IndyMac Bancorp, the holding company for IndyMac Bank F.S.B., today announced that it expects earnings per share for the third quarter of 2004 will be approximately 78 cents per share, below its previously forecasted range of 85-95 cents per share and a decrease of 10 percent compared to the third quarter of 2003.

IndyMac’s earnings release and conference call is scheduled to take place on Oct. 28, 2004.

The change in outlook is due principally to three items:

1. Declining net interest and gain on sale margins, mitigated by an increase in mortgage production and market share.

The declining net interest margin resulted from a significant change in the mix of production to adjustable rate mortgages, which had the effect of reducing the net interest margin approximately 15 percent relative to the third quarter of 2003.

The mix change to adjustable rate mortgages combined with more of our production generated in the lower margin correspondent and conduit business channels and a more competitive and volatile environment reduced gain on sale margins approximately 33 percent relative to the third quarter of 2003.

IndyMac substantially offset most of the above items through its mortgage loan production, which increased 21 percent year over year and resulted in record market share of 1.54 percent, an increase of 117 percent year over year.

2. An underestimation of the impact of the purchase accounting adjustments related to the acquisition of Financial Freedom Holdings Inc.

3. Continued carryover impact from the implementation of SEC Staff Accounting Bulletin (SAB) No. 105 on gain on sale margins, as the March 31, 2004 pipeline clears out.

On a pro forma, operating basis, which excludes the purchase accounting and SAB No. 105 adjustments, IndyMac expects that earnings will be approximately 88 cents per share, a 1 percent increase over the third quarter of 2003. This pro forma comparison is provided so that investors have a basis for comparing results for historical periods on a consistent basis and to provide the ability to analyze IndyMac’s future operations.

“Forecasting continues to be difficult in the wake of a significant mortgage industry transition, the volatile interest rate environment and the relative complexity of our business model. Still, our GAAP earnings of 78 cents per share reflect strong performance given the fact that the overall mortgage industry volumes declined 44 percent year over year and industry margins have compressed as well. Further, absent the non-operating purchase accounting and SAB No. 105 items, EPS were essentially unchanged at 88 cents per share. This pro forma, operating EPS number is, in our view, the more comparable number in relation to prior periods and also more reflective of the expectation we have for our near-term performance,” said Michael W. Perry, IndyMac’s Chief Executive Officer.

“In our view, the third quarter results demonstrate the resilience and stability of our hybrid thrift/mortgage banking model to generate strong returns in a rapidly changing market environment. We plan to update our fourth quarter and 2005 forecast when we formally announce the results for the third quarter and our dividend on October 28th. However, as we look to next year, we expect earnings and EPS to again reach new record levels,” Perry added.

At 11 a.m. EDT on Thursday, Oct. 28, 2004, the company will host a live Webcast and conference call to discuss the results of the third quarter in greater detail, followed by a question-and-answer session

IndyMac facilitates automated underwriting, risk-based pricing and rate lock of home loans on a nationwide basis via the Internet at the point of sale. IndyMac provides mortgage products and services through various mortgage-banking divisions and invests in certain of its mortgage loan production and mortgage servicing for long-term returns.

IndyMac Bank also offers a wide array of Web-enhanced banking services, including deposits, competitive CD and money market accounts, and online bill payment services. IndyMac Bank is FDIC insured.


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