Exhibit 99.1

News
CapitalSource Inc.

5404 Wisconsin Avenue
Second Floor
Chevy Chase, MD 20815

		FOR IMMEDIATE RELEASE
For information contact:
Investor Relations:		Media Relations:
Dennis Oakes		Michael Weiss
Senior Vice President, Investor Relations		Director of Communications
(212) 321-7212		(301) 841-2918
doakes@capitalsource.com		mweiss@capitalsource.com

CAPITALSOURCE REPORTS SECOND QUARTER 2011 RESULTS

	•		Net Income of $17 Million or $0.05 Per Share
	•		New Funded Loans of $543 Million
	•		Parent Company Unrestricted Cash Tops $1.2 Billion
	•		Credit Profile Improved
	•		Capital Deployment Strategy Announced

Chevy Chase, MD, July 29, 2011 —CapitalSource Inc. (NYSE: CSE) today announced financial results for the second quarter 2011. Net income for the quarter was $17 million or $0.05 per diluted share, compared to net income of $3 million or $0.01 per diluted share in the prior quarter and net income of $18 million or $0.06 per diluted share in the second quarter 2010.

“We have spent considerable time over the past few months evaluating how best to achieve two key strategic priorities — returning Parent Company capital to the shareholders and converting CapitalSource Bank to a California chartered commercial bank. While pursuing those goals simultaneously would be ideal, the options that potentially allow us to do so involve significant complexity, uncertainty and delay,” said John K. Delaney, CapitalSource Executive Chairman. “As a result, after thorough analysis of our strategic options and with the advice of a financial advisor, our Board has decided to pursue a course of action that is within our control — expeditiously returning Parent Company capital to shareholders, while extending the timeframe for conversion to a commercial bank charter.”

“As a result of our decision not to accelerate the normal course disposition of Parent Company assets, we do not anticipate filing an application for bank holding company status for at least 18 months. The Parent’s regulatory credit metrics should be substantially improved by then, which we expect would simplify the Federal Reserve review process when it does occur,” said Tad Lowrey, CapitalSource Bank

President and CEO. “Converting to a commercial charter has many longer term benefits, so it remains an important strategic priority. Since our current industrial charter is an extremely efficient operating model, however, this delay should have little or no impact on our profitability and growth projections for CapitalSource Bank over the next two years.”

“New loans funded in the second quarter of $543 million were above our expected quarterly range and boosted our total production for the first half of 2011 to nearly $1.2 billion. As a result, we now expect full year originations to top $2 billion, which represents a 25% year-over-year increase,” said James J. Pieczynski, CapitalSource Co-CEO. “Importantly, there was broad-based participation among our various specialty lending groups in originations this quarter. For the first six months of the year our multifamily, healthcare real estate, lender finance, corporate asset finance, and technology cash flow groups have had the highest production levels.”

“The second quarter at CapitalSource Bank was solidly profitable. Net interest margin remained above 5% and the fully-taxed return on average assets of 1.78% was above our expected range for the year of 1.25% — 1.50%,” said Donald F. Cole, CapitalSource CFO. “On a consolidated basis the second quarter was a story of balance sheet strengthening, as our Parent Company liquidity increased to over $1.2 billion and the remaining legacy loan portfolio declined by $823 million or 25%. Following the quarter close, we also redeemed $281 million of convertible debentures — further reducing Parent Company debt.”

CAPITALSOURCE BANK SEGMENT

This segment includes our commercial lending and banking business activities in CapitalSource Bank.

Second Quarter 2011 Highlights

•

Net Income was $28 million, a decrease of $5 million from the prior quarter primarily due to a $16 million higher income tax expense this quarter, though pretax income increased from $35 million in the prior quarter to $47 million in the current quarter.

•

Loan Production was $543 million during the quarter compared to $627 million in the prior quarter, resulting in a 4.7% net increase in the loan portfolio balance despite loan pay-offs and charge-offs totaling $350 million during the quarter.

•

Net Interest Margin for the quarter was 5.07%, a decrease of 36 basis points from the prior quarter primarily due to a decline in investment and loan yields.

•

Capital — The risk-based capital ratio declined 13 basis points to 18.67% while the Tier 1 leverage ratio was unchanged at 13.47%.

•

Credit Quality — Loan loss provision was a reversal of $1 million for the quarter, compared to an $11 million provision in the prior quarter. Net charge-offs were $23 million in the quarter, compared to net charge-offs of $3 million in the prior quarter, which included recoveries of $12 million. Non-accrual loans increased to $220 million, or 5.23% of loans, at quarter end compared to $175 million, or 4.35% of loans, at the end of the prior quarter primarily due to the addition of one large loan to non-accrual status. A $107 million non-accrual loan was sold on July 1, 2011, reducing the total non-accrual balance to approximately $112 million. The allowance for loan losses decreased to $109 million, or 2.58% of loans at quarter end compared to $133 million, or 3.31% of loans, at the end of the prior quarter.

First Quarter 2011 Details

Interest Income was $90 million, a decrease of $1 million from the prior quarter primarily due to lower investment and loan yields due to a shift in the loan mix to a higher percentage of lower yielding loans, partially offset by an increase in average loans.

		Quarter Ended
														6/30/11 vs. 3/31/11								6/30/11 vs. 6/30/10
Net Income		6/30/11				3/31/11				6/30/10				$				%				$				%
($ in thousands)
Interest income		$	90,490			$	91,804			$	78,926			$	(1,314	)			(1	)%		$	11,564				15	%
Interest expense			15,612				15,210				16,431				(402	)			(3	)			819				5
Provision for loan losses			(1,331	)			11,242				5,094				12,573				112				6,425				126
Operating expenses			32,594				32,941				29,248				347				1				(3,346	)			(11	)
Other income			3,000				2,965				7,067				35				1				(4,067	)			(58	)
Income tax expense (benefit)			18,840				3,095				(2,463	)			(15,745	)			(509	)			(21,303	)			(865	)
Net income			27,775				32,281				37,683				(4,506	)			(14	)			(9,908	)			(26	)

		Quarter Ended
		06/30/2011												03/31/2011
		Average				Interest				Average				Average				Interest				Average
Net Interest Margin		Balance				Income/Expense				Yield/Cost				Balance				Income/Expense				Yield/Cost
($ in thousands)
Total loans		$	3,943,136			$	78,488				7.98	%		$	3,792,412			$	76,845				8.22	%
Investment securities			1,553,432				11,599				2.99				1,596,615				14,723				3.74
Cash and other interest earning assets			428,701				403				0.38				334,278				236				0.29
Total interest-earning assets			5,925,269				90,490				6.13				5,723,305				91,804				6.51
Deposits			4,738,233				13,398				1.13				4,673,752				13,383				1.16
Borrowings			426,484				2,214				2.08				373,278				1,827				1.98
Total interest-bearing liabilities		$	5,164,717				15,612				1.21			$	5,047,030				15,210				1.22
Net interest spread						$	74,878				4.92	%						$	76,594				5.29	%
Net interest margin											5.07	%											5.43	%

Cash and Investments decreased by $18 million to $1.9 billion. The portfolio yield at quarter end decreased by 78 basis points to 2.45%, due to the extension of a CMBS bond which reduced the related discount accretion. Overall duration was unchanged at 2.6 years.

Cash and Investments		06/30/2011												03/31/2011
($ in thousands)		Book Value				Yield				Duration				Book Value				Yield				Duration
Cash and cash equivalents		$	382,065				0.29	%			0.1			$	440,928				0.28	%			—
Agency callable notes			124,984				2.01	%			4.6				164,223				1.79	%			4.2
Agency debt			55,918				2.11	%			1.0				76,843				1.73	%			1.0
Agency MBS			1,110,767				2.69	%			3.4				944,968				2.83	%			3.9
Non-agency MBS			87,558				4.39	%			1.9				97,062				4.45	%			2.7
CMBS			136,250				4.50	%			2.5				179,077				13.17	%			1.0
Corporate debt			4,998				3.04	%			0.4				4,998				3.04	%			0.7
Asset-back securities			18,874				11.69	%			1.1				21,398				10.73	%			2.0
U.S. Treasury and agency securities			19,796				2.99	%			6.2				29,795				2.13	%			4.2
		$	1,941,210				2.45	%			2.6				1,959,292				3.23	%			2.6

Total Loans Held for Investment and Loans Held for Sale increased $189 million (4.7%) from the prior quarter as detailed below:

		Quarter Ended
Loan Roll Forward		6/30/2011				03/31/2011				6/30/2010
($ in thousands)
Beginning balance		$	4,012,819			$	3,848,511			$	3,194,251
New fundings			542,728				627,470				549,043
Loans
Principal repayments			(326,884	)			(428,426	)			(328,720	)
Sales			—				(17,373	)			(3,395	)
Transfers to foreclosed assets			(3,270	)			(2,013	)			—
Charge-offs			(23,320	)			(15,350	)			62,851
Ending balance		$	4,202,073			$	4,012,819			$	3,474,030
		Quarter Ended
Loan Portfolio Mix		6/30/2011				03/31/2011				6/30/2010
($ in thousands)
General asset-based		$	592,712			$	756,851			$	666,868
Healthcare asset-based			195,479				181,988				241,995
Equipment finance			283,494				274,669				81,952
Cash flow			1,052,187				835,030				812,859
General commercial real estate			729,316				794,345				964,651
Healthcare real estate			463,460				428,322				450,489
Multifamily			726,582				587,011				174,130
Small business			158,843				154,603				81,086
Total		$	4,202,073			$	4,012,819			$	3,474,030

Deposits were $4.8 billion at quarter end, an increase of $77 million (2%) from the end of the prior quarter. The weighted average interest rate on deposits was 1.13% at the end of the quarter, a decline of 2 basis points from the end of the prior quarter.

FHLB Borrowings were $480 million, an increase of $80 million from the end of the prior quarter. FHLB borrowings are used primarily for interest rate risk management and short-term funding purposes. As of June 30, 2011, the remaining maturities were extended to 3.2 years compared to 2.9 years at the end of the prior quarter.

Allowance for Loan Losses was $109 million, or 2.58% of the loan portfolio, a decrease of $24 million from the end of the prior quarter.

		Quarter Ended
Allowance for Loan Losses		6/30/2011
($ in thousands)		General				Specific				Total				% Loans
Beginning balance		$	130,214			$	2,756			$	132,970				3.31	%
Provision for loan losses			(22,903	)			21,572				(1,331	)
Charge-offs, net			—				(23,047	)			(23,047	)			2.31	%
Ending balance		$	107,311			$	1,281			$	108,592				2.58	%

		Quarter Ended
		3/31/2011
		General				Specific				Total				% Loans
Beginning balance		$	122,997			$	1,881			$	124,878				3.25	%
Provision for loan losses			7,217				4,025				11,242
Charge-offs, net			—				(3,150	)			(3,150	)			0.33	%
Ending balance		$	130,214			$	2,756			$	132,970				3.31	%

Non-Performing Assets were $238 million, an increase of $32 million (16%) from the prior quarter primarily due to one loan that was previously restructured but placed on non-accrual status this quarter, partially offset by a decrease in REO assets. A $107 million non-accrual loan was sold on July 1, 2011, reducing non-performing assets to approximately $131 million.

		6/30/2011								3/31/2011
						% of Total								% of Total
Non-performing Assets		Loan Balance				Assets				Loan Balance				Assets
($ in thousands)
Non-accrual loans — current		$	183,593				2.88	%		$	116,568				1.89	%
Non-accrual loans — delinquent 30-89 days			1,266				0.02				1,688				0.03
Non-accrual loans — delinquent 90+ days			34,802				0.55				56,338				0.91
Total non-accrual loans			219,661				3.45	%			174,594				2.83	%
Accruing loans — delinquent 90+ days			136				—				186				—
REO			17,807				0.28				30,416				0.49
Total non-performing assets		$	237,604				3.73	%		$	205,196				3.32	%

Accruing Troubled Debt Restructurings were $36 million, a decrease of $67 million from the prior quarter primarily due to one loan that was previously restructured but placed on non-accrual status this quarter. In addition, there were $169 million of TDRs which were on non-accrual, though current as to payment status, at quarter end (included in the “Non-accrual loans — current” line in the table above).

Operating Expenses were $33 million, consistent with the prior quarter. Operating expenses included $11 million related to loan referral services provided by the Parent Company.

Income Tax Expense was $19 million for the quarter which reflects an effective tax rate of 40.0%.

OTHER COMMERCIAL FINANCE SEGMENT

This segment includes the CapitalSource Inc. loan portfolio and other business activities at the Parent Company.

Net Loss was $8 million, compared to $35 million in the prior quarter. The decrease in net loss was primarily due to the decrease in provision for loan losses of $31 million.

Interest Income was $41 million, a decrease of $7 million from the prior quarter primarily due to a significant decline in interest-earning assets as paydown of legacy loans totaled $566 million during the quarter.

Unrestricted Cash was $1.2 billion, an increase of $485 million from the prior quarter primarily due to loan repayments and sales.

Total Loans Held for Investment and Loans Held for Sale decreased by $673 million from the prior quarter as detailed below:

		Quarter Ended
Loan Roll Forward		6/30/2011				03/31/2011				6/30/2010
($ in thousands)
Beginning balance		$	2,072,904			$	2,509,699			$	4,766,913
New fundings			—				12,925				16,858
Loans
Principal repayments			(566,085	)			(184,715	)			(622,223	)
Sales			(34,469	)			(176,285	)			(9,374	)
Transfers to foreclosed assets			(7,538	)			—				(23,765	)
Charge-offs			(64,902	)			(88,720	)			70,267
Ending balance		$	1,399,910			$	2,072,904			$	4,198,676

Allowance for Loan Losses was $91 million, or 6.46% of the loan portfolio, a decline of $60 million from the end of the prior quarter.

		Quarter Ended
Allowance for Loan Losses		6/30/2011
($ in thousands)		General				Specific				Total				% Loans
Beginning balance		$	91,873			$	58,431			$	150,304				7.25	%
Provision for loan losses			(17,906	)			20,760				2,854
Charge-offs, net			—				(62,612	)			(62,612	)			15.63	%
Ending balance		$	73,967			$	16,579			$	90,546				6.46	%

		Quarter Ended
		3/31/2011
		General				Specific				Total				% Loans
Beginning balance		$	127,156			$	77,088			$	204,244				8.14	%
Provision for loan losses			(35,283	)			68,850				33,567
Charge-offs, net			—				(87,507	)			(87,507	)			14.97	%
Ending balance		$	91,873			$	58,431			$	150,304				7.25	%

Non-Performing Assets were $327 million, a decline of $136 million (29%) from the prior quarter primarily due to a $118 million decrease in non-accrual loans as a result of loan sales and charge-offs. As of June 30, 2011, 41 loans totaling $128 million were considered impaired and on non-accrual, but were current as to payment status. All collections on those loans are applied to the outstanding principal balance.

		6/30/2011								3/31/2011
						% of Total								% of Total
Non-performing Assets		Loan Balance				Assets				Loan Balance				Assets
($ in thousands)
Non-accrual loans — current		$	135,729				4.49	%		$	163,974				5.23	%
Non-accrual loans — delinquent 30-89 days			756				0.02				31,853				1.02
Non-accrual loans — delinquent 90+ days			120,149				3.98				178,946				5.71
Total non-accrual loans			256,634				8.49	%			374,773				11.96	%
Accruing loans — delinquent 90+ days			39,941				1.32				46,885				1.50
REO			30,624				1.01				41,053				1.31
Total non-performing assets		$	327,199				10.82	%		$	462,711				14.77	%

Accruing Troubled Debt Restructurings were $127 million, an increase of $12 million from the prior quarter primarily due to two loans totaling $9 million that were restructured in the quarter. In addition, there were $77 million of TDRs at quarter end which were on non-accrual, though current as to payment status (included in the “Non-accrual loans — current” line in the table above).

Other income was $25 million for the quarter, compared to $32 million for the prior quarter, primarily due to decreased gains on investment sales, partially offset by lower expenses of real estate owned and other foreclosed assets and decreased losses on derivatives.

CONSOLIDATED

Net Income was $17 million or $0.05 per diluted share, compared to $3 million, or $0.01 per diluted share, in the prior quarter as detailed below:

		Quarter Ended
														6/30/11 vs. 3/31/11								6/30/11 vs. 6/30/10
Net Income		6/30/11				3/31/11				6/30/10				$				%				$				%
($ in thousands)
Interest income		$	127,425			$	142,152			$	164,720			$	(14,727	)			(11	)%		$	(37,295	)			(23)	%
Interest expense			45,807				46,752				60,757				945				2				14,950				25
Provision for loan losses			1,523				44,809				25,262				43,286				97				23,739				94
Operating expenses			55,322				54,261				53,591				(1,061	)			(2	)			(1,731	)			(3	)
Other income (expense)			9,070				17,991				(34,806	)			(8,921	)			(50	)			43,876				126
Income tax expense (benefit)			17,249				11,162				(4,174	)			(6,087	)			(55	)			(21,423	)			(513	)
Net income			16,594				3,159				18,340				13,435				425				(1,746	)			(10	)

Interest Income was $127 million, a decrease of $15 million (11%) from the prior quarter primarily due to a decline in the average balance of interest-earning assets.

Total Loans Held for Investment and Loans Held for Sale decreased $484 million from the prior quarter as detailed below:

Loan Roll Forward		6/30/2011				03/31/2011				6/30/2010
($ in thousands)
Beginning balance		$	6,085,723			$	6,358,210			$	7,961,164
New fundings			542,728				640,395				565,901
Loans
Principal repayments			(892,969	)			(613,141	)			(950,943	)
Sales			(34,469	)			(193,658	)			(12,769	)
Transfers to foreclosed assets			(10,808	)			(2,013	)			(23,765	)
Charge-offs			(88,222	)			(104,070	)			133,118
Ending balance		$	5,601,983			$	6,085,723			$	7,672,706

Allowance for Loan Losses was $199 million, or 3.55% of the loan portfolio, compared to $283 million or 4.65% at the end of the prior quarter.

Net Charge-Offs were $86 million in the quarter, a decrease of $5 million from the prior quarter. Net charge-offs as a percentage of average loans for the twelve month period ended June 30, 2011 were 5.55%, compared to 5.78% for the twelve month period ended March 31, 2011.

		Quarter Ended
Allowance for Loan Losses		6/30/2011
($ in thousands)		General				Specific				Total				% Loans
Beginning balance		$	222,087			$	61,187			$	283,274				4.65	%
Provision for loan losses			(40,809	)			42,332				1,523
Charge-offs, net			—				(85,659	)			(85,659	)			6.12	%
Ending balance		$	181,278			$	17,860			$	199,138				3.55	%

		Quarter Ended
		3/31/2011
		General				Specific				Total				% Loans
Beginning balance		$	250,153			$	78,969			$	329,122				5.17	%
Provision for loan losses			(28,066	)			72,875				44,809
Charge-offs, net			—				(90,657	)			(90,657	)			5.90	%
Ending balance		$	222,087			$	61,187				283,274				4.65	%

Non-Performing Assets were $565 million, a decline of $103 million (15%) from the prior quarter primarily due to a $73 million decrease in non-accrual loans. As of June 30, 2011, 52 loans totaling $204 million were considered impaired and on non-accrual but were current as to payment status. All collections on those loans are applied to the outstanding principal balance. A $112 million non-accrual loan was sold on July 1, 2011, reducing non-performing assets to approximately $453 million.

		6/30/2011								3/31/2011
						% of Total								% of Total
Non-performing Assets		Loan Balance				Assets				Loan Balance				Assets
($ in thousands)
Non-accrual loans — current		$	319,322				3.43	%		$	280,542				3.03	%
Non-accrual loans — delinquent 30-89 days			2,022				0.02				33,541				0.36
Non-accrual loans — delinquent 90+ days			154,951				1.66				235,284				2.54
Total non-accrual loans			476,295				5.11	%			549,367				5.92	%
Accruing loans — delinquent 90+ days			40,077				0.43				47,071				0.51
REO			48,431				0.52				71,469				0.77
Total non-performing assets		$	564,803				6.06	%		$	667,907				7.20	%

Troubled Debt Restructurings Accruing were $163 million, a decrease of $55 million from the prior quarter. In addition, there were $246 million of TDRs which were on non-accrual, but current as to payment status, at quarter end (included in the “Non-accrual loans — current” line in the table above).

Operating Expenses were $55 million, an increase of $1 million from the prior quarter, primarily due to an increase in professional fees.

		Quarter Ended
Operating Expenses		6/30/2011				3/31/2011
($ in thousands)
Compensation and benefits		$	29,098			$	30,379
Professional fees			10,914				7,188
Other operating expenses			15,310				16,694
Total operating expenses		$	55,322			$	54,261

Income Tax Expense was $17 million for the quarter, primarily related to the change in net deferred tax assets with respect to CapitalSource Bank.

Valuation Allowance related to the Company’s deferred tax assets at quarter end was $437 million, a decrease of $20 million from the end of the prior quarter. The net deferred tax asset at quarter end, after subtracting the valuation allowance, was $47 million, a decrease of $16 million from the prior quarter. The valuation allowance is a non-cash accounting charge that will exist until there is sufficient positive evidence to support its reduction or reversal.

Book Value Per Share was $6.53 at the end of the quarter, an increase of $0.12 from the end of the prior quarter. Total shareholders’ equity was $2.1 billion at the end of the quarter, an increase of $39 million from the prior quarter primarily due to net income and an increase in accumulated other comprehensive income due to a tax benefit, unrealized gains on agency MBS, gains on foreign currency translation and mark-to-market gains on debt securities.

Average Diluted Shares Outstanding were 327.1 million shares for the quarter, compared to 327.0 million shares for the prior quarter. Total outstanding shares at June 30, 2011 were 323.2 million.

Quarterly Cash Dividend of $0.01 per common share was paid on June 30, 2011 to common shareholders of record on June 15, 2011.

Conference Call Details

A conference call to discuss the results will be hosted on Friday, July 29, 2011 at 8:30 a.m. EST. Interested parties may access the call via webcast on the Investor Relations section of the CapitalSource web site at http://www.capitalsource.com/investor_relations. An audio replay will also be available on the website from approximately 12 Noon EDT July 29, 2011 through October 29, 2011.

CapitalSource Bank will file its Consolidated Reports of Condition and Income for A Bank With Domestic Offices Only FFIEC 041, for the quarter ended June 30, 2011 (the Call Report) with the Federal Deposit Insurance Corporation (FDIC) on or before July 30, 2011. The Call Report may be found on the FDIC website at http://cdr.ffiec.gov/Public/ following filing by CapitalSource Bank and posting by the FDIC.

About CapitalSource

CapitalSource Inc. (NYSE: CSE) is a commercial lender that provides financial products to small and middle market businesses nationwide and offers depository products and services in southern and central California through its wholly owned subsidiary CapitalSource Bank. As of June 30, 2011, CapitalSource had total assets of $9.3 billion and $4.8 billion in deposits. Visit www.capitalsource.com for more information.

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, strategies, goals, and projections and including statements about projected loan originations, our expectations regarding our application to become a bank holding company and convert CapitalSource Bank’s charter to a commercial charter, as well as the impact of the timing of the conversion on our profitability and growth, growing our business and assets, return of excess capital at the Parent Company to shareholders, and projected return on average assets, all 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,’ ‘assume,’ ‘intend,’ ‘believe,’ ‘expect,’ ‘estimate,’ ‘forecast,’ ‘plan,’ ‘position,’ ‘project,’ ‘will,’ ‘should,’ ‘would,’ ‘seek,’ ‘continue,’ ‘outlook,’ ‘look forward,’ and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding preliminary and future financial and operating results and future transactions and their 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: changes in economic or market conditions or investment or lending opportunities; regulatory restrictions; continued or worsening disruptions in credit and other markets; increase in interest rates and lending spreads; competitive and other market pressures on product pricing and services; reduced demand for our services; declines in asset values; expenses being higher than the income generated by the portfolio; additional capital needed by CS Bank to meet regulatory requirements; drawdown of unfunded commitments substantially in excess of historical drawings; loan losses; substantial run off of CapitalSource Bank portfolio; compression of spreads; higher than anticipated increases in operating expenses; success and timing of other business strategies; and other factors described in CapitalSource’s 2010 Annual Report on Form 10-K and documents subsequently filed by CapitalSource with the Securities and Exchange Commission. All forward-looking statements included in this 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 except as required by applicable law.

CapitalSource Second Quarter 2011 — Financial Supplement

Table of Contents

Consolidated Balance Sheets			13
Consolidated Statements of Income			14
Segment Statements of Income			15
Segment Balance Sheets			16
Selected Financial Data			17
Credit Quality Data			18

CapitalSource Second Quarter 2011 — Financial Supplement

CapitalSource Inc.
Consolidated Balance Sheets
($ in thousands)

		June 30,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Cash and cash equivalents		$	1,581,266			$	820,450
Restricted cash			101,256				128,586
Investment securities:
Available-for-sale, at fair value			1,472,743				1,522,911
Held-to-maturity, at amortized cost			136,250				184,473
Total investment securities			1,608,993				1,707,384
Loans:
Loans held for sale			119,247				205,334
Loans held for investment			5,482,736				6,152,876
Less deferred loan fees and discounts			(77,591	)			(106,438	)
Less allowance for loan losses			(199,138	)			(329,122	)
Loans held for investment, net			5,206,007				5,717,316
Total loans			5,325,254				5,922,650
Interest receivable			38,117				57,393
Other investments			61,665				71,889
Goodwill			173,135				173,135
Other assets			425,258				563,920
Total assets		$	9,314,944			$	9,445,407
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits		$	4,785,790			$	4,621,273
Credit facilities			—				67,508
Term debt			697,910				979,254
Other borrowings			1,451,983				1,375,884
Other liabilities			268,911				347,546
Total liabilities			7,204,594				7,391,465
Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)			—				—
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 323,179,426 and 323,225,355 shares issued and shares outstanding, respectively)			3,232				3,232
Additional paid-in capital			3,917,731				3,911,341
Accumulated deficit			(1,857,311	)			(1,870,572	)
Accumulated other comprehensive income, net			46,698				9,941
Total shareholders’ equity			2,110,350				2,053,942
Total liabilities and shareholders’ equity		$	9,314,944			$	9,445,407

CapitalSource Second Quarter 2011 — Financial Supplement

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,
		2011				2011				2010				2011				2010
		(Unaudited)												(Unaudited)
Net interest income:
Interest income:
Loans		$	113,647			$	123,500			$	148,797			$	237,147			$	305,047
Investment securities			12,688				18,352				15,619				31,040				30,210
Other			1,090				300				304				1,390				877
Total interest income			127,425				142,152				164,720				269,577				336,134
Interest expense:
Deposits			13,398				13,383				15,279				26,781				31,637
Borrowings			32,409				33,369				45,478				65,778				94,121
Total interest expense			45,807				46,752				60,757				92,559				125,758
Net interest income			81,618				95,400				103,963				177,018				210,376
Provision for loan losses			1,523				44,809				25,262				46,332				244,202
Net interest income (loss) after provision for loan losses			80,095				50,591				78,701				130,686				(33,826	)
Operating expenses:
Compensation and benefits			29,098				30,379				29,423				59,477				63,606
Professional fees			10,914				7,188				8,497				18,102				18,867
Other administrative expenses			15,310				16,694				15,671				32,004				34,323
Total operating expenses			55,322				54,261				53,591				109,583				116,796
Other income (expense):
Gain on investments, net			8,725				23,515				10,257				32,240				16,336
Loss on derivatives			(271	)			(1,878	)			(3,614	)			(2,149	)			(7,951	)
Net expense of real estate owned and other foreclosed assets			(10,355	)			(10,173	)			(43,175	)			(20,528	)			(83,667	)
Other income, net			10,971				6,527				1,726				17,498				18,201
Total other income (expense)			9,070				17,991				(34,806	)			27,061				(57,081	)
Net income (loss) from continuing operations before income taxes			33,843				14,321				(9,696	)			48,164				(207,703	)
Income tax expense (benefit)			17,249				11,162				(4,174	)			28,411				16,832
Net income (loss) from continuing operations			16,594				3,159				(5,522	)			19,753				(224,535	)
Net income from discontinued operations, net of taxes			—				—				2,166				—				9,489
Net gain from sale of discontinued operations, net of taxes			—				—				21,696				—				21,696
Net income (loss)		$	16,594			$	3,159			$	18,340			$	19,753			$	(193,350	)
Basic income (loss) per share:
From continuing operations		$	0.05			$	0.01			$	(0.02	)		$	0.06			$	(0.70	)
From discontinued operations		$	—			$	—			$	0.08			$	—			$	0.10
Net income (loss) per share		$	0.05			$	0.01			$	0.06			$	0.06			$	(0.60	)
Diluted income (loss) per share:
From continuing operations		$	0.05			$	0.01			$	(0.02	)		$	0.06			$	(0.70	)
From discontinued operations		$	—			$	—			$	0.08			$	—			$	0.10
Net income (loss) per share		$	0.05			$	0.01			$	0.06			$	0.06			$	(0.60	)
Average shares outstanding:
Basic			320,426,484				320,196,690				320,802,358				320,311,588				320,547,818
Diluted			327,087,717				326,963,738				320,802,358				327,025,588				320,547,818
Dividends declared per share		$	0.01			$	0.01			$	0.01			$	0.02			$	0.02

CapitalSource Inc.
Segment Statements of Income
(Unaudited)
($ in thousands)

		Three Months Ended June 30, 2011																Three Months Ended March 31, 2011
						OTHER																OTHER
		CAPITALSOURCE				COMMERCIAL				INTERCOMPANY								CAPITALSOURCE				COMMERCIAL				INTERCOMPANY
		BANK				FINANCE				ELIMINATIONS				CONSOLIDATED				BANK				FINANCE				ELIMINATIONS				CONSOLIDATED
Net interest income:
Interest income		$	90,490			$	40,701			$	(3,766	)		$	127,425			$	91,804			$	47,614			$	2,734			$	142,152
Interest expense			15,612				30,195				—				45,807				15,210				31,542				—				46,752
Net interest income			74,878				10,506				(3,766	)			81,618				76,594				16,072				2,734				95,400
Provision for loan losses			(1,331	)			2,854				—				1,523				11,242				33,567				—				44,809
Net interest income (loss) after provision for loan losses			76,209				7,652				(3,766	)			80,095				65,352				(17,495	)			2,734				50,591
Compensation and benefits			11,926				17,759				(587	)			29,098				11,708				19,502				(831	)			30,379
Professional fees			449				10,465				—				10,914				364				6,824				—				7,188
Other operating expenses			20,219				13,452				(18,361	)			15,310				20,869				15,000				(19,175	)			16,694
Total operating expenses			32,594				41,676				(18,948	)			55,322				32,941				41,326				(20,006	)			54,261
Total other income			3,000				24,751				(18,681	)			9,070				2,965				32,354				(17,328	)			17,991
Net income (loss) before income taxes			46,615				(9,273	)			(3,499	)			33,843				35,376				(26,467	)			5,412				14,321
Income tax expense (benefit)			18,840				(1,591	)			—				17,249				3,095				8,067				—				11,162
Net income (loss)		$	27,775			$	(7,682	)		$	(3,499	)		$	16,594			$	32,281			$	(34,534	)		$	5,412			$	3,159

		Six Months Ended June 30, 2011																Six Months Ended June 30, 2010
						OTHER																OTHER
		CAPITALSOURCE				COMMERCIAL				INTERCOMPANY								CAPITALSOURCE				COMMERCIAL				INTERCOMPANY
		BANK				FINANCE				ELIMINATIONS				CONSOLIDATED				BANK				FINANCE				ELIMINATIONS				CONSOLIDATED
Net interest income:
Interest income		$	182,294			$	88,315			$	(1,032	)		$	269,577			$	160,380			$	179,666			$	(3,912	)		$	336,134
Interest expense			30,822				61,737				—				92,559				33,732				92,026				—				125,758
Net interest income			151,472				26,578				(1,032	)			177,018				126,648				87,640				(3,912	)			210,376
Provision for loan losses			9,911				36,421				—				46,332				92,798				151,404				—				244,202
Net interest income (loss) after provision for loan losses			141,561				(9,843	)			(1,032	)			130,686				33,850				(63,764	)			(3,912	)			(33,826	)
Compensation and benefits			23,634				37,261				(1,418	)			59,477				22,138				41,468				—				63,606
Professional fees			813				17,289				—				18,102				997				17,870				—				18,867
Other operating expenses			41,088				28,452				(37,536	)			32,004				30,448				31,561				(27,686	)			34,323
Total operating expenses			65,535				83,002				(38,954	)			109,583				53,583				90,899				(27,686	)			116,796
Total other income (expense)			5,965				57,105				(36,009	)			27,061				15,226				(44,668	)			(27,639	)			(57,081	)
Net income (loss) from continuing operations before income taxes			81,991				(35,740	)			1,913				48,164				(4,507	)			(199,331	)			(3,865	)			(207,703	)
Income tax expense (benefit)			21,935				6,476				—				28,411				(2,519	)			19,351				—				16,832
Net income (loss) from continuing operations		$	60,056			$	(42,216	)		$	1,913			$	19,753			$	(1,988	)		$	(218,682	)		$	(3,865	)		$	(224,535	)