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 SECOND QUARTER 2008 RESULTS

•

Credit Performance Within Historical Range

•

GAAP Net Income of $0.25 per Diluted Share

•

CapitalSource Bank Opened for Business

Chevy Chase, Md., August 5 — CapitalSource Inc. (NYSE: CSE) today announced financial results for the second quarter 2008. GAAP net income for the quarter was $60.1 million, or $0.25 per diluted share, and Adjusted Earnings for the quarter was $29.1 million, or $0.12 per diluted share.

“This is an exciting time for CapitalSource. Within the last 10 days we have commenced operations at 22 branches of CapitalSource Bank in California with $5.2 billion in deposits and started approving new loans in the Bank,” said John K. Delaney, Chairman and CEO of CapitalSource. “We are now extremely well positioned to grow our market leading commercial lending business inside our new bank — while maintaining our uncompromising and historically strong credit standards,” added Delaney.

“We are very pleased with the performance of our commercial lending business, including our continued strong core lending spread,” said Thomas A. Fink, Chief Financial Officer. “We are also pleased with the credit performance of our commercial loan portfolio this quarter. Our credit metrics remain within our historical range, despite a modest decline in loan balance over the past four quarters, and our newly established depository makes our already strong balance sheet and liquidity even stronger,” added Fink.

Commercial Finance Segment

	•		Total commercial loans were approximately $9.4 billion at quarter end, a decrease of approximately $331.4 million from the prior quarter, as loan runoff outpaced loan growth.
	•		Net investment income was $134.5 million for the quarter, a decrease of $9.9 million from the prior quarter.

	•		Interest income was $201.6 million for the quarter, a decrease of $22.8 million from the prior quarter, consistent with a decrease in short term interest rates. In the second quarter weighted average LIBOR decreased by 71 basis points and the weighted average prime rate decreased by 114 basis points. The negative impact of falling interest rates was partially offset by interest rate floors in approximately 41% of the Company’s commercial loans as of June 30, 2008.
	•		Yield on average interest-earning assets was 9.75% for the quarter, a decrease of 51 basis points from the prior quarter.
	•		Core lending spread, defined as loan yield less prepayment-related fee income and average one-month LIBOR, was 7.05%, a decrease of 7 basis points compared to the prior quarter.
	•		Prepayment-related fee income was $10.8 million for the quarter and contributed 43 basis points to yield, an increase of $7.3 million from the prior quarter when prepayment-related fee income contributed only 14 basis points to yield.
	•		Cost of funds was 5.40% for the quarter, a decrease of 5 basis points from the prior quarter primarily due to declining interest rates, but largely offset by higher financing fees and higher credit spreads in the quarter. Overall borrowing spread to average one-month LIBOR was 2.81%, an increase of 66 basis points from the prior quarter.
	•		Leverage, as measured by the ratio of total debt-to-equity at the end of the quarter, was 2.98x, a decrease from 4.37x at the end of the prior quarter, primarily due to the underwritten equity offering the Company completed during June.
	•		Net finance margin, defined as net investment income divided by average interest-earning assets, was 5.40% for the quarter, a decrease of 34 basis points from the prior quarter primarily due to the increase in our borrowing spread to LIBOR partially offset by higher prepayment-related fee income.
	•		Provision for loan losses was $27.5 million for the quarter, bringing the total allowance for loan losses to $141.1 million or 1.35% of total commercial assets, an increase of 8 basis points from the prior quarter.
	•		Adjusted earnings contributed by the Commercial Finance segment was $60.1 million ($0.24 per diluted share), compared to $113.5 million in the prior quarter. The lower adjusted earnings in the quarter was due primarily to an increase in income taxes, an increase in charge-offs and realized losses on derivatives.

Commercial Credit Metrics

	•		Loans on non-accrual status, which the Company considers its primary credit metric, increased by 37 basis points from the prior quarter to 1.99% of commercial assets.
	•		Loans 60 or more days contractually delinquent as a percentage of total commercial assets increased 36 basis points to 1.05%.
	•		Net charge-offs were $23.3 million, an increase of $18.2 million from the prior quarter. As a percentage of average commercial assets, annualized net charge-offs for the quarter were 90 basis points, which is within the historical range.

•

Allowance for loan losses was $141.1 million, an increase of $4.4 million from the prior quarter. As a percentage of commercial assets at quarter end, the allowance for loan losses was 1.35%, an increase of 8 basis points from the prior quarter.

Healthcare Net Lease Segment

•

Direct real estate investments were consistent with the prior quarter at approximately $1.0 billion, decreasing $9.3 million primarily due to depreciation.

Residential Mortgage Investment Portfolio

	•		Mortgage-backed securities declined from $3.31 billion to $1.60 billion, primarily due to the sale of approximately $1.5 billion of Agency MBS and principal paydowns. There was a corresponding decrease in repurchase agreements used to finance the Agency MBS from $3.43 billion to $1.54 billion.
	•		Mortgage-related receivables declined from $1.98 billion to $1.91 billion, primarily due to paydowns during the quarter.

Consolidated Other Income

	•		Gain (loss) on investments, net was ($4.8) million, a decrease from $1.1 million in the prior quarter primarily due to write-downs on three cost basis investments, partially offset by realized gains on investment sales and dividends received.
	•		Gain (loss) on derivatives was $15.1 million, compared to ($38.1) million in the prior quarter, primarily due to net realized and unrealized gains in the fair value of interest rate swaps used to hedge certain assets and liabilities and, thereby, minimize the Company’s exposure to interest rate movements. In Adjusted Earnings for the quarter, the Company removes the impact of unrealized gains and losses on derivatives and foreign currency (net gain of approximately $33.1 million) which resulted in an adjusted earnings loss of $18.0 million.
	•		Gain (loss) on the Residential Mortgage Investment Portfolio, net was $9.1 million compared to ($55.4) million in the prior quarter, primarily due to derivative gains and losses in the Agency MBS portfolio. In Adjusted Earnings for the quarter, the Company realized a net loss of $48.0 million related to the residential mortgage investment portfolio, primarily due to $35.0 million net losses incurred in connection with the sale of approximately $1.5 billion of Agency MBS.
	•		Other income (expense), net was $19.2 million compared to ($4.7) million in the prior quarter, primarily due to a gain on extinguishment of debt and equity earnings.

Funding and Liquidity

	•		During the quarter, the Company raised $365.8 million in connection with the issuance of 34.5 million shares in an underwritten equity offering.
	•		During the quarter, the Company raised $64.7 million through the issuance of approximately 4.7 million shares of common stock under its Dividend Reinvestment and Stock Purchase Plan (DRIP). The Company does not intend to accept direct purchase or waiver investments pursuant to the DRIP program during the remainder of the third quarter of 2008.
	•		After the quarter closed, CapitalSource Bank commenced operations with approximately $5.2 billion of retail deposits, 22 retail bank branches in Southern and Central California and approximately $5.2 billion in cash and other assets. The Bank used a portion of its cash to purchase approximately $2.1 billion in commercials loans from CapitalSource and began operations with a total capital ratio of more than 15.6%.
	•		The Company used the proceeds of the loan sale to CapitalSource Bank to reduce its credit facility borrowings and certain securitizations by approximately $1.6 billion and to fund approximately $500 million of the initial Bank capitalization of $921 million.

Operating Expenses

•

Operating expenses as a percentage of average total assets (excluding sale-leaseback depreciation) increased in the quarter to 1.56%, an increase of 25 basis points from the prior quarter due largely to a decline in average asset balance, resulting from the sale of Agency MBS and the decrease in commercial loan balance.

Income Tax Rate

•

Income taxes in the quarter were $37.2 million, compared to $3.1 million in the prior quarter, primarily due to significantly higher pre-tax GAAP income. The full year projected tax rate is 35%.

Return on Equity

•

Consolidated return on average equity, was 8.66% for the quarter, compared to 1.02% in the prior quarter.

Share Count

•

Weighted average dilutive shares outstanding were 236.4 million shares for the quarter ended June 30, 2008, compared to 221.5 million shares at the end of the prior quarter.

Dividends

•

A regular quarterly cash dividend of $0.60 per common share was paid on June 30, 2008 to common shareholders of record on June 16, 2008.

CapitalSource will hold an analyst and investor conference call with a simultaneous webcast on August 5, 2008 at 8:30 a.m. (Eastern Time) to discuss the Company’s second quarter 2008 results. To participate, analysts and investors may call (888) 713-4218 from within United States or (617) 213-4870 from outside

the United States, utilizing the pass code 67380064. Other interested parties may access a webcast of the conference call at the Investor Relations section of the CapitalSource website at www.capitalsource.com.

A telephonic replay will be available from approximately 10:30 a.m. (Eastern Time) on August 5, 2008 through August 12, 2008. Please call (888) 286-8010 from the United States or (617) 801-6888 from outside the United States with the pass code 72241169. An audio replay will also be available on the Investor Relations section of the CapitalSource website. A transcript of the earnings conference call will also be posted to the Investor Relations section of the CapitalSource website on August 5, 2008.

About CapitalSource

CapitalSource Inc. (NYSE: CSE) is a commercial lender offering focused lending products serving clients in the middle market. CapitalSource Inc. and its subsidiaries collectively managed total assets of approximately $17.3 billion as of June 30, 2008, including a commercial loan portfolio of $9.4 billion and a healthcare net lease portfolio of $1.0 billion. CapitalSource operates principally through its CapitalSource Bank subsidiary, which had $5.2 billion in deposits and 22 retail banking branches as of July 25, 2008. CapitalSource is headquartered in Chevy Chase, MD. For more information about CapitalSource, visit 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 and including statements about growing our commercial lending business and maintaining our credit standards, the strength of our balance sheet and liquidity and our intention not to accept direct purchase or waiver investments pursuant to our DRIP program during the remainder of the third quarter of 2008, 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,” “plan,” “will,” “look forward,” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding 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: the recently completed bank transaction; changes in economic conditions; continued or worsening disruptions in credit and other markets; movements in interest rates and lending spreads; our ability to successfully and cost effectively operate CapitalSource Bank; our ability to successfully grow CapitalSource Bank’s deposits or deploy its capital in favorable lending transactions or acquire assets in accordance with our strategic plan; competitive and other market pressures on product pricing and services; success and timing of other business strategies; the nature, extent, and timing of governmental actions and reforms; changes in tax laws or regulations affecting REITs, extended disruption of vital infrastructure; and other factors described in CapitalSource’s 2007 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 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.

CapitalSource Second Quarter 2008 – Financial Supplement

Table of Contents

Consolidated Balance Sheets		7
Consolidated Statements of Income		8
Segment Data		9
Adjusted Earnings Definition		10
Adjusted Earnings Reconciliation		11-13
Selected Financial Data		14-15
Commercial Asset Portfolio		16
Credit Quality Data		17

CapitalSource Second Quarter 2008 – Financial Supplement
CapitalSource Inc.
Consolidated Balance Sheets
(Unaudited)
($ in thousands)

		June 30,				March 31,				June 30,
		2008				2008				2007
ASSETS
Cash and cash equivalents		$	169,667			$	270,789			$	271,492
Restricted cash			428,955				527,258				221,650
Mortgage-related receivables, net			1,907,229				1,978,852				2,162,715
Mortgage-backed securities pledged, trading			1,606,475				3,310,176				4,290,965
Receivables under reverse-repurchase agreements			—				—				26,237
Loans held for sale			98,817				37,989				154,229
Loans:
Loans			9,329,068				9,721,333				8,761,127
Less deferred loan fees and discounts			(169,954	)			(151,291	)			(128,785	)
Less allowance for loan losses			(141,128	)			(136,745	)			(127,547	)
Loans, net			9,017,986				9,433,297				8,504,795
Direct real estate investments, net			1,007,699				1,016,972				1,032,838
Investments			289,943				270,481				197,543
Other assets			366,832				855,624				299,226
Total assets		$	14,893,603			$	17,701,438			$	17,161,690
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Liabilities:
Repurchase agreements		$	1,541,795			$	3,427,856			$	4,217,086
Credit facilities			1,687,242				2,373,106				3,671,041
Term debt			6,562,841				7,021,686				5,652,228
Other borrowings			1,669,195				1,574,994				1,082,176
Other liabilities			357,765				605,586				214,806
Total liabilities			11,818,838				15,003,228				14,837,337
Noncontrolling interests			15,246				43,938				44,871
Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)			—				—				—
Common stock ($0.01 par value, 1,200,000,000, 500,000,00 and 500,000,000 shares authorized; 276,139,152, 234,844,241 and 191,877,813 shares issued and shares outstanding, respectively)			2,761				2,348				1,918
Additional paid-in capital			3,586,096				3,097,310				2,361,158
Accumulated deficit			(538,619	)			(455,041	)			(85,978	)
Accumulated other comprehensive income, net			9,281				9,655				2,384
Total shareholders’ equity			3,059,519				2,654,272				2,279,482
Total liabilities, noncontrolling interests and shareholders’ equity		$	14,893,603			$	17,701,438			$	17,161,690

CapitalSource Second Quarter 2008 – Financial Supplement
CapitalSource Inc.
Consolidated Statements of Income
(Unaudited)
($ in thousands, except per share data)

		Three Months Ended
		June 30,				March 31,				June 30,				Six Months Ended June 30,
		2008				2008				2007				2008				2007
Net investment income:
Interest income		$	254,222			$	308,325			$	311,184			$	562,547			$	600,738
Fee income			41,267				33,641				45,056				74,908				95,083
Total interest and fee income			295,489				341,966				356,240				637,455				695,821
Operating lease income			24,210				27,690				22,118				51,900				42,406
Total investment income			319,699				369,656				378,358				689,355				738,227
Interest expense			160,083				188,945				200,291				349,028				386,940
Net investment income			159,616				180,711				178,067				340,327				351,287
Provision for loan losses			31,674				5,659				17,410				37,333				32,336
Net investment income after provision for loan losses			127,942				175,052				160,657				302,994				318,951
Operating expenses:
Compensation and benefits			37,808				31,789				38,615				69,597				78,629
Depreciation of direct real estate investments			8,990				8,916				7,390				17,906				14,152
Other administrative expenses			23,844				26,804				20,438				50,648				38,984
Total operating expenses			70,642				67,509				66,443				138,151				131,765
Other income (expense):
Diligence deposits forfeited			1,714				647				1,813				2,361				2,675
(Loss) gain on investments, net			(4,827	)			1,141				17,002				(3,686	)			23,165
Gain (loss) on derivatives			15,098				(38,111	)			3,153				(23,013	)			898
Gain (loss) on residential mortgage investment portfolio			9,060				(55,377	)			(13,846	)			(46,317	)			(19,544	)
Other income (expense), net			19,241				(4,699	)			12,957				14,542				19,934
Total other income (expense)			40,286				(96,399	)			21,079				(56,113	)			27,128
Noncontrolling interests expense			283				1,297				1,272				1,580				2,602
Net income before income taxes			97,303				9,847				114,021				107,150				211,712
Income taxes			37,243				3,076				29,693				40,319				48,694
Net income		$	60,060			$	6,771			$	84,328			$	66,831			$	163,018
Net income per share:
Basic		$	0.26			$	0.03			$	0.45			$	0.29			$	0.89
Diluted		$	0.25			$	0.03			$	0.45			$	0.29			$	0.88
Adjusted earnings per share:
Diluted		$	0.12			$	0.51			$	0.68			$	0.60			$	1.31
Average shares outstanding:
Basic			235,076,287				220,085,148				185,371,033				227,580,584				182,274,147
Diluted			236,445,230				221,493,514				187,428,430				228,969,238				184,512,451
Dividends declared per share		$	0.60			$	0.60			$	0.60			$	1.20			$	1.18

CapitalSource Second Quarter 2008 – Financial Supplement

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

		Three Months Ended June 30, 2008																Three Months Ended March 31, 2008
										Residential Mortgage				Consolidated												Residential Mortgage				Consolidated
		Commercial Finance				Healthcare Net Lease				Investment				Total				Commercial Finance				Healthcare Net Lease				Investment				Total
Net investment income:
Interest income		$	201,626			$	347			$	52,249			$	254,222			$	224,383			$	482			$	83,460			$	308,325
Fee income			41,260				7				—				41,267				33,630				11				—				33,641
Total interest and fee income			242,886				354				52,249				295,489				258,013				493				83,460				341,966
Operating lease income			—				24,210				—				24,210				—				27,690				—				27,690
Total investment income			242,886				24,564				52,249				319,699				258,013				28,183				83,460				369,656
Interest expense			108,425				10,859				40,799				160,083				113,643				10,796				64,506				188,945
Net investment income			134,461				13,705				11,450				159,616				144,370				17,387				18,954				180,711
Provision for loan losses			27,465				—				4,209				31,674				2,971				—				2,688				5,659
Net investment income after provision for loan losses			106,996				13,705				7,241				127,942				141,399				17,387				16,266				175,052
Other operating expenses			57,843				11,380				1,419				70,642				53,137				11,173				3,199				67,509
Total other income (expense)			33,880				(1,416	)			7,822				40,286				(39,757	)			—				(56,642	)			(96,399	)
Noncontrolling interests expense			(369	)			652				—				283				(117	)			1,414				—				1,297
Net income (loss) before income taxes			83,402				257				13,644				97,303				48,622				4,800				(43,575	)			9,847
Income taxes			37,243				—				—				37,243				3,076				—				—				3,076
Net income (loss)		$	46,159			$	257			$	13,644			$	60,060			$	45,546			$	4,800			$	(43,575	)		$	6,771

		Six Months Ended June 30, 2008																Six Months Ended June 30, 2007
										Residential Mortgage				Consolidated												Residential Mortgage				Consolidated
		Commercial Finance				Healthcare Net Lease				Investment				Total				Commercial Finance				Healthcare Net Lease				Investment				Total
Net investment income:
Interest income		$	426,009			$	829			$	135,709			$	562,547			$	436,155			$	294			$	164,289			$	600,738
Fee income			74,890				18				—				74,908				95,083				—				—				95,083
Total interest and fee income			500,899				847				135,709				637,455				531,238				294				164,289				695,821
Operating lease income			—				51,900				—				51,900				—				42,406				—				42,406
Total investment income			500,899				52,747				135,709				689,355				531,238				42,700				164,289				738,227
Interest expense			222,068				21,655				105,305				349,028				214,616				19,148				153,176				386,940
Net investment income			278,831				31,092				30,404				340,327				316,622				23,552				11,113				351,287
Provision for loan losses			30,436				—				6,897				37,333				32,336				—				—				32,336
Net investment income after provision for loan losses			248,395				31,092				23,507				302,994				284,286				23,552				11,113				318,951
Other operating expenses			110,980				22,553				4,618				138,151				110,265				18,520				2,980				131,765
Total other (expense) income			(5,877	)			(1,416	)			(48,820	)			(56,113	)			46,672				—				(19,544	)			27,128
Noncontrolling interests expense			(486	)			2,066				—				1,580				(457	)			3,059				—				2,602
Net income (loss) before income taxes			132,024				5,057				(29,931	)			107,150				221,150				1,973				(11,411	)			211,712
Income taxes			40,319				—				—				40,319				48,694				—				—				48,694
Net income (loss)		$	91,705			$	5,057			$	(29,931	)		$	66,831			$	172,456			$	1,973			$	(11,411	)		$	163,018

CapitalSource Second Quarter 2008 – Financial Supplement

CapitalSource Inc.
Adjusted Earnings
(Unaudited)

     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 items, including real estate depreciation, amortization of deferred financing fees, non-cash equity compensation, certain realized and unrealized gains and losses on residential mortgage investments held in our portfolio as of the balance sheet date 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.

CapitalSource Second Quarter 2008 – Financial Supplement

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 June 30, 2008, March 31, 2008 and June 30, 2007, and the six months ended June 30, 2008 and 2007 was as follows:

		Three Months Ended												Six Months Ended
		June 30, 2008				March 31, 2008				June 30, 2007				June 30, 2008				June 30, 2007
Net income (loss)		$	60,060			$	6,771			$	84,328			$	66,831			$	163,018
Add:
Real estate depreciation and amortization (1)			8,459				8,760				7,896				17,219				14,658
Amortization of deferred financing fees (2)			26,810				11,953				6,823				38,763				12,332
Non-cash equity compensation			12,030				6,514				9,859				18,544				20,571
Net realized and unrealized (gains) losses on residential mortgage investment portfolio including related derivatives (3)			(57,022	)			27,394				15,846				(29,628	)			23,381
Unrealized (gain) loss on derivatives and foreign currencies, net			(33,140	)			47,634				(1,287	)			14,492				(959	)
Unrealized loss on investments, net			4,475				4,657				1,170				9,132				1,217
Provision for loan losses			32,028				5,659				17,410				37,689				32,336
Recoveries (4)			(356	)			—				—				(356	)			—
Less:
Charge offs			24,237				6,076				13,625				30,313				23,876
Non-recurring items			—				—				—				—				—
Adjusted earnings		$	29,107			$	113,266			$	128,420			$	142,373			$	242,678
Net income per share:
Basic — as reported		$	0.26			$	0.03			$	0.45			$	0.29			$	0.89
Diluted — as reported		$	0.25			$	0.03			$	0.45			$	0.29			$	0.88
Average shares outstanding:
Basic — as reported			235,076,287				220,085,148				185,371,033				227,580,584				182,274,147
Diluted — as reported			236,445,230				221,493,514				187,428,430				228,969,238				184,512,451
Adjusted earnings per share:
Basic		$	0.12			$	0.51			$	0.69			$	0.63			$	1.33
Diluted (5)		$	0.12			$	0.51			$	0.68			$	0.62			$	1.31
Average shares outstanding:
Basic			235,076,287				220,085,148				185,371,033				227,580,584				182,274,147
Diluted (6)			236,445,230				221,493,514				189,425,285				228,969,238				186,737,699

CapitalSource Second Quarter 2008 — Financial Supplement
CapitalSource Inc.
Adjusted Earnings Reconciliations
(Unaudited)
($ in thousands, except per share data)

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

		Three Months Ended June 30, 2008
		Commercial				Healthcare				Residential Mortgage
		Finance				Net Lease				Investment				Consolidated Total
Net income		$	46,160			$	257			$	13,643			$	60,060
Add:
Real estate depreciation and amortization (1)			—				8,459				—				8,459
Amortization of deferred financing fees (2)			26,432				145				233				26,810
Non-cash equity compensation			12,030				—				—				12,030
Net realized and unrealized gains on residential mortgage investment portfolio including related derivatives (3)			—				—				(57,022	)			(57,022	)
Unrealized gain on derivatives and foreign currencies, net			(33,140	)			—				—				(33,140	)
Unrealized loss on investments, net			4,475				—				—				4,475
Provision for loan losses			27,819				—				4,209				32,028
Recoveries (4)			(356	)			—				—				(356	)
Less:
Charge offs			23,325				—				912				24,237
Non-recurring items			—				—				—				—
Adjusted earnings		$	60,095			$	8,861			$	(39,849	)		$	29,107
Net income per share:
Basic — as reported		$	0.20			$	—			$	0.06			$	0.26
Diluted — as reported		$	0.19			$	—			$	0.06			$	0.25
Average shares outstanding:
Basic — as reported			235,076,287				235,076,287				235,076,287				235,076,287
Diluted — as reported			236,445,230				236,445,230				236,445,230				236,445,230
Adjusted earnings per share:
Basic		$	0.25			$	0.04			$	(0.17	)		$	0.12
Diluted		$	0.25			$	0.04			$	(0.17	)		$	0.12
Average shares outstanding:
Basic			235,076,287				235,076,287				235,076,287				235,076,287
Diluted			236,445,230				236,445,230				236,445,230				236,445,230

		Three Months Ended March 31, 2008
		Commercial				Healthcare				Residential Mortgage
		Finance				Net Lease				Investment				Consolidated Total
Net income (loss)		$	45,546			$	4,800			$	(43,575	)		$	6,771
Add:
Real estate depreciation and amortization (1)			—				8,760				—				8,760
Amortization of deferred financing fees (2)			11,316				312				325				11,953
Non-cash equity compensation			6,514				—				—				6,514
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)			—				—				27,394				27,394
Unrealized loss on derivatives and foreign currencies, net			47,634				—				—				47,634
Unrealized loss on investments, net			4,657				—				—				4,657
Provision for loan losses			2,971				—				2,688				5,659
Recoveries (4)			—				—				—				—
Less:
Charge offs			5,155				—				921				6,076
Non-recurring items			—				—				—				—
Adjusted earnings		$	113,483			$	13,872			$	(14,089	)		$	113,266
Net income per share:
Basic — as reported		$	0.21			$	0.02			$	(0.20	)		$	0.03
Diluted — as reported		$	0.21			$	0.02			$	(0.20	)		$	0.03
Average shares outstanding:
Basic — as reported			220,085,148				220,085,148				220,085,148				220,085,148
Diluted — as reported			221,493,514				221,493,514				221,493,514				221,493,514
Adjusted earnings per share:
Basic		$	0.51			$	0.06			$	(0.06	)		$	0.51
Diluted		$	0.51			$	0.06			$	(0.06	)		$	0.51
Average shares outstanding:
Basic			220,085,148				220,085,148				220,085,148				220,085,148
Diluted			221,493,514				221,493,514				221,493,514				221,493,514

CapitalSource Second Quarter 2008 — Financial Supplement
CapitalSource Inc.
Adjusted Earnings Reconciliations
(Unaudited)
($ in thousands, except per share data)

For our Commercial Finance segment, Healthcare Net Lease segment and Residential Mortgage segment, reconciliations of reported net income to adjusted earnings for the three months ended June 30, 2007, were as follows:

		Three Months Ended June 30, 2007
		Commercial				Healthcare Net				Residential Mortgage
		Finance				Lease				Investment				Consolidate Total
Net income (loss)		$	93,727			$	715			$	(10,114	)		$	84,328
Add:
Real estate depreciation and amortization (1)			—				7,896				—				7,896
Amortization of deferred financing fees (2)			6,063				438				322				6,823
Non-cash equity compensation			9,859				—				—				9,859
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)			—				—				15,846				15,846
Unrealized gain on derivatives and foreign currencies, net			(1,287	)			—				—				(1,287	)
Unrealized loss on investments, net			1,170				—				—				1,170
Provision for loan losses			17,410				—				—				17,410
Recoveries (4)			—				—				—				—
Less:
Charge offs			13,625				—				—				13,625
Non-recurring items			—				—				—				—
Adjusted earnings		$	113,317			$	9,049			$	6,054			$	128,420
Net income per share:
Basic — as reported		$	0.51			$	—			$	(0.06	)		$	0.45
Diluted — as reported		$	0.50			$	—			$	(0.05	)		$	0.45
Average shares outstanding:
Basic — as reported			185,371,033				185,371,033				185,371,033				185,371,033
Diluted — as reported			187,428,430				187,428,430				187,428,430				187,428,430
Adjusted earnings per share:
Basic		$	0.61			$	0.05			$	0.03			$	0.69
Diluted (5)		$	0.60			$	0.05			$	0.03			$	0.68
Average shares outstanding:
Basic			185,371,033				185,371,033				185,371,033				185,371,033
Diluted (6)			189,425,285				189,425,285				189,425,285				189,425,285

CapitalSource Second Quarter 2008 — Financial Supplement
CapitalSource Inc.
Selected Financial Data
(Unaudited)

		Three Months Ended
		June 30,				March 31,				June 30,				Six Months Ended June 30,
		2008				2008				2007				2008				2007
Commercial Finance Segment:
Performance ratios:
Return on average assets			1.78	%			1.74	%			4.06	%			1.76	%			3.89	%
Return on average equity			8.83	%			9.58	%			21.76	%			9.19	%			19.96	%
Adjusted return on average assets			2.32	%			4.34	%			4.91	%			3.34	%			4.80	%
Adjusted return on average equity			11.49	%			23.87	%			26.31	%			17.39	%			24.61	%
Yield on average interest earning assets			9.75	%			10.26	%			12.08	%			10.01	%			12.27	%
Cost of funds			5.40	%			5.45	%			6.12	%			5.42	%			6.09	%
Net finance margin			5.40	%			5.74	%			7.12	%			5.57	%			7.31	%
Operating expenses as a percentage of average total assets			2.24	%			2.03	%			2.39	%			2.13	%			2.49	%
Efficiency ratio (operating expenses / net investment income and other income)			34.36	%			50.79	%			28.14	%			40.66	%			30.35	%
Core lending spread			7.05	%			7.12	%			6.44	%			7.08	%			6.48	%
Leverage ratios:
Total debt to equity (as of period end)			2.98	x			4.37	x			4.51	x			2.98	x			4.51	x
Equity to total assets (as of period end)			24.79	%			18.07	%			17.97	%			24.79	%			17.97	%
Average balances ($ in thousands):
Average loans		$	9,715,111			$	9,848,101			$	8,708,240			$	9,781,606			$	8,413,903
Average assets			10,376,831				10,487,426				9,262,898				10,432,128				8,935,328
Average interest earning assets			9,992,540				10,082,728				9,053,082				10,037,634				8,731,605
Average income earning assets			9,992,540				10,082,728				9,053,082				10,037,634				8,731,605
Average borrowings			8,053,850				8,366,784				7,327,650				8,210,315				7,108,002
Average equity			2,097,063				1,906,553				1,727,297				2,001,808				1,742,379
Healthcare Net Lease Segment:
Performance ratios:
Return on average assets			0.10	%			1.76	%			0.31	%			0.93	%			0.45	%
Return on average equity			0.28	%			5.47	%			0.80	%			2.82	%			1.37	%
Adjusted return on average assets			3.29	%			5.07	%			3.95	%			4.19	%			3.94	%
Adjusted return on average equity			9.68	%			15.82	%			10.18	%			12.68	%			11.90	%
Yield on average income earning assets			9.08	%			10.41	%			10.16	%			9.74	%			10.30	%
Cost of funds			7.16	%			7.07	%			7.11	%			7.12	%			7.92	%
Net finance margin			5.02	%			6.32	%			5.18	%			5.67	%			5.54	%
Operating expenses as a percentage of average total assets			4.23	%			4.09	%			4.13	%			4.16	%			4.25	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			0.89	%			0.83	%			0.91	%			0.86	%			1.00	%
Efficiency ratio (operating expenses / net investment income and other income)			92.60	%			64.26	%			81.36	%			76.00	%			78.63	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)			19.45	%			12.98	%			17.95	%			15.66	%			18.55	%
Leverage ratios:
Total debt to equity (as of period end)			1.63	x			1.57	x			1.54	x			1.63	x			1.54	x
Equity to total assets (as of period end)			34.69	%			35.75	%			36.33	%			34.69	%			36.33	%
Average balances ($ in thousands):
Average assets		$	1,079,855			$	1,096,445			$	919,839			$	1,088,150			$	878,692
Average interest earning assets			26,652				35,296				29,937				30,974				27,127
Average income earning assets			1,095,916				1,102,592				902,906				1,099,254				857,162
Average borrowings			608,298				612,468				601,463				610,384				487,628
Average equity			367,297				351,756				356,522				359,527				290,915