October 30, 2002 for the nine
months ended September 30, 2002.



| |                      
| | ---------------------
| | INDYMAC BANCORP, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ MICHAEL W. PERRY

| |                                            
| | -------------------------------------------
| |                                            
| | Michael W. Perry                           
| | Vice Chairman of the Board of
    Directors
| | and Chief Executive Officer                



| |     |               
| | --- | --------------
| | By: | /s/ SCOTT KEYS

| |                             
| | ----------------------------
| |                             
| | Scott Keys                  
| | Executive Vice President and
| | Chief Financial Officer     

40



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##### Table of Contents



CERTIFICATION

I, Michael W. Perry, Vice Chairman of the Board
of Directors and Chief Executive Officer of IndyMac Bancorp,
Inc. (IndyMac Bancorp), certify that:



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q of IndyMac Bancorp;                                                                                                                                                                                                                                                                            
|
| | 2.     Based on my
    knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this quarterly
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this quarterly report;                       
|
| | 4.     The
    registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                              



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrants
    auditors and the audit committee of registrants board of
    directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officer and I have indicated
    in this quarterly report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.

Date: October 30, 2002



| |                                            
| | -------------------------------------------
| | /s/ MICHAEL W. PERRY                       
| |                                            
| | Michael W. Perry                           
| | Vice Chairman of the Board of
    Directors
| | and Chief Executive Officer                

41



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##### Table of Contents



CERTIFICATION

I, Scott Keys, Executive Vice President and Chief
Financial Officer of IndyMac Bancorp, Inc. (IndyMac
Bancorp), certify that:



| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q of IndyMac Bancorp;                                                                                                                                                                                                                                                                            
|
| | 2.     Based on my
    knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this quarterly
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this quarterly report;                       
|
| | 4.     The
    registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                              



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrants
    auditors and the audit committee of registrants board of
    directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officer and I have indicated
    in this quarterly report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.

Date: October 30, 2002



| |                            
| | ---------------------------
| | /s/ SCOTT KEYS             
| |                            
| | Scott Keys                 
| | Executive Vice President   
| | and Chief Financial Officer

42