IndyMac’s results for 2003 were strong. Loan production increased by 44% to $30.0 billion, a new record, and total assets grew by 38% to $13.2 billion. As a result, we achieved record levels of revenues and earnings of $708.1 million and $171.3 million, respectively. Earnings per share (EPS) reached $3.01, a 25% increase year-over-year, which was well ahead of our long-term targeted growth rate of 15%. Return on equity was 18.3% and book value per share of $17.93 reflected a 16% increase. While the mortgage industry as a whole also reported record volumes, volatile interest rates created risk management challenges for many of our peers. We began to see companies exiting the mortgage business or reporting subpar results in the face of these challenges. IndyMac’s disciplined interest rate and credit risk management ensured solid results for the Company during this period.

While strong, these results would likely have been better in 2003 if we were a pure mortgage banker with all of our capital devoted to mortgage banking activities. IndyMac operates as a hybrid thrift/mortgage bank, which means we have capital devoted to both investing activities and mortgage banking activities. To illustrate, we retained for investment purposes $4.4 billion of our mortgage loan production that if we were a pure mortgage banker, we would have sold for gains in 2003. During periods of declining interest rates, IndyMac’s investing activities tend to underperform due to accelerated prepayment activities but mortgage banking returns increase—this occurred in 2003.

During periods of stable to rising rates, the returns on investing activities improve and serve to balance the expected declines in mortgage loans produced. As a result, our business model is expected to produce more stable, consistent results over the long-term than a pure mortgage banker that is more influenced by the cycles.

This balance was proven during the fourth quarter of 2003. As mortgage interest rates rose, the returns from our investing activities improved from –3% in the third quarter at the peak of the refinance boom to 8% in the fourth quarter. This improvement served to significantly offset the expected decline in mortgage production from $8.5 billion in the third quarter to $6.3 billion in the fourth. As a result, while the overall mortgage industry production declined by 49%, we reported EPS of $0.75, our second highest on record. And the decline in our mortgage production of 26% was significantly less than the overall industry such that our market share improved 44%.

In addition to strong operating performance, we also reestablished quarterly dividend payments in the first quarter of 2003. The dividend payments, combined with increased investor confidence in our hybrid model to provide strong returns after the refinance boom, resulted in an improved price/earnings multiple on our shares and a total shareholder return for the year of 65%. While the price/earnings multiple has improved, it remains at a 28% discount to our average over the last decade and a 44% discount to the average thrift multiple.