exv99w2

Exhibit 99.2

CapitalSource Inc.
Consolidated Balance Sheets
(Unaudited)
($ in thousands)


	December 31,			September 30,			December 31,
	2008			2008			2007
ASSETS
Cash and cash equivalents	$	1,338,563		$	1,289,360		$	178,699
Restricted cash		419,383			1,796,225			513,803
Marketable securities, available for sale		642,714			797,063			—
Mortgage-related receivables, net		1,801,535			1,841,629			2,033,296
Mortgage-backed securities pledged, trading		1,489,291			1,522,960			4,030,180
Commercial real estate “A” participation interest, net		1,396,611			1,626,602			—
Loans held for sale		8,543			85,147			94,327
Loans:
Loans		9,396,751			9,283,445			9,717,146
Less deferred loan fees and discounts		(174,317	)		(176,234	)		(147,089	)
Less allowance for loan losses		(423,844	)		(163,855	)		(138,930	)

Loans, net		8,798,590			8,943,356			9,431,127
Interest receivable		117,516			84,592			95,441
Direct real estate investments, net		989,716			998,834			1,017,604
Investments		178,972			202,549			231,645
Goodwill		173,135			179,706			5,344
Deferred tax assets		174,433			16,636			—
Other assets		885,899			481,377			408,883

Total assets	$	18,414,901		$	19,866,036		$	18,040,349


LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	5,043,695		$	5,048,251		$	—
Repurchase agreements		1,595,750			2,870,073			3,910,027
Credit facilities		1,445,062			1,515,261			2,207,063
Term debt		5,338,456			5,412,535			7,146,437
Other borrowings		1,560,224			1,600,223			1,704,108
Other liabilities		592,136			359,031			444,997

Total liabilities		15,575,323			16,805,374			15,412,632

Noncontrolling interests		457			10,627			45,446

Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)		—			—			—
Common stock ($0.01 par value, 1,200,000,000; 1,200,000,000 and 500,000,000 shares authorized; 282,804,211; 276,364,708 and 220,704,800 shares issued and shares outstanding, respectively)		2,828			2,764			2,207
Additional paid-in capital		3,683,065			3,604,114			2,902,501
Accumulated deficit		(855,867	)		(544,274	)		(327,387	)
Accumulated other comprehensive income (loss), net		9,095			(12,569	)		4,950

Total shareholders’ equity		2,839,121			3,050,035			2,582,271

Total liabilities, noncontrolling interests and shareholders’ equity	$	18,414,901		$	19,866,036		$	18,040,349

CapitalSource Inc.
Consolidated Statements of Income
(Unaudited)
($ in thousands, except per share data)


	Three Months Ended
	December 31,			September 30,			December 31,			Year Ended December 31,
	2008			2008			2007			2008			2007
Net investment income:
Interest income:
Loans	$	238,679		$	239,294		$	268,665		$	946,593		$	1,039,533
Mortgage-backed securities pledged, trading		19,146			20,784			57,187			122,181			212,869
Other		14,177			13,934			7,270			39,787			25,501

Total interest income		272,002			274,012			333,122			1,108,561			1,277,903
Fee income		28,264			29,974			37,974			133,146			162,395

Total interest and fee income		300,266			303,986			371,096			1,241,707			1,440,298
Operating lease income		27,708			28,140			27,079			107,748			97,013

Total investment income		327,974			332,126			398,175			1,349,455			1,537,311
Interest expense:
Deposits		44,067			32,178			—			76,245			—
Borrowings		138,519			148,318			227,547			635,865			847,241

Total interest expense		182,586			180,496			227,547			712,110			847,241

Net investment income		145,388			151,630			170,628			637,345			690,070
Provision for loan losses		445,452			110,261			33,952			593,046			78,641

Net investment (loss) income after provision for loan losses		(300,064	)		41,369			136,676			44,299			611,429

Operating expenses:
Compensation and benefits		44,331			29,473			40,818			143,401			157,755
Depreciation of direct real estate investments		9,085			8,898			8,928			35,889			32,004
Professional fees		22,816			7,839			7,014			52,578			29,375
Other administrative expenses		15,293			15,309			14,333			59,327			48,857

Total operating expenses		91,525			61,519			71,093			291,195			267,991
Other income (expense):
(Loss) gain on investments, net		(39,566	)		(30,010	)		(735	)		(73,569	)		20,270
(Loss) gain on derivatives		(20,728	)		2,659			(31,554	)		(41,082	)		(46,150	)
Loss on residential mortgage investment portfolio		(29,506	)		(26,956	)		(25,395	)		(102,779	)		(75,164	)
(Loss) gain on debt extinguishment		(23,926	)		70,057			678			58,856			678
Other income, net of expenses		(32,407	)		12,413			4,855			(15,509	)		25,716

Total other (expense) income		(146,133	)		28,163			(52,151	)		(174,083	)		(74,650	)

Noncontrolling interests expense		(54	)		(100	)		1,154			1,426			4,938


Net (loss) income before income taxes		(537,668	)		8,113			12,278			(422,405	)		263,850
Income tax (benefit) expense		(240,158	)		58			27,312			(199,781	)		87,563

Net (loss) income	$	(297,510	)	$	8,055		$	(15,034	)	$	(222,624	)	$	176,287


Net (loss) income per share:
Basic	$	(1.07	)	$	0.03		$	(0.07	)	$	(0.89	)	$	0.92
Diluted	$	(1.07	)	$	0.03		$	(0.07	)	$	(0.89	)	$	0.91

Adjusted earnings per share:
Basic	$	0.55		$	0.30		$	0.52		$	1.51		$	2.34
Diluted	$	0.55	(6)	$	0.30		$	0.51		$	1.50		$	2.32

Average shares outstanding:
Basic		277,179,051			272,005,048			210,021,621			251,213,699			191,697,254
Diluted		277,179,051			272,585,479			210,021,621			251,213,699			193,282,656

Dividends declared per share	$	0.05		$	0.05		$	0.60		$	1.30		$	2.38

CapitalSource Inc.
Segment Data
(Unaudited)
($ in thousands)


	Three Months Ended December 31, 2008											Three Months Ended September 30, 2008
						Residential											Residential
	Commercial			Healthcare		Mortgage			Consolidated			Commercial			Healthcare		Mortgage			Consolidated
	Banking			Net Lease		Investment			Total			Banking			Net Lease		Investment			Total
Net investment income:
Interest income	$	227,848		$	111	$	44,043		$	272,002		$	227,367		$	115	$	46,530		$	274,012
Fee income		28,156			108		—			28,264			29,753			221		—			29,974

Total interest and fee income		256,004			219		44,043			300,266			257,120			336		46,530			303,986
Operating lease income		—			27,708		—			27,708			—			28,140		—			28,140

Total investment income		256,004			27,927		44,043			327,974			257,120			28,476		46,530			332,126
Interest expense		132,882			10,753		38,951			182,586			133,357			10,824		36,315			180,496

Net investment income		123,122			17,174		5,092			145,388			123,763			17,652		10,215			151,630
Provision for loan losses		441,086			—		4,366			445,452			105,282			—		4,979			110,261

Net investment (loss) income after provision for loan losses		(317,964	)		17,174		726			(300,064	)		18,481			17,652		5,236			41,369

Other operating expenses		75,183			13,361		2,981			91,525			47,454			11,555		2,510			61,519

Total other (expense) income		(115,758	)		105		(30,480	)		(146,133	)		54,813			107		(26,757	)		28,163

Noncontrolling interests expense		(66	)		12		—			(54	)		(154	)		54		—			(100	)


Net (loss) income before income taxes		(508,839	)		3,906		(32,735	)		(537,668	)		25,994			6,150		(24,031	)		8,113
Income tax (benefit) expense		(240,158	)		—		—			(240,158	)		58			—		—			58

Net (loss) income	$	(268,681	)	$	3,906	$	(32,735	)	$	(297,510	)	$	25,936		$	6,150	$	(24,031	)	$	8,055


	Year Ended December 31, 2008												Year Ended December 31, 2007
							Residential															Residential
	Commercial			Healthcare			Mortgage			Consolidated			Commercial			Healthcare			Mortgage			Consolidated
	Banking			Net Lease			Investment			Total			Banking			Net Lease			Investment			Total
Net investment income:
Interest income	$	881,224		$	1,055		$	226,282		$	1,108,561		$	928,190		$	1,362		$	348,351		$	1,277,903
Fee income		132,799			347			—			133,146			162,395			—			—			162,395

Total interest and fee income		1,014,023			1,402			226,282			1,241,707			1,090,585			1,362			348,351			1,440,298
Operating lease income		—			107,748			—			107,748			—			97,013			—			97,013

Total investment income		1,014,023			109,150			226,282			1,349,455			1,090,585			98,375			348,351			1,537,311
Interest expense		488,307			43,232			180,571			712,110			481,605			41,047			324,589			847,241

Net investment income		525,716			65,918			45,711			637,345			608,980			57,328			23,762			690,070
Provision for loan losses		576,804			—			16,242			593,046			77,576			—			1,065			78,641

Net investment (loss) income after provision for loan losses		(51,088	)		65,918			29,469			44,299			531,404			57,328			22,697			611,429

Other operating expenses		233,617			47,469			10,109			291,195			220,550			41,441			6,000			267,991

Total other (expense) income		(66,822	)		(1,204	)		(106,057	)		(174,083	)		883			(369	)		(75,164	)		(74,650	)

Noncontrolling interests expense		(706	)		2,132			—			1,426			(1,037	)		5,975			—			4,938

Net (loss) income before income taxes		(350,821	)		15,113			(86,697	)		(422,405	)		312,774			9,543			(58,467	)		263,850
Income tax (benefit) expense		(199,781	)		—			—			(199,781	)		87,563			—			—			87,563

Net (loss) income	$	(151,040	)	$	15,113		$	(86,697	)	$	(222,624	)	$	225,211		$	9,543		$	(58,467	)	$	176,287

CapitalSource Inc.
Adjusted Earnings
(Unaudited)

We evaluate our performance based on several measures, including adjusted earnings. Adjusted earnings represents net income as determined in accordance with U.S. generally accepted accounting principles (“GAAP”), adjusted for certain items. It is limited in that it excludes real estate depreciation, amortization of deferred financing fees, non-cash equity compensation, realized and unrealized gains and losses on investments in residential mortgage-backed securities and related derivatives, unrealized gains and losses on other derivatives and foreign currencies, net unrealized gains and losses on investments, provision for loan losses, charge offs, recoveries, nonrecurring items and the cumulative effect of changes in accounting principles, each computed in accordance with GAAP. To compensate for these limitations, we encourage investors to review adjusted earnings in connection with net income and cash flows from operating, investing and financing activities in our consolidated financial statements, to help analyze how our business is performing. Adjusted earnings should not be considered as an alternative to net income or cash flows (each computed in accordance with GAAP)

Management views adjusted earnings and the related per share measures as useful and appropriate supplemental measures of our operating performance in addition to net income and earnings per share because they facilitate evaluation of the company without the effects of certain adjustments in accordance with GAAP that may not necessarily be indicative of current operating performance. The use of adjusted earnings is similar to the practices of other REITs who also publish certain non-GAAP measures to supplement their GAAP measures. Since such reporting practice is common in the REIT industry, we believe it is important for us to also utilize a similar non-GAAP measure as supplemental information to provide investors a means to better compare our operating performance to that of other REITs. Adjusted earnings and other supplemental performance measures are defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted earnings to other REITs.

CapitalSource Inc.
Adjusted Earnings Reconciliations
(Unaudited)
($ in thousands, except per share data)

Reconciliation of our reported net income to adjusted earnings for the three months ended December 31, 2008, September 30, 2008 and December 31, 2007, and the years ended December 31, 2008 and 2007 was as follows:


	Three Months Ended									Year Ended
	December 31, 2008			September 30, 2008			December 31, 2007			December 31, 2008			December 31, 2007
Net (loss) income	$	(297,510	)	$	8,055		$	(15,034	)	$	(222,624	)	$	176,287
Add:
Real estate depreciation and amortization (1)		8,218			8,183			8,557			33,620			31,785
Amortization of deferred financing fees (2)		24,234			32,865			9,961			95,862			29,783
Non-cash equity compensation		16,567			8,483			12,581			43,594			44,488
Net realized and unrealized losses (gains) on residential mortgage investment portfolio including related derivatives (3)		20,339			(16,229	)		25,571			(25,518	)		81,022
Unrealized loss (gain) on derivatives and foreign currencies, net		32,532			(18,031	)		35,728			28,992			51,233
Unrealized loss on investments, net		53,907			34,148			2,946			97,187			12,615
Provision for loan losses		445,502			110,605			33,952			593,797			78,641
Recoveries (4)		(50	)		(344	)		—			(750	)		—
Less:
Charge offs		183,783			85,515			6,008			299,611			57,679
Non-recurring items (5)		(33,640	)		—			—			(33,640	)		—

Adjusted earnings	$	153,596		$	82,220		$	108,254		$	378,189		$	448,175


Net (loss) income per share:
Basic — as reported	$	(1.07	)	$	0.03		$	(0.07	)	$	(0.89	)	$	0.92
Diluted — as reported	$	(1.07	)	$	0.03		$	(0.07	)	$	(0.89	)	$	0.91

Average shares outstanding:
Basic — as reported		277,179,051			272,005,048			210,021,621			251,213,699			191,697,254
Diluted — as reported		277,179,051			272,585,479			210,021,621			251,213,699			193,282,656

Adjusted earnings per share:
Basic	$	0.55		$	0.30		$	0.52		$	1.51		$	2.34
Diluted	$	0.55	⁽⁶⁾	$	0.30		$	0.51		$	1.50		$	2.32	⁽⁷⁾

Average shares outstanding:
Basic		277,179,051			272,005,048			210,021,621			251,213,699			191,697,254
Diluted		292,808,963			272,585,479			211,609,633			252,105,509			194,792,918	⁽⁸⁾


⁽¹⁾		Depreciation and amortization for direct real estate investments only. Excludes depreciation for corporate leasehold improvements, fixed assets and other non-real estate items.

⁽²⁾		Includes amortization of deferred financing fees and other non-cash interest expense.

⁽³⁾		Includes adjustments to reflect certain realized and unrealized gains and losses on residential mortgage investments held in our portfolio as of the balance sheet date and related derivative instruments.

⁽⁴⁾		Includes all recoveries on loans during the period.

⁽⁵⁾		Includes impairment of goodwill and loss on induced conversion of convertible debt.

⁽⁶⁾		Adjusted to include interest expense of $6.8 million on convertible debt for the three months ended December 31, 2008, which is considered dilutive to adjusted earnings per share, but is antidilutive to GAAP net loss.

⁽⁷⁾		Adjusted to reflect the impact of adding back noncontrolling interests expense of $3.1 million for the year ended December 31, 2007 to adjusted earnings due to the application of the if-converted method on non-managing member units which are considered dilutive to adjusted earnings per share, but are antidilutive to GAAP net income per share for this period.

⁽⁸⁾		Adjusted to include average non-managing member units of 1,113,259 for the year ended December 31, 2007, which are considered dilutive to adjusted earnings per share, but are antidilutive to GAAP net income per share for this period.

CapitalSource Inc.
Adjusted Earnings Reconciliations
(Unaudited)
($ in thousands, except per share data)

For our Commercial Banking segment, Healthcare Net Lease segment and Residential Mortgage Investment segment, reconciliations of reported net income to adjusted earnings for the three months ended December 31, 2008 and September 30, 2008, were as follows:


	Three Months Ended December 31, 2008
						Residential
	Commercial			Healthcare		Mortgage			Consolidated
	Banking			Net Lease		Investment			Total
Net (loss) income	$	(268,681	)	$	3,906	$	(32,735	)	$	(297,510	)
Add:
Real estate depreciation and amortization (1)		—			8,218		—			8,218
Amortization of deferred financing fees (2)		19,267			265		4,702			24,234
Non-cash equity compensation		16,567			—		—			16,567
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)		—			—		20,339			20,339
Unrealized loss on derivatives and foreign currencies, net		32,532			—		—			32,532
Unrealized loss on investments, net		53,907			—		—			53,907
Provision for loan losses		441,136			—		4,366			445,502
Recoveries (4)		(50	)		—		—			(50	)
Less:
Charge offs		180,900			—		2,883			183,783
Non-recurring items (5)		(33,640	)		—		—			(33,640	)

Adjusted earnings	$	147,418		$	12,389	$	(6,211	)	$	153,596


Net (loss) income per share:
Basic — as reported	$	(0.96	)	$	0.01	$	(0.12	)	$	(1.07	)
Diluted — as reported	$	(0.96	)	$	0.01	$	(0.12	)	$	(1.07	)

Average shares outstanding:
Basic — as reported		277,179,051			277,179,051		277,179,051			277,179,051
Diluted — as reported		277,179,051			277,179,051		277,179,051			277,179,051

Adjusted earnings (loss) per share:
Basic	$	0.53		$	0.04	$	(0.02	)	$	0.55
Diluted (6)	$	0.53		$	0.04	$	(0.02	)	$	0.55

Average shares outstanding:
Basic		277,179,051			277,179,051		277,179,051			277,179,051
Diluted		292,808,963			292,808,963		292,808,963			292,808,963


	Three Months Ended September 30, 2008
						Residential
	Commercial			Healthcare		Mortgage			Consolidated
	Banking			Net Lease		Investment			Total
Net income (loss)	$	25,936		$	6,150	$	(24,031	)	$	8,055
Add:
Real estate depreciation and amortization (1)		—			8,183		—			8,183
Amortization of deferred financing fees (2)		31,109			208		1,548			32,865
Non-cash equity compensation		8,483			—		—			8,483
Net realized and unrealized gains on residential mortgage investment portfolio including related derivatives (3)		—			—		(16,229	)		(16,229	)
Unrealized gain on derivatives and foreign currencies, net		(18,031	)		—		—			(18,031	)
Unrealized loss on investments, net		34,148			—		—			34,148
Provision for loan losses		105,626			—		4,979			110,605
Recoveries (4)		(344	)		—		—			(344	)
Less:
Charge offs		82,459			—		3,056			85,515
Non-recurring items		—			—		—			—

Adjusted earnings	$	104,468		$	14,541	$	(36,789	)	$	82,220


Net income (loss) per share:
Basic — as reported	$	0.10		$	0.02	$	(0.09	)	$	0.03
Diluted — as reported	$	0.10		$	0.02	$	(0.09	)	$	0.03

Average shares outstanding:
Basic — as reported		272,005,048			272,005,048		272,005,048			272,005,048
Diluted — as reported		272,585,479			272,585,479		272,585,479			272,585,479

Adjusted earnings (loss) per share:
Basic	$	0.39		$	0.05	$	(0.14	)	$	0.30
Diluted	$	0.38		$	0.05	$	(0.13	)	$	0.30

Average shares outstanding:
Basic		272,005,048			272,005,048		272,005,048			272,005,048
Diluted		272,585,479			272,585,479		272,585,479			272,585,479


⁽¹⁾		Depreciation and amortization for direct real estate investments only. Excludes depreciation for corporate leasehold improvements, fixed assets and other non-real estate items.

⁽²⁾		Includes amortization of deferred financing fees and other non-cash interest expense.

⁽³⁾		Includes adjustments to reflect certain realized and unrealized gains and losses on residential mortgage investments held in our portfolio as of the balance sheet date and related derivative instruments.

⁽⁴⁾		Includes all recoveries on loans during the period.

⁽⁵⁾		Includes impairment of goodwill and loss on induced conversion of convertible debt.

⁽⁶⁾		Adjusted to include interest expense of $6.8 million on convertible debt for the three months ended December 31, 2008, which is considered dilutive to adjusted earnings per share, but is antidilutive to GAAP net loss.

CapitalSource Inc.
Adjusted Earnings Reconciliations
(Unaudited)
($ in thousands, except per share data)


	Three Months Ended December 31, 2007
					Residential
	Commercial		Healthcare		Mortgage			Consolidated
	Banking		Net Lease		Investment			Total
Net income (loss)	$	706	$	4,245	$	(19,985	)	$	(15,034	)
Add:
Real estate depreciation and amortization (1)		—		8,557		—			8,557
Amortization of deferred financing fees (2)		9,007		172		782			9,961
Non-cash equity compensation		12,581		—		—			12,581
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)		—		—		25,571			25,571
Unrealized loss on derivatives and foreign currencies, net		35,728		—		—			35,728
Unrealized loss on investments, net		2,946		—		—			2,946
Provision for loan losses		33,302		—		650			33,952
Recoveries (4)		—		—		—			—
Less:
Charge offs		5,818		—		190			6,008
Non-recurring items		—		—		—			—

Adjusted earnings	$	88,452	$	12,974	$	6,828		$	108,254


Net income (loss) per share:
Basic — as reported	$	—	$	0.02	$	(0.09	)	$	(0.07	)
Diluted — as reported	$	—	$	0.02	$	(0.09	)	$	(0.07	)

Average shares outstanding:
Basic — as reported		210,021,621		210,021,621		210,021,621			210,021,621
Diluted — as reported		210,021,621		210,021,621		210,021,621			210,021,621

Adjusted earnings per share:
Basic	$	0.42	$	0.06	$	0.04		$	0.52
Diluted	$	0.42	$	0.06	$	0.03		$	0.51

Average shares outstanding:
Basic		210,021,621		210,021,621		210,021,621			210,021,621
Diluted		211,609,633		211,609,633		211,609,633			211,609,633


		⁽¹⁾ Depreciation and amortization for direct real estate investments only. Excludes depreciation for corporate leasehold improvements, fixed assets and other non-real estate items.

		⁽²⁾ Includes amortization of deferred financing fees and other non-cash interest expense.

		⁽³⁾ Includes adjustments to reflect certain realized and unrealized gains and losses on residential mortgage investments held in our portfolio as of the balance sheet date and related derivative instruments.

		⁽⁴⁾ Includes all recoveries on loans during the period.

CapitalSource Inc.
Selected Financial Data
(Unaudited)


	Three Months Ended
	December 31,			September 30,			December 31,			Year Ended December 31,
	2008			2008			2007			2008			2007
Commercial Banking Segment:

Performance ratios:
Return on average assets		(7.81	%)		0.81	%		0.03	%		(1.28	%)		2.35	%
Return on average equity		(42.97	%)		4.15	%		0.14	%		(6.75	%)		12.76	%
Adjusted return on average assets		4.28	%		3.24	%		3.39	%		3.60	%		3.97	%
Adjusted return on average equity		23.58	%		16.71	%		18.00	%		19.00	%		21.53	%
Yield on average interest earning assets		7.83	%		8.36	%		11.12	%		8.96	%		11.71	%
Cost of funds		4.76	%		5.20	%		6.44	%		5.18	%		6.31	%
Net finance margin		3.77	%		4.02	%		5.79	%		4.64	%		6.54	%
Operating expenses as a percentage of average
total assets		2.18	%		1.47	%		2.20	%		1.97	%		2.31	%
Efficiency ratio (operating expenses / net
investment income and other income)		1020.95	%		26.57	%		48.52	%		50.91	%		36.16	%
Core lending spread		6.85	%		6.78	%		6.13	%		6.99	%		6.25	%
Loan yield		9.19	%		9.54	%		11.53	%		9.88	%		12.14	%

Leverage ratios:
Total debt and deposits to equity (as of period end)		5.07x			4.66x			4.39x			5.07x			4.39x
Equity to total assets (as of period end)		16.14	%		17.50	%		18.20	%		16.14	%		18.20	%
Total risk-based capital		19.4	%		21.0	%		N/A			19.4	%		N/A

CapitalSource Bank Ratios:
Operating expense as a percentage of deposits		1.59	%		1.56	%		N/A			1.58	%		N/A
Cash as a percentage of assets		19.91	%		18.15	%		N/A			19.91	%		N/A
Percentage of commercial lending assets		45.37	%		44.37	%		N/A			45.38	%		N/A
Percentage of commercial loans		28.73	%		25.35	%		N/A			28.73	%		N/A
Percentage of funding		45.57	%		45.00	%		N/A			45.57	%		N/A
Average cost of deposits		3.49	%		3.37	%		N/A			3.45	%		N/A

Average balances ($ in thousands):
Average loans	$	9,655,471		$	9,387,006		$	9,658,941		$	9,650,734		$	9,015,761
Average assets		13,656,347			12,782,858			10,347,669			11,830,048			9,565,431
Average interest earning assets		12,972,061			12,206,770			10,005,790			11,322,138			9,316,088
Average income earning assets		12,972,061			12,206,770			10,005,790			11,322,138			9,316,088
Average borrowings		6,060,936			6,398,652			8,278,134			7,214,643			7,633,687
Average deposits		5,006,314			3,774,541			N/A			2,207,209			N/A
Average equity		2,480,617			2,480,438			1,949,243			2,238,853			1,765,119

Healthcare Net Lease Segment:

Performance ratios:
Return on average assets		1.45	%		2.28	%		1.52	%		1.40	%		0.96	%
Return on average equity		4.03	%		6.77	%		4.77	%		4.13	%		2.70	%
Adjusted return on average assets		4.61	%		5.39	%		4.64	%		4.61	%		4.20	%
Adjusted return on average equity		12.78	%		16.01	%		14.59	%		13.57	%		11.86	%
Yield on average income earning assets		4.56	%		7.43	%		5.49	%		5.68	%		4.09	%
Cost of funds		7.14	%		7.12	%		7.07	%		7.14	%		6.87	%
Net finance margin		6.26	%		6.44	%		6.02	%		6.03	%		5.84	%
Operating expenses as a percentage of average total assets		4.97	%		4.28	%		4.27	%		4.40	%		4.16	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets		1.59	%		0.98	%		1.07	%		1.07	%		0.95	%
Efficiency ratio (operating expenses / net investment income and other income)		77.33	%		65.07	%		67.64	%		73.35	%		72.76	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)		24.75	%		14.96	%		16.98	%		17.89	%		16.57	%

Leverage ratios:
Total debt to equity (as of period end)		1.52x			1.58x			1.54x			1.52x			1.54x
Equity to total assets (as of period end)		37.01	%		35.55	%		36.21	%		37.01	%		36.21	%

Average balances ($ in thousands):
Average assets	$	1,065,526		$	1,070,651		$	1,108,478		$	1,078,064		$	996,627
Average interest earning assets		19,065			17,931			42,014			24,702			33,303
Average income earning assets		1,088,089			1,086,955			1,104,748			1,093,356			981,232
Average borrowings		597,492			602,809			611,333			605,239			597,152
Average equity		384,475			360,397			352,839			366,017			352,839

CapitalSource Inc.
Selected Financial Data
(Unaudited)


	Three Months Ended
	December 31,			September 30,			December 31,			Year Ended December 31,
	2008			2008			2007			2008			2007
Consolidated CapitalSource Inc.:

Performance ratios:
Return on average assets		(6.30	%)		0.18	%		(0.33	%)		(1.26	%)		1.05	%
Return on average equity		(37.31	%)		1.03	%		(2.27	%)		(7.59	%)		7.41	%
Adjusted return on average assets		3.25	%		1.83	%		2.40	%		2.15	%		2.67	%
Adjusted return on average equity		19.26	%		10.47	%		16.35	%		12.90	%		18.83	%
Yield on average interest earning assets		7.06	%		7.47	%		8.98	%		7.83	%		9.31	%
Cost of funds		4.75	%		4.99	%		6.08	%		5.00	%		6.01	%
Net finance margin		3.21	%		3.49	%		3.88	%		3.77	%		4.20	%
Operating expenses as a percentage of average total assets		1.94	%		1.37	%		1.58	%		1.65	%		1.59	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets		1.74	%		1.17	%		1.38	%		1.45	%		1.40	%
Efficiency ratio (operating expenses / net investment income and other income)		(12285.23	%)		34.22	%		60.01	%		62.86	%		43.55	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)		(11065.77	%)		29.27	%		52.47	%		55.11	%		38.35	%

Leverage ratios:
Total debt and deposits to equity (as of period end)		5.28x			5.39x			5.80x			5.28x			5.80x
Equity to total assets (as of period end)		15.42	%		15.35	%		14.31	%		15.42	%		14.31	%
Total risk-based capital		19.9	%		21.0	%		N/A			19.9	%		N/A

Average balances ($ in thousands):
Average loans	$	9,655,471		$	9,387,006		$	9,658,941		$	9,650,734		$	9,015,761
Average assets		18,747,950			17,839,831			17,884,309			17,605,597			16,813,814
Average interest earning assets		16,878,519			16,147,676			16,392,353			15,854,057			15,472,459
Average income earning assets		17,947,544			17,216,700			17,455,086			16,922,711			16,420,388
Average borrowings		10,251,286			10,581,114			14,856,622			12,036,350			14,105,355
Average deposits		5,006,314			3,774,541			N/A			2,207,209			N/A
Average equity		3,163,214			3,114,374			2,627,612			2,932,628			2,380,629

CapitalSource Inc.
Commercial Asset Portfolio
(Unaudited)
($ in thousands)


	December 31, 2008				September 30, 2008				December 31, 2007
Composition of portfolio by type:
Senior secured loans (1)	$	5,640,559	54	%	$	5,593,220	54	%	$	5,695,167	52	%
First mortgage loans (1)		2,723,862	26			2,668,600	26			2,995,048	28
Subordinate loans (1)		1,130,452	11			1,164,690	11			1,177,522	11
Direct real estate investments		989,716	9			998,834	9			1,017,604	9

Total commercial assets	$	10,484,589	100	%	$	10,425,344	100	%	$	10,885,341	100	%

Composition of portfolio by business:
Corporate Finance	$	2,659,038	25	%	$	2,766,461	26	%	$	2,979,241	28	%
Healthcare and Specialty Finance		3,988,463	38			3,820,920	37			3,952,270	36
Structured Finance		3,837,088	37			3,837,963	37			3,953,830	36

Total commercial assets	$	10,484,589	100	%	$	10,425,344	100	%	$	10,885,341	100	%


(1)		“Loans” include loans, loans held for sale and related accrued interest.

CapitalSource Inc.
Credit Quality Data
(Unaudited)


	December 31,			September 30,			June 30,			March 31,			December 31,			September 30,			June 30,			March 31,			December 31,
	2008			2008			2008			2008			2007			2007			2007			2007			2006
Loans 60 or more days contractually delinquent:
As a % of total commercial lending assets⁽¹⁾		1.75	%		1.81	%		1.16	%		0.77	%		0.75	%		0.74	%		1.09	%		0.85	%		1.12	%
Loans 30-89 days contractually delinquent:
As a % of total commercial lending assets⁽¹⁾		2.75	%		0.39	%		0.74	%		1.12	%		0.85	%		0.22	%		0.44	%		1.33	%		2.15	%
Loans 90 or more days contractually delinquent:
As a % of total commercial lending assets⁽¹⁾		1.30	%		1.72	%		1.17	%		0.59	%		0.59	%		0.71	%		0.88	%		0.80	%		0.79	%
Loans on non-accrual ⁽²⁾ :
As a % of total commercial lending assets		4.03	%		2.39	%		2.20	%		1.79	%		1.73	%		1.76	%		1.97	%		1.78	%		2.34	%
Impaired loans^(3) :
As a % of total commercial lending assets		6.35	%		6.35	%		5.40	%		4.06	%		3.23	%		3.46	%		3.91	%		3.24	%		3.58	%
Allowance for loan losses:
As a % of total commercial lending assets		3.89	%		1.48	%		1.50	%		1.40	%		1.41	%		1.16	%		1.43	%		1.45	%		1.54	%
Net charge offs (last twelve months):
As a % of total average commercial lending assets		2.89	%		1.22	%		0.66	%		0.57	%		0.64	%		0.76	%		0.75	%		0.78	%		0.69	%


⁽¹⁾		Includes commercial loans, loans held for sale receivables under reverse-repurchase agreements, commercial real estate “A” participation interest and related accrued interest.

⁽²⁾		Includes loans with an aggregate principal balance of $95.7 million, $100.0 million, $58.3 million, $49.9 million, $55.5 million, $21.0 million, $31.0 million, $41.5 million and $47.0 million as of December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006, respectively, that were also classified as loans 60 or more days contractually delinquent. Also includes non-accrual loans held for sale with an aggregate principal balance of $14.5 million $14.5 million, $14.9 million and $3.0 million as of December 31, 2008, September 30, 2008, June 30, 2008 and September 30, 2007, respectively.

⁽³⁾		Includes loans with an aggregate principal balance of $141.8 million, $174.9 million, $81.7 million, $64.2 million, $55.5 million, $55.1 million, $78.7 million, $54.4 million and $47.0 million as of December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006, respectively, that were also classified as loans 60 or more days contractually delinquent, and loans with an aggregate principal balance of $423.4 million, $249.4 million, $192.4 million, $174.5 million, $170.5 million, $166.4 million, $173.1 million, $153.8 million and $183.5 million as of December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006, respectively, that were also classified as loans on non-accrual status.