Expanding and enhancing our established mortgage bank franchise.
We plan to grow our mortgage loan production volumes over the next five years and steadily increase our market share. We are confident in our ability to achieve this plan as our business model has strong fundamentals and provides competitive advantages. These include:

• Leadership in technology to interface with our customers, with the ability to leverage that technology across multiple products and customer channels to generate efficiencies and reduce costs.
• Targeted regional office expansion that allows us to combine our technology with a local sales effort and enhanced customer service to grow our customer base.
• Efficient use of capital through improved inventory turn times for our mortgage loans held for sale. The faster the turn time, the stronger the return on equity in our mortgage banking businesses as we are able to improve our capital efficiency. In 2002, we "turned" our mortgage loans held for sale 8.3 times a year, an improvement from 6.1 times a year in 2001. Our goal over the next five years is to further improve our turn to 13 times a year.

The mortgage industry requires intense focus and commitment. As we look out on the competitive landscape, we see expanding opportunities for IndyMac to gain market share through solid execution, focus and unwavering commitment to the industry. As the requirements for scale, enhanced technology, strong risk management and the need for robust financing and investor distribution channels have elevated the barriers to entry in the mortgage market, we do not believe there will be many successful new entrants to this business and we expect to see other entities, that do not have the same focus and commitment to the industry as IndyMac, exit.

Diversify our revenue stream.
Our core mortgage banking activities generated 83% of our earnings in 2002 (mortgage banking activities consist of the Mortgage Bank and the B2C channel of the Consumer Bank), while earnings from our investing activities were 17% (investing activities consist of the Investment Portfolio Group and the Consumer Bank's HELOC Division and Retail Bank).

Mortgage banking is a high return on equity business due to our ability to use capital efficiently, but can be cyclical based on changes in interest rates. Investing activities, while generating lower returns on equity, have the advantage of providing more stable, predictable earnings streams. As we turn our mortgage loans held for sale more quickly, we will be able to utilize more of our balance sheet capacity and capital to grow our investing activities. We expect to increase our mortgage loans held for investment, mortgage securities, and mortgage loan servicing over the next five years to generate a greater portion of our earnings in the form of core net interest and fee income.

In addition, our new HELOC Division is expected to increase production as we expand our direct marketing efforts to homeowners nationwide. Our outstanding HELOCs have grown 267%, from $85 million at December 31, 2001 to $312 million at December 31, 2002. We intend to hold our HELOCs for investment, as our HELOC is a prime-based, adjustable-rate high quality product. At December 31, 2002, the average FICO score of this portfolio was 711, with an average combined loan to value of 78% and delinquencies of 0.54%. The HELOC product also tends to be somewhat counter-cyclical to the mortgage industry. As interest rates rise, consumers who want to tap the equity in their home for various financial reasons are more inclined to utilize a HELOC product than a cash-out refinance of their existing low rate mortgage loan. By 2007, we expect to see IndyMac Mortgage Bank generating approximately 50% of our earnings, with the Consumer Bank contributing approximately 20% (about half through its B2C channel and half through its HELOC and Retail Bank divisions) and the Investment Portfolio Group contributing approximately 30%.

Strong execution of our revenue diversification strategy will help to soften fluctuation in earnings caused by mortgage cycles and thus will provide more predictability and stability to our results. The equity markets tend to reward companies that have more stable, predictable earnings with higher price/earnings multiples.