IndyMac Bank Announces Agreement to Acquire Financial Freedom Holdings Inc.; The Recognized Industry Leader in the Reverse Mortgage Market

Business Wire, May 5, 2004

Business Editors

PASADENA, Calif.--(BUSINESS WIRE)--May 5, 2004

IndyMac Bancorp, Inc. (NYSE:NDE) ("IndyMac" or the "Company"), the holding company for IndyMac Bank(R) FSB, today announced the signing of a definitive agreement by IndyMac Bank to acquire 93.75% of the outstanding shares of common stock of Financial Freedom Holdings Inc. ("Financial Freedom"), the leading provider of reverse mortgages in the U.S. and related assets from Lehman Brothers Bank, FSB and its affiliates. Financial Freedom will become a subsidiary of IndyMac Bank. The transaction is valued at approximately $80 million, assuming Financial Freedom performs as projected through the closing date.

The remaining shares of common stock of Financial Freedom are held by its Chief Executive Officer and are subject to a separate stock purchase agreement with IndyMac Bank. The Chief Executive Officer of Financial Freedom and certain other members of its senior management have entered into employment agreements with IndyMac, contingent upon the closing of the transaction.

IndyMac's Board of Directors has unanimously approved the transaction. The transaction is expected to close in the second or third quarter pending the satisfaction of certain closing conditions, including regulatory approvals.

Highlights

-- Accretive to IndyMac's earnings per share in first year

-- Financial Freedom is the recognized industry leader with the

largest market share in the reverse mortgage business in the

U.S.

-- 93% of the loans are FHA-insured and sold to Fannie Mae

-- Reverse mortgage loans produced by Financial Freedom in 2003

totaled $976 million

-- Proprietary technology platforms for point-of-sale loan

origination and loan servicing

-- Acquisition of a distinctive "niche" product that complements

IndyMac's core single-family lending business

Reverse mortgages are non-recourse, predominantly FHA-insured mortgages that allow homeowners age 62 or older to convert home equity to cash. Fannie Mae is the primary investor in these loans today. The reverse mortgage product is becoming an increasingly popular vehicle among senior citizens seeking to access the equity in their home for income replacement, home maintenance/repair, healthcare funding and estate planning. The product is attractive due to several compelling features, which include: no recourse to the borrower, no repayment during the borrower's occupancy of the home, and a repayment amount that cannot exceed the value of the home (after costs of sale). Any excess equity remains the property of the borrower or the borrower's estate. Each loan requires counseling by an independent FHA-approved counselor prior to the completion of the transaction. Given the demographics of the senior population and increasing product awareness, industry experts forecast reverse mortgage growth of 60% near term and 20% compounded annual growth through 2015.

"This acquisition makes us the number one ranked provider of reverse mortgages in the U.S., a rapidly growing segment of the mortgage market. Financial Freedom fits perfectly with our strategic plan to remain focused on our core competency in the single-family residential mortgage industry while increasing our market share through geographic expansion and distinctive niche products," commented Michael W. Perry, IndyMac's Chairman and Chief Executive Officer.

James Mahoney, Financial Freedom's Chief Executive Officer stated, "We are excited about becoming a part of IndyMac. Through the due diligence process our management teams have gotten to know each other's operations well and we believe that there are significant synergies that can be achieved through this transaction. With their exclusive focus on mortgage lending, IndyMac has the resources and scale to help us achieve our goals of reaching the next level of success."

Financing of the Transaction

Management expects this transaction to permanently deploy approximately $50 million to $60 million of regulatory capital. IndyMac has a variety of means to finance this capital deployment including the issuance of common stock from its effective shelf registration, or the issuance of trust preferred securities.

"The Financial Freedom acquisition is expected to be accretive to IndyMac's EPS within 12 months of closing, assuming 100% of the permanent capital deployment is funded with newly issued equity. Due to purchase accounting issues, the transaction is expected to be a few cents dilutive in the first full quarter of operations following closing, but significantly accretive thereafter," commented Mr. Perry.

Morgan Stanley acted as IndyMac's financial advisor and Alston & Bird acted as IndyMac's legal counsel on this transaction.

Conference Call

On Thursday, May 6, 2004, at 3:00 P.M. EDT (12:00 PDT), Michael W. Perry, Chairman and Chief Executive Officer, will host a live Webcast and conference call to discuss the Financial Freedom acquisition followed by a question and answer session. A slide presentation will accompany the Webcast/conference call and will be available via IndyMac Bank's home page at www.indymacbank.com.