Insider sales follow stock rise at Pasadena mortgage lender.

INVESTORS often get nervous when corporate managers sell large chunks of stock in their company.

At IndyMac Bancorp Inc., the Pasadena-based mortgage lender, top executives have sold shares or exercised options worth $11.4 million in the past two months.

Roger Molvar, executive vice president and chief accounting officer, has pocketed $3.5 million through sales of stock and options.

Michael Perry, chairman and chief executive, took home $4 million. And Richard Wohl, senior executive vice president of IndyMac Bank and president and chief operating officer of the mortgage banking group, cashed in for $3.8 million.

"It's a lot of money," admitted Perry, who used some of the proceeds to buy his wife "a little beach house" in Newport Beach. "The numbers are a lot more than we ever thought we'd make in our lives."

Perry said insiders were taking advantage of the stock's recent upswing. IndyMac closed at $27.22 on Dec. 10, up 50 percent, adjusted for dividends, since the beginning of the year.

Perry said the insider sales have nothing to do with the company's performance.

IndyMac, he said, is less dependent on the refinance market than home purchases and will weather the post refinance boom better than the competition. The company reported third-quarter net income of $49.7 million, compared with $37 million for the like period a year ago. Revenues rose 32 percent, to $199 million.

The company's former parent, Countrywide Financial Corp., has feasted on the refinance market but also contends that it will weather the downturn well. At a price of $99.76 each on Dec. 10, Countrywide's shares have nearly doubled year-to-date.

Spin-off recruit

Perry, a former auditor with Peat Marwick (now part of KPMG) and a bank executive at Commerce Security Bank in Sacramento, was hired 11 years ago by Angelo Mozilo, chairman of Countrywide, to head up a passive REIT subsidiary that needed turning around.

The publicly held unit was tiny back then, when it had three employees and a market capitalization of $75 million. Today, IndyMac Bancorp boasts 4,000 employees and a market cap of $1.5 billion.

The question for IndyMac and other mortgage lenders is how to reposition themselves for lost loan volume as the housing market slows and interest rates rise. Mortgage volumes are expected to drop 40 percent to 50 percent next year, although Perry expects volume in the current quarter to fall just 28 percent.

The pipeline of pending mortgages fell 32 percent, to $4.7 billion as of Sept. 30, though loan production for the third quarter jumped 64 percent to a record $8.5 billion.

"Every quarter that volume declines we make up for it with market-share gains," said Perry. "We don't benefit as much from the refi boom, so we fall at a much slower pace than the other guy."

Shares of mortgage lenders fell last week after Washington Mutual Inc., the No. 3 U.S. mortgage lender, said it would eliminate 2,900 jobs early next year--even though it already cut 4,500 jobs this year. (IndyMac's shares topped at $31.97 on Nov. 4.)

"All of us are down," said Perry. "But in other industries if you have a 50 percent decline in volume they ask for a bailout from the government. Our forecast shows that we're going to weather the transition to a more normal market."

Local mortgage brokers have been expecting a drop from refinancings for months.

"We definitely saw this coming," said David Soleymani, managing director at mortgage broker First Capital Corp. in Santa Monica, which is the largest single source of business for IndyMac, generating roughly $50 million a month in mortgages.

IndyMac uses an electronic system to automatically approve mortgage applications. Though it has online bank and retail offices, its business is primarily driven by independent brokers such as First Capital.

Prices are considered competitive, but not the cheapest in the industry. "Where they shine is for a less-than-perfect borrower but not someone who is a credit risk," Soleymani said.

As a hedge against any drop-off in mortgage originations, IndyMac focuses on generating returns on its investment portfolio and interest-earning assets. Perry expects the portfolio to earn 15 percent to 16 percent next year, compared with 3 percent in the past few years.

IndyMac Bancorp Inc.

[GRAPHIC OMITTED]

YEAR (Dec. 31)                     2002     2001

Revenues (millions)              $477.1   $544.9
Loan Loss Provision (millions)     16.2       22
Total Expenses (millions)           284    364.3
Operating Income (millions)       193.1    180.6
Net Income (millions)             143.4    116.4
Earnings Per Share                $2.41    $1.84

SUMMARY

Business: Mortgage lending

Headquarters: Pasadena

CEO: Michael A. Perry

Market Cap: $1.5 billion Dividend Yield: 2.8%

Total Assets: $12.1 billion P/E Ratio: 9.5