Fitch Downgrades Indymac's IDR To 'BB'; Outlook Remains Negative

Business Wire, Jan 24, 2008

NEW YORK -- Fitch Ratings has downgraded the Long-term Issuer Default Ratings (IDRs) of Indymac Bancorp Inc. (IMB) and Indymac Bank FSB to 'BB' from 'BBB-'. The Rating Outlook is Negative. Fitch's action reflects the continued weakness of the U.S. residential mortgage market and virtual absence of a private, secondary mortgage market. Approximately $440 million in debt is involved in Fitch's rating action. A complete list of rating actions is provided at the end of this release.

Ratings downgraded with a Negative Outlook:

Indymac Bancorp Inc.

-- Long-term IDR to 'BB' from 'BBB-';

-- Short-term IDR to 'B' from 'F3';

-- Individual to 'C/D' from 'B/C'.

Fitch's downgrade reflects the expectation that IMB's near-term return to profitability will be challenging as changes in mortgage industry dynamics, once viewed as temporary, become more permanent. Fitch believes that, due to company's mono-line focus and diminished competitive advantage, credit risk is more speculative in nature.

Fitch views IMB's efforts to right size costs while maintaining adequate capital and liquidity positions as appropriate given the operating environment. In addition, IMB has taken decisive steps to address credit quality and improve profitability. However, Fitch believes that the benefits from such measures may not be realized in the near term as the economics of the residential mortgage business remain difficult due to the confluence of several factors. Tighter agency lending guidelines, for example, have led to additional cuts to IMB's product pipeline resulting in significantly lower volume forecasts for 2008. Further, balance sheet growth of higher-yielding, non-conforming loans is limited due to potential capital constraints.

Fitch anticipates credit quality metrics to weaken further with non-conforming delinquency trends approaching historical highs. Higher seasoning from slower portfolio growth and greater California concentration, relative to peers, is also expected to further erode asset quality. A ratings downgrade is possible should credit quality worsen beyond Fitch's expectations or continue to materially impact profitability in 2008. Also, declining capital trends would also pressure the current rating. Should market conditions improve and IMB's five key execution priorities result in material improvement, Fitch would revisit the Negative Outlook.

Fitch downgraded the following ratings with a Negative Outlook:

Indymac Bancorp, Inc.

-- Long-term IDR to 'BB' from 'BBB-';

-- Individual to 'C/D' from 'B/C';

-- Short-term IDR to 'B' from 'F3'.

Indymac Bank F.S.B.

-- Long-term IDR to 'BB' from 'BBB-';

-- Long-term deposits to 'BB from 'BBB';

-- Individual to 'C/D' from 'B/C';

-- Short-term IDR to 'B' from 'F3';

-- Short-term deposits to 'B' from 'F3'.

Indymac Capital Trust I

-- Trust preferred to 'B ' from 'BB .

Fitch affirmed the following ratings:

Indymac Bancorp, Inc.

-- Support '5';

-- Support floor 'NF'.

Indymac Bank F.S.B.

-- Support '5';

-- Support floor 'NF'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.