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CapitalSource Inc.
Consolidated Balance Sheets
($ in thousands)


	June 30,			December 31,
	2009			2008
	(Unaudited)

ASSETS
Cash and cash equivalents	$	1,002,407		$	1,338,563
Restricted cash		202,920			419,383
Investment securities:
Available-for-sale, at fair value		829,326			679,551
Held-to-maturity, at amortized cost		219,154			14,389

Total investment securities		1,048,480			693,940
Mortgage-backed securities pledged, trading		—			1,489,291
Mortgage-related receivables, net		1,626,387			1,801,535
Commercial real estate “A” participation interest, net		887,569			1,396,611
Loans:
Loans held for sale		59,460			8,543
Loans held for investment		8,884,252			9,396,751
Less deferred loan fees and discounts		(155,924	)		(174,317	)
Less allowance for loan losses		(447,728	)		(423,844	)

Loans held for investment, net		8,280,600			8,798,590

Total loans		8,340,060			8,807,133
Interest receivable		104,703			117,516
Direct real estate investments, net		958,909			989,716
Other investments		106,673			127,746
Goodwill		173,135			173,135
Other assets		654,988			1,065,063

Total assets	$	15,106,231		$	18,419,632


LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Deposits	$	4,547,939		$	5,043,695
Repurchase agreements		—			1,595,750
Credit facilities		1,249,698			1,445,062
Term debt		4,770,352			5,338,456
Other borrowings		1,598,141			1,573,813
Other liabilities		330,661			592,136

Total liabilities		12,496,791			15,588,912

Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)		—			—
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 303,306,840 and 282,804,211 shares issued and shares outstanding, respectively)		3,033			2,828
Additional paid-in capital		3,818,943			3,686,765
Accumulated deficit		(1,224,344	)		(868,425	)
Accumulated other comprehensive income, net		11,185			9,095

Total CapitalSource Inc. shareholders’ equity		2,608,817			2,830,263
Noncontrolling interests		623			457

Total shareholders’ equity		2,609,440			2,830,720

Total liabilities and shareholders’ equity	$	15,106,231		$	18,419,632

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


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008
Net investment income:
Interest income:
Loans	$	183,093		$	199,392		$	222,118		$	382,485		$	468,619
Investment securities		13,469			20,553			29,417			34,022			86,757
Other		913			1,742			2,687			2,655			7,171

Total interest income		197,475			221,687			254,222			419,162			562,547
Fee income		24,906			31,396			41,267			56,302			74,908

Total interest and fee income		222,381			253,083			295,489			475,464			637,455
Operating lease income		27,406			27,880			24,210			55,286			51,900

Total investment income		249,787			280,963			319,699			530,750			689,355
Interest expense:
Deposits		29,959			38,387			—			68,346			—
Borrowings		80,906			92,648			158,115			173,554			348,587

Total interest expense		110,865			131,035			158,115			241,900			348,587

Net investment income		138,922			149,928			161,584			288,850			340,768
Provision for loan losses		203,847			155,267			31,674			359,114			37,333

Net investment (loss) income after provision for loan losses		(64,925	)		(5,339	)		129,910			(70,264	)		303,435

Operating expenses:
Compensation and benefits		34,808			35,037			37,808			69,845			69,597
Depreciation of direct real estate investments		8,838			8,964			8,990			17,802			17,906
Professional fees		11,860			17,420			8,989			29,280			21,923
Other administrative expenses		22,254			16,858			14,855			39,112			28,725

Total operating expenses		77,760			78,279			70,642			156,039			138,151

Other income (expense):
Loss on investments, net		(4,967	)		(16,127	)		(4,961	)		(21,094	)		(3,993	)
(Loss) gain on derivatives		(1,333	)		(686	)		15,098			(2,019	)		(23,013	)
Gain (loss) on residential mortgage investment portfolio		—			15,311			9,060			15,311			(46,317	)
Gain (loss) on extinguishment of debt		4,565			(57,128	)		12,725			(52,563	)		12,725
Other (expense) income, net		(10,970	)		(15,497	)		8,364			(26,467	)		4,485

Total other (expense) income		(12,705	)		(74,127	)		40,286			(86,832	)		(56,113	)


Net (loss) income before income taxes		(155,390	)		(157,745	)		99,554			(313,135	)		109,171
Income tax expense (benefit)		91,179			(53,425	)		37,243			37,754			40,319

Net (loss) income		(246,569	)		(104,320	)		62,311			(350,889	)		68,852
Net (loss) income attributable to noncontrolling interests		(22	)		(16	)		283			(38	)		1,580

Net (loss) income attributable to CapitalSource Inc	$	(246,547	)	$	(104,304	)	$	62,028		$	(350,851	)	$	67,272


Net (loss) income per share attributable to CapitalSource Inc.:
Basic	$	(0.82	)	$	(0.36	)	$	0.26		$	(1.19	)	$	0.30
Diluted	$	(0.82	)	$	(0.36	)	$	0.26		$	(1.19	)	$	0.29

Average shares outstanding:
Basic		299,452,870			290,098,800			235,076,287			294,818,311			227,580,584
Diluted		299,452,870			290,098,800			236,445,230			294,818,311			228,969,238

Dividends declared per share	$	0.01		$	0.01		$	0.60		$	0.02		$	1.20

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


	Three Months Ended June 30, 2009															Three Months Ended March 31, 2009
				OTHER															OTHER
	CAPITALSOURCE			COMMERCIAL			HEALTHCARE			INTERCOMPANY						CAPITALSOURCE			COMMERCIAL			HEALTHCARE			INTERCOMPANY
	BANK			FINANCE			NET LEASE			ELIMINATIONS			CONSOLIDATED			BANK			FINANCE			NET LEASE			ELIMINATIONS			CONSOLIDATED
Net investment income:
Interest income	$	66,744		$	133,059		$	97		$	(2,425	)	$	197,475		$	72,867		$	151,133		$	85		$	(2,398	)	$	221,687
Fee income		6,052			20,629			—			(1,775	)		24,906			4,557			27,327			—			(488	)		31,396

Total interest and fee income		72,796			153,688			97			(4,200	)		222,381			77,424			178,460			85			(2,886	)		253,083
Operating lease income		—			—			27,406			—			27,406			—			—			27,880			—			27,880

Total investment income		72,796			153,688			27,503			(4,200	)		249,787			77,424			178,460			27,965			(2,886	)		280,963
Interest expense		30,551			77,215			5,524			(2,425	)		110,865			38,413			89,263			5,757			(2,398	)		131,035

Net investment income		42,245			76,473			21,979			(1,775	)		138,922			39,011			89,197			22,208			(488	)		149,928
Provision for loan losses		90,470			113,377			—			—			203,847			24,991			130,276			—			—			155,267

Net investment (loss) income after provision for loan losses		(48,225	)		(36,904	)		21,979			(1,775	)		(64,925	)		14,020			(41,079	)		22,208			(488	)		(5,339	)

Compensation and benefits		11,005			23,179			624			—			34,808			10,954			23,807			276			—			35,037
Depreciation of direct real estate investments		—			—			8,838			—			8,838			—			—			8,964			—			8,964
Professional fees		615			11,046			199			—			11,860			595			16,614			211			—			17,420
Other operating expenses		14,582			16,347			2,016			(10,691	)		22,254			12,191			15,723			2,136			(13,192	)		16,858

Total operating expenses		26,202			50,573			11,676			(10,691	)		77,760			23,740			56,144			11,587			(13,192	)		78,279

Total other income (expense)		8,364			(11,277	)		1,005			(10,797	)		(12,705	)		9,561			(71,765	)		1,365			(13,288	)		(74,127	)


Net (loss) income before income taxes		(66,063	)		(98,754	)		11,308			(1,881	)		(155,390	)		(159	)		(168,988	)		11,986			(584	)		(157,745	)
Income tax expense (benefit)		4,781			89,702			(3,304	)		—			91,179			(65	)		(58,023	)		4,663			—			(53,425	)

Net (loss) income		(70,844	)		(188,456	)		14,612			(1,881	)		(246,569	)		(94	)		(110,965	)		7,323			(584	)		(104,320	)
Net loss attributable to noncontrolling interests		—			(22	)		—			—			(22	)		—			(16	)		—			—			(16	)

Net (loss) income attributable to CapitalSource Inc	$	(70,844	)	$	(188,434	)	$	14,612		$	(1,881	)	$	(246,547	)	$	(94	)	$	(110,949	)	$	7,323		$	(584	)	$	(104,304	)


	Six Months Ended June 30, 2009															Six Months Ended June 30, 2008
				OTHER															OTHER
	CAPITALSOURCE			COMMERCIAL			HEALTHCARE			INTERCOMPANY						CAPITALSOURCE			COMMERCIAL			HEALTHCARE			INTERCOMPANY
	BANK			FINANCE			NET LEASE			ELIMINATIONS			CONSOLIDATED			BANK			FINANCE			NET LEASE			ELIMINATIONS			CONSOLIDATED
Net investment income:
Interest income	$	139,611		$	284,192		$	182		$	(4,823	)	$	419,162		$	—		$	568,153		$	829		$	(6,435	)	$	562,547
Fee income		10,609			47,956			—			(2,263	)		56,302			—			74,890			18			—			74,908

Total interest and fee income		150,220			332,148			182			(7,086	)		475,464			—			643,043			847			(6,435	)		637,455
Operating lease income		—			—			55,286			—			55,286			—			—			51,900			—			51,900

Total investment income		150,220			332,148			55,468			(7,086	)		530,750			—			643,043			52,747			(6,435	)		689,355
Interest expense		68,964			166,478			11,281			(4,823	)		241,900			—			333,367			21,655			(6,435	)		348,587

Net investment income		81,256			165,670			44,187			(2,263	)		288,850			—			309,676			31,092			—			340,768
Provision for loan losses		115,461			243,653			—			—			359,114			—			37,333			—			—			37,333

Net investment (loss) income after provision for loan losses		(34,205	)		(77,983	)		44,187			(2,263	)		(70,264	)		—			272,343			31,092			—			303,435

Compensation and benefits		21,959			46,986			900			—			69,845			—			68,622			975			—			69,597
Depreciation of direct real estate investments		—			—			17,802			—			17,802			—			—			17,906			—			17,906
Professional fees		1,210			27,660			410			—			29,280			—			21,476			447			—			21,923
Other operating expenses		26,773			32,070			4,152			(23,883	)		39,112			—			25,500			3,225			—			28,725

Total operating expenses		49,942			106,717			23,263			(23,883	)		156,039			—			115,598			22,553			—			138,151

Total other income (expense)		17,925			(83,042	)		2,370			(24,085	)		(86,832	)		—			(54,697	)		(1,416	)		—			(56,113	)


Net (loss) income before income taxes		(66,222	)		(267,742	)		23,294			(2,465	)		(313,135	)		—			102,048			7,123			—			109,171
Income tax expense		4,716			31,679			1,359			—			37,754			—			40,319			—			—			40,319

Net (loss) income		(70,938	)		(299,421	)		21,935			(2,465	)		(350,889	)		—			61,729			7,123			—			68,852
Net (loss) income attributable to noncontrolling interests		—			(38	)		—			—			(38	)		—			(486	)		2,066			—			1,580

Net (loss) income attributable to CapitalSource Inc	$	(70,938	)	$	(299,383	)	$	21,935		$	(2,465	)	$	(350,851	)	$	—		$	62,215		$	5,057		$	—		$	67,272

CapitalSource Inc.
Selected Financial Data
(Unaudited)


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008

CapitalSource Bank Segment:

Performance ratios:
Return on average assets		(4.94	%)		(0.01	%)		N/A			(2.45	%)		N/A
Return on average equity		(30.84	%)		(0.04	%)		N/A			(15.45	%)		N/A
Yield on average interest earning assets		5.19	%		5.35	%		N/A			5.27	%		N/A
Cost of funds		2.58	%		3.16	%		N/A			2.87	%		N/A
Net finance margin		3.01	%		2.69	%		N/A			2.85	%		N/A
Operating expenses as a percentage of average total assets		1.83	%		1.62	%		N/A			1.72	%		N/A
Core lending spread		6.96	%		6.81	%		N/A			6.85	%		N/A
Loan yield		7.33	%		7.29	%		N/A			7.28	%		N/A

Capital ratios:
Tier 1 leverage		12.46	%		12.87	%		N/A			12.46	%		N/A
Total risk-based capital		16.77	%		17.24	%		N/A			16.77	%		N/A
Tangible common equity to tangible assets		12.49	%		13.12	%		N/A			12.49	%		N/A

Average balances ($ in thousands):
Average loans	$	2,947,753		$	2,791,350			N/A		$	2,870,021			N/A
Average assets		5,748,682			5,943,750			N/A			5,845,714			N/A
Average interest earning assets		5,626,428			5,872,004			N/A			5,748,737			N/A
Average deposits		4,629,352			4,923,789			N/A			4,775,757			N/A
Average borrowings		123,033			5,000			N/A			64,343			N/A
Average equity		921,405			930,552			N/A			925,953			N/A

Other Commercial Finance Segment:

Performance ratios:
Return on average assets		(8.37	%)		(4.44	%)		1.64	%		(6.31	%)		0.78	%
Return on average equity		(49.69	%)		(29.00	%)		10.25	%		(39.41	%)		5.28	%
Yield on average interest earning assets		7.84	%		8.33	%		8.55	%		8.10	%		8.51	%
Cost of funds		4.23	%		4.25	%		4.96	%		4.29	%		5.02	%
Net finance margin		3.90	%		4.27	%		4.22	%		4.04	%		4.10	%
Operating expenses as a percentage of average total assets		2.25	%		2.25	%		1.58	%		2.25	%		1.44	%
Core lending spread		8.59	%		8.68	%		7.07	%		8.47	%		7.11	%
Loan yield		9.05	%		9.62	%		10.11	%		9.18	%		10.36	%

Leverage ratios:
Total debt to equity (as of period end)		5.65x			5.32x			4.15x			5.65x			4.15x
Equity to total assets (as of period end)		14.59	%		15.40	%		19.01	%		14.59	%		19.01	%

Average balances ($ in thousands):
Average loans	$	6,405,635		$	6,733,765		$	9,715,111		$	6,568,794		$	9,781,606
Average assets		9,034,419			10,125,135			15,067,109			9,574,897			16,084,727
Average interest earning assets		7,856,362			8,692,688			14,040,040			8,272,665			15,153,501
Average borrowings		7,329,372			8,310,324			12,234,515			7,817,138			13,311,662
Average equity		1,521,013			1,551,346			2,416,071			1,531,820			2,364,971

CapitalSource Inc.
Selected Financial Data
(Unaudited)


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008

Healthcare Net Lease Segment:

Performance ratios:
Return on average assets		5.63	%		2.82	%		0.10	%		4.22	%		0.93	%
Return on average equity		11.83	%		5.85	%		0.27	%		8.74	%		2.60	%
Yield on average income earning assets		10.37	%		10.58	%		9.08	%		10.47	%		9.74	%
Cost of funds		4.72	%		4.77	%		7.16	%		4.84	%		7.12	%
Net finance margin		8.18	%		8.31	%		5.02	%		8.24	%		5.67	%
Operating expenses as a percentage of average total assets		4.50	%		4.46	%		4.23	%		4.48	%		4.16	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets		1.09	%		1.01	%		0.89	%		1.05	%		0.86	%

Leverage ratios:
Total debt to equity (as of period end)		0.93x			0.96x			1.63x			0.93x			1.63x
Equity to total assets (as of period end)		48.37	%		47.65	%		34.69	%		48.37	%		34.69	%

Average balances ($ in thousands):
Average assets	$	1,040,676		$	1,053,377		$	1,079,855		$	1,046,992		$	1,088,150
Average interest earning assets		17,394			15,175			26,652			16,291			30,974
Average income earning assets		1,077,872			1,084,124			1,095,916			1,080,981			1,099,254
Average borrowings		469,284			474,497			608,298			470,009			610,384
Average equity		495,576			507,863			383,841			505,962			390,004

Consolidated CapitalSource Inc.:

Performance ratios:
Return on average assets		(6.35	%)		(2.51	%)		1.57	%		(4.36	%)		0.80	%
Return on average equity		(33.79	%)		(14.20	%)		8.89	%		(23.96	%)		4.90	%
Yield on average interest earning assets		6.61	%		7.04	%		8.43	%		6.83	%		8.42	%
Cost of funds		3.58	%		3.92	%		5.04	%		3.76	%		5.11	%
Net finance margin		3.83	%		3.89	%		4.28	%		3.86	%		4.20	%
Operating expenses as a percentage of average total assets		2.00	%		1.88	%		1.78	%		1.94	%		1.64	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets		1.77	%		1.67	%		1.56	%		1.72	%		1.43	%

Leverage ratios:
Total debt and deposits to equity (as of period end)		4.66x			4.48x			3.76x			4.66x			3.76x
Equity to total assets (as of period end)		17.27	%		17.85	%		20.48	%		17.27	%		20.48	%
Tangible common equity to tangible assets		16.22	%		16.85	%		20.25	%		16.22	%		20.25	%

Average balances ($ in thousands):
Average loans	$	9,352,814		$	9,524,747		$	9,715,111		$	9,438,343		$	9,781,606
Average assets		15,577,640			16,873,725			15,881,032			16,222,139			16,908,992
Average interest earning assets		13,499,610			14,579,500			14,066,691			14,037,222			15,184,475
Average income earning assets		14,560,088			15,648,449			15,135,956			15,101,912			16,252,755
Average borrowings		7,780,606			8,644,983			12,595,070			8,210,407			13,674,303
Average deposits		4,629,352			4,923,789			N/A			4,775,757			N/A
Average equity		2,926,463			2,978,957			2,799,913			2,952,565			2,754,975

CapitalSource Inc.
Credit Quality Data
(Unaudited)


	June 30, 2009			March 31, 2009			December 31, 2008			September 30, 2008			June 30, 2008			March 31, 2008			December 31, 2007			September 30, 2007			June 30, 2007
Loans 30-89 days contractually delinquent:
As a % of total commercial lending assets⁽¹⁾		1.19	%		1.21	%		2.75	%		0.39	%		0.74	%		1.12	%		0.85	%		0.22	%		0.44	%
Loans 90 or more days contractually delinquent:
As a % of total commercial lending assets		4.15	%		2.79	%		1.30	%		1.72	%		1.17	%		0.59	%		0.59	%		0.71	%		0.88	%
Loans on non-accrual ⁽²⁾ :
As a % of total commercial lending assets		8.91	%		5.88	%		4.03	%		2.39	%		2.20	%		1.79	%		1.73	%		1.76	%		1.97	%
Impaired loans^{(3) :}
As a % of total commercial lending assets		12.11	%		8.24	%		6.35	%		6.35	%		5.40	%		4.06	%		3.23	%		3.46	%		3.91	%
Allowance for loan losses:
As a % of total commercial lending assets		4.51	%		4.26	%		3.89	%		1.48	%		1.50	%		1.40	%		1.41	%		1.16	%		1.43	%
Net charge offs (last twelve months):
As a % of total average commercial lending assets		5.40	%		3.95	%		2.89	%		1.22	%		0.66	%		0.57	%		0.64	%		0.76	%		0.75	%


⁽¹⁾		Includes commercial loans, loans held for sale, commercial real estate “A” participation interest and related accrued interest.

⁽²⁾		Includes loans with an aggregate principal balance of $295.3 million, $115.2 million, $110.3 million, $96.3 million, $58.3 million, $47.2 million, $55.5 million, $17.7 million and $31.1 million as of June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively, that were also classified as loans 90 or more days contractually delinquent. Also includes non-performing loans held for sale that had an aggregate principal balance of $13.8 million, $14.0 million, $14.5 million, $14.5 million, $14.9 million and $3.0 million as of June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and September 30, 2007, respectively. As of March 31, 2008, December 31, 2007 and June 30, 2007 there were no non-performing loans classified as held for sale.

⁽³⁾		Includes loans with an aggregate principal balance of $390.3 million , $179.3 million, $128.9 million, $163.8 million, $81.7 million, $47.2 million, $55.5 million, $57.4 million and $76.2 million as of June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively, that were also classified as loans 90 or more days contractually delinquent, and loans with an aggregate principal balance of $870.6 million, $601.1 million, $423.4 million, $249.4 million, $192.4 million, $174.5 million, $170.5 million, $166.4 million and $173.1 million as of June 30, 2009, March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, December 31, 2007, September 30, 2007 and June 30, 2007, respectively, that were also classified as loans on non-accrual status.