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
Senior Vice President — Investor Relations		Director of Communications
(212) 321-7212		(301) 841-2918

CAPITALSOURCE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS

	•		Pretax Profitability and Significant Margin Expansion at CapitalSource Bank in the Quarter
	•		Healthcare Net Lease Asset Sales and HUD Financing Enhance Parent Liquidity
	•		$70 Million Net Increase in Allowance for Loan Losses in the Quarter
	•		Cumulative Loss Assumptions in Legacy Portfolio Reconfirmed
	•		Mortgage Related Receivables Sold
	•		2010 Quarterly Loan Originations Projected at $250-$350 Million

Chevy Chase, Md., February 25, 2010 — CapitalSource Inc. (NYSE: CSE) today announced financial results for the fourth quarter and full year 2009. Net loss for the quarter was $244 million, or $0.76 per diluted share, compared to a net loss of $274 million, or $0.87 per diluted share in the prior quarter and a net loss of $301 million, or $1.08 per diluted share in the fourth quarter of 2008. Net loss for the full year 2009 was $869 million or $2.84 per diluted share, compared to a net loss of $220 million or $0.88 per diluted share for the prior year.

“2009 was a transition year for CapitalSource, during which we successfully addressed several significant challenges and opportunities. Over the past four quarters we substantially strengthened our balance sheet by selling some of our healthcare net lease assets, paying down and extending our credit facilities and redeeming a convertible debt issue. We also completed our first full year of operations at CapitalSource Bank, while taking several steps to improve its profitability,” said John K. Delaney, CapitalSource Executive Chairman. “Our results this quarter were largely driven by the reserves added to our allowance for loan losses, principally related to the legacy loan portfolio. Those reserves reflect, from an accounting perspective, the inherent loss content in that portfolio we have spoken about for the past few quarters and

in that regard they are consistent with our expectations. As we look ahead to 2010, however, we believe we are nearing the point where our provisions will return to pre-crisis levels which will lead to consolidated profitability,” added Delaney.

“Profitability fundamentals improved at CapitalSource Bank throughout 2009. We saw significant margin expansion this quarter, as our cost of deposits declined and lower yielding assets were redeployed into new loans made at attractive spreads,” commented Steven A. Museles, CapitalSource Co-CEO. “A pretax profit in the fourth quarter, despite a $49 million loan loss provision, is a strong indication of growing profitability at CapitalSource Bank. During 2010 we are expecting some additional margin expansion and the decline of loan loss provisions related to the legacy loans purchased from the Parent Company in connection with the Bank’s initial formation in 2008,” added Museles.

“After a thorough review of our existing lending platforms, current market conditions and the competitive landscape, we are confident of our ability to increase new funded loan production in 2010 to a range of $250-$350 million per quarter, 25-50% higher than our 2009 production levels,” commented James J. Pieczynski, CapitalSource Co-CEO. “The CapitalSource national asset generation platform has been central to our strength since the Company was founded and remains the heart of our story going forward. We will focus our efforts this year on historic areas of strength such as healthcare, lender finance and security while significantly expanding our presence in equipment finance,” added Pieczynski.

“The closing of step 1 of the sale of our healthcare net lease assets to Omega Healthcare Investors, Inc. and the closing of HUD financing on certain other healthcare net lease assets added meaningfully to liquidity and facilitated commitment reduction and debt repayment on our syndicated bank facility of $225 million in the quarter. On the credit front, the net increase in reserves in the fourth quarter is consistent with our long-term view of the cumulative losses we expect from the legacy portfolio,” noted Donald F. Cole, CapitalSource CFO. “We remain comfortable with our cumulative loss assumptions and expect to reach an inflection point during 2010, when reserving for future losses in our legacy loan portfolio is largely completed,” concluded Cole.

Revised Metrics

•

In a continued effort to conform more to a banking industry presentation, certain amounts in financial statements from prior periods have been reclassified to conform to the current period presentation. The reclassifications impact interest, fee and other income in our consolidated statements of operations, and also have a related impact on certain operating metrics. In addition, all applicable ratios have been recast for prior periods to reflect metrics based on consolidated continuing operations.

CapitalSource Bank Segment

•

Commercial loans and loans held for sale increased $74 million from the prior quarter to $3.1 billion. There were approximately $299 million in new loan commitments closed at CapitalSource Bank during the quarter, of which $213 million funded at closing and the remaining $86 million are unfunded commitments. CapitalSource Bank closed $1.1 billion in new loan commitments during 2009, of which $806 million funded at closing. The yield on the commercial loan portfolio was 7.68% for the quarter, an increase of 28 basis points from the prior quarter.

•

The “A” Participation Interest, net was $531 million at the end of the quarter, reflecting principal repayments of $193 million, partially offset by discount accretion of $9 million. Our position remains significantly over-collateralized by the total underlying collateral pool. At the end of the quarter, the “A” Participation Interest represented 16% of the total $3.3 billion in underlying loan and property

balances, a decrease from 20% at the end of the prior quarter. Under the “A” Participation Interest structure, we receive 70% of all principal collections on the underlying loans and properties. Management expects the “A” Participation Interest to be fully repaid in 2010.

•		Cash and cash equivalents, including restricted cash totaled $822 million at the end of the quarter, an increase from $801 million at the end of the prior quarter.
•		Investment securities, available-for-sale, which consist primarily of investments in Agency callable notes and Agency and Non-Agency MBS, were $902 million at the end of the quarter, an increase from $701 million at the end of the prior quarter.
•		Investment securities, held-to-maturity decreased $8 million during the quarter to $242 million due to principal payments on CMBS, partially offset by discount accretion. CapitalSource Bank focuses on the most senior AAA-rated CMBS tranches with substantial credit support, including cash defeasance.
•		Deposits were $4.5 billion at the end of the quarter, an increase of $93 million, or 2%, from the prior quarter. The average rate on new and renewed certificates of deposit was 1.44% for the quarter, compared to 1.47% for the prior quarter. At quarter end, the weighted average interest rate on deposits was 1.56%, a decrease of 29 basis points from the prior quarter end and a decrease of 186 basis points from the prior year end.
•		Interest income was $84 million for the quarter, an increase of $7 million from the prior quarter, primarily due to the increased yield on loans and higher discount accretion on the “A” Participation Interest.
•		Net finance margin for the quarter was 4.66% compared to 3.94% in the prior quarter, primarily due to higher asset yields and lower cost of funds.
•		Yield on average interest earning assets was 6.04% for the quarter, an increase of 42 basis points from the prior quarter primarily due to higher yields on the commercial loan portfolio and higher discount accretion on the “A” Participation Interest. Yield on average interest earnings assets, excluding the “A” Participation Interest, increased to 5.84% for the quarter from 5.68% in the prior quarter.
•		Cost of interest-bearing liabilities, which includes deposits and FHLB borrowings, was 1.67% for the quarter compared to 2.01% for the prior quarter. The average cost of deposits was 1.66% for the quarter, a decrease of 36 basis points from the prior quarter due to re-pricing higher rate maturing certificates of deposit and continued reductions in deposit rates offered. The average cost of FHLB borrowings was 1.79% during the quarter, compared to 1.84% for the prior quarter.
•		Non-interest income was $9 million for the quarter, an increase of $2 million from the prior quarter. Non-interest income consisted of $6 million loan servicing fee income earned by servicing loans for the Parent Company and $3 million of gain on sales of loans. The increase from the prior quarter was primarily due to a gain from sales of loans, partially offset by a decrease in loan servicing fee income.
•		Total operating expenses were $25 million which was consistent with the prior quarter. During the current quarter, $5 million of loan sourcing expense was paid to the Parent Company consistent with the prior quarter. Operating expenses as a percentage of average total assets were 1.77%, a decrease of 2 basis points from the prior quarter.

•		Total Risk-Based Capital Ratio was 17.47% at the end of the quarter compared to 16.75% at the end of the prior quarter.
•		Tier 1 Leverage Ratio at the end of the quarter was 12.80% compared to 12.52% at the end of the prior quarter.
•		Tangible Common Equity to Tangible Assets at the end of the quarter was 12.63% compared to 12.71% at the end of the prior quarter.

Other Commercial Finance Segment

•		Total commercial loans and loans held for sale, were $5.2 billion at the end of the quarter, a decrease from $5.7 billion at the end of the prior quarter, primarily due to loan repayments, loans charged-off and loan foreclosures. Loan yield was 7.37% for the quarter, a decrease of 37 basis points from the prior quarter.
•		Cash and cash equivalents were $416 million at the end of the quarter, an increase from $302 million at the end of the prior quarter, primarily due to the sale of 82 healthcare net lease facilities to Omega Healthcare Investors, Inc. (“Omega”) and another buyer coupled with the closing of HUD mortgages on properties to be sold in step 2 of the transaction with Omega.
•		Restricted cash was $107 million at the end of the quarter, a decrease from $137 million at the end of the prior quarter.
•		Interest income was $118 million for the quarter, a decrease of $17 million from the prior quarter, primarily due to the decrease in commercial loans, and an increase in non-accrual loans. Excluding the legacy residential mortgage investment portfolio, interest income was $103 million for the quarter compared to $117 million in the prior quarter.
•		Yield on average interest-earning assets was 6.73% for the quarter, a decrease of 17 basis points from the prior quarter, primarily due to an increase in the loans on non-accrual and the sale of the mortgage related receivables. Excluding the legacy residential mortgage investment portfolio, the yield on average interest-earnings assets was 7.22% for the quarter compared to 7.56% in the prior quarter.
•		Cost of funds was 4.78% for the quarter, an increase of 21 basis points from the prior quarter primarily due to the acceleration of deferred finance fees as credit facility balances were repaid. Borrowing spread to average one-month LIBOR increased 24 basis points to 4.54%.
•		Total operating expenses were $58 million in the quarter, an increase from $49 million in the prior quarter primarily due to an increase in compensation and benefits for severance payments related to management changes and loan related credit and workout expenses, partially offset by a decrease in other professional fees. Operating expenses as a percentage of average total assets were 3.05% for the quarter, an increase of 76 basis points from the prior quarter.

Healthcare Net Lease Segment

•

Discontinued Operations On November 17, 2009, we announced the execution of an agreement to sell certain direct real estate investments (143 properties) to Omega and on November 30, 2009 we closed on the sale of 37 other properties included in our Healthcare Net Lease segment. On December 22,

		2009, we closed on the 40 properties sold to Omega (“step 1”), and we anticipate closing on the sale of a second group of 40 properties to Omega during 2010 (“step 2”). Accordingly, the financial position and results of operations of these direct real estate investments sold or expected to be sold have been removed from the line items and separately presented as “discontinued operations” in the financial statements. Our 63 properties that are subject to Omega’s option to purchase prior to December 31, 2011 (“step 3”) are not included in discontinued operations and are still shown in continuing operations.
•		Direct real estate investments, net were $336 million at the end of the quarter, a decrease of $3 million from the prior quarter, primarily due to depreciation.
•		Operating lease income was $9 million, a decrease of $0.1 million from the prior quarter.

Consolidated Metrics

Assets

•

Total commercial lending assets (including loans, loans held for sale and the “A” Participation Interest) were $8.9 billion at the end of the quarter compared to $9.4 billion at the end of the prior quarter. The decrease was primarily due to the net reduction in the “A” Participation Interest, loan foreclosures, loan repayments and charge-offs, partially offset by new loans closed.

Credit

•

Loans on non-accrual were $1.1 billion at the end of the quarter, an increase from $994 million at the end of the prior quarter. As a percentage of commercial lending assets, non-accruals were 12.06% compared to 10.58% at the end of the prior quarter. Of the non-accruals at the Parent Company, $468 million were current. Non-accruals at CapitalSource Bank were $172 million at the end of the quarter, a decrease from $184 million at the end of the prior quarter. As a percentage of core loans in CapitalSource Bank (“core loans” excludes the “A” Participation Interest), non-accruals were 5.60%. Of the non-accruals at the Bank, $61 million were current.

•

Loans 30-89 days delinquent were $276 million at the end of the quarter, an increase from $132 million at the end of the prior quarter, primarily due to troubled commercial real estate loans that have matured and remain delinquent. As a percentage of commercial lending assets, loans 30-89 days delinquent were 3.12% compared to 1.40% at the end of the prior quarter. As a percentage of core loans in CapitalSource Bank, loans 30-89 days delinquent were 0.92%. CapitalSource Bank had four loans totaling $28 million that were 30-89 days delinquent at the end of the quarter compared to three loans totaling $38 million that were 30-89 days delinquent at the end of the prior quarter.

•

Loans 90 or more days delinquent were $425 million at the end of the quarter, an increase from $396 million at the end of the prior quarter. As a percentage of commercial lending assets, loans 90 or more days delinquent were 4.80% compared to 4.21% at the end of the prior quarter. As a percentage of core loans in CapitalSource Bank, loans 90 or more days delinquent were 3.34%. CapitalSource Bank had five loans totaling $103 million that were 90 or more days delinquent at the end of the quarter compared to three loans totaling $13 million at the end of the prior quarter.

•

Net commercial charge-offs were $191 million, an increase of $56 million from the prior quarter. As a percentage of average commercial lending assets, net commercial charge-offs for the 12 months ended December 31, 2009, were 6.16%. CapitalSource Bank had $24 million in charge-offs in the quarter

compared to $13 million in the prior quarter. As a percentage of average core loans in CapitalSource Bank, net charge-offs for the 12 months ended December 31, 2009 were 3.98%.

•		Provision for commercial loan losses was $261 million for the quarter, an increase of $57 million from the prior quarter. The provision for commercial loan losses at CapitalSource Bank was $49 million for the quarter, compared to $48 million in the prior quarter.
•		Allowance for loan losses was $587 million at the end of the quarter, a net increase of $70 million from the prior quarter. As a percentage of commercial lending assets, the allowance for loan losses was 6.63% compared to 5.51% at the end of the prior quarter. The allowance for loan losses at CapitalSource Bank increased from $127 million at the end of the prior quarter to $153 million at the end of the current quarter, or 4.96% of core loans.

Other Income/(Expense)

•		Loss on investments, net was $1 million for the quarter primarily due to write-downs on certain cost-based investments, partially offset by dividends received. Loss on investments was $8 million in the prior quarter.
•		Loss on derivatives, net was $1 million for the quarter primarily due to net interest expense and net realized losses, partially offset by unrealized gains. Loss on derivatives, net was $10 million in the prior quarter.
•		Gain on extinguishment of debt was $1 million for the quarter compared to $11 million in the prior quarter.
•		Other expense, net was $8 million for the quarter primarily due to net losses related to the sale of certain healthcare facilities and REO, partially offset by gains related to the sale of other healthcare facilities and a gain on the sale of the mortgage related receivables. Other expense, net was $4 million in the prior quarter.

Income Taxes

•		The valuation allowance related to our deferred tax assets increased to approximately $362 million at quarter end compared to $286 million at the end of the prior quarter due to losses reported in the quarter. The net deferred tax asset at quarter end, after subtracting the valuation allowance, was $107 million. The valuation allowance is a non-cash accounting charge that will exist until there is sufficient positive evidence to support its reduction or reversal. Such evidence would include a period of positive pre-tax income for those entities for which an allowance has been established.
•		Income tax expense in the quarter of $5 million was primarily the result of CapitalSource Bank producing taxable income for the year and the establishment of a valuation allowance at a subsidiary that incurred operating losses.

Book Value

•

Book Value per share was $6.76 at the end of the quarter, a decrease from $7.51 at the end of the prior quarter, primarily due to the current quarter loss. Total shareholders’ equity was $2.2 billion at the end of the quarter, a decrease of $244 million from the prior quarter primarily due to the current quarter loss and the dividend payment of $0.01 per share made to shareholders during the quarter.

•

Tangible Book Value per share at the end of the quarter was $6.18 compared to $6.93 at the end of prior quarter, primarily due to the current quarter loss. Tangible equity was $2.0 billion at the end of the quarter, a decrease of $243 million from the prior quarter.

Share Count

•

Average diluted shares outstanding were 320.1 million shares for the quarter, compared to 315.6 million shares for the prior quarter, primarily due to the full quarter effect of the equity issuance completed in July. Total outstanding shares at December 31, 2009 were 323.0 million.

Dividends

•

A quarterly cash dividend of $0.01 per common share was paid on December 31, 2009 to common shareholders of record on December 16, 2009.

A conference call to discuss the results will be hosted on Thursday, February 25, 2010 at 8:30 a.m. EST. Analysts and investors interested in participating are invited to call (866) 843-0890 from within the United States or (412) 317-9250 from outside the United States, with passcode 8576523. A webcast of the call will be available on the Investor Relations section of the CapitalSource web site at http://www.capitalsource.com.

A telephonic replay will also be available from approximately 12 noon EST February 25, 2010 through March 4, 2010. Please call (877) 344-7529 from the United States or (412) 317-0088 from outside the United States with passcode 437836. 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 February 25, 2010.

A slide presentation that may be referred to on the conference call will be posted to the Investor Relations homepage of the CapitalSource website prior to the call at the following address: http://www.capitalsource.com/investor_relations.

About CapitalSource

CapitalSource Inc. (NYSE: CSE) is a commercial lender that provides financial products to middle market businesses and offers depository products and services in southern and central California through its wholly owned subsidiary CapitalSource Bank. As of December 31, 2009, CapitalSource had total commercial assets of $9.2 billion and $4.5 billion in deposits. The Company is headquartered in Chevy Chase, MD. 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, goals, and projections and including statements about growing our business and our assets, increased loan production levels and focus areas, expanding loan product lines, managing our legacy portfolio, the impact of the U.S. economy on our business, our portfolio’s credit trends, expected losses, costs and provisions and their impact on our financial results, our

delinquent, impaired and non-accrual loans and troubled debt restructurings as well as our charge offs, reserves and delinquencies, our expectations regarding future credit performance, charge-offs, loss assumptions and provisions for loan losses, our expectations regarding profitability and margins, our outlook, projections and strategies, including regarding asset origination and credit, the performance, security and payment of the “A” Participation Interest, and our valuation allowance against a portion of our deferred tax assets, our Omega transaction with respect to our healthcare net lease portfolio, timing and implications of future closings under this transaction and our anticipated cash proceeds therefrom, and our discontinued operations all of 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,” “goal,” “will,” “outlook,” “continue,” “look forward,” “should,” 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: changes in economic or market conditions or investment or lending opportunities; continued or worsening recession in the overall economy or disruptions in credit and other markets; movements in interest rates and lending spreads; continued or worsening credit losses, charge-offs, reserves and delinquencies; our ability to successfully and cost effectively operate our business, including CapitalSource Bank; our ability to successfully grow deposits and commercial loan assets or deploy capital in favorable lending transactions; 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 our business; the Omega transactions involving our net lease portfolio may not be completed on the proposed terms and schedule or at all; the ability of the parties to satisfy the various conditions to the completion of the proposed transactions; obtaining government approval of the proposed transactions, if applicable; potential adjustments to the form and amount of consideration payable in the planned transactions; our ability to generate the expected cash proceeds from those transactions; and other factors described in CapitalSource’s 2008 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, except as required by applicable law.

CapitalSource Fourth Quarter 2009 — Financial Supplement

Table of Contents

Consolidated Balance Sheets			10
Consolidated Statements of Operations			11
Segment Data			12-13
Selected Financial Data			14-15
Credit Quality Data			16

CapitalSource Inc.
Consolidated Balance Sheets
($ in thousands)

		December 31,				December 31,
		2009				2008
		(Unaudited)
ASSETS
Cash and cash equivalents		$	1,172,785			$	1,335,916
Restricted cash			172,765				404,019
Investment securities:
Available-for-sale, at fair value			960,591				679,551
Held-to-maturity, at amortized cost			242,078				14,389
Total investment securities			1,202,669				693,940
Mortgage-backed securities pledged, trading			—				1,489,291
Mortgage-related receivables, net			—				1,801,535
Commercial real estate “A” participation interest, net			530,560				1,396,611
Loans:
Loans held for sale			670				8,543
Loans held for investment			8,321,160				9,447,249
Less deferred loan fees and discounts			(146,329	)			(174,317	)
Less allowance for loan losses			(586,696	)			(423,844	)
Loans held for investment, net			7,588,135				8,849,088
Total loans			7,588,805				8,857,631
Interest receivable			33,949				67,018
Direct real estate investments, net			336,007				346,167
Other investments			96,517				127,746
Goodwill			173,135				173,135
Other assets			679,209				1,040,157
Assets of discontinued operations, held for sale			260,541				686,466
Total assets		$	12,246,942			$	18,419,632
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits		$	4,483,879			$	5,043,695
Repurchase agreements			—				1,595,750
Credit facilities			542,781				1,445,062
Term debt			2,956,536				5,338,456
Other borrowings			1,466,834				1,493,243
Other liabilities			390,504				542,533
Liabilities of discontinued operations			223,149				130,173
Total liabilities			10,063,683				15,588,912
Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)			—				—
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 323,042,613 and 282,804,211 shares issued and shares outstanding, respectively)			3,230				2,828
Additional paid-in capital			3,909,364				3,686,765
Accumulated deficit			(1,748,822	)			(868,425	)
Accumulated other comprehensive income, net			19,361				9,095
Total CapitalSource Inc. shareholders’ equity			2,183,133				2,830,263
Noncontrolling interests			126				457
Total shareholders’ equity			2,183,259				2,830,720
Total liabilities and shareholders’ equity		$	12,246,942			$	18,419,632

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

		Three Months Ended												Year Ended
		December 31,				September 30				December 31,				December 31,				December 31,
		2009				2009				2008				2009				2008
		(Unaudited)												(Unaudited)
Net investment income:
Interest income:
Loans		$	181,693			$	191,928			$	258,072			$	796,976			$	1,037,561
Investment securities			13,516				13,421				26,606				60,959				138,102
Other			870				1,126				6,716				4,651				23,866
Total interest income			196,079				206,475				291,394				862,586				1,199,529
Fee income			6,041				5,176				7,114				22,884				33,099
Total interest and fee income			202,120				211,651				298,508				885,470				1,232,628
Operating lease income			8,526				8,425				8,474				33,985				31,896
Total investment income			210,646				220,076				306,982				919,455				1,264,524
Interest expense:
Deposits			18,410				22,674				44,067				109,430				76,245
Borrowings			76,114				81,328				130,153				328,283				617,112
Total interest expense			94,524				104,002				174,220				437,713				693,357
Net investment income			116,122				116,074				132,762				481,742				571,167
Provision for loan losses			265,487				221,385				445,452				845,986				593,046
Net investment loss after provision for loan losses			(149,365	)			(105,311	)			(312,690	)			(364,244	)			(21,879	)
Operating expenses:
Compensation and benefits			40,423				29,339				44,331				139,607				143,401
Depreciation of direct real estate investments			2,540				2,540				2,540				10,160				10,110
Professional fees			12,529				15,212				22,816				57,072				52,578
Other administrative expenses			22,949				19,862				15,169				81,029				58,947
Total operating expenses			78,441				66,953				84,856				287,868				265,036
Other expense:
Loss on investments, net			(1,158	)			(8,472	)			(39,566	)			(30,724	)			(73,569	)
Loss on derivatives			(738	)			(10,298	)			(20,728	)			(13,055	)			(41,082	)
(Loss) gain on residential mortgage investment portfolio			—				(3	)			(29,506	)			15,308				(102,779	)
Gain (loss) on extinguishment of debt			577				11,472				(23,926	)			(40,514	)			58,856
Other expense, net			(7,975	)			(3,839	)			(30,654	)			(36,900	)			(5,185	)
Total other expense			(9,294	)			(11,140	)			(144,380	)			(105,885	)			(163,759	)
Net loss from continuing operations before income taxes			(237,100	)			(183,404	)			(541,926	)			(757,997	)			(450,674	)
Income tax expense (benefit)			5,125				97,089				(229,965	)			136,314				(190,583	)
Net loss from continuing operations			(242,225	)			(280,493	)			(311,961	)			(894,311	)			(260,091	)
Net income from discontinued operations, net of taxes			8,518				6,257				10,831				33,335				41,310
Net (loss) income from sale of discontinued operations, net of taxes			(10,215	)			—				—				(8,071	)			104
Net loss			(243,922	)			(274,236	)			(301,130	)			(869,047	)			(218,677	)
Net income (loss) attributable to noncontrolling interests (includes income related to discontinued operations of $1.6 million for the year ended December 31, 2008)			—				10				(54	)			(28	)			1,426
Net loss attributable to CapitalSource Inc.			(243,922	)			(274,246	)			(301,076	)			(869,019	)			(220,103	)
Basic (loss) income per share:
From continuing operations		$	(0.76	)		$	(0.89	)		$	(1.13	)		$	(2.92	)		$	(1.04	)
From discontinued operations		$	(0.01	)		$	0.02			$	0.04			$	0.08			$	0.16
Attributable to CapitalSource Inc.		$	(0.76	)		$	(0.87	)		$	(1.08	)		$	(2.84	)		$	(0.88	)
Diluted (loss) income per share:
From continuing operations		$	(0.76	)		$	(0.89	)		$	(1.13	)		$	(2.92	)		$	(1.04	)
From discontinued operations		$	(0.01	)		$	0.02			$	0.04			$	0.08			$	0.16
Attributable to CapitalSource Inc.		$	(0.76	)		$	(0.87	)		$	(1.08	)		$	(2.84	)		$	(0.88	)
Average shares outstanding:
Basic			320,050,373				315,604,434				277,179,051				306,417,394				251,213,699
Diluted			320,050,373				315,604,434				277,179,051				306,417,394				251,213,699
Dividends declared per share		$	0.01			$	0.01			$	0.05			$	0.04			$	1.30

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

		Three Months Ended December 31, 2009
						OTHER
		CAPITALSOURCE				COMMERCIAL				HEALTHCARE NET				INTERCOMPANY
Net investment income:		BANK				FINANCE				LEASE				ELIMINATIONS				CONSOLIDATED
Interest income		$	83,698			$	118,141			$	161			$	(5,921	)		$	196,079
Fee income			1,412				4,629				—				—				6,041
Total interest and fee income			85,110				122,770				161				(5,921	)			202,120
Operating lease income			—				—				8,526				—				8,526
Total investment income			85,110				122,770				8,687				(5,921	)			210,646
Interest expense			19,427				73,455				5,819				(4,177	)			94,524
Net investment income			65,683				49,315				2,868				(1,744	)			116,122
Provision for loan losses			49,469				216,018				—				—				265,487
Net investment income (loss) after provision for loan losses			16,214				(166,703	)			2,868				(1,744	)			(149,365	)
Compensation and benefits			11,147				28,735				541				—				40,423
Depreciation of direct real estate investments			—				—				2,540				—				2,540
Professional fees			733				11,790				6				—				12,529
Other operating expenses			13,287				17,164				1,324				(8,826	)			22,949
Total operating expenses			25,167				57,689				4,411				(8,826	)			78,441
Total other income (expense)			9,472				(5,973	)			(1,018	)			(11,775	)			(9,294	)
Net income (loss) from continuing operations before income taxes			519				(230,365	)			(2,561	)			(4,693	)			(237,100	)
Income tax (benefit) expense			(14,869	)			18,314				1,680				—				5,125
Net income (loss) from continuing operations			15,388				(248,679	)			(4,241	)			(4,693	)			(242,225	)
Net income from discontinued operations, net of taxes			—				—				8,518				—				8,518
Net loss from sale of discontinued operations, net of taxes			—				—				(10,215	)			—				(10,215	)
Net income (loss) attributable to CapitalSource Inc		$	15,388			$	(248,679	)		$	(5,938	)		$	(4,693	)		$	(243,922	)

		Three Months Ended September 30, 2009
						OTHER
		CAPITALSOURCE				COMMERCIAL				HEALTHCARE NET				INTERCOMPANY
Net investment income:		BANK				FINANCE				LEASE				ELIMINATIONS				CONSOLIDATED
Interest income		$	76,985			$	135,436			$	107			$	(6,053	)		$	206,475
Fee income			1,800				3,376				—				—				5,176
Total interest and fee income			78,785				138,812				107				(6,053	)			211,651
Operating lease income			—				—				8,425				—				8,425
Total investment income			78,785				138,812				8,532				(6,053	)			220,076
Interest expense			23,602				78,729				5,722				(4,051	)			104,002
Net investment income			55,183				60,083				2,810				(2,002	)			116,074
Provision for loan losses			48,451				172,934				—				—				221,385
Net investment income (loss) after provision for loan losses			6,732				(112,851	)			2,810				(2,002	)			(105,311	)
Compensation and benefits			11,410				17,345				584				—				29,339
Depreciation of direct real estate investments			—				—				2,540				—				2,540
Professional fees			575				14,411				226				—				15,212
Other operating expenses			13,380				16,880				1,555				(11,953	)			19,862
Total operating expenses			25,365				48,636				4,905				(11,953	)			66,953
Total other income (expense)			7,409				(5,830	)			(1,104	)			(11,615	)			(11,140	)
Net loss from continuing operations before income taxes			(11,224	)			(167,317	)			(3,199	)			(1,664	)			(183,404	)
Income tax expense (benefit)			3,925				93,807				(643	)			—				97,089
Net loss from continuing operations			(15,149	)			(261,124	)			(2,556	)			(1,664	)			(280,493	)
Net income from discontinued operations, net of taxes			—				—				6,257				—				6,257
Net (loss) income			(15,149	)			(261,124	)			3,701				(1,664	)			(274,236	)
Net income attributable to noncontrolling interests			—				10				—				—				10
Net (loss) income attributable to CapitalSource Inc		$	(15,149	)		$	(261,134	)		$	3,701			$	(1,664	)		$	(274,246	)

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

		Year Ended December 31, 2009
						OTHER
		CAPITALSOURCE				COMMERCIAL				HEALTHCARE				INTERCOMPANY
Net investment income:		BANK				FINANCE				NET LEASE				ELIMINATIONS				CONSOLIDATED
Interest income		$	307,653			$	573,543			$	450			$	(19,060	)		$	862,586
Fee income			6,462				16,422				—				—				22,884
Total interest and fee income			314,115				589,965				450				(19,060	)			885,470
Operating lease income			—				—				33,985				—				33,985
Total investment income			314,115				589,965				34,435				(19,060	)			919,455
Interest expense			111,993				318,662				20,109				(13,051	)			437,713
Net investment income			202,122				271,303				14,326				(6,009	)			481,742
Provision for loan losses			213,381				632,605				—				—				845,986
Net investment (loss) income after provision for loan losses			(11,259	)			(361,302	)			14,326				(6,009	)			(364,244	)
Compensation and benefits			44,516				93,066				2,025				—				139,607
Depreciation of direct real estate investments			—				—				10,160				—				10,160
Professional fees			2,518				54,414				140				—				57,072
Other operating expenses			53,440				65,562				6,689				(44,662	)			81,029
Total operating expenses			100,474				213,042				19,014				(44,662	)			287,868
Total other income (expense)			34,806				(91,080	)			(2,136	)			(47,475	)			(105,885	)
Net loss from continuing operations before income taxes			(76,927	)			(665,424	)			(6,824	)			(8,822	)			(757,997	)
Income tax (benefit) expense			(6,228	)			143,800				(1,258	)			—				136,314
Net loss from continuing operations			(70,699	)			(809,224	)			(5,566	)			(8,822	)			(894,311	)
Net income from discontinued operations, net of taxes			—				—				33,335				—				33,335
Net loss from sale of discontinued operations, net of taxes			—				—				(8,071	)			—				(8,071	)
Net (loss) income			(70,699	)			(809,224	)			19,698				(8,822	)			(869,047	)
Net loss attributable to noncontrolling interests			—				(28	)			—				—				(28	)
Net (loss) income attributable to CapitalSource Inc		$	(70,699	)		$	(809,196	)		$	19,698			$	(8,822	)		$	(869,019	)

		Year Ended December 31, 2008
						OTHER
		CAPITALSOURCE				COMMERCIAL				HEALTHCARE				INTERCOMPANY
Net investment income:		BANK				FINANCE				NET LEASE				ELIMINATIONS				CONSOLIDATED
Interest income		$	146,542			$	1,059,514			$	1,055			$	(7,582	)		$	1,199,529
Fee income			1,562				31,190				347				—				33,099
Total interest and fee income			148,104				1,090,704				1,402				(7,582	)			1,232,628
Operating lease income			—				—				31,896				—				31,896
Total investment income			148,104				1,090,704				33,298				(7,582	)			1,264,524
Interest expense			76,246				591,645				37,546				(12,080	)			693,357
Net investment income			71,858				499,059				(4,248	)			4,498				571,167
Provision for loan losses			55,600				537,446				—				—				593,046
Net investment income (loss) after provision for loan losses			16,258				(38,387	)			(4,248	)			4,498				(21,879	)
Compensation and benefits			20,010				121,219				2,172				—				143,401
Depreciation of direct real estate investments			—				—				10,110				—				10,110
Professional fees			2,624				49,429				525				—				52,578
Other operating expenses			20,653				53,049				8,503				(23,258	)			58,947
Total operating expenses			43,287				223,697				21,310				(23,258	)			265,036
Total other income (expense)			12,451				(138,174	)			41				(38,077	)			(163,759	)
Net loss from continuing operations before income taxes			(14,578	)			(400,258	)			(25,517	)			(10,321	)			(450,674	)
Income tax benefit			(6,089	)			(183,146	)			(1,348	)			—				(190,583	)
Net loss from continuing operations			(8,489	)			(217,112	)			(24,169	)			(10,321	)			(260,091	)
Net income from discontinued operations, net of taxes			—				—				41,310				—				41,310
Net income from sale of discontinued operations, net of taxes			—				—				104				—				104
Net (loss) income			(8,489	)			(217,112	)			17,245				(10,321	)			(218,677	)
Net (loss) income attributable to noncontrolling interests			—				(706	)			2,132				—				1,426
Net (loss) income attributable to CapitalSource Inc		$	(8,489	)		$	(216,406	)		$	15,113			$	(10,321	)		$	(220,103	)

CapitalSource Inc.
Selected Financial Data
(Unaudited)

		Three Months Ended												Year Ended
		December 31,				September 30				December 31,				December 31,				December 31,
		2009				2009				2008				2009				2008
CapitalSource Bank Segment:
Performance ratios:
Return on average assets			1.08	%			(1.07	%)			(1.19	%)			(1.23	%)			(0.32	%)
Return on average equity			6.99	%			(6.89	%)			(7.69	%)			(7.86	%)			(2.09	%)
Yield on average interest earning assets			6.04	%			5.62	%			5.46	%			5.54	%			5.70	%
Cost of funds			1.67	%			2.01	%			3.49	%			2.36	%			3.45	%
Net finance margin			4.66	%			3.94	%			2.51	%			3.56	%			2.76	%
Operating expenses as a percentage of average total assets			1.77	%			1.79	%			1.58	%			1.75	%			1.62	%
Core lending spread			7.44	%			7.13	%			4.51	%			7.05	%			4.40	%
Loan yield			7.68	%			7.40	%			6.70	%			7.38	%			7.07	%
Capital ratios:
Tier 1 leverage			12.80	%			12.52	%			13.38	%			12.80	%			13.38	%
Total risk-based capital			17.47	%			16.75	%			17.44	%			17.47	%			17.44	%
Tangible common equity to tangible assets			12.63	%			12.71	%			12.45	%			12.63	%			12.45	%
Average balances ($ in thousands):
Average loans		$	3,051,946			$	2,906,688			$	2,610,303			$	2,924,673			$	1,071,601
Average assets			5,629,210				5,614,879				6,056,465				5,732,960				2,665,672
Average interest earning assets			5,589,080				5,557,381				5,923,848				5,672,675				2,600,219
Average deposits			4,413,805				4,459,800				5,006,314				4,604,887				2,207,209
Average borrowings			201,967				200,011				N/A				133,227				N/A
Average equity			873,916				872,325				940,338				899,320				406,944
Other Commercial Finance Segment:
Performance ratios:
Return on average assets			(13.14	%)			(12.28	%)			(9.51	%)			(9.23	%)			(1.53	%)
Return on average equity			(90.02	%)			(78.47	%)			(61.19	%)			(60.21	%)			(10.06	%)
Yield on average interest earning assets			6.73	%			6.90	%			7.58	%			7.23	%			8.12	%
Cost of funds			4.78	%			4.57	%			4.89	%			4.46	%			5.07	%
Net finance margin			2.70	%			2.99	%			3.31	%			3.32	%			3.71	%
Operating expenses as a percentage of average total assets			3.05	%			2.29	%			2.23	%			2.43	%			1.58	%
Core lending spread			7.13	%			7.47	%			7.18	%			7.67	%			7.13	%
Loan yield			7.37	%			7.74	%			9.37	%			8.00	%			9.80	%
Leverage ratios:
Total debt to equity (as of period end)			3.57x				5.45x				6.20x				3.57x				6.20x
Equity to total assets (as of period end)			20.81	%			15.06	%			13.30	%			20.81	%			13.30	%
Average balances ($ in thousands):
Average loans		$	5,569,045			$	5,943,007			$	7,045,709			$	6,104,150			$	8,581,928
Average assets			7,510,840				8,437,236				11,890,601				8,767,889				14,119,497
Average interest earning assets			7,234,367				7,981,177				11,229,656				8,162,038				13,440,001
Average borrowings			6,098,344				6,841,000				9,797,512				7,137,868				11,659,636
Average equity			1,095,952				1,320,307				1,848,025				1,343,876				2,152,028

CapitalSource Inc.
Selected Financial Data
(Unaudited)

		Three Months Ended												Year Ended
		December 31,				September 30				December 31,				December 31,				December 31,
		2009				2009				2008				2009				2008
Healthcare Net Lease Segment:
Performance ratios:
Return on average assets			(6.15	%)			(4.26	%)			(8.04	%)			(2.05	%)			(7.44	%)
Yield on average income earning assets			12.81	%			9.52	%			8.89	%			10.14	%			8.45	%
Cost of funds			5.29	%			5.53	%			7.27	%			4.95	%			7.24	%
Operating expenses as a percentage of average total assets			6.39	%			5.71	%			7.40	%			5.70	%			5.74	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			2.71	%			2.75	%			4.59	%			2.65	%			3.01	%
Average balances ($ in thousands):
Average assets		$	273,665			$	340,850			$	358,979			$	333,672			$	371,518
Average interest earning assets			31,984				18,739				19,065				20,864				24,702
Average income earning assets			263,963				351,030				377,976				335,031				377,606
Average borrowings			436,667				410,469				511,012				406,644				518,759
Consolidated CapitalSource Inc.:
Performance ratios:
Return on average assets			(7.30	%)			(7.87	%)			(6.86	%)			(6.13	%)			(1.54	%)
Return on average equity			(52.09	%)			(52.71	%)			(47.68	%)			(41.35	%)			(10.95	%)
Yield on average interest earning assets			6.24	%			6.19	%			6.89	%			6.39	%			7.67	%
Cost of funds			3.42	%			3.51	%			4.56	%			3.61	%			4.90	%
Net finance margin			3.51	%			3.31	%			3.00	%			3.39	%			3.47	%
Operating expenses as a percentage of average total assets			2.37	%			1.88	%			1.87	%			1.97	%			1.57	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			2.29	%			1.81	%			1.81	%			1.90	%			1.51	%
Leverage ratios:
Total debt and deposits to equity (as of period end)			4.40x				6.03x				6.56x				4.50x				6.56x
Equity to total assets (as of period end)			17.90	%			13.95	%			12.83	%			17.90	%			12.83	%
Tangible common equity to tangible assets			16.55	%			15.94	%			14.49	%			16.55	%			14.49	%
Average balances ($ in thousands):
Average loans		$	8,620,992			$	8,849,696			$	9,662,215			$	9,028,580			$	9,655,117
Average assets			13,156,717				14,144,972				18,041,403				14,585,513				16,898,427
Average interest earning assets			12,855,432				13,557,298				17,178,771				13,855,334				16,066,509
Average income earning assets			13,119,395				13,908,328				17,556,748				14,190,365				16,444,116
Average borrowings			6,554,886				7,285,940				10,164,806				7,520,155				11,957,169
Average deposits			4,413,805				4,459,800				5,006,314				4,604,887				2,207,209
Average equity			1,844,746				2,111,328				2,595,770				2,162,823				2,375,048