IndyMac Announces 57% Increase in Third Quarter EPS to $0.55

Business Wire, Oct 18, 2001

Business Editors

PASADENA, Calif.--(BUSINESS WIRE)--Oct. 18, 2001

IndyMac Bancorp, Inc. (NYSE:NDE) ("IndyMac" or the "Company"), the holding company for IndyMac Bank(SM), today reported third quarter net earnings of $34.5 million, or $0.55 per diluted share.

The per share earnings reflect an increase of 57 percent in comparison with $0.35 per diluted share on a recurring basis for the third quarter of 2000.

Highlights of the Quarter

-- Internet Webcast Access: http://www.indymacbank.com

-- The telephone dial-in number is (800) 946-0741, access code No. 504680

-- The replay number is (888) 203-1112, access code No. 504680

"The current strong quarter reflects the overall outstanding market for mortgage originations and our continued focus and successful execution over all aspects of our core mortgage lending business," commented Michael W. Perry, IndyMac's Vice Chairman and Chief Executive Officer. "Our strong interest rate risk management successfully offset the accelerated prepayment activity in our servicing related assets while credit risk management efforts have continued a nine-quarter trend of improvement in the ratio of non-performing assets to total assets. The low interest rate environment is obviously ideal for mortgage lending and we continue to see strong production levels. The current quarter reflects an increase of 79% in mortgage production over the prior year and a 5% increase over the very robust second quarter. The production numbers would have been even higher had it not been for the horrible tragedy that struck our Country during September, temporarily delaying the closing of loan transactions. As a result, we enter October with an increased pipeline of loans in process, 21% higher than the pipeline at the end of the second quarter, and we expect to see continued solid production through the fourth quarter and on into 2002," continued Mr. Perry.

Mortgage Banking Loan Production Up 79%

IndyMac's mortgage banking group funded $4.4 billion of mortgage loans during the third quarter of this year, an increase of 79% over the third quarter of 2000. "We are focused on building our mortgage loan production through channel expansion, product expansion and customer expansion with a sharp focus on profitability through proper risk-based pricing and secondary market execution and cost control," commented Richard Wohl, President and Chief Operating Officer of the Mortgage Banking Group.

One item of note, given the strong refinance environment, is that IndyMac's servicing portfolio is approximately equal to its annual loan production run rate. This compares to the top mortgage originators whose servicing portfolios generally approximate 2 to 3 times their annual loan production. These servicers tend to benefit more and are able to increase loan production at a faster rate due to streamlined refinancing of loans in their portfolios and gain market share in this environment, but are subject to greater interest rate risk due to servicing impairment. Conversely, IndyMac tends to lose market share in the current environment and gain market share in a non-refinance environment as it focuses on its sales and marketing metrics to drive production.

B2B Loan Production Up 71%

IndyMac Bank's core B2B channel continues to drive loan production and profitability. The B2B channel funded $3.9 billion of loans as follows:

                              Q3 01    Q3 00     %       Q2 01     %
                                              Change            Change
Volume By Product
(in millions)
  Prime                     $ 3,233   $1,711     89%   $ 3,077     5%
  Subprime                      292      350    -17%       240    22%
  Consumer Construction         335      195     72%       310     8%

     Total                  $ 3,860   $2,256     71%   $ 3,627     6%
e-MITS Production           $ 3,408   $1,818     87%   $ 3,213     6%

Key drivers of growth
 and profitability
Customers                     3,477    2,587     34%     3,468     0%
Sales and Marketing
 Personnel                      212      177     20%       185    15%
Profit contribution
 (per share)                  $0.50    $0.23    117%     $0.43    16%
Cost per funded loan
 (bps)                           76       76      0%        78    -3%

The strategy within the B2B channel is to continue its emphasis on building market share with plans to expand to a 6th new regional operations center in the Midwest during the next six months. Key focus areas for this group are customer profitability and growth, enhancing the technology platform and strengthening its customer service and operations efficiency. Active customers remained approximately even with second quarter as the Company's sales force was concentrated on working with existing customers during this heavy refinance environment. In addition, the Company has been undergoing a study of its customer base, including asset quality of loans produced and profitability and, as a result of this study, suspended or terminated a high number of customers during the quarter.