Exhibit 99.1

		News
		CapitalSource Inc.
		4445 Willard Avenue
		Twelfth Floor
		Chevy Chase, MD 20815

		FOR IMMEDIATE RELEASE
For information contact:
Investor Relations:		Media Relations:
Dennis Oakes		Michael E. Weiss
Vice President – Investor Relations		Director of Communications
(212) 321-7212		(301) 841-2918

CAPITALSOURCE REPORTS THIRD QUARTER 2007 RESULTS

•

$0.60 per share 4th quarter Dividend Planned

•

Increased Liquidity: Two Term Financings Totaling $1.47 Billion Completed

•

New Business Originated at Higher Spreads

•

Improved Lending Environment Characterized by Reduced Competition

•

Credit Remains Stable – Delinquency & Non-Accrual Metrics Improved

Chevy Chase, MD, November 6, 2007 – CapitalSource Inc. (NYSE: CSE) today announced financial results for the quarter ended September 30, 2007. Adjusted earnings for the quarter were $97.6 million, or $0.50 per diluted share. Net income for the quarter was $28.3 million, or $0.15 per diluted share.

“Despite significant and unprecedented challenges for all financial institutions, I am very pleased with the performance of our business this quarter,” said John K. Delaney, CapitalSource Chairman and CEO. “CapitalSource successfully navigated the recent capital markets disruption with minimal impact on our business. During the quarter, we prudently grew our lending business, strengthened our balance sheet and produced improvements in key credit metrics while leveraging operating expenses.”

“Looking ahead to the fourth quarter and 2008, CapitalSource is particularly well positioned to succeed in current market conditions,” added Delaney. “We are already originating new business at wider spreads and are seeing major competitors exit the middle market where we focus. We also are nearing completion of the TierOne Bank acquisition, which will further enhance our margins and profitability. In light of these improving conditions, we plan to pay a dividend of $0.60 per share to our shareholders in the fourth quarter.”

“Our 16.2% adjusted return on equity this quarter, against a backdrop of extreme capital market conditions, once again proved the strength and stability of CapitalSource’s business,” said Thomas A. Fink, CapitalSource CFO. “Our liquidity is very strong and was enhanced during the quarter to bring our committed and undrawn credit facility capacity today to $3.2 billion. Also, as expected and as a result of our conservative hedging practices, our residential mortgage investment portfolio performed extremely well and was remarkably steady during the quarter.”

“Our credit performance continues to be very good with improvements this quarter in both our delinquency and non-accrual statistics. Based on the improvement in these metrics and the current level of allocated reserves, we expect charge-offs to be materially lower in the fourth quarter,” added Fink. “Prepayment-related fee income and equity gains were down significantly in the quarter. Though lumpy, these items are a regular part of our business and we expect them to return to more normalized levels.”

Business Overview

The careful actions taken in creating the CapitalSource portfolio, together with disciplined credit processes and a conservative funding platform, were rewarded in the third quarter. The company is extremely well positioned to take advantage of a very attractive market which some of our major competitors are exiting. CapitalSource did not experience any significant funding issues in either its core commercial lending business or its residential mortgage portfolio. Consequently, the business has significant capital and liquidity to pursue current market opportunities and grow its commercial portfolio with higher risk-adjusted return assets.

In the short term, investors should expect:

	•		Continued asset growth, as CapitalSource takes advantage of improving market opportunities.
	•		Stable credit performance, in line with historical ranges.
	•		Prepayment-related fee income and returns on the company’s equity portfolio will continue to vary from quarter to quarter, but are expected to increase from this quarter’s unusually low level.
	•		Some quarter-to-quarter variation in cost of funds (as a spread to LIBOR) based on capital markets volatility.
	•		Further leveraging of the company’s infrastructure and expense base, resulting in additional operational efficiencies.

CapitalSource’s healthcare real estate lease business continues to perform well and benefit from an excellent market opportunity. Given the growth and significance of this business, the company will begin reporting the healthcare real estate lease portfolio as a separate segment with fourth quarter 2007 results.

“The business prospects for CapitalSource today are more exciting and potentially rewarding for shareholders than at any time since we launched the company seven years ago,” said John Delaney. “Our business priorities and principles remain unchanged. We will aggressively pursue current market opportunities. We will continue to drive growth in our specialty business units which have delivered uncommon levels of risk-adjusted returns. And, we are focused on successfully integrating TierOne Bank which will make deposit-based funding a meaningful part of our capital plan.”

Assets under Management

•

Assets under management were approximately $20.7 billion, an increase of $615.8 million, or 3.1%, from the prior quarter.

Commercial Asset Portfolio

	•		Total commercial assets, including commercial loans and direct real estate investments, were $10.7 billion at quarter end, an increase of $695.9 million, or 7.0%, from the prior quarter.
	•		Interest income was $250.0 million for the quarter, an increase of $22.2 million, or 9.7%, from the prior quarter, primarily due to net portfolio growth.
	•		Operating lease income was $27.5 million for the quarter, an increase of $5.4 million, or 24.3%, from the prior quarter, primarily due to a full quarter of income generated from assets acquired during the prior quarter along with income generated from assets acquired during the third quarter.
	•		Net investment income was $163.2 million for the quarter, a decrease of $9.3 million, or 5.4%, from the prior quarter, primarily due to an increase in interest expense and a significant reduction in prepayment-related fee income, partially offset by an increase in the average balance of commercial loans.

Commercial Net Finance Margin

	•		Yield on average interest-earning assets was 11.30% for the quarter, a decrease of 75 basis points from the prior quarter. The decrease in yield is primarily due to a 63 basis point decrease in prepayment-related fee income, partially offset by an increase in interest income.
	•		Prepayment-related fee income contributed 13 basis points to yield for the quarter, compared to 76 basis points in the prior quarter. Prepayment-related fee income is expected to increase from this quarter’s unusually low level.
	•		Cost of funds was 6.46% for the quarter, an increase of 26 basis points from the prior quarter. Overall borrowing spread to average one-month LIBOR was 15 basis points higher at 1.03% for the quarter, compared to 0.88% for the prior quarter.
	•		Leverage, as measured by the ratio of total debt-to-equity at the end of the quarter, remains at 4.03x, unchanged from the prior quarter, although average leverage during the quarter was higher.
	•		Net finance margin, defined as net investment income divided by average income earning assets, was 5.95% for the quarter. The decrease of 100 basis points from 6.95% in the prior quarter was primarily due to higher average leverage, increased interest expense and a decrease in prepayment-related fee income.

Other Income

	•		Gain (loss) on investments, net was $(2.0) million, a decrease of $19.0 million from the prior quarter, due to a significantly lower level of realized gains on our equity investments as compared to the prior quarter, and write-downs in certain cost-based investment securities.
	•		Other income, net of expenses was $(3.4) million, a $16.3 million decrease as compared to the prior quarter, primarily due to decreases on the gains from loan syndication activity, lower fees arising from HUD mortgage origination services, and lower income from third-party asset management.
	•		Gain (loss) on residential mortgage investment portfolio was $(30.2) million, or 48 basis points of the portfolio, a loss $16.4 million more than in the prior quarter, primarily due to the net change in the fair value of Agency MBS and related derivatives. Within the Agency MBS portfolio, interest rate and duration risk are hedged by BlackRock and the securities are fully guaranteed by Freddie Mac or Fannie Mae. Adjusted earnings include an adjustment for realized and unrealized gains (losses) on these items.
	•		Gain (loss) on derivatives was $(15.5) million, a decrease of $18.6 million from the prior quarter. Adjusted earnings include an adjustment for unrealized gains (losses) on these items.

Commercial Credit

	•		Loans on non-accrual status, which the company considers its primary credit metric, decreased 18 basis points from the prior quarter to 1.59% of total commercial assets.
	•		Delinquencies as a percentage of total commercial assets decreased 30 basis points from the prior quarter to 0.67%.
	•		Net charge-offs increased $14.2 million from the previous quarter to $27.8 million. As a percentage of average commercial assets, annualized net charge-offs for the year-to-date period increased 47 basis points from the prior quarter to 1.04%, but are expected to be materially lower in the fourth quarter.
	•		Allowance for loan losses as a percentage of total commercial assets decreased 23 basis points from the prior quarter to 1.05%. At September 30, 2007 allowance for loan loss was $111.7 million.
	•		Allocated Reserves decreased to $11.4 million from $33.4 million, primarily reflecting this quarter’s charge-off of previously-reserved for loans.
	•		Impaired commercial loans as a percentage of total commercial assets decreased 38 basis points from the prior quarter to 3.12%.

Funding and Liquidity

•

During the quarter, the company raised $291.3 million through the issuance of approximately 16.3 million shares of common stock under its Dividend Reinvestment and Stock Purchase Plan. Board members who beneficially own in the aggregate

			approximately 30% of the total outstanding shares of CapitalSource elected to reinvest their third quarter dividends.
	•		On July 30, the company closed its offering of $250 million 7.25% senior subordinated convertible notes due 2037. The notes have an initial conversion rate of 36.9079 shares of the company’s common stock per $1,000 principal amount, representing a conversion price of approximately $27.09 per share.
	•		On September 11, the company completed a $1.07 billion term financing of commercial real estate loans from the company’s portfolio. The transaction was a private placement and was initially funded at $1.07 billion and may be increased at any time during the two months following the transaction to $1.5 billion. The note bears interest (excluding fees) at a floating commercial paper rate plus 1.50% and is prepayable by the company at any time.
	•		On October 11, the company completed a $400 million term financing of commercial loans from the company’s portfolio. The transaction was a private placement and was rated A by Fitch Ratings and A2 by Moody’s Investor Service. The transaction has a one-year replenishment period during which principal collected can be invested in additional loan collateral. The note bears interest (excluding fees) at a floating commercial paper rate plus 1.10% and is pre payable by the company at any time.
	•		The company expects to complete another term financing prior to year-end.

Effective Tax Rate

•

The overall annual estimated tax rate at quarter end was 23.95%, compared to 23.00% at the end of the prior quarter reflecting the company’s estimate of a higher level of earnings than previously projected in its taxable REIT subsidiary.

Adjusted Return on Equity

•

The consolidated adjusted return on equity, defined as adjusted earnings divided by average GAAP equity, was 16.20% for the quarter, compared to 22.33% in the prior quarter. The accompanying Financial Supplement provides a detailed reconciliation of GAAP net income to adjusted earnings.

TierOne Update

	•		The company filed its application for approval of the acquisition of TierOne with the Office of Thrift Supervision (OTS) on June 29, 2007. Final action on the application is expected in the near future.
	•		A joint proxy statement/prospectus was mailed to TierOne’s stockholders on or about October 30, 2007 relating to the TierOne stockholder meeting to approve the merger, scheduled to be held on November 29, 2007. The full document is posted on the SEC Filings section of the CapitalSource website at www.capitalsource.com.

CapitalSource will hold an analyst and investor conference call with a simultaneous webcast November 6, 2007 at 8:30 a.m. (Eastern Time) to discuss the company’s third quarter results. To participate, analysts and investors may call (888) 713-4214 from within United States or (617) 213-4866 from outside the United States, utilizing the passcode, 84141653. Other interested parties may access a webcast of the conference call at the Investor Relations section of the CapitalSource web site at www.capitalsource.com

A telephonic replay will be available from approximately 10:30 a.m. (Eastern Time) on November 6, 2007, through November 13, 2007. Please call (888) 286-8010 from the United States or (617) 801-6888 from outside the United States with the passcode 17198856. An audio replay will also be available on the Investor Relations section of the CapitalSource website.

The company’s third quarter 2007 investor presentation will be posted to the Investor Relations section of the CapitalSource website. A transcript of the earnings conference call will be posted on November 6, 2007.

About CapitalSource

CapitalSource (NYSE: CSE) is a leading commercial lending, investment and asset management business focused on the middle market. CapitalSource manages an asset portfolio, which as of September 30, 2007 was approximately $20.7 billion. Headquartered in Chevy Chase, Maryland, the company has approximately 560 employees in offices across the U.S. and in Europe. For more information, visit http://www.capitalsource.com.

Forward Looking Statements

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections with respect to dividend, prepayment-related fees, equity gains, term financings, loan growth, charge-offs, operating efficiencies, segment reporting and the proposed merger between CapitalSource and TierOne, which are subject to numerous assumptions, risks, and uncertainties.  All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including without limitation: the merger with TierOne may not be approved or completed on the proposed terms and schedule or at all; changes in economic conditions; movements in interest rates; competitive and other market pressures on loan pricing and services; success and timing of other business strategies; the nature, extent, and timing of governmental actions and reforms; extended disruption of vital infrastructure; and other factors described in CapitalSource’s 2006 Annual Report on Form 10-K, and documents subsequently filed by CapitalSource with the Securities and Exchange Commission, including our Current Report on Form 8-K as filed with the SEC on July 23, 2007.  All forward-looking statements included in this news release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information About the Merger with TierOne

In connection with the proposed transaction, CapitalSource filed with the SEC a registration statement on Form S-4 containing the joint proxy statement/prospectus of TierOne and other relevant documents that were mailed to security holders of TierOne. WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CAPITALSOURCE, TIERONE AND THE PROPOSED TRANSACTION. A definitive proxy statement has been sent to security holders of TierOne seeking approval of the proposed transaction. Investors may obtain these materials and other documents filed with the SEC free of charge at the SEC’s website, www.sec.gov. In addition, a copy of the proxy statement/prospectus may be obtained free of charge by directing a request to CapitalSource Inc., 4445 Willard Avenue, 12^th Floor, Chevy Chase, Maryland 20815, Attention: Investor Relations; or by directing a request to TierOne Corporation, 1235 N Street, Lincoln, Nebraska 68508, Attention: Edward J. Swotek, Senior Vice President, Investor Relations Department.

This document is not a solicitation of a proxy from any security holder of TierOne or an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

TierOne, its directors and executive officers and certain other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding TierOne’s directors and executive officers is available in TierOne’s proxy statement filed with the SEC on March 30, 2007. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials that has been filed with the SEC.

CapitalSource Inc.
Consolidated Balance Sheets
(Unaudited)

		September 30,				June 30,				September 30,
		2007				2007				2006
		($ in thousands)
ASSETS
Cash and cash equivalents		$	245,862			$	271,492			$	651,143
Restricted cash			296,789				221,650				362,949
Mortgage-related receivables, net			2,092,553				2,162,715				2,340,433
Mortgage-backed securities pledged, trading			4,159,037				4,290,965				3,424,516
Receivables under reverse-repurchase agreements			26,157				26,237				52,906
Loans held for sale			352,030				154,229				77,532
Loans:
Loans			9,251,283				8,761,127				7,219,331
Less deferred loan fees and discounts			(132,673	)			(128,785	)			(122,255	)
Less allowance for loan losses			(111,692	)			(127,547	)			(102,659	)
Loans, net			9,006,918				8,504,795				6,994,417
Direct real estate investments, net			1,031,905				1,032,838				278,053
Investments			195,819				197,543				170,766
Other assets			351,329				299,226				139,159
Total assets		$	17,758,399			$	17,161,690			$	14,491,874
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Liabilities:
Repurchase agreements		$	4,030,477			$	4,217,086			$	3,387,521
Credit facilities			2,701,685				3,384,551				2,915,811
Term debt			6,550,232				5,652,228				5,080,284
Other borrowings			1,612,258				1,368,666				922,721
Other liabilities			322,477				214,806				111,990
Total liabilities			15,217,129				14,837,337				12,418,327
Noncontrolling interests			51,205				44,871				56,371
Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)			—				—				—
Common stock ($0.01 par value, 500,000,000 shares authorized; 208,540,632, 191,877,813 and 178,677,872 shares issued; 208,540,632, 191,877,813 and 177,377,872 shares outstanding, respectively)			2,085				1,918				1,774
Additional paid-in capital			2,664,842				2,361,158				2,024,761
Accumulated deficit			(181,336	)			(85,978	)			18,460
Accumulated other comprehensive income, net			4,474				2,384				2,107
Treasury stock, at cost			—				—				(29,926	)
Total shareholders’ equity			2,490,065				2,279,482				2,017,176
Total liabilities, noncontrolling interests and shareholders’ equity		$	17,758,399			$	17,161,690			$	14,491,874

CapitalSource Inc.
Consolidated Statements of Income
(Unaudited)

		Three Months Ended
		Sept 30,				June 30,				Sept 30,				Nine Months Ended September 30,
		2007				2007				2006				2007				2006
		($ in thousands, except per share data)
Net investment income:
Interest income		$	344,043			$	311,184			$	280,066			$	944,781			$	731,601
Fee income			29,338				45,056				53,955				124,421				132,100
Total interest and fee income			373,381				356,240				334,021				1,069,202				863,701
Operating lease income			27,490				22,118				7,855				69,934				19,174
Total investment income			400,871				378,358				341,876				1,139,136				882,875
Interest expense			232,754				200,291				170,118				619,694				421,818
Net investment income			168,117				178,067				171,758				519,442				461,057
Provision for loan losses			12,353				17,410				24,849				44,690				51,033
Net investment income after provision for loan losses			155,764				160,657				146,909				474,752				410,024
Operating expenses:
Compensation and benefits			38,309				38,615				33,924				116,937				101,374
Other administrative expenses			26,824				27,828				19,307				79,961				56,167
Total operating expenses			65,133				66,443				53,231				196,898				157,541
Other income (expense):
Diligence deposits forfeited			1,465				1,813				598				4,141				3,968
(Loss) gain on investments, net			(1,984	)			17,002				7,223				21,181				5,483
(Loss) gain on derivatives			(15,494	)			3,153				(5,074	)			(14,596	)			1,576
(Loss) gain on residential mortgage investment portfolio			(30,225	)			(13,846	)			2,291				(49,769	)			220
Other income, net of expenses			(3,389	)			12,957				5,700				16,545				11,131
Total other income			(49,627	)			21,079				10,738				(22,498	)			22,378
Noncontrolling interests expense			1,182				1,272				1,259				3,784				3,350
Net income before income taxes and cumulative effect of accounting change			39,822				114,021				103,157				251,572				271,511
Income taxes			11,557				29,693				22,304				60,251				52,945
Net income before cumulative effect of accounting change			28,265				84,328				80,853				191,321				218,566
Cumulative effect of accounting change, net of taxes			—				—				—				—				370
Net income		$	28,265			$	84,328			$	80,853			$	191,321			$	218,936
Net income per share:
Basic		$	0.15			$	0.45			$	0.47			$	1.03			$	1.34
Diluted		$	0.15			$	0.45			$	0.47			$	1.02			$	1.32
Average shares outstanding:
Basic			191,976,931				185,371,033				171,777,989				185,522,634				163,373,576
Diluted			193,607,986				187,428,430				173,354,891				187,636,502				166,028,844
Dividends declared per share		$	0.60			$	0.60			$	0.49			$	1.78			$	1.47

CapitalSource Inc.

We evaluate our performance based on several measures, including adjusted earnings. Management views adjusted earnings and the related per share measures as useful and appropriate supplements to net income and earnings per share. These measures serve as an additional measure of our operating performance because they facilitate evaluation of the company without the effects of certain adjustments in accordance with U.S. generally accepted accounting principles (“GAAP”) that may not necessarily be indicative of current operating performance. We define adjusted earnings as net income as determined in accordance with GAAP, adjusted for certain non-cash items, including real estate depreciation, amortization of deferred financing fees, non-cash equity compensation, realized and unrealized gains and losses on our residential mortgage investment portfolio 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.

Adjusted earnings should not be considered as an alternative to net income or cash flows from operating activities (each computed in accordance with GAAP). Instead, adjusted earnings should be reviewed 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 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.

A reconciliation of our reported net income to adjusted earnings for the three months ended September 30, 2007, June 30, 2007 and September 30, 2006 and nine months ended September 30, 2007 and 2006 was as follows:

		Three Months Ended												Nine Months Ended
		September 30, 2007				June 30, 2007				September 30, 2006				September 30, 2007				September 30, 2006
		($ in thousands, except per share data)
Net income		$	28,265			$	84,328			$	80,853			$	191,321			$	218,936
Add:
Real estate depreciation and amortization (1)			8,570				7,896				3,087				23,675				7,350
Amortization of deferred financing fees (2)			7,491				6,823				7,031				19,823				21,976
Non-cash equity compensation			11,336				9,859				8,640				31,908				24,993
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)			32,425				15,846				1,123				55,805				1,782
Unrealized loss (gain) on derivatives and foreign currencies, net			16,464				(1,287	)			6,937				15,504				(196	)
Unrealized loss on investments, net			8,452				1,170				404				9,669				5,510
Provision for loan losses			12,353				17,410				24,849				44,690				51,034
Recoveries (4)			—				—				—				—				—
Less:
Charge offs (5)			27,796				13,625				11,000				51,671				11,276
Non-recurring items (6)			—				—				—				—				4,725
Cumulative effect of accounting change, net of taxes			—				—				—				—				370
Adjusted earnings		$	97,560			$	128,420			$	121,924			$	340,724			$	315,014
Net income per share:
Basic — as reported		$	0.15			$	0.45			$	0.47			$	1.03			$	1.34
Diluted — as reported		$	0.15			$	0.45			$	0.47			$	1.02			$	1.32
Average shares outstanding:
Basic — as reported			191,976,931				185,371,033				171,777,989				185,522,634				163,373,576
Diluted — as reported			193,607,986				187,428,430				173,354,891				187,636,502				166,028,844
Adjusted earnings per share:
Basic		$	0.51			$	0.69			$	0.71			$	1.84			$	1.93
Diluted (7)		$	0.50			$	0.68			$	0.70			$	1.82			$	1.89
Average shares outstanding:
Basic			191,976,931				185,371,033				171,777,989				185,522,634				163,373,576
Diluted (8)			193,607,986				189,425,285				175,865,709				189,120,843				168,300,536

CapitalSource Inc.

		Three Months Ended September 30, 2007												Three Months Ended June 30, 2007
		Commercial				Residential								Commercial				Residential
		Lending &				Mortgage				Consolidated				Lending &				Mortgage				Consolidated
		Investment				Investment				Total				Investment				Investment				Total
		($ in thousands)
Net investment income:
Interest income		$	249,972			$	94,071			$	344,043			$	227,795			$	83,389			$	311,184
Fee income			29,338				—				29,338				45,056				—				45,056
Total interest and fee income			279,310				94,071				373,381				272,851				83,389				356,240
Operating lease income			27,490				—				27,490				22,118				—				22,118
Total investment income			306,800				94,071				400,871				294,969				83,389				378,358
Interest expense			143,602				89,152				232,754				122,513				77,778				200,291
Net investment income			163,198				4,919				168,117				172,456				5,611				178,067
Provision for loan losses			11,938				415				12,353				17,410				—				17,410
Net investment income after provision for loan losses			151,260				4,504				155,764				155,046				5,611				160,657
Total operating expenses			63,783				1,350				65,133				64,564				1,879				66,443
Total other income (expense)			(19,402	)			(30,225	)			(49,627	)			34,925				(13,846	)			21,079
Noncontrolling interests expense			1,182				—				1,182				1,272				—				1,272
Net income (loss) before income taxes			66,893				(27,071	)			39,822				124,135				(10,114	)			114,021
Income taxes			11,557				—				11,557				29,693				—				29,693
Net income (loss)		$	55,336			$	(27,071	)		$	28,265			$	94,442			$	(10,114	)		$	84,328

		Nine Months Ended September 30, 2007												Nine Months Ended September 30, 2006
		Commercial				Residential								Commercial				Residential
		Lending &				Mortgage				Consolidated				Lending &				Mortgage				Consolidated
		Investment				Investment				Total				Investment				Investment				Total
Net investment income:
Interest income		$	686,420			$	258,361			$	944,781			$	547,128			$	184,473			$	731,601
Fee income			124,421				—				124,421				132,100				—				132,100
Total interest and fee income			810,841				258,361				1,069,202				679,228				184,473				863,701
Operating lease income			69,934				—				69,934				19,174				—				19,174
Total investment income			880,775				258,361				1,139,136				698,402				184,473				882,875
Interest expense			377,366				242,328				619,694				250,967				170,851				421,818
Net investment income			503,409				16,033				519,442				447,435				13,622				461,057
Provision for loan losses			44,275				415				44,690				50,732				301				51,033
Net investment income after provision for loan losses			459,134				15,618				474,752				396,703				13,321				410,024
Total operating expenses			191,529				5,369				196,898				151,183				6,358				157,541
Total other income (expense)			27,271				(49,769	)			(22,498	)			22,158				220				22,378
Noncontrolling interests expense			3,784				—				3,784				3,350				—				3,350
Net income (loss) before income taxes and cumulative effect of accounting change			291,092				(39,520	)			251,572				264,328				7,183				271,511
Income taxes			60,251				—				60,251				52,945				—				52,945
Net income (loss) before cumulative effect of accounting change			230,841				(39,520	)			191,321				211,383				7,183				218,566
Cumulative effect of accounting change, net of taxes			—				—				—				370				—				370
Net income (loss)		$	230,841			$	(39,520	)		$	191,321			$	211,753			$	7,183			$	218,936

CapitalSource Inc.

		Three Months Ended
		September 30,				June 30,				September 30,				Nine Months Ended September 30,
		2007				2007				2006				2007				2006
Commercial Lending & Investment Segment:
Performance ratios:
Adjusted return on average assets			3.23	%			5.44	%			5.47	%			4.19	%			5.48	%
Adjusted return on average equity			17.10	%			26.58	%			25.29	%			20.93	%			25.03	%
Yield on average interest earning assets			11.30	%			12.05	%			13.07	%			11.89	%			12.81	%
Cost of funds			6.46	%			6.20	%			6.26	%			6.30	%			5.98	%
Net finance margin			5.95	%			6.95	%			8.19	%			6.71	%			8.21	%
Operating expenses as a percentage of average total assets			2.27	%			2.54	%			2.51	%			2.50	%			2.72	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			1.95	%			2.25	%			2.36	%			2.19	%			2.60	%
Efficiency ratio (operating expenses / net investment income and other income)			44.36	%			31.13	%			29.65	%			36.09	%			32.19	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)			38.15	%			27.57	%			27.85	%			31.74	%			30.63	%
Leverage ratios:
Total debt to equity (as of period end)			4.03x				4.03x				3.67x				4.03x				3.67x
Equity to total assets (as of period end)			19.46	%			19.46	%			21.05	%			19.46	%			21.05	%
Average balances ($ in thousands):
Average loans		$	9,556,672			$	8,708,240			$	7,382,209			$	8,799,012			$	6,790,186
Average assets			11,141,568				10,182,737				8,084,986				10,261,330				7,428,345
Average interest earning assets			9,813,180				9,083,019				7,678,450				9,114,113				7,086,281
Average income earning assets			10,878,248				9,955,988				7,939,826				10,023,352				7,289,292
Average borrowings			8,821,916				7,929,113				6,139,327				8,008,884				5,609,304
Average equity			2,101,591				2,083,820				1,748,354				2,056,485				1,625,445
Consolidated CapitalSource Inc.:
Performance ratios:
Adjusted return on average assets			2.19	%			3.14	%			3.55	%			2.77	%			3.53	%
Adjusted return on average equity			16.20	%			22.33	%			24.09	%			19.83	%			22.85	%
Yield on average interest earning assets			9.13	%			9.51	%			10.01	%			9.43	%			10.02	%
Cost of funds			6.16	%			5.87	%			5.87	%			5.98	%			5.70	%
Net finance margin			3.86	%			4.49	%			5.05	%			4.32	%			5.26	%
Operating expenses as a percentage of average total assets			1.46	%			1.63	%			1.54	%			1.60	%			1.76	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			1.26	%			1.44	%			1.45	%			1.41	%			1.69	%
Efficiency ratio (operating expenses / net investment income and other income)			54.97	%			33.36	%			29.17	%			39.62	%			32.59	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)			47.44	%			29.65	%			27.48	%			34.98	%			31.07	%
Leverage ratios:
Total debt to equity (as of period end)			5.98x				6.42x				6.10x				5.98x				6.10x
Equity to total assets (as of period end)			14.02	%			13.28	%			13.92	%			14.02	%			13.92	%
Average balances ($ in thousands):
Average loans		$	9,556,672			$	8,708,240			$	7,382,209			$	8,799,012			$	6,790,186
Average assets			17,642,856				16,392,440				13,725,326				16,453,061				11,938,342
Average interest earning assets			16,229,597				15,028,300				13,237,128				15,162,542				11,527,276
Average income earning assets			17,294,665				15,901,269				13,498,504				16,071,782				11,730,287
Average borrowings			14,980,939				13,691,403				11,503,180				13,852,181				9,901,508
Average equity			2,389,313				2,306,554				2,024,841				2,297,397				1,843,237

CapitalSource Inc.
Commercial Asset Portfolio
(Unaudited)

		September 30, 2007								June 30, 2007								September 30, 2006
Composition of portfolio by type:
Senior secured loans (1)		$	5,456,046				51	%		$	5,365,139				54	%		$	4,276,534				56	%
First mortgage loans (1)			3,057,652				29				2,864,815				29				2,556,621				34
Subordinate loans (1)			1,115,772				10				711,639				7				516,614				7
Direct real estate investments			1,031,905				10				1,032,838				10				265,108				3
Total commercial assets		$	10,661,375				100	%		$	9,974,431				100	%		$	7,614,877				100	%
Composition of portfolio by business:
Healthcare and Specialty Finance		$	4,115,541				39	%		$	3,830,840				39	%		$	3,167,533				42	%
Structured Finance			3,841,265				36				3,534,140				35				2,482,933				32
Corporate Finance			2,704,569				25				2,609,451				26				1,964,411				26
Total commercial assets		$	10,661,375				100	%		$	9,974,431				100	%		$	7,614,877				100	%

CapitalSource Inc.
Credit Quality Data
(Unaudited)

Credit Metrics by Asset Classification:

		September 30, 2007				June 30, 2007				September 30, 2006
60 or more days contractually delinquent:
As a % of total Commercial Assets(1)			0.67	%			0.97	%			0.81	%
As a % of total Commercial Loans(2)			0.74	%			1.09	%			0.84	%
Non-accrual (3) :
As a % of total Commercial Assets			1.59	%			1.77	%			2.31	%
As a % of total Commercial Loans			1.76	%			1.97	%			2.39	%
Impaired (4) :
As a % of total Commercial Assets			3.12	%			3.50	%			3.50	%
As a % of total Commercial Loans			3.46	%			3.91	%			3.63	%
Total (excluding assets in multiple categories):
As a % of total Commercial Assets			3.30	%			3.72	%			3.70	%
As a % of total Commercial Loans			3.66	%			4.15	%			3.83	%
Allowance for Loan Loss:
As a % of total Commercial Assets			1.05	%			1.28	%			1.35	%
As a % of total Commercial Loans			1.16	%			1.43	%			1.40	%
Net Charge Offs (annualized):
As a % of total Average Commercial Assets			1.04	%			0.57	%			1.18	%
As a % of total Average Commercial Loans			1.15	%			0.63	%			1.22	%