CapitalSource Reports Third Quarter 2013 Results

  • Net Income of $48 Million or $0.24 Per Share, Includes Non-recurring Tax Benefit of $12 million or $0.06 Per Share
  • Net Interest Income of $92 Million at CapitalSource Bank is 9% Higher Than 3Q'12
  • 3Q Loan Growth of $174 Million or 2.7% at CapitalSource Bank / 13.6% Growth YTD
  • Net Interest Margin at CapitalSource Bank of 4.86%
  • Credit Metrics Remained at Very Low Levels

LOS ANGELES, Oct. 23, 2013 (GLOBE NEWSWIRE) -- CapitalSource Inc. (NYSE:CSE) today announced financial results for the third quarter of 2013. The Company reported net income of $48 million or $0.24 per diluted share, including a tax benefit of $12 million or $0.06 per diluted share recorded in connection with resolution of an IRS examination of three prior tax years. Excluding the tax benefit, net income was $36 million or $0.18 per diluted share, compared to net income of $29 million or $0.15 per diluted share in the prior quarter and net income of $31 million or $0.14 per diluted share in the third quarter of 2012.

"The third quarter was an ongoing demonstration of the breadth and depth of our national lending franchise, as loan growth of $174 million raised year-to-date growth to 13.6%," said James J. Pieczynski, CapitalSource CEO. "Despite continuing competitive pressures, we saw early signs this quarter that pricing is stabilizing with a bias to go higher as interest rates start to move up. We are continuing to execute on all of our core business strategies in anticipation of the merger with PacWest Bancorp, which is still expected to close in the first quarter of next year."

"Key indicators of growth and profitability at CapitalSource Bank - including net interest income, net interest margin, return on assets and credit performance - each improved in the quarter," said Tad Lowrey, CapitalSource Bank Chairman and CEO. "Particularly noteworthy were the Bank's net interest margin at 4.86%, which is among the highest in the industry, and a decline in non-performing assets to 0.56% of total assets. Finally, our capital levels remain extremely strong, with a Tier 1 Leverage Ratio of 13.55%."

"Our focus on building a cost efficient organization and efforts to resolve legacy problem assets continued to produce expense savings above our initial expectations, as evidenced by a $4 million decline in consolidated operating expenses compared to the prior quarter. We now expect full year consolidated operating expenses to decline by more than 5% from the prior year level, despite the significant asset growth we will experience this year," said John Bogler, CapitalSource Chief Financial Officer. "Unrestricted cash at the Parent Company grew to $295 million, principally as a result of loan sales and payoffs, and no shares were repurchased this quarter pursuant to terms of the merger agreement," added Bogler. "Additionally, an IRS examination covering tax years 2006-2008 was concluded, resulting in a $12 million tax benefit."

CAPITALSOURCE BANK SEGMENT

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

Third Quarter 2013 Highlights
  • Net Income was $38 million, an increase of $8 million from the prior quarter, due primarily to higher interest income on loans and lower provision for loan and lease loss.
  • Loans and Leases increased $174 million or 2.7%. New funded loan and lease production was $604 million, compared to $710 million in the prior quarter. Total loans and leases were $6.5 billion at quarter end, an increase of 23% from one year ago.
  • Net Interest Margin was 4.86%, an increase of 7 basis points from the prior quarter, primarily due to a higher percentage of loans to assets and less MBS premium amortization. Loan yield declined 15 basis points to 6.30%, primarily due to repayments and re-pricing of existing loans and lower yields on new loans.
  • Capital - The Tier 1 leverage ratio increased 4 basis points to 13.55%, while the total risk-based capital ratio increased 10 basis points to 16.28%.
  • Credit Quality - All key credit quality metrics improved in the quarter and remained at very low levels. Loan and lease loss provision was $2.2 million, compared to $7.1 million in the prior quarter. Non-performing assets decreased by $18 million to $44 million or 0.56% of total assets, compared to 0.80% at the end of the prior quarter. Net charge-offs were $1.7 million in the quarter, compared to $1.9 million in the prior quarter, and were 0.12% as a percentage of average loans for the twelve month period ended September 30, 2013, compared to 0.16% for the twelve month period ended June 30, 2013.

Third Quarter 2013 Details
  Quarter Ended
        9/30/13 vs 6/30/13 9/30/13 vs 9/30/12
  9/30/2013 6/30/2013 9/30/2012 $ % $ %
($ in thousands)              
Interest income $ 107,810 $ 101,237 $ 99,807 $ 6,573 6% $ 8,003 8%
Interest expense 16,106 15,430 15,521 (676) (4) (585) (4)
Loan and lease loss provision 2,230 7,056 273 4,826 68 (1,957) (717)
Non-interest income 16,039 15,116 13,585 923 6 2,454 18
Non-interest expense 42,101 43,405 39,964 1,304 3 (2,137) (5)
Income tax expense 25,015 20,392 23,782 (4,623) (23) (1,233) (5)
Net income 38,397 30,070 33,852 8,327 28 4,545 13

Net Interest Margin was 4.86%, an increase of 7 basis points from the prior quarter due primarily to a more favorable mix of higher yielding interest-earning assets and less MBS premium amortization in the quarter.
  Quarter Ended
  9/30/2013   6/30/2013
Net Interest Margin Average Balance Interest Income/Expense Average Yield/Cost   Average Balance Interest Income/Expense Average Yield/Cost
($ in thousands)              
Loans $ 6,326,704 $ 100,461 6.30% (1) $ 5,895,895 $ 94,784 6.45%
Investment securities 1,044,070 6,922 2.63   1,026,601 6,048 2.36
Cash and other interest-earning assets 109,515 427 1.55 (2) 263,520 405 0.62
Total interest-earning assets 7,480,289 107,810 5.72   7,186,016 101,237 5.65
Deposits 5,963,151 13,407 0.89   5,784,433 12,747 0.88
Borrowings 632,608 2,699 1.69   601,868 2,683 1.79
Total interest-bearing liabilities 6,595,759 16,106 0.97   6,386,301 15,430 0.97
Net interest income / spread   $ 91,704 4.75%     $ 85,807 4.68%
Net interest margin     4.86%       4.79%
               
(1) Loan yield for the quarter included 39 basis points of fee and discount accretion, compared to 46 basis points in the prior quarter
(2) Other interest earning assets included short term investments and FHLB stock with an average yield of 2.17%, compared to 1.26% in the prior quarter

Non-Interest Expense was $42 million, a decrease of $1 million from the prior quarter due primarily to lower loan servicing expenses.

Income Tax Expense was $25 million for the quarter, compared to $20 million in the prior quarter due to higher pre-tax income. The effective tax rate for the quarter was 39.5%, compared to 40.4% in the prior quarter.

Cash and Investments decreased by $56 million to $1.2 billion. The portfolio yield declined by 6 basis points, primarily due to changes in the MBS portfolio.
Cash and Investments 9/30/2013 6/30/2013
($ in thousands) Balance Yield Duration (Years) Balance Yield Duration (Years)
Cash and cash equivalents and restricted cash $ 180,261 0.13% 0.0 $ 158,026 0.19% 0.0
Agency MBS 838,182 2.33% 4.3 911,472 2.29% 3.5
Non-agency MBS 22,206 4.72% 1.7 25,435 4.75% 1.9
CMBS 74,403 2.32% 1.0 74,713 2.49% 1.3
CLO 47,860 2.66% 5.3 47,857 2.75% 6.0
Asset-backed securities 3,599 11.36% 1.5 4,088 11.62% 1.0
SBA Asset-backed securities 15,708 3.12% 5.9 16,807 3.14% 5.8
  $ 1,182,219 2.08% 3.4 $ 1,238,398 2.14% 3.0

Loans and Leases increased $174 million or 2.7% from the prior quarter. Loan growth in the quarter was net of a $125 million prepayment of several multifamily loans by a single borrower. Total loans and leases at quarter end were 23.0% higher than one year ago.
  Quarter Ended
Loan and Lease Roll Forward (1) 9/30/2013 6/30/2013 9/30/2012
($ in thousands)      
Beginning balance $ 6,410,398 $ 6,006,817 $ 5,338,673
New loans or commitment increases funded 603,808 709,964 623,445
Existing loans and leases      
Principal repayments, net (2) (385,177) (346,973) (535,047)
Leased equipment depreciation (3,646) (3,527) (2,307)
Transfers to held for sale, net (10,569) (13,260)
Loan sales (3) (27,218) (11,977) (44,285)
Transfers to foreclosed assets (118) (932)
Net charge-offs (1,660) (1,916) (3,622)
Loans purchased from the Parent Company 58,010
Ending balance - Net principal 6,585,818 6,410,398 5,362,665
Deferred fees and discounts (45,614) (44,340) (45,971)
Ending balance - Net book $ 6,540,204 $ 6,366,058 $ 5,316,694
       
(1) Includes operating leases and equity investments related to operating leases which are included in other assets and other investments, respectively, on our balance sheet.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), increases in existing term loans and other organic changes within the loan portfolio.
(3) Consists of loans that were both transferred to HFS and sold within the period reported.
  Quarter Ended  
Loan and Lease Portfolio Detail 9/30/2013   6/30/2013 9/30/2012
($ in thousands)        
Healthcare Asset Based  $ 132,855    $ 138,058  $ 155,444
Equipment Finance 681,153 (1) 676,225 561,607
Lender Finance & Timeshare 928,284   867,942 763,144
Insurance Premium Finance 38,783   25,696 11,083
Other Asset Based 66,138   55,009 46,060
Total Asset Based 1,847,213   1,762,930 1,537,338
General Cash Flow 272,502   243,970 216,213
Technology Cash Flow 672,461   686,878 595,689
Healthcare Cash Flow 517,475   447,688 300,210
Security Cash Flow 320,463   341,094 272,531
Professional Practice 159,095   166,537 158,608
Total Cash Flow 1,941,996   1,886,167 1,543,251
General Commercial Real Estate 942,623   807,295 670,994
Multifamily 843,721   1,009,485 867,654
Healthcare Real Estate 731,789   679,971 519,042
Small Business 278,476   264,550 224,386
Total Real Estate 2,796,609   2,761,301 2,282,076
Total - Net Principal 6,585,818   6,410,398 5,362,665
Deferred fees and discounts (45,614)   (44,340) (45,971)
Total - Net Book  $ 6,540,204    $ 6,366,058  $ 5,316,694
         
(1) Includes $142 million of operating leases and related equity investments as of September 30, 2013 and $147 million as of June 30, 2013 which are included in Other Assets and Other Investments, respectively. 

Deposits were $6.1 billion at quarter end, an increase of $190 million or 3.2% from the prior quarter. The weighted average interest rate on total deposits was unchanged from the prior quarter at 0.89%. The weighted average rate of new and renewing time deposits in the quarter was 0.93%, compared to 0.88% in the prior quarter.

FHLB Borrowings were $590 million, a decrease of $85 million from the prior quarter. The ending balance in the prior quarter included $80 million of overnight advances used to fund loan growth at the end of the second quarter. There were no overnight advances outstanding at the end of the third quarter. The weighted average rate of FHLB term borrowings was 1.78% as of September 30, 2013, unchanged from the prior quarter and the average remaining maturity was 2.6 years, compared to 2.9 years at the end of the prior quarter.

Allowance for Loan and Lease Losses was $106 million or 1.65% of the loan portfolio as detailed below.
  Quarter Ended
Allowance for Loan and Lease Losses 9/30/2013
($ in thousands) General Specific Total % Loans
Beginning balance $ 103,997 $ 982 $ 104,979  
Loan and lease loss provision 745 1,485 2,230  
Charge-offs, net (1,660) (1,660)  
Ending balance $ 104,742 $ 807 $ 105,549 1.65%
         
         
  Quarter Ended
  6/30/2013
  General Specific Total % Loans
Beginning balance $ 98,512 $ 1,327 $ 99,839  
Loan and lease loss provision 5,485 1,571 7,056  
Charge-offs, net (1,916) (1,916)  
Ending balance $ 103,997 $ 982 $ 104,979 1.69%

Non-performing Assets declined by $18 million to $44 million or 0.56% of total assets.
Non-performing Assets 9/30/2013 6/30/2013
  Balance % of Total Assets Balance % of Total Assets
($ in thousands)        
Non-accrual loans - current $ 37,589 0.47% $ 53,902 0.69%
Non-accrual loans - delinquent 30-89 days 727 0.01 404 0.01
Non-accrual loans - delinquent 90+ days 1,959 0.03 3,767 0.05
Total non-accrual loans 40,275 0.51 58,073 0.75
REO and foreclosed assets 4,098 0.05 4,181 0.05
Total non-performing assets $ 44,373 0.56% $ 62,254 0.80%

Troubled Debt Restructurings were $20 million, all of which were current and on non-accrual. At June 30, 2013 troubled debt restructurings were $19 million, all of which were on non-accrual and $0.1 million of which were delinquent.

OTHER COMMERCIAL FINANCE SEGMENT

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

Third Quarter 2013 Details

Net Income was $9 million, compared to a net loss of $2 million in the prior quarter, due primarily to a tax benefit of $12 million resulting from the resolution of an IRS examination covering tax years 2006-2008.
  Quarter Ended
        9/30/13 vs. 6/30/13 9/30/13 vs. 9/30/12
  9/30/2013 6/30/2013 9/30/2012 $ % $ %
($ in thousands)              
Interest income $ 4,598 $ 5,910 $ 16,899 $ (1,312) (22)% $ (12,301) (73)%
Interest expense 2,538 3,044 3,992 506 17 1,454 36
Loan and lease loss provision / (recovery) (3,299) (2,224) 8,686 1,075 (48) (11,985) (138)
Non-interest income 3,401 628 1,439 2,773 442 1,962 136
Non-interest expense 9,510 11,231 13,037 1,721 15 3,527 27
Income tax benefit (10,176) (3,063) (5,779) 7,113 232 4,397 76
Net income (loss) 9,426 (2,450) (1,598) 11,876 485 11,024 690

Interest Income was $5 million, a decrease of $1 million from the prior quarter due primarily to a lower average loan balance as the Parent Company loan portfolio continued to liquidate.

Non-Interest Income was $3 million, compared to $1 million in the prior quarter due primarily to increases in gain on investments and loan sales.

Non-Interest Expense was $10 million, a decrease of $1 million from the prior quarter due primarily to lower compensation expense and legal fees, largely offset by merger-related costs.

Unrestricted Cash at quarter end was $295 million, an increase of $128 million from the prior quarter. The largest sources of cash were loan sales and principal collections of $125 million and tax payments from the Bank to the Parent Company of $15 million. The principal uses of cash in the quarter were operating expenses, the quarterly dividend payment on common stock, interest on trust preferred securities and merger-related costs. There were no share repurchases during the quarter.

Loans decreased by $117 million from the prior quarter to $141 million as detailed below.
  Quarter Ended
Loan and Lease Roll Forward 9/30/2013 6/30/2013 9/30/2012
($ in thousands)      
Beginning balance $ 259,364 $ 351,397 $ 801,127
Existing loans and leases      
Principal repayments, net (1) (72,010) (27,269) (46,938)
Transfers to held for sale, net (3,446) (39,930)
Loan sales (2) (39,188) (6,038) (14,617)
Transfers to foreclosed assets
Net charge-offs (2,630) (716) (12,066)
Intercompany sales (58,010)
Ending balance - Net principal 142,090 259,364 687,576
Deferred fees and discounts (1,509) (2,165) (7,423)
Ending Balance - Net book $ 140,581 $ 257,199 $ 680,153
       
(1) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), increases in existing term loans and other organic changes within the loan portfolio. 
(2) Consists of loans that were both transferred to HFS and sold within the period reported.

Allowance for Loan and Lease Losses declined to $10 million. The allowance for loan and lease losses ratio increased from 6.03% to 6.82%, as detailed below, due to the decline in the Parent Company loan portfolio from $257 million to $141 million.
  Quarter Ended
Allowance for Loan and Lease Losses 9/30/2013
($ in thousands) General Specific Total % Loans
Beginning balance $ 8,546 $ 6,968 $ 15,514  
Loan and lease loss provision / (recovery) 86 (3,385) (3,299)  
Charge-offs, net (2,630) (2,630)  
Ending balance $ 8,632 $ 953 $ 9,585 6.82%
         
  Quarter Ended
  6/30/2013
  General Specific Total % Loans
Beginning balance $ 10,423 $ 8,031 $ 18,454  
Loan and lease loss provision / (recovery) (1,877) (347) (2,224)  
Charge-offs, net (716) (716)  
Ending balance $ 8,546 $ 6,968 $ 15,514 6.03%

Non-performing Assets were $85 million, a decline of $26 million from the prior quarter due primarily to a $24 million decline in non-accrual loans. All collections on non-accrual loans are applied to the outstanding principal balance.
Non-performing Assets 9/30/2013 6/30/2013
  Balance % of Total Assets Balance % of Total Assets
($ in thousands)        
Non-accrual loans current $ 45,982 5.41% $ 51,457 5.77%
Non-accrual loans - delinquent 30-89 days 1
Non-accrual loans - delinquent 90+ days 28,492 3.35 46,547 5.22
Total non-accrual loans 74,475 8.76 98,004 10.99
Accruing loans - delinquent 90+ days
REO and foreclosed assets 10,401 1.22 12,379 1.39
Total non-performing assets $ 84,876 9.98% $ 110,383 12.38%

Troubled Debt Restructurings were $61 million, $55 million of which were on non-accrual and $10 million of which were delinquent as to payment status. At June 30, 2013 troubled debt restructurings were $85 million, $78 million of which were on non-accrual and $27 million of which were delinquent as to payment status.

CONSOLIDATED

Third Quarter 2013 Details

Net Income was $48 million or $0.24 per diluted share, including a tax benefit of $12 million or $0.06 per diluted share resulting from the resolution of an IRS examination of tax years 2006-2008. Excluding the tax benefit, net income was $36 million or $0.18 per diluted share, compared to net income of $29 million or $0.15 per diluted share in the prior quarter, as detailed below. Pretax income increased to $63 million compared to $46 million in the prior quarter, due to an increase in interest income, lower loan and lease loss provision, higher non-interest income and a decrease in non-interest expense.
  Quarter Ended
        9/30/13 vs. 6/30/13 9/30/13 vs. 9/30/12
  9/30/2013 6/30/2013 9/30/2012 $ % $ %
($ in thousands)              
Interest income $ 112,718 $ 108,405 $ 115,234 $ 4,313 4% $ (2,516) (2)%
Interest expense 18,644 18,474 19,513 (170) (1) 869 4
Loan and lease loss provision / (recovery) (1,069) 4,832 8,959 5,901 122 10,028 112
Non-interest income 15,708 11,548 9,297 4,160 36 6,411 69
Non-interest expense 47,614 50,695 47,009 3,081 6 (605) (1)
Income tax expense 14,839 17,329 18,003 2,490 14 3,164 18
Net income 48,398 28,623 31,047 19,775 69 17,351 56

Interest Income was $113 million, an increase of $4 million from the prior quarter, due primarily to a $292 million increase in average loans.

Net Interest Margin was 4.77%, an increase of 3 basis points from the prior quarter due primarily to a more favorable mix of higher yielding interest-earning assets. Net interest income was $94 million, an increase of $4 million from the prior quarter.

Non-Interest Income was $16 million, compared to $12 million in the prior quarter due primarily to increases in gain on investments and loan sales.

Non-Interest Expense was $48 million, a decrease of $3 million from the prior quarter due primarily to lower compensation expense, benefits and legal fees, largely offset by $5 million of merger-related costs. For the full year, operating expenses are projected to total $170-175 million and non-operating expenses, including pre-close merger-related costs, are projected to total approximately $20 million. 
  Quarter Ended
Non-Interest Expense 9/30/2013 6/30/2013
($ in thousands)    
Compensation and benefits  $ 26,618  $ 27,725
Professional fees (49) 1,757
Occupancy expenses 3,434 3,239
FDIC fees and assessments 1,642 1,582
General depreciation and amortization 1,590 1,571
Loan servicing expense 925 2,743
Other administrative expenses 6,129 6,056
Total operating expenses 40,289 44,673
Leased equipment depreciation 3,646 3,527
Expense from real estate owned and other foreclosed assets, net (768) 1,972
Other non-interest expense, net (includes merger-related costs) 4,447 523
Total non-interest expense  $ 47,614  $ 50,695

Loans and Leases increased $58 million from the prior quarter as detailed below.
  Quarter Ended
Loan and Lease Roll Forward (1) 9/30/2013 6/30/2013 9/30/2012
($ in thousands)      
Beginning balance $ 6,669,762 $ 6,358,214 $ 6,139,800
New loans or commitment increases funded 603,808 709,964 623,445
Existing loans and leases      
Principal repayments, net (2) (457,187) (374,242) (581,985)
Leased equipment depreciation (3,646) (3,527) (2,307)
Transfers to held for sale, net (14,015) (53,190)
Loan sales (3) (66,406) (18,015) (58,902)
Transfers to foreclosed assets (118) (932)
Net charge-offs (4,290) (2,632) (15,688)
Ending balance - Net principal 6,727,908 6,669,762 6,050,241
Deferred fees and discounts (46,407) (46,099) (53,907)
Ending balance - Net book $ 6,681,501 $ 6,623,663 $ 5,996,334
       
(1) Includes operating leases and equity investments related to operating leases which are included in Other Assets and Other Investments.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), increases in existing term loans and other organic changes within the loan portfolio. 
(3) Consists of loans that were both transferred to HFS and sold within the period reported.

Allowance for Loan and Lease Losses was $115 million, or 1.76% of the loan portfolio, compared to $120 million, or 1.86% at the end of the prior quarter. Net charge-offs as a percentage of average loans for the twelve month period ended September 30, 2013 were 0.59%, compared to 0.79% for the twelve month period ended June 30, 2013.
  Quarter Ended
Allowance for Loan and Lease Losses 9/30/2013
($ in thousands) General Specific Total % Loans
Beginning balance $ 112,543 $ 7,950 $ 120,493  
Loan and lease loss provision / (recovery) 831 (1,900) (1,069)  
Charge-offs, net (4,290) (4,290)  
Ending balance $ 113,374 $ 1,760 $ 115,134 1.76%
         
  Quarter Ended
  6/30/2013
  General Specific Total % Loans
Beginning balance $ 108,935 $ 9,358 $ 118,293  
Loan and lease loss provision 3,608 1,224 4,832  
Charge-offs, net (2,632) (2,632)  
Ending balance $ 112,543 $ 7,950 $ 120,493 1.86%

Non-performing Assets were $129 million, a decrease of $43 million from the prior quarter due primarily to a $41 million decrease in non-accrual loans, as three non-accrual loans were either sold or paid off in the quarter, and a $2 million decline in REO and other foreclosed assets. All collections on non-accrual loans are applied to the outstanding principal balance. 
Non-performing Assets 9/30/2013 6/30/2013
  Balance % of Total Assets Balance % of Total Assets
($ in thousands)        
Non-accrual loans - current $ 83,571 0.95% $ 105,359 1.21%
Non-accrual loans - delinquent 30-89 days 728 0.01 404
Non-accrual loans - delinquent 90+ days 30,451 0.35 50,314 0.59
Total non-accrual loans 114,750 1.31 156,077 1.80
Accruing loans - delinquent 90+ days
REO and foreclosed assets 14,499 0.17 16,560 0.19
Total non-performing assets $ 129,249 1.48% $ 172,637 1.99%

Troubled Debt Restructurings were $81 million, $75 million of which were on non-accrual and $10 million of which were delinquent as to payment status. At June 30, 2013 troubled debt restructurings were $104 million, $97 million of which were on non-accrual and $27 million of which were delinquent as to payment status.

Valuation Allowance related to the Company's deferred tax assets was $123 million, a decrease of $2 million from the end of the prior quarter. The net deferred tax asset at quarter end after subtracting the valuation allowance was $271 million, a decrease of $62 million from the prior quarter due primarily to the resolution of an IRS tax examination of tax years 2006-2008 which resulted in the reversal of uncertain tax liabilities.

Consolidated Tax Expense was $15 million, which equates to an effective tax rate of 23.5%. Non-recurring tax items in the quarter include a $12.3 million benefit in connection with the closing of an IRS examination for tax years 2006-2008 and a $2.7 million expense related to the establishment of additional valuation allowance related to capital assets. Excluding those two items, the effective tax rate was 38.5%.

Book Value Per Share was $8.09 at the end of the quarter, an increase of $0.20 from the prior quarter. Total shareholders' equity was $1.6 billion at the end of the quarter, an increase of $42 million from the prior quarter.

Tangible Book Value Per Share was $7.21 at the end of the quarter, an increase of $0.20 from the end of the prior quarter.

Average Diluted Shares Outstanding were 198.5 million shares for the quarter, compared to 197.3 million shares for the prior quarter. Total outstanding shares at September 30, 2013 were 196.9 million.

No Share Repurchases were made during the quarter, pursuant to the terms of the pending merger.

Quarterly Cash Dividend of $0.01 per common share was paid on September 27, 2013 to common shareholders of record on September 13, 2013.

CapitalSource Bank Call Report

CapitalSource Bank will file its Consolidated Reports of Condition and Income for a Bank With Domestic Offices Only-FFIEC 041, for the quarter ended September 30, 2013 (the "Call Report") with the Federal Deposit Insurance Corporation ("FDIC") on or before October 30, 2013. The Call Report will subsequently be posted by the FDIC on its website at http://cdr.ffiec.gov/Public/ .

About CapitalSource

CapitalSource Inc. (NYSE:CSE), through its wholly owned subsidiary CapitalSource Bank, makes commercial loans to small and middle-market businesses nationwide and offers depository products and services in 21 retail branches in southern and central California. CapitalSource, headquartered in Los Angeles, CA, had total assets of $8.8 billion and total deposits of $6.1 billion as of September 30, 2013. For more information, 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, strategies, goals, and projections and including statements about our expectations regarding pending merger between the Company and PacWest, interest spread and asset yield, and consolidated operating expenses, all which are subject to numerous assumptions, risks, and uncertainties. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words 'anticipate,' 'assume,' 'intend,' 'believe,' 'expect,' 'estimate,' 'forecast,' 'plan,' 'position,' 'project,' 'will,' 'should,' 'would,' 'seek,' 'continue,' 'outlook,' 'look forward,' and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding preliminary and future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including without limitation: the ability to complete the pending merger between the Company and PacWest, including obtaining regulatory approvals and approval by the stockholders of PacWest and the Company, or any future transaction, successfully integrate the companies following completion of the merger or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected time-frames or at all; the possibility that regulatory approvals may not be received on expected timeframes or at all; the possibility that personnel changes in connection with the merger may not proceed as planned; the possibility that the cost of additional capital may be more than expected; changes in the Company's stock price before completion of the merger, including as a result of the financial performance of PacWest prior to closing; the reaction to the merger of the companies' customers, employees and counterparties; changes in interest rates and lending spreads; competitive and other market pressures on product pricing and services; unfavorable changes in asset mix; changes in loan repayment levels due to negative impact of rate changes to discounts and premiums; higher than anticipated increases in operating expenses; increased litigation, asset workout or loan servicing expenses; higher compensation costs and professional fees to retain and/or incent employees; and other factors described in CapitalSource's 2012 Annual Report on Form 10-K and documents subsequently filed by CapitalSource with the Securities and Exchange Commission. All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law.
CapitalSource Third Quarter 2013 - Financial Supplement
 
CapitalSource Inc.
Consolidated Balance Sheets
 ($ in thousands)
     
  September 30, December 31,
  2013 2012
  (Unaudited)  
     
ASSETS
Cash and cash equivalents $216,377 $178,880
Interest-bearing deposits in other banks 55,126 110,208
Other short-term investments 159,954 9,998
Restricted cash 59,635 104,044
Investment securities:    
Available-for-sale, at fair value 911,572 1,079,025
Held-to-maturity, at amortized cost 122,262 108,233
Total investment securities 1,033,834 1,187,258
Loans held for sale 13,977 22,719
Loans held for investment 6,585,585 6,192,858
Less deferred loan fees and discounts (46,407) (53,628)
Total loans held for investment 6,539,178 6,139,230
Less allowance for loan and lease losses (115,134) (117,273)
Total loans held for investment, net 6,424,044 6,021,957
Interest receivable 24,813 29,112
Other investments 54,771 60,363
Goodwill 173,135 173,135
Deferred tax asset, net 271,291 362,283
Other assets 267,962 289,048
Total assets $8,754,919 $8,549,005
     
     
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:    
Deposits $6,051,411 $5,579,270
Term debt 177,188
Other borrowings 1,001,599 1,005,738
Other liabilities 108,695 161,637
Total liabilities 7,161,705 6,923,833
     
     
Shareholders' equity:    
Preferred stock (50,000,000 shares authorized; no shares outstanding)
Common stock ($0.01 par value, 1,200,000,000 shares    
authorized; 196,944,961 and 209,551,674 shares issued    
and outstanding, respectively) 1,969 2,096
Additional paid-in capital 3,030,990 3,157,533
Accumulated deficit (1,458,647) (1,559,107)
Accumulated other comprehensive income, net 18,902 24,650
Total shareholders' equity 1,593,214 1,625,172
Total liabilities and shareholders' equity $8,754,919 $8,549,005
     
CapitalSource Third Quarter 2013 - Financial Supplement
CapitalSource Inc.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
($ in thousands, except per share data)
           
  Three Months Ended Nine Months Ended
  September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
Net interest income:          
Interest income:          
Loans and leases $104,211 $100,946 $105,066 $308,046 $322,437
Investment securities 8,003 7,040 9,784 24,936 29,737
Other 504 419 384 1,236 1,119
Total interest income 112,718 108,405 115,234 334,218 353,293
Interest expense:          
Deposits 13,407 12,747 12,738 38,260 38,669
Borrowings 5,237 5,727 6,775 17,021 21,866
Total interest expense 18,644 18,474 19,513 55,281 60,535
Net interest income 94,074 89,931 95,721 278,937 292,758
Loan and lease loss provision / (recovery) (1,069) 4,832 8,959 16,268 30,567
Net interest income after loan and lease loss provision / (recovery) 95,143 85,099 86,762 262,669 262,191
Non-interest income:          
Loan fees 5,921 4,266 4,174 13,299 11,899
Leased equipment income 5,194 5,020 3,299 15,039 9,815
Gain on investments, net 2,123 1,104 1,856 5,105 929
(Loss) gain on derivatives, net (1,566) 978 (978) 226 (649)
Other non-interest income, net 4,036 180 946 6,805 7,303
Total non-interest income 15,708 11,548 9,297 40,474 29,297
Non-interest Expense:          
Compensation and benefits 26,618 27,725 25,523 79,325 77,347
Professional fees (49) 1,757 2,469 3,176 9,158
Occupancy expenses 3,434 3,239 3,422 10,888 13,402
FDIC fees and assessments 1,642 1,582 1,507 4,778 4,419
General depreciation and amortizations 1,590 1,571 1,330 4,687 4,536
Loan servicing expense 925 2,743 1,183 5,137 11,228
Other administrative expenses 6,129 6,056 6,477 18,995 19,674
Total operating expenses 40,289 44,673 41,911 126,986 139,764
Leased equipment depreciation 3,646 3,527 2,307 10,573 6,883
Expense from real estate owned and other foreclosed assets, net (768) 1,972 2,308 1,142 6,579
Loss on extinguishment of debt (8,059)
Other non-interest expense, net 4,447 523 483 4,263 (908)
Total non-interest expense 47,614 50,695 47,009 142,964 144,259
Net income before income taxes 63,237 45,952 49,050 160,179 147,229
Income tax expense (benefit) 14,839 17,329 18,003 53,810 (296,305)
Net income 48,398 28,623 31,047 106,369 443,534
           
Other comprehensive (loss) income, net of tax          
Unrealized (loss) gain on available-for-sale securities, net of tax (4,285) 165 2,315 (5,748) 2,802
Unrealized loss on foreign currency translation, net of tax (351)
Other comprehensive (loss) income (4,285) 165 2,315 (5,748) 2,451
Comprehensive income $44,113 $28,788 $33,362 $100,621 $445,985
           
Net income per share:          
Basic $0.25 $0.15 $0.14 $0.54 $1.94
Diluted $0.24 $0.15 $0.14 $0.53 $1.88
Average shares outstanding:          
Basic 193,099,993 192,422,552 219,664,637 195,606,073 229,091,849
Diluted 198,456,994 197,287,617 226,441,294 200,703,002 235,712,522
Dividends declared per share $0.01 $0.01 $0.01 $0.03 $0.03
 
CapitalSource Inc.
Segment Balance Sheets
(Unaudited)
($ in thousands)
                 
  September 30, 2013 June 30, 2013
  CAPITALSOURCE BANK OTHER COMMERCIAL FINANCE INTERCOMPANY ELIMINATIONS CONSOLIDATED CAPITALSOURCE BANK OTHER COMMERCIAL FINANCE INTERCOMPANY ELIMINATIONS CONSOLIDATED
ASSETS                
                 
Cash and cash equivalents and restricted cash $180,261 $310,831 $— $491,092 $158,026 $184,123 $— $342,149
Investment securities:                
Available-for-sale 879,696 31,876 911,572 957,802 31,978 989,780
Held-to-maturity 122,262 122,262 122,570 122,570
Loans 6,408,385 144,054 716 6,553,155 6,219,463 257,200 406 6,477,069
Allowance for loan and lease losses (105,549) (9,585) (115,134) (104,979) (15,514) (120,493)
Loans, net of allowance for loan and lease losses 6,302,836 134,469 716 6,438,021 6,114,484 241,686 406 6,356,576
Receivables due from affiliates 1,253 7,120 (8,373) 2,927 7,866 (10,793)
Other assets 446,933 366,067 (21,028) 791,972 456,337 425,938 (14,644) 867,631
Total assets $7,933,241 $850,363 $(28,685) $8,754,919 $7,812,146 $891,591 $(25,031) $8,678,706
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
                 
Liabilities:                
Deposits $6,051,411 $— $— $6,051,411 $5,861,497 $— $— $5,861,497
Borrowings 590,000 411,599 1,001,599 675,000 410,266 1,085,266
Balance due to affiliates 7,120 1,253 (8,373) 7,866 2,927 (10,793)
Other liabilities 86,903 46,423 (24,631) 108,695 103,914 94,365 (17,981) 180,298
Total liabilities 6,735,434 459,275 (33,004) 7,161,705 6,648,277 507,558 (28,774) 7,127,061
                 
Shareholders' equity:                
Common stock 921,000 1,969 (921,000) 1,969 921,000 1,967 (921,000) 1,967
Additional paid-in capital/retained earnings/deficit 273,357 370,217 928,769 1,572,343 235,913 358,880 931,699 1,526,492
Accumulated other comprehensive income, net 3,450 18,902 (3,450) 18,902 6,956 23,186 (6,956) 23,186
Total shareholders' equity 1,197,807 391,088 4,319 1,593,214 1,163,869 384,033 3,743 1,551,645
                 
Total liabilities and shareholders' equity $7,933,241 $850,363 $(28,685) $8,754,919 $7,812,146 $891,591 $(25,031) $8,678,706
 
CapitalSource Inc.
Segment Statements of Operations
(Unaudited)
($ in thousands)
                 
  Three Months Ended September 30, 2013 Three Months Ended June 30, 2013
Net interest income: CAPITALSOURCE BANK OTHER COMMERCIAL FINANCE INTERCOMPANY ELIMINATIONS CONSOLIDATED CAPITALSOURCE BANK OTHER COMMERCIAL FINANCE INTERCOMPANY ELIMINATIONS CONSOLIDATED
Interest income:                
Loans and leases $100,461 $3,440 $310 $104,211 $94,784 $4,904 $1,258 $100,946
Investment securities 6,922 1,081 8,003 6,048 992 7,040
Other 427 77 504 405 14 419
Total interest income 107,810 4,598 310 112,718 101,237 5,910 1,258 108,405
Interest expense:                
Deposits 13,407 13,407 12,747 12,747
Borrowings 2,699 2,538 5,237 2,683 3,044 5,727
Total interest expense 16,106 2,538 18,644 15,430 3,044 18,474
Net interest income 91,704 2,060 310 94,074 85,807 2,866 1,258 89,931
Loan and lease loss provision / (recovery) 2,230 (3,299) (1,069) 7,056 (2,224) 4,832
Net interest income after loan and lease loss provision / (recovery) 89,474 5,359 310 95,143 78,751 5,090 1,258 85,099
Non-interest income:                
Loan fees 5,643 278 5,921 4,071 195 4,266
Leased equipment income 5,194 5,194 5,020 5,020
Other non-interest income, net 5,202 3,123 (3,732) 4,593 6,025 433 (4,196) 2,262
Total non-interest income, net 16,039 3,401 (3,732) 15,708 15,116 628 (4,196) 11,548
Non-interest expense:                
Compensation and benefits 27,421 (803) 26,618 26,984 741 27,725
Professional fees 984 (1,033) (49) 1,208 549 1,757
Leased equipment depreciation 3,646 3,646 3,527 3,527
Expense of real estate owned and other foreclosed assets, net 6 (774) (768) (3) 1,975 1,972
Other non-interest expense, net 10,044 12,120 (3,997) 18,167 11,689 7,966 (3,941) 15,714
Total non-interest expense, net 42,101 9,510 (3,997) 47,614 43,405 11,231 (3,941) 50,695
Net income (loss) before income taxes 63,412 (750) 575 63,237 50,462 (5,513) 1,003 45,952
Income tax expense (benefit) 25,015 (10,176) 14,839 20,392 (3,063) 17,329
Net income (loss) $38,397 $9,426 $575 $48,398 $30,070 $(2,450) $1,003 $28,623
                 
  Nine Months Ended September 30, 2013 Nine Months Ended September 30, 2012
Net interest income: CAPITALSOURCE BANK OTHER COMMERCIAL FINANCE INTERCOMPANY ELIMINATIONS CONSOLIDATED CAPITALSOURCE BANK OTHER COMMERCIAL FINANCE INTERCOMPANY ELIMINATIONS CONSOLIDATED
Interest income:                
Loans and leases $288,540 $17,165 $2,341 $308,046 $267,905 $58,357 $(3,825) $322,437
Investment securities 21,742 3,194 24,936 25,626 4,111 29,737
Other 1,121 115 1,236 1,008 111 1,119
Total interest income 311,403 20,474 2,341 334,218 294,539 62,579 (3,825) 353,293
Interest expense:                
Deposits 38,260 38,260 38,669 38,669
Borrowings 8,067 8,954 17,021 8,305 13,561 21,866
Total interest expense 46,327 8,954 55,281 46,974 13,561 60,535
Net interest income 265,076 11,520 2,341 278,937 247,565 49,018 (3,825) 292,758
Loan and lease loss provision 12,438 3,830 16,268 14,745 15,822 30,567
Net interest income after loan and lease loss provision 252,638 7,690 2,341 262,669 232,820 33,196 (3,825) 262,191
Non-interest income:                
Loan fees 12,658 641 13,299 9,565 2,334 11,899
Leased equipment income 15,039 15,039 9,815 9,815
Other non-interest income, net 16,991 8,630 (13,485) 12,136 22,872 4,190 (19,479) 7,583
Total non-interest income, net 44,688 9,271 (13,485) 40,474 42,252 6,524 (19,479) 29,297
Non-interest expense:                
Compensation and benefits 78,973 352 79,325 74,818 2,529 77,347
Professional fees 3,195 (19) 3,176 4,615 4,543 9,158
Leased equipment depreciation 10,573 10,573 6,883 6,883
Expense of real estate owned and other foreclosed assets, net (9) 1,151 1,142 1,334 5,245 6,579
Loss on extinguishment of debt (8,059) (8,059)
Other non-interest expense, net 31,680 29,910 (12,842) 48,748 36,657 35,968 (20,274) 52,351
Total non-interest expense, net 124,412 31,394 (12,842) 142,964 124,307 40,226 (20,274) 144,259
Net income (loss) before income taxes 172,914 (14,433) 1,698 160,179 150,765 (506) (3,030) 147,229
Income tax expense (benefit) 69,804 (15,994) 53,810 62,047 (358,352) (296,305)
Net income (loss) $103,110 $1,561 $1,698 $106,369 $88,718 $357,846 $(3,030) $443,534
 
CapitalSource Inc.
Selected Financial Data
(Unaudited)
           
  Three Months Ended Nine Months Ended
  September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
CapitalSource Bank Segment:          
           
Performance ratios:          
Return on average assets 1.94% 1.58% 1.88% 1.80% 1.69%
Return on average equity 12.94% 10.46% 12.75% 12.00% 11.45%
Return on average tangible equity 15.17% 12.30% 15.25% 14.13% 13.75%
Yield on average interest earning assets 5.72% 5.65% 5.88% 5.77% 5.96%
Cost of interest bearing liabilities 0.97% 0.97% 1.02% 0.97% 1.06%
Deposits 0.89% 0.88% 0.93% 0.88% 0.97%
Borrowings 1.69% 1.79% 1.85% 1.76% 1.90%
Net interest spread 4.75% 4.68% 4.86% 4.80% 4.90%
Net interest margin 4.86% 4.79% 4.97% 4.91% 5.01%
Operating expenses as a percentage of average total assets 1.97% 2.08% 2.07% 2.00% 2.21%
Efficiency ratio (1) 37.26% 40.59% 38.83% 38.28% 41.02%
Loan yield 6.30% 6.45% 6.95% 6.47% 7.09%
Capital ratios:          
Tier 1 leverage 13.55% 13.51% 12.82% 13.55% 12.82%
Total risk-based capital 16.28% 16.18% 16.69% 16.28% 16.69%
Tangible common equity to tangible assets 13.20% 12.97% 12.55% 13.20% 12.55%
Average balances ($ in thousands):          
Average loans $6,326,704 $5,895,895 $5,231,242 $5,963,288 $5,046,915
Average assets 7,872,206 7,618,652 7,174,140 7,646,196 7,016,564
Average interest earning assets 7,480,289 7,186,016 6,752,549 7,220,959 6,598,045
Average deposits 5,963,151 5,784,433 5,469,501 5,796,560 5,347,534
Average borrowings 632,608 601,868 597,674 611,374 583,785
Average equity 1,177,526 1,153,504 1,056,261 1,148,766 1,035,100
           
Other Commercial Finance Segment:          
           
Performance ratios:          
Yield on average interest earning assets 5.19% 5.57% 7.66% 6.25% 8.47%
Cost of interest bearing liabilities 2.45% 2.71% 2.56% 2.62% 2.63%
Net interest spread 2.74% 2.86% 5.10% 3.63% 5.84%
Net interest margin 2.33% 2.70% 5.85% 3.51% 6.63%
Loan yield 6.68% 5.72% 7.91% 7.00% 8.84%
Average balances ($ in thousands):          
Average loans $204,258 $344,136 $763,361 $327,871 $882,013
Average assets 888,371 933,295 1,477,940 968,039 1,379,590
Average interest earning assets 351,528 425,389 877,722 438,275 987,268
Average borrowings 410,686 449,933 621,371 456,928 687,966
Average equity 382,778 383,888 742,001 415,088 552,141
           
Consolidated CapitalSource Inc.: (2)          
           
Performance ratios:          
Return on average assets 2.20% 1.35% 1.43% 1.66% 7.06%
Return on average equity 12.27% 7.46% 6.85% 9.08% 37.18%
Return on average tangible equity 13.81% 8.40% 7.58% 10.21% 41.73%
Yield on average interest earning assets 5.71% 5.71% 6.01% 5.83% 6.22%
Cost of interest bearing liabilities 1.06% 1.08% 1.16% 1.08% 1.22%
Net interest spread 4.65% 4.63% 4.85% 4.75% 5.00%
Net interest margin 4.77% 4.74% 4.99% 4.87% 5.15%
Efficiency ratio (1) 37.96% 45.61% 40.81% 41.12% 44.34%
Operating expenses as a percentage of average total assets 1.85% 2.10% 1.94% 1.97% 2.22%
Leverage ratios:          
Equity to total assets (as of period end) 18.20% 17.88% 20.09% 18.20% 20.09%
Tangible common equity to tangible assets 16.54% 16.20% 18.46% 16.54% 18.46%
Average balances ($ in thousands):          
Average loans $6,531,395 $6,239,609 $5,995,021 $6,291,134 $5,930,657
Average assets 8,732,982 8,528,821 8,648,882 8,591,257 8,394,136
Average interest earning assets 7,832,249 7,610,983 7,630,690 7,659,209 7,587,042
Average borrowings 1,043,295 1,051,801 1,219,045 1,068,301 1,271,751
Average deposits 5,963,151 5,784,433 5,469,501 5,796,560 5,347,534
Average equity 1,564,289 1,539,984 1,802,085 1,566,979 1,593,372
(1)  Efficiency ratio is defined as operating expense (non-interest expense less REO expense, early debt term expense, provision for unfunded commitments and lease depreciation) divided by net interest and non-interest income, less leased equipment depreciation.
(2)  Applicable ratios have been calculated on a continuing operations basis.
 
CapitalSource Inc.
Credit Quality Data
(Unaudited)
           
  September 30, 2013 June 30, 2013 March 31, 2013 December 31, 2012 September 30, 2012
           
Loans 30-89 days contractually delinquent:          
As a % of total loans (1) 0.01% 0.01% 0.71% 0.40% 0.51%
Loans 30-89 days contractually delinquent $0.7 $0.4 $43.7 $24.5 $30.3
           
Loans 90 or more days contractually delinquent:          
As a % of total loans (1) 0.46% 0.78% 0.69% 0.63% 0.72%
Loans 90 or more days contractually delinquent $30.5 $50.3 $43.0 $39.1 $43.2
           
Loans on non-accrual: (2)          
As a % of total loans (1) 1.75% 2.41% 2.40% 1.94% 2.66%
Loans on non-accrual $114.8 $156.1 $148.6 $119.7 $158.8
           
Impaired loans: (3)          
As a % of total loans (4) 1.80% 2.51% 2.41% 3.29% 4.51%
Impaired loans $117.4 $162.4 $148.9 $201.7 $266.1
           
Allowance for loan and lease losses:          
As a % of total loans (4) 1.76% 1.86% 1.92% 1.91% 2.15%
As a % of non-accrual loans 100.33% 77.20% 79.58% 97.96% 79.75%
Allowance for loan and lease losses $115.1 $120.5 $118.3 $117.3 $126.6
           
Net charge offs (last twelve months):          
As a % of total average loans 0.59% 0.79% 1.24% 1.27% 2.09%
Net charge offs (last twelve months) $36.7 $48.2 $74.4 $75.8 $123.7
           
           
(1)  Includes loans held for investment, loans held for sale and deferred loan fees and discounts. Excludes allowance for loan and lease losses.
(2)  Includes loans with an aggregate principal balance of $30.5 million, $50.3 million, $43.0 million, $39.1 million, and $43.2 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012, and September 30, 2012, respectively, that were also classified as loans 90 or more days contractually delinquent. Also includes non-performing loans held for sale that had an aggregate principal balance of $3.5 million, $8.3 million and $2.4 million, as of September 30, 2013, March 31, 2013 and December 31, 2012, respectively. As of June 30, 2013 and September 30, 2012 there were no non-performing loans classified as held for sale.
(3)  Includes loans with an aggregate principal balance of $30.5 million, $50.3 million, $43.0 million, $38.1 million, and $43.2 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012, and September 30, 2012, respectively, that were also classified as loans 90 or more days contractually delinquent, and loans with an aggregate principal balance of $111.3 million, $156.1 million, $140.4 million, $117.3 million, and $158.8 million as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, respectively, that were also classified as loans on non-accrual status.
(4)  Includes loans held for investment and deferred loan fees and discounts. Excludes the allowance for loan and lease losses.
CONTACT: Investor Relations:         Dennis Oakes         Senior Vice President, Investor Relations         & Corporate Communications         (212) 321-7212         doakes@capitalsource.com                  Media Relations:         Michael Weiss         Director of Communications         (301) 841-2918         mweiss@capitalsource.com