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 FOURTH QUARTER AND FULL YEAR 2007 RESULTS

•

Quarterly Dividend of $0.60 Per Share Projected for 2008

•

Strong and Stable Credit Performance

•

Liquidity Increased to $3.4 Billion of Undrawn Capacity in Credit Facilities

•

No Funding Issues Throughout Capital Markets Disruption

•

Adjusted Earnings Per Diluted Share of $0.51 for the Quarter and $2.32 for the Full Year 2007

Chevy Chase, MD, February 21, 2008 — CapitalSource Inc. (NYSE: CSE) today announced financial results for the fourth quarter and year ended December 31, 2007. Adjusted Earnings for the quarter were $108.3 million, or $0.51 per diluted share. Full year 2007 Adjusted Earnings increased 5% from the prior year to $448.2 million, or $2.32 per diluted share. Net loss for the quarter was ($15.0) million, or ($0.07) per diluted share. Net income for the year was $176.3 million, or $0.91 per diluted share.

“The unique value of CapitalSource was evident once again this quarter as we delivered strong and stable credit, excellent liquidity and superior returns on equity in the midst of a broad and dramatic financial dislocation,” said John K. Delaney, CapitalSource Chairman and CEO. “As competitors retreat from our market, the near term prospects for high quality lending opportunities have never been better. I am both extremely pleased with how well the company continues to navigate the capital markets disruption and excited about our future prospects.”

“Given the strength and performance of our business and, in particular, credit metrics that remain at the low end of historical ranges, we declared a $0.60 per share cash dividend for the first quarter of 2008 yesterday and we are projecting a $0.60 per share quarterly cash dividend for the balance of 2008,” Delaney added.

“Our business performed well in 2007, particularly in the context of a market environment that has become difficult for many financial institutions,” said Thomas A. Fink CapitalSource CFO. “Full year Adjusted

Earnings increased 5% to $448.2 million and consolidated adjusted return on equity was 18.8%, with the Commercial Finance segment delivering a 21.5% adjusted return on equity.”

“While managing the left side of our balance sheet has always been important to us, we focus as much attention on managing the right side of our balance sheet, and this has become another area of success for CapitalSource,” added Fink. “During the fourth quarter we continued this success and enhanced our already strong liquidity levels through two term financings totaling $835 million and the continued operation of our Dividend Reinvestment and Stock Purchase Plan. We ended the quarter with undrawn credit facility capacity of $3.4 billion, up $500 million from the prior quarter. These are significant accomplishments, especially in light of current market conditions.”

“Patience and discipline will be rewarded in the current environment. We expect our growth in 2008 to be attractive but highly selective, capitalizing on the significant opportunities available to us. From our perspective, those opportunities continue to get better, with pricing, terms and structures the best I have seen since we started CapitalSource,” Delaney added. “As always, job one is to maintain ample liquidity and stable credit performance.”

Business Overview

The foundation of CapitalSource’s business model includes a focused asset strategy, low leverage, direct origination, senior debt orientation, and strong credit discipline. This model continues to be the right one for managing through the current capital markets disruption that began in June of last year. During 2007, the Company’s core middle market finance business grew 27%, producing investment income approximately 25% higher then the prior year. During the second half of the year, higher funding costs (expressed as a spread to LIBOR) significantly reduced the bottom line benefit of that growth, but net investment income was 12.9% above full year 2006.

CapitalSource continues its cautious, prudent approach to leverage and financing of the business. The Company has been proactive and conservative throughout the capital markets disruption that began in the second half of 2007, raising $743.3 million in junior capital during the third and fourth quarters of 2007, in the form of convertible debt and proceeds from the Dividend Reinvestment and Stock Purchase Plan (DRIP). This strategy has strengthened and de-levered the Company’s balance sheet, but has come at a cost in terms of a higher share count and lower Adjusted Earnings per share than anticipated.

CapitalSource continues its emphasis on improving operating leverage across the firm. On a consolidated level and in each segment of the business, operating expenses as a percentage of total assets declined substantially from 2006. A level head count and operating efficiencies throughout 2007 allowed the Company to leverage its fully built-out infrastructure and expense base. The Company expects this trend toward lower operating expenses as a percentage of assets to continue in 2008.

With these fourth quarter results, the Company initiated the separate reporting of its Healthcare Net Lease segment due to the significant growth and development of this business. The Healthcare Net Lease segment is similar to other publicly traded healthcare property REITs and is in the business of investing in income-producing healthcare facilities, principally long-term care facilities. CapitalSource has reclassified applicable comparative prior period segment information to reflect the separate reporting of the Healthcare Net Lease segment.

The Company’s consolidated net income was negatively impacted in the fourth quarter by net unrealized losses relating to interest rate swaps executed to minimize the Company’s exposure to interest rate risk in its

Commercial Finance and Healthcare Net Lease segments. CapitalSource generally has not applied hedge accounting to these swaps and, as a result, changes in the fair value of such swaps are recognized in GAAP net income, while changes in the fair value of the underlying hedged exposures are not. To correct for this asymmetry and reflect the unrealized nature of the changes in fair value of such swaps, any such unrealized losses are added to, or any unrealized gains are subtracted from, GAAP earnings for purposes of determining the Company’s adjusted Earnings.

Assets Under Management

•

Assets under management were approximately $20.9 billion as of December 31, 2007, an increase of $184.5 million from the prior quarter and an increase of $3.9 billion, or 23.1%, from December 31, 2006.

Commercial Finance Segment

	•		Total commercial loans were $9.9 billion at quarter end, an increase of $238.3 million from the prior quarter and an increase of $2.0 billion, or 25.7%, from December 31, 2006.
	•		Interest income was $242.5 million for the quarter, a decrease of $6.9 million from the prior quarter, primarily due to a decrease of 44 basis points in the average coupon rate of interest charged on loans (consistent with the decrease in LIBOR and prime rates during the quarter), partially offset by the increase in the average balance of our commercial loan portfolio. Full year interest income was $928.2 million, an increase of $179.2 million, or 23.9%, from the year ended December 31, 2006.
	•		Net investment income was $146.1 million for the quarter, a decrease of $0.1 million from the prior quarter, primarily due to a decrease in interest income, partially offset by an increase in prepayment-related fee income. Full year net investment income was $609.0 million, an increase of $34.5 million, or 6%, from the year ended December 31, 2006.
	•		Yield on average interest-earning assets was 11.12% for the quarter, a decrease of 19 basis points from the prior quarter. The decrease was primarily due to a decrease in the average coupon rate of interest charged on loans (consistent with the decrease in LIBOR and prime rates during the quarter), partially offset by an increase in prepayment-related fee income.
	•		Prepayment-related fee income was $12.4 million in the quarter and contributed 49 basis points to yield, an increase of $9.2 million, or 36 basis points, from the prior quarter.
	•		Provision for loan loss was $33.3 million in the quarter, bringing the total allowance for loan losses to $138.9 million or 1.28% of total commercial assets, an increase of 23 basis points from the prior quarter.
	•		Cost of funds was 6.44% for the quarter, an increase of 3 basis points from the prior quarter. Overall borrowing spread to average one-month LIBOR was 1.53%, an increase of 55 basis points from the prior quarter primarily due to short-term funding market volatility and higher costs of recently completed financings.

	•		Leverage, as measured by the ratio of total debt-to-equity at the end of the quarter, was 4.39x, a decrease from 4.48x at the end of the prior quarter. For historical comparison purposes, the combined leverage for the Commercial Finance segment and the Healthcare Net Lease segment at the end of the fourth quarter was 3.98x, a decrease from 4.03x at the end of the prior quarter.
	•		Net finance margin, defined as net investment income divided by average interest-earning assets, was 5.79% for the quarter, a decrease of 14 basis points from the prior quarter, primarily due to a decrease in yield on average interest-earning assets.
	•		Adjusted earnings contributed by the Commercial Finance segment were $88.5 million, an increase of 12.1% compared to $78.9 million in the prior quarter.

Healthcare Net Lease Segment

	•		Direct real estate investments decreased $14.3 million from the prior quarter to $1.0 billion at December 31, 2007, due primarily to depreciation and the sale of one property. Direct real estate investments increased $295.3 million, or 40.9%, from December 31, 2006.
	•		Operating lease income was $27.1 million for the fourth quarter, a decrease of $0.4 million from the prior quarter. Full year operating lease income more than tripled to $97.0 million from $30.7 million for the year ended December 31, 2006.
	•		Adjusted earnings contributed by the Healthcare Net Lease segment were $13.0 million, an increase of 11.3% compared to $11.7 million in the prior quarter.

Consolidated Other Income

	•		Gain (loss) on investments, net of $(0.2) million in the fourth quarter, improved from a loss of ($2.0) million in the prior quarter, primarily due to changes in Commercial Finance segment items including lower unrealized losses and write-downs on equity investments and an increase in dividends received, partially offset by a decrease in realized gains.
	•		Other income, net of expenses of $4.3 million, improved from a loss of ($3.4) million in the prior quarter primarily due to increases in income relating to our equity interests in certain non-consolidated entities and an increase in fees arising from HUD mortgage originating services, partially offset by increased foreign currency exchange losses.
	•		Gain (loss) on the residential mortgage investment portfolio was ($25.4) million in the fourth quarter or 42 basis points of the portfolio, compared to ($30.2) million in the prior quarter, primarily due to the net change in fair value of Agency MBS and related derivatives.
	•		Gain (loss) on derivatives was $(31.6) million in the fourth quarter, compared to a loss of ($15.5) million in the prior quarter. These net unrealized losses were primarily due to the unrealized net change in the fair value of swaps used in hedging certain assets and liabilities to minimize the Company’s exposure to interest rate movements. We do not apply hedge accounting to these swaps. As a result, movements in the net fair value of hedging instruments are reported in Other Income (Expense), while changes in the fair value of hedged exposures are not.

Commercial Credit Metrics

	•		Loans on non-accrual status, which the Company considers its primary credit metric, decreased by 2 basis points from the prior quarter to 1.57% of commercial assets.
	•		Loans 60 or more days contractually delinquent increased 1 basis point from the prior quarter to 0.68% of commercial assets.
	•		Net charge-offs were $6.0 million for the fourth quarter, a decrease of $21.8 million from the previous quarter. As a percentage of average commercial assets, annualized net charge-offs for the full year 2007 were 58 basis points, a decrease of 8 basis points from the prior year.

Funding and Liquidity

	•		During the quarter, the Company raised $207.0 million through the issuance of approximately 12.1 million shares of common stock under its Dividend Reinvestment and Stock Purchase Plan (DRIP). The Company raised approximately $714.5 million through the DRIP during the year ended December 31, 2007.
	•		On October 11, 2007, the Company raised $400.0 million in a term financing using loans from the Company’s portfolio. The transaction was completed as a single tranche in a private placement and was rated A by Fitch Ratings and A2 by Moody’s Investor Service. The transaction has a one-year replenishment period during which principal collected can be invested in additional loan collateral. The note bears interest (excluding fees) at a floating commercial paper rate plus 1.10% and is prepayable by the Company at any time.
	•		On November 16, 2007, the Company raised $435.0 million in a term financing using loans from the Company’s portfolio. The transaction was a private placement of multiple tranches rated AAA through A by Fitch Ratings and Aaa through A2 by Moody’s Investor Service. The sold tranches were priced at a weighted average interest rate (excluding fees) of one-month LIBOR plus 1.05%.

Income Tax Rate

	•		Tax expense for the quarter and the full year as a result of earnings in the taxable REIT subsidiary was in line with expectations.
	•		The overall effective tax rate in 2007, expressed as a percentage of consolidated pre-tax GAAP net income, was 33.2% due to the lower level of GAAP earnings in the Qualified REIT subsidiary resulting from depreciation of our direct real estate investments in the Healthcare Net Lease portfolio, unrealized losses on swap transactions, and mark-to-market losses on the Residential Mortgage Investment Portfolio (RMIP) business.

Adjusted Return on Equity

	•		Consolidated adjusted return on average equity, defined as Adjusted Earnings divided by average GAAP equity, was 16.35% for the quarter, 15 basis points higher than the prior quarter.
	•		Consolidated adjusted return on average equity was 18.83% for the full year 2007. The accompanying Financial Supplement provides a detailed reconciliation of GAAP net income to Adjusted Earnings.

Share Count

	•		Weighted average shares outstanding, dilutive to Adjusted Earnings, were 211.6 million shares for the quarter ended December 31, 2007, compared to 193.6 million shares for the prior quarter.
	•		For the year ended December 31, 2007, the weighted average diluted shares outstanding, dilutive to Adjusted Earnings, were 194.8 million shares compared to 171.6 million shares for the prior year.

Dividends

	•		A regular quarterly cash dividend of $0.60 per common share was paid on December 31, 2007 to common shareholders of record as of December 17, 2007. The total amount of dividends per share in 2007 was $2.38.
	•		Separately, CapitalSource yesterday announced a regular quarterly cash dividend on its common stock of $0.60 per share for the quarter ended March 31, 2008. It will be payable on or about March 31, 2008 to shareholders of record on March 17, 2008. The ex-dividend date is March 13, 2008.

Tangible Book Value

	•		Tangible book value per share at December 31, 2007 was $11.54, an increase of 1.3% from the December 31, 2006 tangible book value per share of $11.39.
	•		Tangible book value adjusted for the depreciation of direct real estate investments in the health care net lease portfolio, unrealized losses on swap transactions, and mark-to-market gains (losses) on the RMIP business was $12.28 per share at December 31, 2007, an increase of 6.0% compared to adjusted tangible book value per share of $11.59 at December 31, 2006

CapitalSource will hold an analyst and investor conference call with a simultaneous webcast February 21, 2008 at 8:30 a.m. (Eastern Time) to discuss the company’s fourth quarter and full year results. To participate, analysts and investors may call (888) 680-0893 from within United States or (617) 213-4859 from outside the United States, utilizing the pass code 85601644. 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 February 21, 2008 through February 28, 2008. Please call (888) 286-8010 from the United States or (617) 801-6888 from outside the United States with the pass code 57114740. An audio replay will also be available on the Investor Relations section of the CapitalSource website.

The Company’s fourth quarter and full year 2007 investor presentation and a transcript of the earnings conference call will be posted to the Investor Relations section of the CapitalSource website on February 21, 2008.

About CapitalSource

CapitalSource (NYSE: CSE) is a leading commercial lending, investment and asset management business focused on the middle market. CapitalSource manages an asset portfolio which as of December 31, 2007 was approximately $20.9 billion. Headquartered in Chevy Chase, Maryland, the Company had approximately 560 employees as of December 31, 2007 in offices across the U.S. and in Europe. For more information, visit http://www.capitalsource.com.

Forward Looking Statements

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, 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 “project,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results, market conditions, business opportunities, dividend projections, operating expenses, growth, competition, liquidity and credit performance) 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 conditions; continued disruptions in credit and other markets; movements in interest rates; competitive pressures on product pricing and services; success and timing of other business strategies; the nature, extent, and timing of governmental actions and reforms; extended disruption of vital infrastructure; and other factors described in reports 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 Fourth Quarter and Full Year 2007 – Financial Supplement

Table of Contents

Consolidated Balance Sheets			9
Consolidated Statements of Income			10
Adjusted Earnings Definition			11
Adjusted Earnings Reconciliation			12-13
Segment Data			14
Selected Financial Data			15-16
Commercial Asset Portfolio			17
Credit Quality Data			18

CapitalSource Fourth Quarter and Full Year 2007 – Financial Supplement

CapitalSource Inc.
Consolidated Balance Sheets
(Unaudited)
($ in thousands)

		December 31,				September 30,				December 31,
		2007				2007				2006
ASSETS
Cash and cash equivalents		$	178,699			$	245,862			$	396,151
Restricted cash			513,803				296,789				240,904
Mortgage-related receivables, net			2,041,917				2,092,553				2,295,922
Mortgage-backed securities pledged, trading			4,060,605				4,159,037				3,502,753
Receivables under reverse-repurchase agreements			—				26,157				51,892
Loans held for sale			94,327				352,030				26,521
Loans:
Loans			9,773,410				9,251,283				7,771,785
Less deferred loan fees and discounts			(147,089	)			(132,673	)			(130,392	)
Less allowance for loan losses			(138,930	)			(111,692	)			(120,575	)
Loans, net			9,487,391				9,006,918				7,520,818
Direct real estate investments, net			1,017,604				1,031,905				722,303
Investments			231,776				190,104				184,333
Other assets			414,227				351,329				268,977
Total assets		$	18,040,349			$	17,752,684			$	15,210,574
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY
Liabilities:
Repurchase agreements		$	3,910,027			$	4,030,477			$	3,510,768
Credit facilities			2,207,063				2,701,685				2,251,658
Term debt			7,255,675				6,550,232				5,809,685
Other borrowings			1,594,870				1,612,258				1,288,575
Other liabilities			444,997				322,477				200,498
Total liabilities			15,412,632				15,217,129				13,061,184
Noncontrolling interests			45,446				45,490				56,350
Shareholders’ equity:
Preferred stock (50,000,000 shares authorized; no shares outstanding)			—				—				—
Common stock ($0.01 par value, 500,000,000 shares authorized; 220,704,800, 208,540,632 and 182,752,290 shares issued, respectively; 220,704,800, 208,540,632 and 181,452,290 shares outstanding, respectively)			2,207				2,085				1,815
Additional paid-in capital			2,902,501				2,664,842				2,139,421
Accumulated deficit			(327,387	)			(181,336	)			(20,735	)
Accumulated other comprehensive income, net			4,950				4,474				2,465
Treasury stock, at cost			—				—				(29,926	)
Total shareholders’ equity			2,582,271				2,490,065				2,093,040
Total liabilities, noncontrolling interests and shareholders’ equity		$	18,040,349			$	17,752,684			$	15,210,574

CapitalSource Fourth Quarter and Full Year 2007 – Financial Supplement

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

		Three Months Ended
		December 31,				September 30,				December 31,				Year Ended December 31,
		2007				2007				2006				2007				2006
Net investment income:
Interest income		$	333,122			$	344,043			$	284,932			$	1,277,903			$	1,016,533
Fee income .			37,974				29,338				38,385				162,395				170,485
Total interest and fee income			371,096				373,381				323,317				1,440,298				1,187,018
Operating lease income			27,079				27,490				11,568				97,013				30,742
Total investment income			398,175				400,871				334,885				1,537,311				1,217,760
Interest expense			227,547				232,754				184,907				847,241				606,725
Net investment income			170,628				168,117				149,978				690,070				611,035
Provision for loan losses			33,952				12,353				30,529				78,641				81,562
Net investment income after provision for loan losses			136,676				155,764				119,449				611,429				529,473
Operating expenses:
Compensation and benefits			40,818				38,309				34,538				157,755				135,912
Depreciation of direct real estate investments			8,928				8,924				4,118				32,004				11,468
Other administrative expenses			21,347				17,900				19,855				78,232				68,672
Total operating expenses			71,093				65,133				58,511				267,991				216,052
Other income (expense):
Diligence deposits forfeited			681				1,465				2,494				4,822				6,462
(Loss) gain on investments, net			(195	)			(1,984	)			6,618				20,987				12,101
(Loss) gain on derivatives			(31,554	)			(15,494	)			909				(46,150	)			2,485
(Loss) gain on residential mortgage investment portfolio			(25,395	)			(30,225	)			2,308				(75,164	)			2,528
Other income, net of expenses			4,312				(3,389	)			2,621				20,855				13,752
Total other income (expense)			(52,151	)			(49,627	)			14,950				(74,650	)			37,328
Noncontrolling interests expense			1,154				1,182				1,361				4,938				4,711
Net income before income taxes and cumulative effect of accounting change			12,278				39,822				74,527				263,850				346,038
Income taxes			27,312				11,557				14,187				87,563				67,132
Net income before cumulative effect of accounting change			(15,034	)			28,265				60,340				176,287				278,906
Cumulative effect of accounting change, net of taxes			—				—				—				—				370
Net (loss) income		$	(15,034	)		$	28,265			$	60,340			$	176,287			$	279,276
Net income per share:
Basic		$	(0.07	)		$	0.15			$	0.35			$	0.92			$	1.68
Diluted		$	(0.07	)		$	0.15			$	0.34			$	0.91			$	1.65
Average shares outstanding:
Basic			210,021,621				191,976,931				174,862,656				191,697,254				166,273,730
Diluted			210,021,621				193,607,986				178,691,422				193,282,656				169,220,007
Dividends declared per share		$	0.60			$	0.60			$	0.55			$	2.38			$	2.02

CapitalSource Fourth Quarter and Full Year 2007 — Financial Supplement

CapitalSource Inc.
Adjusted Earnings Definition
(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, realized and unrealized gains and losses on our residential mortgage investment portfolio and related derivatives, unrealized gains and losses on other derivatives and foreign currencies, net unrealized gains and losses on investments, provision for loan losses, charge offs, recoveries, nonrecurring items and the cumulative effect of changes in accounting principles.

     Adjusted Earnings should not be considered as an alternative to net income or cash flows from operating activities (each computed in accordance with GAAP). Instead, Adjusted Earnings should be reviewed in connection with net income and cash flows from operating, investing and financing activities in our consolidated financial statements, to help analyze how our business is performing. Adjusted Earnings and other supplemental performance measures are defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our Adjusted Earnings to other REITs.

CapitalSource Fourth Quarter and Full Year 2007 — Financial Supplement

CapitalSource Inc.
Adjusted Earning Reconciliation
(Unaudited)
($ in thousands, except per share data)

A reconciliation of our reported net income to Adjusted Earnings for the three months ended December 31, 2007, September 30, 2007 and December 31, 2006 and for the year ended December 31, 2007 and 2006 were as follows:

		Three Months Ended												Year Ended
		December 31, 2007				September 30, 2007				December 31, 2006				December 31, 2007				December 31, 2006
Net income		$	(15,034	)		$	28,265			$	60,340			$	176,287			$	279,276
Add:
Real estate depreciation and amortization (1)			8,557				8,570				4,118				31,785				10,323
Amortization of deferred financing fees (2)			9,961				7,491				9,012				29,783				30,842
Non-cash equity compensation			12,581				11,336				8,301				44,488				33,294
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)			25,571				32,425				1,749				81,022				5,862
Unrealized loss (gain) on derivatives and foreign currencies, net			35,728				16,464				(1,274	)			51,233				(1,470	)
Unrealized loss on investments, net			2,946				8,452				2,014				12,615				7,524
Provision for loan losses			33,952				12,353				30,529				78,641				81,662
Recoveries (4)			—				—				—				—				—
Less:
Charge offs (5)			6,008				27,796				5,234				57,679				16,510
Non-recurring items (6)			—				—				—				—				4,725
Cumulative effect of accounting change, net of taxes			—				—				—				—				370
Adjusted earnings		$	108,254			$	97,560			$	109,555			$	448,175			$	425,708
Net income per share:
Basic — as reported		$	(0.07	)		$	0.15			$	0.35			$	0.92			$	1.68
Diluted — as reported		$	(0.07	)		$	0.15			$	0.34			$	0.91			$	1.65
Average shares outstanding:
Basic — as reported			210,021,621				191,976,931				174,862,656				191,697,254				166,273,730
Diluted — as reported			210,021,621				193,607,986				178,691,422				193,282,656				169,220,007
Adjusted earnings per share:
Basic		$	0.52			$	0.51			$	0.63			$	2.34			$	2.56
Diluted (7)		$	0.51			$	0.50			$	0.61			$	2.32			$	2.51
Average shares outstanding:
Basic			210,021,621				191,976,931				174,862,656				191,697,254				166,273,730
Diluted (8)			211,609,633				193,607,986				181,202,240				194,792,918				171,551,972

CapitalSource Fourth Quarter and Full Year 2007 — Financial Supplement

CapitalSource Inc.
Adjusted Earning Reconciliation
(Unaudited)
($ in thousands, except per share data)

     For our Commercial Finance segment and Healthcare Lease segment a reconciliation of reported net income to Adjusted Earnings for the three months ended December 31, 2007 and September 30, 2007 were as follows:

		Three Months Ended December 31, 2007								Three Months Ended September 30, 2007
		Commercial Finance				Healthcare Net Lease				Commercial Finance				Healthcare Net Lease
Net income		$	706			$	4,245			$	52,050			$	3,286
Add:
Real estate depreciation and amortization (1)			—				8,557				—				8,570
Amortization of deferred financing fees (2)			9,007				172				6,474				(198	)
Non-cash equity compensation			12,581				—				11,336				—
Net realized and unrealized losses on residential mortgage investment portfolio including related derivatives (3)			—				—				—				—
Unrealized loss (gain) on derivatives and foreign currencies, net			35,728				—				16,464				—
Unrealized loss on investments, net			2,946				—				8,452				—
Provision for loan losses			33,302				—				11,938				—
Recoveries (4)			—				—				—				—
Less:
Charge offs (5)			5,818				—				27,796				—
Non-recurring items			—				—				—				—
Cumulative effect of accounting change, net of taxes			—				—				—				—
Adjusted earnings		$	88,451			$	12,975			$	78,917			$	11,658
Net income per share:
Basic — as reported		$	0.00			$	0.02			$	0.27			$	0.02
Diluted — as reported		$	0.00			$	0.02			$	0.27			$	0.02
Average shares outstanding:
Basic — as reported			210,021,621				210,021,621				191,976,931				191,976,931
Diluted — as reported			210,021,621				210,021,621				193,607,986				193,607,986
Adjusted earnings per share:
Basic		$	0.42			$	0.06			$	0.41			$	0.06
Diluted		$	0.42			$	0.06			$	0.41			$	0.06
Average shares outstanding:
Basic			210,021,621				210,021,621				191,976,931				191,976,931
Diluted			211,609,633				211,609,633				193,607,986				193,607,986

CapitalSource Fourth Quarter and Full Year 2007 – Financial Supplement

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

		Three Months Ended December 31, 2007																Three Months Ended September 30, 2007
										Residential				Consolidated												Residential				Consolidated
		Commercial Finance				Healthcare Net Lease				Mortgage Investment				Total				Commercial Finance				Healthcare Net Lease				Mortgage Investment				Total
Net investment income:
Interest income		$	242,550			$	581			$	89,991			$	333,122			$	249,485			$	487			$	94,071			$	344,043
Fee income			37,974				—				—				37,974				29,338				—				—				29,338
Total interest and fee income			280,524				581				89,991				371,096				278,823				487				94,071				373,381
Operating lease income			—				27,079				—				27,079				—				27,490				—				27,490
Total investment income			280,524				27,660				89,991				398,175				278,823				27,977				94,071				400,871
Interest expense			134,395				10,891				82,261				227,547				132,595				11,007				89,152				232,754
Net investment income			146,129				16,769				7,730				170,628				146,228				16,970				4,919				168,117
Provision for loan losses			33,302				—				650				33,952				11,938				—				415				12,353
Net investment income after provision for loan losses			112,827				16,769				7,080				136,676				134,290				16,970				4,504				155,764
Other operating expenses			57,502				11,921				1,670				71,093				52,782				11,001				1,350				65,133
Total other income (expense)			(27,612	)			856				(25,395	)			(52,151	)			(18,177	)			(1,225	)			(30,225	)			(49,627	)
Noncontrolling interests expense			(304	)			1,458				—				1,154				(276	)			1,458				—				1,182
Net income (loss) before income taxes			28,017				4,246				(19,985	)			12,278				63,607				3,286				(27,071	)			39,822
Income taxes			27,312				—				—				27,312				11,557				—				—				11,557
Net income (loss)		$	705			$	4,246			$	(19,985	)		$	(15,034	)		$	52,050			$	3,286			$	(27,071	)		$	28,265

		Year Ended December 31, 2007																Year Ended December 31, 2006
										Residential				Consolidated												Residential				Consolidated
		Commercial Finance				Healthcare Net Lease				Mortgage Investment				Total				Commercial Finance				Healthcare Net Lease				Mortgage Investment				Total
Net investment income:
Interest income		$	928,190			$	1,362			$	348,351			$	1,277,903			$	749,011			$	—			$	267,522			$	1,016,533
Fee income			162,395				—				—				162,395				170,485				—				—				170,485
Total interest and fee income			1,090,585				1,362				348,351				1,440,298				919,496				—				267,522				1,187,018
Operating lease income			—				97,013				—				97,013				—				30,742				—				30,742
Total investment income			1,090,585				98,375				348,351				1,537,311				919,496				30,742				267,522				1,217,760
Interest expense			481,605				41,047				324,589				847,241				344,988				11,176				250,561				606,725
Net investment income			608,980				57,328				23,762				690,070				574,508				19,565				16,961				611,035
Provision for loan losses			77,576				—				1,065				78,641				81,211				—				351				81,562
Net investment income after provision for loan losses			531,404				57,328				22,697				611,429				493,297				19,565				16,610				529,473
Other operating expenses			220,550				41,441				6,000				267,991				193,053				14,359				8,640				216,052
Total other income (expense)			883				(369	)			(75,164	)			(74,650	)			37,297				(2,497	)			2,528				37,328
Noncontrolling interests expense			(1,037	)			5,975				—				4,938				(806	)			5,517				—				4,711
Net income (loss) before income taxes and cumulative effect of accounting change			312,774				9,543				(58,467	)			263,850				338,347				(2,807	)			10,498				346,038
Income taxes			87,563				—				—				87,563				67,132				—				—				67,132
Net income (loss) before cumulative effect of accounting change			225,211				9,543				(58,467	)			176,287				271,215				(2,807	)			10,498				278,906
Cumulative effect of accounting change, net of taxes			—				—				—				—				370				—				—				370
Net income (loss)		$	225,211			$	9,543			$	(58,467	)		$	176,287			$	271,585			$	(2,807	)		$	10,498			$	279,276

CapitalSource Fourth Quarter and Full Year 2007 – Financial Supplement

CapitalSource Inc.
Selected Financial Data
(Unaudited)

		Three Months Ended
		December 31,				September 30,				December 31,				Year Ended December 31,
		2007				2007				2006				2007				2006
Commercial Finance Segment:
Performance ratios:
Adjusted return on average assets			3.39	%			3.12	%			4.89	%			3.97	%			5.39	%
Adjusted return on average equity			18.00	%			17.98	%			24.91	%			21.53	%			27.84	%
Yield on average interest earning assets			11.12	%			11.31	%			12.38	%			11.71	%			12.62	%
Cost of funds			6.44	%			6.41	%			6.43	%			6.31	%			6.12	%
Net finance margin			5.79	%			5.93	%			7.19	%			6.54	%			7.89	%
Operating expenses as a percentage of average total assets			2.20	%			2.09	%			2.51	%			2.31	%			2.60	%
Efficiency ratio (operating expenses / net investment income and other income)			48.52	%			41.22	%			33.42	%			36.16	%			31.55	%
Leverage ratios:
Total debt to equity (as of period end)			4.39	x			4.48	x			4.08	x			4.39	x			4.08	x
Equity to total assets (as of period end)			18.20	%			18.07	%			19.47	%			18.20	%			19.47	%
Average balances ($ in thousands):
Average loans		$	9,658,941			$	9,556,672			$	7,511,147			$	9,015,761			$	6,971,908
Average assets			10,347,669				10,028,102				8,046,299				9,565,431				7,420,449
Average interest earning assets			10,005,790				9,776,439				7,699,868				9,316,088				7,284,243
Average income earning assets			10,005,790				9,776,439				7,699,868				9,316,088				7,284,243
Average borrowings			8,278,134				8,201,972				6,223,953				7,633,687				5,639,481
Average equity			1,949,243				1,741,658				1,580,770				1,765,119				1,435,559
Healthcare Net Lease Segment:
Performance ratios:
Adjusted return on average assets			4.64	%			4.15	%			3.75	%			4.20	%			2.70	%
Adjusted return on average equity			14.59	%			12.85	%			6.92	%			11.86	%			3.03	%
Yield on average interest earning assets			5.49	%			5.26	%			N/A				4.09	%			N/A
Cost of funds			7.07	%			7.04	%			7.03	%			6.87	%			6.08	%
Net finance margin			6.02	%			6.11	%			4.80	%			5.84	%			7.26	%
Operating expenses as a percentage of average total assets			4.27	%			3.92	%			4.68	%			4.16	%			5.15	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			1.07	%			0.74	%			1.11	%			0.95	%			1.04	%
Efficiency ratio (operating expenses / net investment income and other income)			67.64	%			69.87	%			75.05	%			72.76	%			84.12	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)			16.98	%			13.19	%			17.77	%			16.57	%			16.94	%
Leverage ratios:
Total debt to equity (as of period end)			1.54	x			1.53	x			1.42	x			1.54	x			1.42	x
Equity to total assets (as of period end)			36.21	%			36.40	%			38.49	%			36.21	%			38.49	%
Average balances ($ in thousands):
Average assets		$	1,108,478			$	1,113,466			$	457,096			$	996,627			$	278,846
Average interest earning assets			42,014				36,742				164,516				33,303				9,324
Average income earning assets			1,104,748				1,101,809				594,571				981,232				269,638
Average borrowings			611,333				619,944				234,626				597,152				183,887
Average equity			352,839				359,933				247,846				352,839				247,846

CapitalSource Fourth Quarter and Full Year 2007 – Financial Supplement

CapitalSource Inc.
Selected Financial Data
(Unaudited)

		Three Months Ended
		December 31,				September 30,				December 31,				Year Ended December 31,
		2007				2007				2006				2007				2006
Consolidated CapitalSource Inc.:
Performance ratios:
Adjusted return on average assets			2.40	%			2.19	%			2.99	%			2.67	%			3.38	%
Adjusted return on average equity			16.35	%			16.20	%			20.68	%			18.83	%			22.31	%
Yield on average interest earning assets			8.98	%			9.13	%			9.29	%			9.31	%			9.80	%
Cost of funds			6.08	%			6.16	%			6.02	%			6.01	%			5.79	%
Net finance margin			3.88	%			3.86	%			4.18	%			4.20	%			4.94	%
Operating expenses as a percentage of average total assets			1.58	%			1.46	%			1.60	%			1.59	%			1.72	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			1.38	%			1.26	%			1.48	%			1.40	%			1.62	%
Efficiency ratio (operating expenses / net investment income and other income)			60.01	%			54.97	%			35.48	%			43.55	%			33.32	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)			52.47	%			47.44	%			32.98	%			38.35	%			31.55	%
Leverage ratios:
Total debt to equity (as of period end)			5.80	x			5.98	x			6.14	x			5.80	x			6.14	x
Equity to total assets (as of period end)			14.31	%			14.02	%			13.76	%			14.31	%			13.76	%
Average balances ($ in thousands):
Average loans		$	9,658,941			$	9,556,672			$	7,511,147			$	9,015,761			$	6,971,908
Average assets			17,884,309				17,642,856				14,541,147				16,813,814				12,594,391
Average interest earning assets			16,392,353				16,229,597				13,804,774				15,472,459				12,112,492
Average income earning assets			17,455,086				17,294,665				14,234,829				16,420,388				12,372,805
Average borrowings			14,856,622				14,980,939				12,194,417				14,105,355				10,479,447
Average equity			2,627,612				2,389,313				2,101,514				2,380,629				1,908,337
Commercial Finance & Healthcare Net Lease Segments, combined: (previously reported as Commercial Lending and Investment Segment)
Performance ratios:
Adjusted return on average assets			3.51	%			3.23	%			4.83	%			4.00	%			5.28	%
Adjusted return on average equity			17.48	%			17.10	%			22.47	%			19.97	%			24.17	%
Yield on average interest earning assets			11.10	%			11.30	%			12.12	%			11.68	%			12.61	%
Cost of funds			6.48	%			6.46	%			6.46	%			6.35	%			6.12	%
Net finance margin			5.82	%			5.95	%			7.01	%			6.47	%			7.86	%
Operating expenses as a percentage of average total assets			2.40	%			2.27	%			2.62	%			2.47	%			2.69	%
Operating expenses (excluding direct real estate depreciation) as a percentage of average total assets			2.10	%			1.95	%			2.43	%			2.17	%			2.54	%
Efficiency ratio (operating expenses / net investment income and other income)			50.99	%			44.36	%			35.30	%			39.13	%			32.98	%
Efficiency ratio (operating expenses excluding direct real estate depreciation) / net investment income and other income)			44.44	%			38.15	%			32.72	%			34.33	%			31.16	%
Leverage ratios:
Total debt to equity (as of period end)			3.98	x			4.03	x			3.78	x			3.98	x			3.78	x
Equity to total assets (as of period end)			19.51	%			19.46	%			20.49	%			19.51	%			20.49	%
Average balances ($ in thousands):
Average loans		$	9,658,941			$	9,556,672			$	7,511,147			$	9,015,761			$	6,971,908
Average assets			11,456,147				11,141,568				8,503,395				10,562,058				7,699,324
Average interest earning assets			10,047,804				9,813,180				7,864,384				9,349,391				7,293,568
Average income earning assets			11,110,537				10,878,248				8,294,439				10,297,320				7,553,881
Average borrowings			8,889,467				8,821,916				6,458,579				8,230,839				5,823,368
Average equity			2,302,082				2,101,591				1,828,616				2,117,958				1,683,406