Our business fundamentals remain strong. To achieve these goals, we must be disciplined in our business metrics and solidly execute our mortgage banking business model. We remain confident that our business model is the best model for producing operating efficiency and scale, and we believe we are positioned to perform well relative to the overall mortgage industry. Our business model incorporates the following elements, which also represent the key competitive advantages in mortgage banking: Leadership in technology, with automated risk-based pricing that can be leveraged across multiple channels, products and customers A disciplined focus on cost control to maintain our low-cost infrastructure Continued expansion of our products, customer base and market share A strong focus on customer service A strong emphasis on properly pricing, hedging and managing mortgage-related assets retained from our mortgage banking activities. The investment portfolio provides important support for our mortgage banking operations. This is because the retention of mortgage banking assets (such as mortgage servicing rights, AAA-rated interest-only securities and residual interests) strengthens our ability to sell our mortgage production across multiple distribution channels. Effective management of credit risk We have also learned a great deal in 2001 about operating as a federally regulated depository institution. Working with our regulators over the past 18 months has enabled us to further strengthen our internal controls and fine-tune the balancing of profitability and risk. It was as a result of our increased focus on weighing risks and returns that we have decided to substantially restructure and refocus our business of lending to subdivision developers. The Company has done well in this business, realizing strong returns and stable income since its inception in 1994. However, we have not done a good job of cross-selling permanent single-family mortgages to our builders’ consumer customers purchasing a home. During the fourth quarter of 2001 we announced that we would be tightening controls and scaling back our builder construction lending operations from 31 states to eight core states. In addition, going forward our construction lending activities will be directed toward those homebuilders that have committed to utilizing our e-MITS technology to provide mortgage loans to their customers. We will employ more stringent underwriting guidelines and pricing on the construction financing; however, our homebuilders will see enhanced earnings opportunities through their ability to act as mortgage lenders to their customers, creating a win/win situation for IndyMac and its homebuilder customers. We expect that this change in focus will result in substantially reduced subdivision construction loans outstanding (our expectation is that construction loans outstanding will decline from eight percent of assets at December 31, 2001 to approximately five percent of assets by 2003), but we expect to substantially improve our mortgage production operations with homebuilders. This strategy is more in line with our commitment to our core mortgage banking business, which has a better risk/return profile than our construction lending business while yielding equal or better returns to shareholders.

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