IndyMac Bancorp Announces Quarterly EPS of $1.18, up 20%

-- Record Quarterly Mortgage Production of $20 Billion Drives Doubling of Market Share to 3.89%

-- Board of Directors Increases Quarterly Cash Dividend 21% to $0.46

IndyMac Bancorp, Inc. (NYSE:NDE) ("Indymac(R)" or the "Company"),the holding company for IndyMac Bank, F.S.B. ("Indymac Bank(R)"),today reported net earnings of $80 million, or $1.18 per share, forthe first quarter of 2006, compared with net earnings of $63 million,or $0.98 per share, in the first quarter of 2005, representingincreases of 26 percent in net earnings and 20 percent in earnings pershare. The 2005 amounts have been retrospectively adjusted forStatement of Financial Accounting Standard 123(R), Share-BasedPayments (a table reporting the impact of this accounting change islocated at the end of this release). Indymac has also filed its Form10-Q for the first quarter with the Securities and ExchangeCommission. The Form 10-Q is available on Indymac's Website atwww.indymacbank.com.

"The first quarter demonstrated the dynamism and resiliency ofIndymac's hybrid thrift/mortgage banking business model," commentedMichael W. Perry, Indymac's Chairman and Chief Executive Officer."Several factors negatively impacted our industry this quarter:mortgage industry volume was 17 percent lower than both Q4 05 and thefirst quarter of last year(1), and mortgage banking profit marginsdeclined significantly across the industry. Additionally, the FederalReserve continued to raise short-term rates, resulting in an evenflatter yield curve. Despite these negative trends, Indymac grew itsEPS by 20 percent over Q1 05 and 11 percent on a sequential quarterlybasis to $1.18. We accomplished these results by: (1) growing mortgageproduction 72 percent over Q1 05 to an all-time record of $20 billion,(2) growing our average interest earning assets 41 percent, (3)profitably deploying $505 million more in capital, a 55 percentincrease, and reducing our undeployed capital from $346 million to$169 million, and (4) leveraging our overhead areas, with combinedoverhead increasing by 11 percent, considerably lower than thepercentage gains we achieved in volume, assets and revenue.

"We are constantly examining how we are deploying our capital andthe returns we earn by business segment," continued Perry. "In thefirst quarter, we deployed a total of $509 million of our capital inour mortgage production divisions, an 83 percent increase over lastyear. However, given mortgage industry margin pressures and ourlower-margin conduit operations comprising a higher percentage of ourproduction volume, the ROE on this capital declined from 97 percentlast year to 51 percent this quarter, still a strong return on ourcapital. We deployed a total of $640 million in our thrift segment, a39 percent increase over last year. This segment continued to earn asolid, stable ROE, earning 25 percent for the quarter.

"Finally, we deployed 15 percent of our capital, or $237 million,in MSRs and other retained assets, up from 12 percent one year ago.This division saw a strong increase in ROE from 17 percent to 29percent, which we believe to be a more normal rate of return for thisbusiness, as we have been able to achieve significant scale in ourmortgage servicing operations and improved effectiveness at hedgingthis asset, including the use of `Value-at-Risk' (VAR) modeling, whichwe implemented last year. Importantly, the ROE improvement in MSRs andretained assets was not achieved simply by writing up the value of theMSRs. The weighted average multiple on the MSR asset remainedrelatively stable at 3.82 this quarter and 3.64 a year ago.

"With respect to scaling this business, the average cost per loanserviced declined to $83 in the first quarter from $99 a year ago,while average ancillary income per loan serviced rose to $99 in thefirst quarter from $96 a year ago. Importantly, our marginal servicingcost per loan is approximately $39, resulting in approximately $60 ofincremental pre-tax profit per loan serviced, on average, beforetaking into consideration the servicing strip revenue," concludedPerry.

Quarterly Cash Dividend Increased

Based on Indymac's strong operating performance and financialposition -- including earnings, capital and liquidity -- and itscommitment to shareholder value, Indymac's Board of Directorsincreased the cash dividend to $0.46 per share. This represents anincrease of 21 percent from the dividend declared and paid in thesecond quarter last year. The cash dividend is payable June 8, 2006 toshareholders of record on May 11, 2006.

Highlights of the First Quarter of 2006 Compared with FirstQuarter 2005

-- Record net revenues of $304.5 million, up 20 percent.

-- Net earnings of $79.8 million, up 26 percent.

-- EPS of $1.18, up 20 percent.

-- ROE of 20 percent, consistent with last year.

-- Record total assets of $24 billion, up 35 percent.

-- Record mortgage loan production of $20 billion, up 72 percent.

-- Record mortgage market share of 3.89 percent, up approximately 108 percent based on the MBA's April 2006 Mortgage Finance Long-Term Forecast.

-- Record pipeline of mortgage loans in process of $10.4 billion at March 31, 2006, up 39 percent.

-- Record portfolio of loans serviced for others of $96.5 billion at March 31, 2006, up 72 percent.

-- Record total number of consumer customers of 635,850, up 44 percent.

-- Strong credit performance, with non-performing assets of $103 million, compared to $96 million a year ago, representing 0.43 percent of total assets, compared to 0.54 percent of total assets last year, and net charge-offs of $1.7 million, the second-lowest quarterly amount in six years.

-- Efficiency ratio of 56 percent, improving from 58 percent, and total expenses to loan production of 84 basis points, improving from 124 basis points.

"We are pleased with our mortgage production gains, which enabledus to more than double our market share, from 1.87 percent in Q1 lastyear to 3.89 percent in Q1 this year," noted Richard H. Wohl, IndymacBank's President. "This was accomplished through our continued driveto leverage our mortgage banking platform, as year-over-year, weincreased our regional mortgage centers from 10 to 13, our sales staffby 27% to 811 and our active customers in the mortgage professionalsdivisions by 33% to 7,174.

"However, our goal is to grow our profits and maximize returns oncapital", continued Wohl, "but for the quarter, net income for ourproduction divisions was down 3 percent year-over-year, and ROE, whilestill strong at 51 percent, declined from 97 percent in Q1 05. Thiswas primarily the result of narrowing mortgage banking revenue marginsin the industry, and, indeed, our revenue margin, which was alsoimpacted by our conduit volumes increasing from 22 percent of totalvolume to 31 percent, declined by 39 percent year-over-year.Nonetheless, we believe that the financial results for our productiondivisions for the quarter will compare favorably to our competitors asa result of three key factors: the breadth that we have in ourmortgage origination channels, the resiliency of our specialty nicheproducts and the efficiencies we have gained as we have leveraged ourmortgage banking platform."

The table below shows the year-over-year performance of Indymac'smortgage production divisions ($ in millions):
Production Divisions
-------------------------------------------
Mortgage Professional Group
-------------------------------------------
Whole- Corresp- Total Mortgage
sale ondent Conduit Professionals
-------------------------- --------- -------- --------- --------------
Net Income Q106 $41,461 $5,804 $9,575 $56,840
-------------------------- --------- -------- --------- --------------
Net Income Q105 $53,034 $4,499 $5,424 $62,957
-------------------------- --------- -------- --------- --------------
$ Change $(11,573) $1,305 $4,151 $(6,117)
-------------------------- --------- -------- --------- --------------
% Change -22% 29% 77% -10%
-------------------------- --------- -------- --------- --------------

-------------------------- --------- -------- --------- --------------
Average Capital Q106 $204,467 $46,483 $179,170 $430,120
-------------------------- --------- -------- --------- --------------
Average Capital Q105 $123,499 $13,237 $65,999 $202,735
-------------------------- --------- -------- --------- --------------
% Change 66% 251% 171% 112%
-------------------------- --------- -------- --------- --------------

-------------------------- --------- -------- --------- --------------
ROE Q106 82% 51% 22% 54%
-------------------------- --------- -------- --------- --------------
ROE Q105 174% 138% 33% 126%
-------------------------- --------- -------- --------- --------------
% Change -53% -63% -33% -57%
-------------------------- --------- -------- --------- --------------


Production
Divisions
------------------
Total
Consumer Financial Production
Direct Freedom Divisions
--------------------------------------- -------- --------- -----------
Net Income Q106 $(683) $8,028 $64,185
--------------------------------------- -------- --------- -----------
Net Income Q105 $(894) $4,222 $66,285
--------------------------------------- -------- --------- -----------
$ Change $211 $3,806 $(2,100)
--------------------------------------- -------- --------- -----------
% Change 24% 90% -3%
--------------------------------------- -------- --------- -----------

--------------------------------------- -------- --------- -----------
Average Capital Q106 $12,765 $65,647 $508,532
--------------------------------------- -------- --------- -----------
Average Capital Q105 $14,918 $59,881 $277,534
--------------------------------------- -------- --------- -----------
% Change -14% 10% 83%
--------------------------------------- -------- --------- -----------

--------------------------------------- -------- --------- -----------
ROE Q106 -22% 50% 51%
--------------------------------------- -------- --------- -----------
ROE Q105 -24% 29% 97%
--------------------------------------- -------- --------- -----------
% Change 8% 72% -47%
--------------------------------------- -------- --------- -----------

"Four of our five production divisions showed year-over-yearimprovements in their net income performance," continued Wohl. "Shortterm, we have allocated more of our capital to our conduit andcorrespondent divisions and will continue to do so. While the ROEs forthese divisions declined year-over-year and are lower than forwholesale, they are above our threshold ROE, and these divisionsproduce earnings growth which is also accretive to the Company's EPS.The wholesale division's net income is down year-over-year, as thisdivision has been most impacted by industry margin compression, butits ROE of 82% still must be considered very strong. This business iscritical to our long-term strategy, and we are confident we can returnit to solid earnings growth while maintaining strong ROEs, as wecontinue to capture market share and leverage our infrastructure morefully and as margins stabilize and improve. Finally, we are verypleased with both the 90 percent net income growth and 72 percent ROEimprovement at Financial Freedom. Given the growth prospects for thereverse mortgage market and our industry-leading position, we are veryexcited about the future of this business."

Regarding the implementation of SFAS 156, Accounting for MortgageServicing Rights at Fair Value, Scott Keys, Indymac's Chief FinancialOfficer, stated, "We made a one-time election to account for allmortgage servicing rights at fair value. This election resulted in a$17.6 million increase to MSRs as of January 1, 2006, an increase indeferred tax liability of $7.0 million and an increase in beginningretained earnings for the first quarter of 2006 of $10.6 million, onan after-tax basis. Indymac's first quarter income statement reflectschanges in the fair market value of the mortgage servicing rights fromJanuary 1, 2006, to March 31, 2006. We believe applying fair valueaccounting to the mortgage servicing rights aligns the economicperformance of this asset more closely with our GAAP results andthereby reduces volatility in earnings as our hedge has always beenfocused on protecting the economic value of the MSRs.

"Looking ahead, four key factors will continue to drive ourearnings growth," added Keys. "First, we will continue to leverage ourmortgage banking platform, growing production and gaining marketshare. Second, we will increase the velocity of our loan sales. Thisquarter we only sold 84 percent of our loan production as compared toour 87 percent historical average. Speeding up our turnover willincrease our ROEs in this business and also make room on the balancesheet for the third part of the strategy, which is toopportunistically grow the thrift investment portfolio, where we areconfident we can earn solid and stable returns on capital. Finally,our production growth will lead to continued growth in the servicingportfolio, where, again, we will continue to realize scale economiesand ROEs similar to the 29% achieved this quarter.

"In light of our strong performance in the first quarter of 2006and the outlook for the remainder of the year, we are raising ourearnings guidance for the year to a range between $5.00 and $5.40 pershare, up from our prior range of $4.50 to $5.20. This EPS forecast isconsidered our best estimation in light of current market expectationsfor interest rates and industry volumes in 2006. However, the economy,interest rates and our industry remain volatile and, as a result, ouractual results could vary significantly from this forecast."

Conference Call

On Tuesday, April 25, 2006, at 12 p.m. EDT (9 a.m. PDT), MichaelW. Perry, Chairman and Chief Executive Officer, will host a live Webcast and conference call in connection with Indymac's annualshareholders' meeting to discuss the results of the first quarter ingreater detail, followed by a question and answer session. A slidepresentation will accompany the Web cast/conference call and can beaccessed along with Indymac's Form 10-Q via Indymac Bank's home pageat www.indymacbank.com.

If you would like to participate:

-- Internet Web cast access is available at: www.indymacbank.com

-- The telephone dial-in number is 800-946-0785 or 719-457-2550 (international) access code #7383804; and

-- The replay number is 888-203-1112 or 719-457-0820 (international) access code #7383804.

To participate on the call, please dial in 15 minutes prior to thescheduled start time. The conference call will be replayedcontinuously beginning two hours after the call on April 25, 2006,through 1:00 a.m. EDT on May 1, 2006, and will be available onIndymac's Website at www.indymacbank.com.
Table Reflecting the Retrospective Adjustment of 2005 Amounts per
SFAS 123(R)

Adjustments to Net Earnings and EPS due to adoption of SFAS 123(R) for
2005

Q1'05 Q2'O5 Q3'O5 Q4'O5 2005
----- ----- ----- ----- ----

Income Statement

Operating
Expenses
As originally
reported $ 144,513 $ 150,568 $ 150,931 $ 160,378 $ 606,390
Adjusted 147,694 153,667 153,860 163,276 618,497
--------- --------- --------- --------- ---------
Difference 3,181 3,099 2,929 2,898 12,107

Net Earnings
As originally
reported 65,476 83,146 79,275 72,329 300,226
Adjusted 63,450 81,714 77,526 70,438 293,128
--------- --------- --------- --------- ---------
Difference (2,026) (1,432) (1,749) (1,891) (7,098)

Diluted
Earnings per
Share
As originally
reported 1.01 1.26 1.18 1.09 4.54
Adjusted 0.98 1.24 1.16 1.06 4.43
--------- --------- --------- --------- ---------
Difference (0.03) (0.02) (0.02) (0.03) (0.11)

Performance
Ratios

Return on
Equity
As originally
reported 21% 25% 22% 19% 22%
Adjusted 20% 25% 22% 19% 21%

Return on
Assets
As originally
reported 1.43% 1.67% 1.38% 1.21% 1.41%
Adjusted 1.39% 1.64% 1.35% 1.18% 1.38%

Efficiency
Ratio
As originally
reported 57% 52% 53% 57% 54%
Adjusted 58% 53% 54% 58% 55%

Operating Expenses
to Mortgage
Production
As originally
reported 1.21% 1.02% 0.86% 0.86% 0.96%
Adjusted 1.27% 1.08% 0.91% 0.91% 1.02%

About Indymac Bank

IndyMac Bancorp, Inc. (NYSE:NDE) (Indymac(R)) is the holdingcompany for IndyMac Bank, F.S.B. (Indymac Bank(R)), the largestsavings and loan in Los Angeles and the 10th largest mortgageoriginator in the nation. Indymac Bank, operating as a hybridthrift/mortgage banker, provides cost-efficient financing for theacquisition, development, and improvement of single-family homes.Indymac also provides financing secured by single-family homes andother banking products to facilitate consumers' personal financialgoals.

With an increased focus on building customer relationships and avaluable consumer franchise, Indymac is committed to becoming a topsix mortgage lender in the U.S. by 2010, while maintaining annualizedearnings per share growth in excess of 15 percent. The company isdedicated to constantly raising expectations and conducting itselfwith the highest level of ethics.

For more information about Indymac and its affiliates, or tosubscribe to the company's Email Alert feature for notification ofcompany news and events, please visithttp://about.indymacbank.com/investors.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release may be deemedto be forward-looking statements within the meaning of the federalsecurities laws. The words "anticipate," "believe," "estimate,""expect," "project," "plan," "forecast," "intend," "goal," "target,"and similar expressions identify forward-looking statements that areinherently subject to risks and uncertainties, many of which cannot bepredicted or quantified. Actual results and the timing of certainevents could differ materially from those projected in or contemplatedby the forward-looking statements due to a number of factors,including the effect of economic and market conditions, includingindustry volumes and margins(2); the level and volatility of interestrates(2); the Company's hedging strategies, hedge effectiveness andasset and liability management(2); the accuracy of subjectiveestimates used in determining the fair value of financial assets ofIndymac; the credit risks with respect to our loans and otherfinancial assets; the actions undertaken by both current and potentialnew competitors(2); the availability of funds from Indymac's lendersand from loan sales and securitizations to fund mortgage loanoriginations and portfolio investments; the execution of Indymac'sgrowth plans and ability to gain market share in a significant markettransition(2); the impact of disruptions triggered by naturaldisasters, including the assessment of the effects of the Gulf CoastHurricanes(2) and the effects of any future hurricanes; the impact ofcurrent, pending or future legislation, regulations(2) or litigation;and other risk factors described in the reports that Indymac fileswith the Securities and Exchange Commission, including the AnnualReport on Form 10-K, Quarterly Reports on Form 10-Q, and its reportson Form 8-K.
(1) Based on the Mortgage Bankers Association's April 12, 2006
estimate of industry volumes.

(2) While all of the above items are important, the highlighted items
represent those that, in management's view, merit increased focus
given current conditions.