IndyMac Receives Final Regulatory Approval to AcquireSGV Bancorp; Clears Way for Transition to...

Business Editors

PASADENA, Calif.--(BUSINESS WIRE)--June 20, 2000

Projected EPS Growth in Excess of 30%

IndyMac Mortgage Holdings, Inc. (NYSE:NDE) ("IndyMac"), one of the nation's leading mortgage lenders, today announced that the Office of Thrift Supervision

IndyMac expects to complete the acquisition on or about July 1, 2000. At that time, substantially all of IndyMac's assets and existing operations will be merged or contributed into the regulated financial institution, which will be known as IndyMac Bank. IndyMac Bank will operate as a wholly owned subsidiary of the publicly traded holding company, which will be renamed IndyMac Bancorp, Inc. and will continue to trade on the New York Stock Exchange using the symbol NDE.

"IndyMac is one of the leading Web-based, consumer lenders in the nation, successfully and profitably utilizing the Internet for a majority of its business. As IndyMac Bank, we will be able to expand the products and services offered to our customers over the Web and leverage our existing marketing efforts, technology and infrastructure," commented Michael W. Perry, IndyMac's Chief Executive Officer. "As we complete the acquisition of SGV Bancorp, IndyMac Bank will become the ninth largest depository institution (in terms of assets) headquartered in California and will be uniquely positioned as the leading new asset generator over the Web among FDIC insured financial institutions," continued Mr. Perry. "IndyMac Bank will launch its new Web site at indymacbank.com on July 3, 2000, with full consumer banking functionality by August 31, 2000."

SGV Bancorp is a Southern California-based, savings and loan holding company with approximately $500 million in assets, $350 million in deposits and 27,000 deposit customers through First Federal Savings and Loan Association of San Gabriel Valley, its federally chartered savings and loan subsidiary.

Conditions to Approval

In granting the approval, the OTS has established certain conditions, the most significant of which are two related to capital. First, similar to other newly approved depository institutions, the OTS will require that IndyMac's core capital to assets ratio be maintained at a level of 8 percent for the first three years of IndyMac's operation as a depository institution. Second, in determining its risk-based capital requirements, IndyMac must double the risk weighting assigned to subprime loans. This will have the effect of raising the risk-based capital requirements on subprime loans in comparison to the standard for a well capitalized institution, from 5 percent to 10 percent. "We understand from the OTS that it is taking comparable supervisory steps with respect to subprime capital requirements for other depository institutions currently. In addition, the OTS expects that new regulations will be forthcoming in the near future for all depository institutions that participate in the subprime market," commented Mr. Perry. Currently, less than 5 percent of the combined companies' assets are represented by subprime loans under the OTS measure.

Upon completion of the acquisition, IndyMac expects to have approximately $415 million of capital in excess of the OTS requirements, including the combined effect of the above OTS conditions. IndyMac projects that its core capital to assets ratio will be 17 percent, more than double the required 8 percent, and its risk-based capital ratio is projected to be 21 percent, also more than twice the 10 percent risk-based capital requirement for a well capitalized institution.

The primary impact of the higher capital requirements will be to reduce the excess capital projected to be remaining at the end of IndyMac Bank's third year as a depository institution. IndyMac plans to utilize its excess capital and retained earnings to continue its share repurchase program and to support growth in its core mortgage banking activities over the next three years. IndyMac has repurchased $129 million of its stock since inception of the program last year and estimates that it will be able to repurchase in excess of $400 million of its stock over the next three years.

"The depository structure creates substantial opportunity for IndyMac to prudently increase leverage and returns to shareholders. The capital requirements, as well as conservative assumptions on interest rates and profit margins, have been factored into our projections of EPS growth of 30% or more per year over the next three years," commented Mr. Perry.

"Upon acquisition of SGV Bancorp, IndyMac Bank will be the most profitable, nearly `pure play' Internet bank in the country. Most Internet banks have focused almost exclusively on the deposit generation aspects of their business, which does not appear to be a highly profitable strategy. Alternatively, IndyMac Bank will be profitable from inception forward as a result of its significant Web-based asset generation franchise and its trading and securitization expertise," concluded Mr. Perry.

Upon completion of its acquisition of SGV Bancorp, IndyMac Bank will be one of the leading nearly "pure play" Internet banks in the country. With over $4 billion in assets and a market cap near $1 billion, IndyMac is a highly scalable consumer financial institution with an industry leading asset generation franchise predominantly over the Web. Through its branchless, technology-based infrastructure, IndyMac generated nearly $2 billion in loan production in the first quarter of this year.

More information about IndyMac and its affiliates, including the OTS Approval Order, can be found at www.indymac.com and, effective July 3, 2000, at www.indymacbank.com.

Forward-Looking Statements

Certain statements contained in this press release may be deemed to be forward-looking statements within the meaning of the federal securities laws. The words "believe," "expect," "forecast," "anticipate," "estimate," "project," "plan," and similar expressions identify forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including the effect of economic and market conditions; the level and volatility of interest rates; the actions undertaken by both current and potential new competitors; the availability of funds from the Company's lenders to fund future mortgage loan originations or portfolio investments; the execution of the Company's growth plans related to the consumer banking operation; and other risk factors outlined in the reports that IndyMac files with the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and its reports on Form 8-K.