Annual Conference for Debt Equity Investors

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Annual Conference for Debt & Equity Investors

              September 21, 2005
Forward-Looking Statements
This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All
statements contained in this presentation that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,”
“expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. Examples of these forward-
looking statements include, but are not limited to: our belief that the election of REIT tax status beginning with our 2006 tax year will unlock
significant shareholder value, is the most efficient way to hold our assets and will offer enhanced business opportunities; our expectations as
to the amount of our historical earnings and profits that we will be required to pay out to our shareholders; our projected earnings levels for
2005 and dividends for 2006 and 2007; our plans to continue to grow our asset-based, corporate finance and real estate lending activities
while expanding into complementary lines of business; our estimates of where our stock should trade; our expectation for lower overall cost of
capital; and our belief that our reserves have been adjusted to an appropriate level.
All forward-looking statements (including statements regarding future financial and operating 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. The forward-looking statements in this presentation regarding our anticipated results and
performance as a REIT commencing in 2006 are subject to particular risks including, but not limited to: resolution of, and receipt of final
Board of Directors approval with respect to, relevant legal, accounting and financial matters relating to our election of REIT status beginning
January 1, 2006, and no occurrence of other events that require a change in the timing of our REIT election; our ability to restructure our
corporate entities and existing financings to permit us to position our assets in the most advantageous manner between the REIT and a
taxable REIT subsidiary; material variance in the expected level of our cumulative earnings and profits or our projected dividend payout, and
the implications of any such variance on our stock price; our ability to access the capital markets on attractive terms or at all to obtain the
financing we will need in 2005 to manage the growth of our existing loan portfolio, the additional financing we will require to acquire sufficient
additional real estate assets as necessary to implement our new business plan, and the additional capital we will require to operate as a REIT
in 2006 and beyond; our management’s ability to operate our business in accordance with the complex rules and regulations governing
REITs as necessary to ensure our qualification for and maintenance of our REIT status; potential changes in tax laws that could reduce the
benefits we associate with the REIT election; our lack of share ownership limitations and transfer restrictions in our charter could result in our
failure to qualify as a REIT if five or fewer individuals were to acquire 50 percent or more of our outstanding shares of common stock; and the
relative attractiveness of our dividend payout as compared to other investment options should market interest rates continue to rise.
More detailed information about factors we believe could cause our actual results, performance or achievements to differ materially from
anticipated levels is contained in our filings with the SEC, including the sections captioned “Risk Factors” and “Business” in our Annual
Report on Form 10-K as filed with the SEC on March 15, 2005. 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.



                                                                                                              Annual Conference for Debt & Equity Investors
                                                                         2                                                             September 21, 2005
                               ®
Agenda
 I.   Overview                                        John Delaney                    12:30-2:00
                                                      Jason Fish
 II. Credit Overview                                  Bryan Corsini                   2:00-2:30


 III. Lending Business Updates                                                        2:30-3:30
        Corporate Finance Business                    Joe Kenary
        HealthCare & Specialty Finance Business       Dean Graham
        Structured Finance Group                      Michael Szwajkowski
      Break                                                                           3:30-4:00
 IV. Financial Updates                                Tom Fink                        4:00-5:00
 V. Wrap-Up                                           John Delaney                    5:00-5:30
 VI. Cocktails                                                                        5:30
     Dinner                                                                           6:30




                                                                  Annual Conference for Debt & Equity Investors
                                                  3                                        September 21, 2005
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           ®




Overview
Roadmap For Discussion
   REIT Election
   Reserve Policy
   Business Overview
   Guidance




                             Annual Conference for Debt & Equity Investors
                         5                            September 21, 2005
               ®
CapitalSource Overview
   Leading Independent Commercial Finance Company
   Asset-Based, Corporate and Real Estate Lending Solutions to a Wide Variety
   of Small- to Medium-Sized Companies
   Customized and Sophisticated Debt Financing Where Our Service, Speed and
   Expertise Result in Higher Risk-Adjusted Margins

   Selected August 31, 2005 Statistics:         Selected First Half 2005 Results:
       $5.2 Billion Loan Portfolio                  Net Income of $84.7 Million vs.
       $8.1 Billion in Commitments                  $51.8 Million First Half 2004
       820 Loans to 542 Customers                   Diluted EPS of $0.72 vs.
       459 Employees                                $0.44 First Half 2004 (64% Increase)
       22 Offices                                   17.3% ROE (28.3% Pre-Tax ROE)
       Non-Accruals at 2.20% of Portfolio




                                                                  Annual Conference for Debt & Equity Investors
                                            6                                              September 21, 2005
                 ®
       CapitalSource Proven Track Record – Performance Since the IPO
                                      Portfolio Growth                                                                   Pre-Tax ROE
              $6.0                                                                              35%
                                                                                   $5.07
              $5.0                                                         $4.72                                                                               29.33%
                                                                 $4.28                          30%
                                                                                                                                      27.35%       27.20%
                                                         $3.78                                                           26.17%
($Billions)




              $4.0
                                              $3.30                                             25%
              $3.0                    $2.75                                                                     21.45%
                             $2.42
                     $1.99                                                                      20%   17.84%
              $2.0

              $1.0                                                                              15%
                     3Q03    4Q03     1Q04        2Q04   3Q04    4Q04       1Q05   2Q05               1Q04       2Q04     3Q04         4Q04         1Q05        2Q05


                                                                                   Diluted EPS
                                                                                                                                          $0.39
                              $0.40

                              $0.35                                                                            $0.33      $0.33

                                                                                                  $0.29
                              $0.30
                                                         $0.25
                                                                                    $0.24
                              $0.25
                                         $0.21
                                                                         $0.20
                              $0.20

                              $0.15
                                          3Q03           4Q03            1Q04        2Q04         3Q04         4Q04       1Q05            2Q05
                                                                                                                                  Annual Conference for Debt & Equity Investors
                                                                                            7                                                              September 21, 2005
                                              ®
REIT Election Summary
   Board Approved REIT Election, Subject to Final Review of Relevant Tax, Legal
   and Financial Issues
   Election will be Transparent to Shareholders
         Accomplished through REIT Election on 2006 Tax Return
         No Shareholder Meeting or Vote Required
         Board will Declare E&P Dividend and Set Record Date
   Will Result in a Special and Recurring Dividend Payments by CapitalSource
         Approximately $325-$375 Million Special Dividend of Undistributed Earnings &
         Profits, which is Required for REIT Qualification (“E&P Dividend”)
                 The E&P Dividend Will Be Paid in Either Cash or a Combination of Cash and Stock
                 No Less than 20% of E&P Dividend to Be Paid in Cash
         Regular Quarterly Dividends* Thereafter Beginning in 1Q06
                 Estimated 2006 Dividend of $2.15 per share
                 Estimated 2007 Dividend of $2.90 per share

   * Before Dilutive Effects of E&P Dividend

                                                                          Annual Conference for Debt & Equity Investors
                                                  8                                                September 21, 2005
                           ®
REIT Election – Prospective Corporate Structure1




                                                            CapitalSource Inc.

 Generally No
                                                                                                                        Tax on
   Tax on
                                                                                                                       Earnings
  Earnings
                                   Qualifying REIT                              Taxable REIT
                                     Subsidiary                               Subsidiary (“TRS”)

                               ≥ 75%                      ≤ 25%
                             Real Estate                 Corporate              Corporate Assets
                               Assets                     Assets2




  (1)   Corporate structure representation is illustrative only.
  (2)   Including value of TRS which is limited to ≤ 20% of REIT assets

                                                                                              Annual Conference for Debt & Equity Investors
                                                                          9                                            September 21, 2005
                             ®
Why Elect REIT Status?
   It is Consistent with Our Strategic Plans
       Fits with the Evolution of the Business Toward Asset-Based Finance
       Existing Business Strategy Continues with Little or No Change
           Does NOT Restrict Expansion of Corporate Lending
       New Business Opportunities with Real Estate Focus are Natural Extensions of
       Existing Businesses via New Product Offerings
   A REIT is a More Efficient Structure for Our Business
       Significant Tax Savings on Our Real Estate Lending Business and a Portion of Our
       Other Lending Businesses
       Lower Cost of Equity Capital
       Enhanced Competitiveness, Particularly for Higher Quality Assets
   The Election Should Unlock Significant Shareholder Value




                                                                   Annual Conference for Debt & Equity Investors
                                           10                                               September 21, 2005
                 ®
But Isn’t CapitalSource a Commercial Finance Company?
   Yes -- And That Won’t Change
   However, Many of Our Existing Lines of Business Also Generate REIT
   Qualifying Assets
      Commercial Real Estate
      HealthCare First Mortgages
      Other Asset-Based Loans Secured by Real Estate
   A REIT is Clearly the Most Efficient Vehicle for Qualifying Real Estate Assets
   By Placing Our Non-Qualifying Assets (e.g. Cash Flow Loans) in a TRS We
   Can Deliver the Best of Both Worlds to Shareholders
      Tax Efficiency in Real Estate Business
      Continued Growth and Significant New Business Opportunities Across All of Our
      Existing Businesses
   All of Our Core Business Products are Doing Very Well and We Anticipate
   Substantial Growth


                                                                Annual Conference for Debt & Equity Investors
                                         11                                              September 21, 2005
                ®
REIT Election Strategic Focus

Leveraging Our Highly Successful Model…              … Into a Better Structure for Expansion
   Over the Last Five Years, CapitalSource           Leverage Platform Into New Products
   has Built the Leading Diversified                 Continue to Execute All Current
   Commercial Finance Platform                       Businesses Unabated
       459 Employees in 22 Offices                   Lower Overall Cost of Capital will
       Origination Platform Very Strong              Enhance Competitive Positioning
       Across All Businesses
                                                     Distribute Income in a More Tax
       Superior Risk Adjusted Yields Generate
       a Superior Return on Equity                   Efficient Way
       Critical Mass in All Major Business           Unlock Significant Shareholder Value
       Lines
       Low Cost, Diverse Funding Platform
       with Investment Grade Credit Rating
       Unique and Proven Credit Process and
       Strategy




                                                                       Annual Conference for Debt & Equity Investors
                                                12                                              September 21, 2005
                  ®
Unlocking Value - Comparison to Peer Commercial Lending REITs

                                                   Dividend    Dividend                     # of
                                                  Yield 2006E Yield 2007E                 Employees              ROE
                                                                                                                17.3%          1H05 Actual
         CapitalSource                                      --                 --                459            28.3%          Pre-Tax 1H05
                                                                                                               >20.0%          REIT Model
         Internally Managed:
         iStar Financial Inc.                             7.53%              8.09%                167
         RAIT Investment Trust                            9.54              10.87                  30
         Capital Trust, Inc.                              7.48               8.08                  24
         Arbor Realty Trust, Inc.                         8.86               9.84                  21       CapitalSource's ROE Exceeds
         Externally Managed:                                                                                that of Every Peer Company
         Newcastle Investment Corp.                       9.06               9.69                 NA
         Anthracite Capital, Inc.                         9.85              10.34                 NA
         Gramercy Capital Corporation                     8.26               9.00                 NA
         Peer Average                                     8.65%              9.42%                  --


        Our Larger, More Diversified Platform and Higher Growth Rate for 2006 &
        2007 Should Allow CapitalSource to Trade1 at the Top of the Peer Group
Source: Median IBES estimates for 2006E dividend yield. 2007E dividend yield assumes 2006E dividend grown at median long-term growth rate estimate.
N.B. Pricing as of 09/16/05.
(1) Actual stock price will depend on many factors, a number of which are beyond CapitalSource’s control.

                                                                                                                        Annual Conference for Debt & Equity Investors
                                                                                 13                                                              September 21, 2005
                                  ®
Unlocking Value – E&P Distribution and Quarterly Dividends
       REIT Qualification Requires:
              Distribution of Earnings & Profits (“E&P”) Accumulated Prior to REIT Election
              Payment to Shareholders of at Least 90% of Annual Income Earned as a REIT
       We Forecast Total E&P at Year End 2005 of $325-$375 Million
                Example of E&P Distribution1:
                   Assume CSE Pays $350 MM Dividend to Common Shareholders
                   Assume 25% in Cash & 75% in Stock
                   If you had 1 Share of CSE, you would Receive a Taxable Dividend2 of $2.61:
                        $1.96 Value of Stock
                        $0.65 in Cash
       We Forecast Dividends per CSE Share of $2.15 in 2006 and $2.90 in 2007
       (Prior to Dilutive Effects of E&P Dividend)
              Paying E&P Dividend in Cash or Stock would be Dilutive as CapitalSource would
              Issue Additional Shares for the Stock Portion and Likely would Raise additional
              Equity Capital to Fund Cash Portion of E&P Dividend.
              Adjusted for Dilution, We Forecast Dividends of $1.96 in 2006 and $2.67 in 2007
 (1)   Assumes 134.3 Million Outstanding Shares
 (2)   Generally Taxed as a Qualifying Dividend

                                                                                 Annual Conference for Debt & Equity Investors
                                                       14                                                 September 21, 2005
                               ®
Unlocking Value – How Should CapitalSource Stock Trade Today?

                                                                                                Peer Group                   “Best in Class”
                               If We Trade to the …                                              Average1                      Platform2


                                                                                                   $ 25.26                        $ 28.64
                                   Today’s Stock Price
                                                                                                         to                               to
                                      Should be…
                                                                                                   $ 30.97                        $ 35.61

 Components of Value/Implied Current Stock Price:
   Cash Portion of E&P Dividend per Share…                                                          $ 0.65                        $ 0.65
   Stock Portion of E&P Dividend per Share…                                                         $ 1.96                        $ 1.96
   Total E&P Dividend per Share                                                                     $ 2.61                        $ 2.61
     Implied Share Price based on 2006 Forecasted Dividend                                          $ 22.651                      $ 26.032
     Implied Share Price based on 2007 Forecasted Dividend                                          $ 28.361                      $ 33.002
 N.B. Actual stock price will depend on many factors, a number of which are beyond CapitalSource’s control.
 (1) Based on management projected dividends ($1.96 in 2006 and $2.67 in 2007) and peer group average projected dividend yields (8.65% in 2006 and 9.42% in 2007).
 (2) Based on management projected dividends ($1.96 in 2006 and $2.67 in 2007) and projected iStar dividend yields (7.53% in 2006 and 8.09% in 2007).
                                                                                                                        Annual Conference for Debt & Equity Investors
                                                                              15                                                                 September 21, 2005
                               ®
REIT Election - Summary

       CapitalSource Has:                      Our REIT Election:
   Highest Pre-Tax ROE of Peers               Consistent with Our
   Commercial Lending Focus                   Business Plan
   Largest & Most Diversified Platform        Preserves Existing Business
   Senior Secured Debt Orientation            Strengths
   Balanced Funding Strategy                  Is a More Efficient Structure
   Minimal Interest Rate Risk                 Unlocks Significant
                                              Shareholder Value



          CapitalSource is “Best In Class” Relative to Other
                    Commercial Lending REITs

                                                       Annual Conference for Debt & Equity Investors
                                         16                                     September 21, 2005
               ®
Reserve Policy
   CapitalSource is Committed to Regularly Updating Reserves
       Based on Actual Loss Experience and Other Relevant Factors
   At Time of IPO, CapitalSource Had Experienced No Losses, so Our Reserve
   Policy was an Estimate of Inherent Losses by Asset Class
      What Resulted was a General Reserve Policy that was Highly Sensitive to Mix of
      Business and Loan Ratings
      Over the Last Year, General Reserves have Trended Down as the Business has
      Shifted to a Greater Asset-Based Orientation
          At the Same Time, Losses have Increased with Seasoning in the Portfolio and Credit
          Statistics have Matured
          This Increase has been in Line with Expectations, but Conflicts with Decreasing
          Reserves
   New Policy Improves “Design” with Higher General Reserves
      We will Charge-off Against the Reserve
      General Reserve is Allocated to Impaired Loans with Remaining Reserves
      Sufficient for Remaining Loans
                                                                     Annual Conference for Debt & Equity Investors
                                            17                                                September 21, 2005
                ®
New Reserve Policy Factors
   New Reserve Factors Based upon CapitalSource Experience
           Also Takes into Account Issues of Seasoning, Overall Economic Conditions
           and Other Relevant Factors
                                              Historical   Revised
                       Loan Type               Losses1     Factors2
                                   Cash Flow                151 bps   300 bps
                            Senior Real Estate               34 bps   100 bps
                                  Asset-Based                18 bps    25 bps
                                                             69 bps   142 bps

   $29.6M Increase in Allowance in August to Rebalance the Reserve Levels
   Allocated Portion of Reserve Adequately Covers All Impaired Loans
   Unallocated Portion is Sufficient for All Other Loans

   (1) Through August 31, 2005. Based on paid-off loans.
   (2) As of August 31, 2005. Based on outstanding loans.

                                                                                Annual Conference for Debt & Equity Investors
                                                            18                                           September 21, 2005
                             ®
Historical Loan Loss Analysis
   Allowance for Loan Loss as of 06/30/05 was $44.6MM or 88 bps
   Analysis of all Paid-Off Loans ($2.36B of Loans Paid Off at Par and Loans
   Resolved with a Loss), Shows Actual Historical Losses of 69 bps
   Weighted Average Loan Rating & Seasoning of All Paid-Off Loans is Similar to
   Current Portfolio
           ($ Millions)         Cash Flow     Real Estate          Asset Based      Total

           Historical (through August 31, 2005)
           Originations         $     2,712       $        2,347   $     2,231 $        7,290
           Paid-Off Loans       $       809       $          850   $       700 $        2,359
           Losses               $        12       $            3   $         1 $            16
           Loss %                     1.51%                0.34%         0.18%          0.69%

           August 31, 2005:
           Balance              $     1,757       $        1,652   $     1,795 $        5,204
           Loss Factor                3.00%                1.00%         0.25%          1.42%
           Allowance            $        53       $           17   $         4 $            74



                                                                                   Annual Conference for Debt & Equity Investors
                                                      19                                                    September 21, 2005
                 ®
Credit Statistics

      Credit Metrics:                               3Q2004       4Q2004       1Q2005    2Q2005                8/31/05

      60+ Days Delinquencies                            0.66%        0.76%    1.12%     1.13%                  1.21%
      Loans on Nonaccrual Status                        1.16%        0.53%    1.49%     2.22%                  2.20%
      Net Charge-Offs Annualized (1)                    0.00%        0.29%    0.00%     0.47%                  0.42%

      Allowance %                                       0.86%        0.82%    0.96%     0.88%                  1.42%
                                                                Non-Accrual
                            Non-Accrual Analysis:                at 8/31/05    Reserve Levels
                            Cash Flow                                3.08%        3.00 %
                            Real Estate                              2.70%        1.00 %
                            Asset-Based                              0.89%         0.25 %
                            Total                                    2.20%        1.42 %

                         Charge-Off Forecast of 50bps (Annualized) in Core Products

(1)    08/31/05 represents YTD charge-offs annualized

                                                                                         Annual Conference for Debt & Equity Investors
                                                                20                                                September 21, 2005
                             ®
Reserve Policy Summary
    New Reserve Policy Implemented in the Third Quarter of 2005
    General Reserves Increased from 88bps to 142bps
    Charge-Offs Will Be Made Against General Reserves


 Current Credit Picture
    Non-Accrual Loans Down Slightly to 2.20% from 2.22% at 6/30/2005
    2006 Charge-Off Forecast of 50bps (Annualized) in Core Products




                                                            Annual Conference for Debt & Equity Investors
                                       21                                            September 21, 2005
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                    ®




Business Overview
The Business In Brief

 3 Lending Groups and a Forensic Audit Subsidiary
           Corporate Finance                        HealthCare & Specialty Finance
    Senior Cash Flow Loans to Private Equity        Asset-Based Lending Practice
    (LBO) Sponsored Companies                       Offering A/R and Real Estate Financing to
    Flexibility and Market Focus is a Clear         HealthCare Companies
    Competitive Advantage                           Includes Business Credit Services Group
    Disciplined Approach to Lending at Low          (Generic ABL) and Alarm Lending
    LTVs and Low Leverage                           Specialized Underwriting and Intense
                                                    Collateral Control

           Structured Finance                               CapitalAnalytics
    Asset-Based Lending Practice                    Captive In-House Audit Function
    Commercial Real Estate Loans                    Independent Audit Capabilities
    Lender & Rediscount Finance                     Involvement with New Loans and
    Sophisticated Structuring Capabilities          Portfolio Reviews
    Predominately Senior Orientation                Crucial Role in Loan Approval and Loan
                                                    Management Process



                                                                     Annual Conference for Debt & Equity Investors
                                               23                                             September 21, 2005
                   ®
All Lending Groups Share Common Business Attributes


                 Entrepreneurial CapitalSource Culture


                    Value-Added Lending Products


                     Market Leadership Positions


                  Sustainable Competitive Advantages


                      Common Operating Model


                                                         Annual Conference for Debt & Equity Investors
                                  24                                              September 21, 2005
             ®
Tailored Operating Model
         Origination                     Underwriting                        Approval                          Servicing

                                    Reports to Group Head                                            Reports to Group Head

                                      Investment Officer
                                                                                                         Loan Officer [49]
                                             [56]                                                       +57 supporting professionals
                                      +50 supporting professionals

         Development
         Officer [22]                                                     Credit Committee
       +15 Marketing staff (incl.                                                [5]1
           Telemarketing)

                                        Underwriting                                                      Loan Analyst
                                         Officer [39]                                                          [32]
                                      (CapitalAnalytics)                                                (CapitalAnalytics)

                                        Reports to Chief                                                  Reports to Chief
                                         Credit Officer                                                    Credit Officer

            Specially Designed to Minimize Losses and Optimize Execution
  Note: Staffing is as of June 30, 2005; number in brackets represents key personnel involved at each phase
  1
    Includes the President of the Lending Business Responsible for the Deal

                                                                                                      Annual Conference for Debt & Equity Investors
                                                                     25                                                        September 21, 2005
                             ®
Our Strategy – Attractive, Defensible, High Margin Niches


Low                                                                                                                HealthCare
                                                                             The Area of Highest                   Real Estate
                                                                             Risk-Adjusted Returns…
                                                                                           The
                                                                                                                   HealthCare
                                                                                      CapitalSource                 Working
                                                                                          Zone                      Capital
  LIQUIDITY




                                                                                                                     Small
                                                                             Structured
                                                                                           Rediscount               Sponsor
                                                                             Real Estate
                                                                                                                   Cash Flow
                                                                 ns
                                                             tur
                                                         d Re
                                                    te
                                                jus
                                              Ad
                                        sk
                                    r Ri
                                e
                           H igh
High
                                                                               Large
              Equipment          Conduit                                                                           Mezzanine
                                                                              Sponsor
               Leasing          Real Estate                                                                         Loans
                                                                             Cash Flow



                          Low                                                                            High
                                                                      EXPERTISE
                                                                                                 Annual Conference for Debt & Equity Investors
                                                                        26                                                September 21, 2005
                            ®
Producing High Returns And Attractive Credit Outcomes

   CapitalSource’s Loans are Typically Used to Fund Growth or an Acquisition
       High Value-Added Financings
       Less Price Sensitive
   CapitalSource’s Borrowers View the Relationship as a 2-4 Year Commitment
   Yield of 12.04% for Six Months Ended June 30, 2005 Demonstrates Premium
   Pricing Capabilities
       Yield Includes Interest Income and Fee Income (“Core” Fees and
       Prepayment-Related Fees)
   Other Income is a Significant Contributor to CapitalSource’s Income
       Includes Diligence Deposits Forfeited, HUD Processing Fees and Other
       Servicing Income which are Directly Tied to Lending Activities
       Also Includes Equity Gains which we Expect to Realize Every Year
   CapitalSource’s Portfolio is 95% Senior Secured Debt as of June 30, 2005
   Our Credit Metrics Reflect a Strong Credit Focus

                                                           Annual Conference for Debt & Equity Investors
                                      27                                            September 21, 2005
               ®
Superior Model For Commercial Finance
                           Unique Credit
                             Process


                                             High Customer
      Minimum Interest                      Value Proposition
       Rate Exposure                           Reinforces
                                             Franchise Value

                           Best in Class
                           Commercial
                           Finance Firm

         Superior
                                              Tax Efficient
        Technology
                                               Structure
         Platform



                          Entrepreneurial
                           Management
                              Culture

                                              Annual Conference for Debt & Equity Investors
                                28                                     September 21, 2005
                ®
Historical Portfolio Balances

               $5.50
                                                                                                            $5.20
                                                                                           $5.07
               $5.00
                                                                            $4.72

               $4.50                                                $4.28

               $4.00                                        $3.78
($ Billions)




               $3.50                           $3.30

               $3.00                   $2.75

                               $2.42
               $2.50

                       $1.99
               $2.00

               $1.50
                       3Q03    4Q03    1Q04    2Q04         3Q04    4Q04    1Q05           2Q05            8/31/05




                                                                               Annual Conference for Debt & Equity Investors
                                                       29                                               September 21, 2005
                               ®
Maintaining True Diversified Senior Debt Focus


           June 30, 2004                         June 30, 2005


                5%                                  5%

                          29%
       25%                                                          35%
                                           30%




                    41%                              30%


         Senior Secured Asset Based         Senior Secured Asset Based
         Senior Secured Cash Flow           Senior Secured Cash Flow
         First Mortgage                     First Mortgage
         Mezzanine                          Mezzanine

                                                      Annual Conference for Debt & Equity Investors
                                      30                                       September 21, 2005
                ®
Our Franchise Strength Is Growing
                                      YTD Closed Deals by Referral Source

                           Participation


                                                              Sponsor                    Investment
                                                        8%        11%                       Bank

                                          Existing                      10%
                                       Client/Sponsor
                                           33%
                                                                          10%
                                                                                Direct

                                                                    16%
                                                        12%
                                                                   Broker



                                    CS Marketing

Note: YTD through August 31, 2005

                                                                                         Annual Conference for Debt & Equity Investors
                                                             31                                                   September 21, 2005
                          ®
Strong And Growing Pipeline

                                                      Pipeline ($ Billions)
$60                                                                                                               $56.5


$50
                                              $42.0                            $42.2
$40
              $30.3
$30

$20

                                                          $9.6                                                                   $9.9
                         $7.1                                                              $8.4
$10

 $0
             Dec. 31, 2003                    Jun. 30, 2004                    Dec. 31, 2004                      Jun. 30, 2005

                                                 Screened Prospects          Term Sheet Issued

Note: Figures include deals reviewed and term sheets issued over the six-month period ending on date shown

                                                                                                       Annual Conference for Debt & Equity Investors
                                                                   32                                                           September 21, 2005
                            ®
Proven Origination Capabilities


                                                    Jan.-Aug. ’04 Jan.-Aug. ’05       % Increase
            Screened Prospects                          $56,885             $80,096          41%
            Term Sheet Issued                           $12,199             $13,979          15%
            Term Sheet Executed                           $4,656            $6,731           45%
            Deals Closed                                  $2,809            $3,596           28%

            Deal Selectivity1                              4.9%              4.5%




Source: Deal Tracker; loan commitments in $ millions
1
  Deal selectivity equals deals closed divided by screened prospects

                                                                                      Annual Conference for Debt & Equity Investors
                                                                       33                                      September 21, 2005
                             ®
CapitalSource – A Compelling Economic Model For Shareholders
                                                                              1
            30%                                     Pretax Return on Equity
            25%

            20%

            15%

                                                                                         CapitalSource
            10%                                                                          Commercial Finance Composite
                                                                                         BDC / REIT Composite
              5%
                         3Q03           4Q03       1Q04    2Q04        3Q04       4Q04      1Q05              2Q05

                                                                    High, Stable Risk-Adjusted Returns
                                                                    High, Stable Return on Assets
                          CapitalSource
                         Economic Model                             Lower Leverage & Lower Risk
                            Produces                                Higher Margin of Safety
                                                                    Superior Return on Equity
1
    Data represent trailing four quarter results

                                                                                             Annual Conference for Debt & Equity Investors
                                                               34                                                     September 21, 2005
                                 ®
Updated Guidance
   2005 Guidance of $1.35 per share
      Includes Effect of August Increase in Allowance of $29.6 Million
      Also Includes Prospective Effect of New Reserve Policy for Remainder of 2005
      Equivalent to 2005 EPS Guidance of $1.53 per Share Excluding Reserve
      Adjustment
      Equity Capital Raise Anticipated
   2006 Guidance for Dividend is $2.15 per Share (Excluding Dilutive Effect of
   E&P Dividend)
   Detailed 2006 Guidance for “Core Products”
           2006 Average Loans:           ~ $ 7.3 Billion
           Average Yield:                ~ 11.5 %
           Other Income                  ~ 0.6 %
           Cost of Funds                 ~ 4.8 %
           Blended Tax Rate              ~ 21.0 %
           Average Leverage              ~ 4:1
           Annualized Charge-Offs        ~    50 bps
      Certain Non-Core Products (Owning FHA Loans, etc.) are Expected to have a Nominal Effect
      on Earnings
      Capital Raise of $630 Million in 2006; Dilutive Effects Included in 2006 Dividend Guidance
                                                                        Annual Conference for Debt & Equity Investors
                                              35                                                 September 21, 2005
                 ®
Updated Guidance (Continued)
   2007 Guidance for Dividend is $2.90 per Share
      Significant Growth in Dividend per Share from 2006 to 2007 is Due to
      Growth in the Business and Better Utilization of the REIT Structure
      In 2006, Many Real Estate Assets that are Currently Commingled in
      Securitizations with Corporate Lending Assets will need to be Held in the
      TRS
      By 2007, We Expect a Higher Percentage of Our Real Estate Assets to be
      Held at the REIT Level




                                                             Annual Conference for Debt & Equity Investors
                                       36                                             September 21, 2005
               ®
                  ®




Credit Overview
Credit Discussion Topics
   Underwriting Process
      5 Elements
   Portfolio Management
      Audits and Site Visits
      Risk Rating Assessment
   Summary of Staff Qualifications




                                          Annual Conference for Debt & Equity Investors
                                     38                            September 21, 2005
               ®
Element #1 – Disciplined View Of “Debt Risk”
   All Loans are Either…
      Secured by Assets, the Value of which is Known in All Market Conditions,
      or
      Secured by a Business Enterprise Value, which has Been Proven Over Time
      (Historical Cash Flow) and Predictable in All Market Conditions
   And have Been…
      Underwritten in a Comprehensive and Focused Manner
   And Managed with…
      The Most Sophisticated Collateral Control and Structural Integrity
   For a Zero Loss Tolerance




                                                             Annual Conference for Debt & Equity Investors
                                       39                                             September 21, 2005
               ®
Element #2 – Experienced, Focused And Specialized Professionals
   Underwriting Elements
      Industry
      Business Model
      Management
      Historical and Projected Performance
      Systems
      Collateral
      Balance Sheet
      Fraud Risk


                   “The Most In-Depth Credit Work Possible”




                                                         Annual Conference for Debt & Equity Investors
                                      40                                          September 21, 2005
               ®
Element #3 – More (And Better) Resources In The Process


                                                                              Lending
                   CapitalAnalytics’
                                                                              Business’
                    Underwriting
                                                 Compared to
                                                                               Credit
                    Memoranda
                                                                             Committee
                                                                             Memoranda



   Audits and Validates Historical Financial Performance       Identifies Lending Opportunities and Fosters
   Assesses Reasonableness of Projected Financial              Relationships with Prospective Clients
   Performance                                                 Negotiates Terms of Prospective Loans
   Assesses Internal Control Environments                      Assesses Historical Financial Performance and
   Evaluates Adequacy of Information Systems                   Projected Financial Performance
   Assesses Collateral and Financial Reporting Capabilities    Assesses Management of Prospective Clients
   Assesses Management Teams of Prospective Clients            Assesses Overall Market in which Prospective
                                                               Clients Operate
   Reviews Proposed Loan Covenants and Suggests
                                                               Determines what Opportunities are Presented to
   Modifications or Additional Covenants
                                                               Credit Committee
   Opines Independently on Risk Level of Proposed
   Lending Opportunities
   Provides Credit Committee with a “Second Opinion”
   Regarding Lending Opportunities


                                                                                      Annual Conference for Debt & Equity Investors
                                                        41                                                     September 21, 2005
                       ®
Tailored Operating Model
         Origination                     Underwriting                        Approval                          Servicing

                                    Reports to Group Head                                            Reports to Group Head

                                      Investment Officer
                                                                                                         Loan Officer [49]
                                             [56]                                                       +57 supporting professionals
                                      +50 supporting professionals

         Development
         Officer [22]                                                     Credit Committee
       +15 Marketing staff (incl.                                                [5]1
           Telemarketing)

                                        Underwriting                                                      Loan Analyst
                                         Officer [39]                                                          [32]
                                      (CapitalAnalytics)                                                (CapitalAnalytics)

                                        Reports to Chief                                                  Reports to Chief
                                         Credit Officer                                                    Credit Officer

            Specially Designed to Minimize Losses and Optimize Execution
  Note: Staffing is as of June 30, 2005; number in brackets represents key personnel involved at each phase
  1
    Includes the President of the Lending Business Responsible for the Deal

                                                                                                      Annual Conference for Debt & Equity Investors
                                                                     42                                                        September 21, 2005
                             ®
Element #5 – CapitalAnalytics At The Core Of The Credit Process
   Wholly Owned Subsidiary of CapitalSource
   Provides Unique Diligence and Audit
   Capabilities
   70+ Professionals
       Trained Underwriters, Auditors, CPAs and Other
       Specialties
       Underwriting Officers are Highly Experienced Credit
       Professionals
                                                             • More Resources        Capital             • Massive Check on
       Loan Analysts Create a Unique, In-House Audit         • Better Quality       Analytics              the System
       Function                                              • Better Execution                          • All Staff Report to
                                                             • Ongoing Monitoring                          the CCO
   Reports Directly to Independent Chief Credit
   Officer – NOT to Lending Groups
   Specialized Industry Groups
   Customized Credit and Underwriting Tools
   Managed as a Separate P&L
       Cost of Platform Largely Billed Directly to Clients
       Provides Incentive To Conduct Follow-Up Audits

                             The CapitalAnalytics Advantage
                          Quality Consistency Control Speed
                                                                                    Annual Conference for Debt & Equity Investors
                                                        43                                                   September 21, 2005
                     ®
Summary of Historical Recovery Analysis

       Since June 2003, CapitalSource has Reported 21 Loans (Totaling $254.5
       Million) as Delinquent and/or Non-Accrual
       Thirteen Loans ($131.6 Million) were Resolved with a Net Recovery of 89%
                  Senior Secured Asset-Based: 2 Loans ($14.2 Million); Net Recovery of 93%
                  Senior Secured Cash Flow: 4 Loans ($50.8 Million); Net Recovery of 80%
                  First Mortgage: 7 Loans ($66.6 Million); Net Recovery of 96%
       Eight Loans ($122.9 Million) remain with $11.3 Million of Specific Reserves
                  Senior Secured Cash Flow : 3 Loans ($52.3 Million)
                  First Mortgage : 5 Loans ($70.6 Million)




  Note: Data as of June 30, 2005. Non-Accrual and Delinquent Loan Balances as of Date Loans First
        Disclosed in Credit Statistics.
  Source: CapitalSource Asset Manager (CAM) - Unaudited

                                                                                                    Annual Conference for Debt & Equity Investors
                                                                 44                                                          September 21, 2005
                          ®
Credit Statistics

      Credit Metrics:                               3Q2004       4Q2004       1Q2005    2Q2005                8/31/05

      60+ Days Delinquencies                            0.66%        0.76%    1.12%     1.13%                  1.21%
      Loans on Nonaccrual Status                        1.16%        0.53%    1.49%     2.22%                  2.20%
      Net Charge-Offs Annualized (1)                    0.00%        0.29%    0.00%     0.47%                  0.42%

      Allowance %                                       0.86%        0.82%    0.96%     0.88%                  1.42%
                                                                Non-Accrual
                            Non-Accrual Analysis:                at 8/31/05    Reserve Levels
                            Cash Flow                                3.08%        3.00 %
                            Real Estate                              2.70%        1.00 %
                            Asset-Based                              0.89%         0.25 %
                            Total                                    2.20%        1.42 %

                         Charge-Off Forecast of 50bps (Annualized) in Core Products

(1)    08/31/05 represents YTD charge-offs annualized

                                                                                         Annual Conference for Debt & Equity Investors
                                                                45                                                September 21, 2005
                             ®
Key Take Aways On Credit
   We have Maintained Credit Standards
      Rigorous Underwriting
      Recurring Audit Work to Support Loan Management
   We have Continued Growing CapitalAnalytics Staff as CapitalSource Grows
   We have a Disciplined Portfolio Review Procedures
      Monitored by Both the Lending Business and CapitalAnalytics
      Weekly Lending Business Meetings and Quarterly In-Depth Portfolio
      Reviews




                                                          Annual Conference for Debt & Equity Investors
                                      46                                           September 21, 2005
               ®
                     ®




Lending Business Overview
                     ®




Corporate Finance Business
Corporate Finance Business

 President – Joe Kenary
                    Customers                                              Borrower Characteristics
    Private Equity Firms (Approx. 500 Primary                       Strong Historical and Prospective Cash Flows
    Sponsors and 1,000 Secondary Sponsors)                          Experienced Management Teams and Sponsors
    Small to Medium-Sized Sponsors are Under-                       Limited Operating Leverage and Event Risk
    Covered                                                         Leadership in Market Niches
    Sponsor Company Industries:
    - Business Services       - Consumer Products & Services
    - Retail, Media           - Value-Added Manufacturing

                     Products                                           Underwriting & Structuring
    Senior Secured Cash Flow Loans                                  Cash Flow Loans Underwritten to Enterprise Value
    Term B, Second Lien and Mezzanine Loans;                        Senior Loans at 40-60% of Enterprise Value
    Limited Equity                                                  Mezzanine Loans at 60-75% of Enterprise Value
    Asset-Based Revolvers

        Competitive Advantages                                                     Competition
    Execution           ▪ Creativity                                “Core”: <$25MM Borrowings (~75% of CFB Loans)
    Flexibility         ▪ Speed                                     - Foothill          - Regional Banks
    Expertise           ▪ “One-Stop” Shop                           Larger Deals: >$25MM Borrowings (~25% of Loans)
    Reputation as Reliable Lender/Brand                             - Commercial Banks - GE Capital     - Merrill Lynch
                                                                    - CIT              - Antares        - Foothill
                                                                    - Hedge Funds      - Abelco Finance
                                                                                           Annual Conference for Debt & Equity Investors
                                                               49                                                   September 21, 2005
                          ®
Corporate Finance – Industry Dynamics
   Sponsor-Driven Business
      Provides a Recurring Source of Business
      Reputation is Very Important
   Lending Market Divided into Three Segments
              Market            EBITDA Range          Transaction Size
          Large Syndicated          > $50M                > $125M
        Middle Market/“Club”     $10M to $50M          $30M to $150M
        Lower Middle Market       $3M to $10M          $10M to $35M

   Prone to Credit Cycle
      Despite a History of Problems and Losses, Regulated Institutions Regularly Come
      In and Out of the Market Providing Volatility and therefore Opportunities
      Lower Middle Market has Seen the Greatest Volatility with a Permanent Migration
      of Banks Leaving the Market

     Our Objective is to be the Consistent Lender of Choice to the Lower
                                Middle Market
                                                                 Annual Conference for Debt & Equity Investors
                                         50                                               September 21, 2005
                ®
Corporate Finance – Leverage Has Not Increased
5.0            Average Closing Leverage Excluding Media & ABL Transactions


4.0
                                                                         3.39 x
                                     3.18 x   3.18 x
               3.05 x                                  2.96 x                     2.91 x                         2.90 x
3.0                         2.79 x                              2.68 x
                                                                                                  2.80 x

      2.27 x

2.0



1.0



0.0
      4Q02     1Q03         2Q03     3Q03     4Q03     1Q04     2Q04     3Q04     4Q04           1Q05            2Q05



                                                                                  Annual Conference for Debt & Equity Investors
                                                       51                                                  September 21, 2005
                        ®
Corporate Finance – Loan-To-Value

                                100%


                                                 Underwritten
                                    75%           Enterprise
                                                   Value


                                    50%

                                                 CapitalSource
                                                 Loan-to-Value
                                    25%              48%



                                    0%


                                    Portfolio-Wide Loan-to-Value of 48%
  Note: Data as of June 30, 2005.

                                                                          Annual Conference for Debt & Equity Investors
                                                      52                                           September 21, 2005
                          ®
Corporate Finance – Portfolio Statistics


                                                                               %
    ($ in Millions)           6/30/04        6/30/05     Increase           Increase

     Outstanding Loans             186            242           56                  30%
     Current Borrowers              89            108           19                  21%
     Outstanding Commitments $    2,112      $   2,536   $    424                   20%
     Loan Balance            $    1,559      $   1,700   $    141                      9%
     Average Loan Amount     $     8.38      $    7.02   $   (1.36)                -16%
     Average Borrower Balance $   17.52      $   15.74   $   (1.78)                -10%




                                                             Annual Conference for Debt & Equity Investors
                                        53                                            September 21, 2005
                  ®
Corporate Finance – Competitive Environment
   Market Remains Flush with Liquidity
      According to S&P Data, All of the Relevant Credit Statistics for the Middle Market
      (Leverage, Equity Contribution, Coverages) are Equal to or More Aggressive than
      1997-99 Levels, the Previous Peak in the LBO Lending Market
   Senior Lending Market Continues to Attract Participants
      Several Mezzanine Lenders Have Migrated into the Senior Lending Market
   Stable Economic and Credit Outlook
      Federal Reserve Survey
          Stable Economic Outlook & Increased Competition Driving an Easing of Credit
          Standards
      Market has Absorbed Several Potential Dislocations in the Past Few Months
          High Yield (GM downgrade) & Energy Prices
          Hurricane Katrina May have Modest Short-Term Impact
          Housing Looms, but no Expectation of Imminent Issues



                                                                   Annual Conference for Debt & Equity Investors
                                          54                                                September 21, 2005
                ®
Corporate Finance – Response To Competitive Environment
   Develop Asset Management Businesses
      Europe
      CDO
      CapitaLogic
   Pursue Larger Deals as a Syndication Opportunity
      More Fee Income / Less Risk
      Leverage Execution Advantage
      Lower Hold Size
   Selectively Manage Portfolio Runoff
   Focus on Smaller Funds and Smaller LBOs where Liquidity is Less Prevalent
      Flexible on Pricing
      Disciplined on Leverage
      Lend to Good Businesses
      Execution and Service
      Portfolio Growing Modestly in 2005; Focus on Asset Management
                      Opportunities & Smaller Deals
                                                           Annual Conference for Debt & Equity Investors
                                       55                                           September 21, 2005
               ®
Corporate Finance – Future Trends
   Enhanced Capital Markets Capabilities
      With Liquidity in Market, Generate Fee Income for Arranging Transactions
      Provide Certainty of Execution without Significant Balance Sheet Risk
   Asset Management / Fee Opportunities
      Businesses Complement Core CFB Business
      Provide Attractive Income Stream to Enhance Already Strong ROE
   Continue Disciplined Investing and Underwriting Model
      Maintain Pricing and Leverage Statistics
      Lend to Good Business Franchises
      Every Credit Undergoes Thorough Underwriting Process




   Adapt to Market Conditions by Focusing on Core SMB Lending Market
                     & Complementary Businesses
                                                               Annual Conference for Debt & Equity Investors
                                        56                                              September 21, 2005
               ®
                            ®




HealthCare & Specialty Finance Business
HealthCare & Specialty Finance Business

 President – Dean Graham
              Business Units                                  Market Opportunity
    Healthcare Credit Group                            Large Size of Middle Market
    Healthcare Real Estate Group                       Underserved by Traditional Lenders
    Healthcare Cash Flow Group                         Middle Market Commands Premium Pricing
    Business Credit Services                           Middle Market Rewards Speed and Execution
    CapitalSource Mortgage Finance (HUD)               Middle Market Rewards Industry Specific
    Security Alarm and Homeland Security Group         Knowledge



                  Products                                 Specialized Credit Skills
    First Mortgage/Acquisition Loans Secured by        Intense Collateral Review, Controlled Funding
    Healthcare Facilities                              Proprietary Loan Management Capabilities
    Asset-Based Loans Secured by Accounts              In-House Reimbursement/Clinical Expertise
    Receivable, Inventory and Other Assets             Specific Industry Knowledge Leads to Better
    Cash Flow Loans for Sponsored LBOs                 Credit Outcomes
    Top 10HUDApproved Lender



                                                                        Note: Portfolio data as of 6/30/05
                                                                           Annual Conference for Debt & Equity Investors
                                                  58                                                September 21, 2005
                     ®
HealthCare & Specialty Finance – Portfolio Statistics


                                                                            %
    ($ in Millions)           6/30/04     6/30/05     Increase           Increase

     Outstanding Loans             211         342         131                    62%
     Current Borrowers             169         256            87                  51%
     Outstanding Commitments $    1,463   $   3,534   $   2,071                142%
     Loan Balance            $     809    $   1,883   $   1,074                133%
     Average Loan Amount     $     3.83   $    5.51   $    1.67                   44%
     Average Borrower Balance $    4.79   $    7.36   $    2.57                   54%




                                                          Annual Conference for Debt & Equity Investors
                                     59                                            September 21, 2005
                  ®
HealthCare & Specialty Finance – July 2004 to June 2005
Healthcare Credit Group
      41 transactions closed
      $1.0B in commitments/$450MM in total fundings
      Funded $250MM of $1.3B Mariner transaction (over 350 facilities)
      Funded 13 hospital deals in excess of $200 million


Healthcare Real Estate Group
      28 transactions closed (excluding portfolio acquisition)
      $749MM in commitments/$660MM in total fundings
      Portfolio acquisition totaling $227MM, 54 loans and 29 new borrowers
      New product offering
          Fixed Rate Loans, Low Leverage Loans and Sale Leaseback Transactions




                                                                       Annual Conference for Debt & Equity Investors
                                             60                                                 September 21, 2005
                 ®
HealthCare & Specialty Finance – July 2004 to June 2005
Healthcare Cash Flow Group
      Closed 7 transactions
      $175MM in commitments/$130MM in total fundings
      Sourced over 330 deal opportunities from 125 different private equity sponsors
      Underwrote $120MM transaction syndicated to over 10 participants
Business Credit Group
      19 transactions closed
      $393MM in total commitments/$243MM in total fundings
      Portfolio growth from $55MM to $236MM (329% increase)
      Increased regional footprint by adding offices in Los Angeles, Boston and Atlanta
      Asset based lending platform with middle market focus
Security Lending Group
      17 transactions closed
      $212MM in total commitments/$125MM in total fundings
      Established leading franchise in the growing Security Alarm market
      Expanding product offering into Homeland Security market
                                                                    Annual Conference for Debt & Equity Investors
                                            61                                               September 21, 2005
                 ®
HealthCare & Specialty Finance – July 2004 to June 2005
CapitalSource Mortgage Finance
      15 transactions closed (HUD refinancing)
      $94MM in total fundings
      Closed significant FHA insured Section 242 Acute Care Hospital loans
      Currently ranked in top 10 HUD lenders for total commitments
      Significant enhancement to overall healthcare product offering


Special Situations Group
      Funded in excess of $100MM
      Created leading middle market DIP/special opportunity platform in business
      Continue to expand and enhance industry leading Special Servicer capabilities




                                                                    Annual Conference for Debt & Equity Investors
                                            62                                               September 21, 2005
                 ®
HealthCare & Specialty Finance – Future Trends

   Mature businesses continue to grow rapidly/solidify leading market position
       Healthcare ABL, Real Estate, HUD
   Growth characteristics/demographics trends remain strong
   Newer businesses establishing leading market positions
       Business Credit Services
       Special Situations
       Security Alarm and Homeland Security
   Middle market opportunities in the specialty markets play to CapitalSource’s
   strengths
   Speed, execution and industry knowledge distinguish CapitalSource over
   traditional banks and other lending sources



                                                              Annual Conference for Debt & Equity Investors
                                          63                                           September 21, 2005
                ®
                      ®




Structured Finance Business
Structured Finance Business

 President – Michael C. Szwajkowski
                                                    Overview
    Providing Focused Capital to Niche Segments within Large Financial Markets
    Premium Risk-Adjusted Returns Principally on Asset-Based Transactions
    Emphasizing Specific Segments of Real Estate and Financial Services Markets Which Demonstrate Strong
    Growth and Earnings Potential
    SFB Intends to be the Premier Player in its Markets by Delivering Creative Capital Solutions in an Intelligent
    and Highly Responsive Manner


           Real Estate Finance                                       Lender & Rediscount Finance
    Leading Provider of Solutions for Real Estate                   Leader in Rediscount Finance, a Highly
    Owners and Developers                                           Fragmented and Inefficient Market
    Broad Array of Products Targeted at Diverse                     “First Call” Lender in This Dynamic and
    Property Types                                                  Lucrative Market
    Continue to Broaden Product Offerings                           Consistency, Creativity and Execution Provide
    National Originations Team                                      Competitive Advantage




                                                                                         Annual Conference for Debt & Equity Investors
                                                         65                                                       September 21, 2005
                      ®
Structured Finance Business – Portfolio Statistics


                                                                             %
    ($ in Millions)           6/30/04     6/30/05     Increase            Increase

     Outstanding Loans             130         183            53                  41%
     Current Borrowers             121         163            42                  35%
     Outstanding Commitments $    1,385   $   2,507   $   1,122                   81%
     Loan Balance            $     920    $   1,486   $     566                   62%
     Average Loan Amount     $     7.08   $    8.12   $    1.04                   15%
     Average Borrower Balance $    7.60   $    9.12   $    1.51                   20%




                                                           Annual Conference for Debt & Equity Investors
                                     66                                             September 21, 2005
                  ®
Structured Finance Business - Real Estate Finance

                  Customers                               Market Opportunity
    Real Estate Developers                         Provide On-Balance Sheet, Non-Commodity
    Owners and Investors                           Solutions
    Corporate Users / Sale Leaseback               Need for Highly Customized Solutions
                                                   Execution-oriented

                   Products                            Specialized Credit Skills
    Intermediate First Mortgage Debt               Property Analytics
    Senior Bridge Loans                            Market Specific Analysis
    Mezzanine Debt                                 Sponsor Capabilities
    Sale Leaseback


        Competitive Advantages                                 Competition
    Sophisticated Structuring Capabilities         Commodity Lenders: Conduits, Banks, Insurance
    Flexibility          ▪ Speed                   Companies
    Expertise             ▪ “One-Stop” Shop        Non-Commodity: Finance Companies, Hedge
                                                   Funds, Private Capital



                                                                      Annual Conference for Debt & Equity Investors
                                              67                                               September 21, 2005
                      ®
Real Estate Finance – Competitive Environment

               Market Update                                         Market Presence
    Liquidity Remains Strong Across the Entire             10 Defined Products – A Compelling Product
    Capital Structure                                      Mix
    Diverse Sources Compete on Price with Limited          Provides Significant Bandwidth in Addressing
    In-House Origination Capability                        the Market
         Conduits                                          Focus Principally on Transactions Below
         Banks                                             $40.00MM – A Less Liquid Portion of the
                                                           Market
         Opportunity Funds
                                                           CapitalSource is on Pace to Exceed Origination
    CapitalSource Competes in More Creative Sectors        Expectations as a Result of:
    of the Market which Require A True Portfolio
                                                                Solid and Broad Product Mix
    Lender Orientation
         Intermediate “Stretch Senior”                          National Originations Team
         Short-Term Bridge Loans                                Established Franchise
         Mezzanine

   Unique Product Mix and Execution Orientation Have Made CapitalSource
        a Leading Provider of Real Estate Finance in the United States

                                                                                 Annual Conference for Debt & Equity Investors
                                                      68                                                  September 21, 2005
                     ®
Structured Finance Business - Lender & Rediscount Finance

                  Customers                               Market Opportunity
    Specialty Lenders                              Market Segments that Require Highly
     – Mortgage Companies                          Specialized Lending Expertise
     – Consumer and Commercial Lenders             Fragmented and Underserved
    Asset Originators                              Need for Highly Customized Solutions

                   Products                            Specialized Credit Skills
    Asset-Based Lending Practice                   Intense Collateral Analysis
    Senior Asset-Based Revolvers                   Rigorous Structuring
    Mortgage Loan Hypothecation                    Portfolio Acquisition Experience/Expertise
    Mortgage Loan Portfolio Acquisitions


        Competitive Advantages                                 Competition
    Sophisticated Structuring Capabilities         Commodity Lenders: Regional Banks,
    Flexibility          ▪ Speed                   Investment Banks, Securitization
    Expertise             ▪ “One-Stop” Shop        Non-Commodity: Foothill, Textron, Hedge
                                                   Funds



                                                                       Annual Conference for Debt & Equity Investors
                                              69                                                September 21, 2005
                      ®
Lender & Rediscount Finance – Competitive Environment

               Market Update                                          Market Presence
    Fragmented and Inconsistent Competition                 CapitalSource Brings A Strong Balance Sheet
    Need for Servicing Capabilities and Organized           and Creativity to Bear in this Highly Fragmented
    Business Development Process Limits Direct              and Diverse Market
    Competition                                             Compelling Product Mix
    Requires Sophisticated Structuring Skills to
    Effectively Compete                                          On-Balance Sheet Revolving
    Requires Robust Infrastructure (Systems and                  Warehouse Facilities
    People)                                                      Purchase Facilities
    CapitalSource is a Dominant Player Due to Strong
                                                                 Whole Loan Purchase
    Balance Sheet, Origination Engine and Servicing
    Expertise




   CapitalSource is the Leading Source of Responsive and Creative Lender &
                    Rediscount Finance in the United States

                                                                                   Annual Conference for Debt & Equity Investors
                                                       70                                                   September 21, 2005
                     ®
Structured Finance Business – Diverse Portfolio
        Real Estate Portfolio (by Property Type)                           Rediscount Portfolio (by Product)
               Hard 5%
               Money                                                                          Mortgage
                                                              Industrial
                                     Hospitality                                         Direct Loan

                   Enhanced                           4%
                                       15%                                                   28%
                    Mezz.
                         10%
                                                       Multi-                                                     Mortgage
                                                   13% Family               Auto   16%                    24%


                          26%
                                                13%                                         33%
                     Condo
                                    10%              Office
                   Conversion
                                                                                          Resort
                                  Special       4%                                        Finance
                                 Situations
                                                   Retail

           Diversification through Broad Origination Channels with Rigorous Focus

                                    Portfolio-Wide Loan-to-Value of 74%
Note: Portfolio data as of September 13, 2005

                                                                                              Annual Conference for Debt & Equity Investors
                                                                     71                                                September 21, 2005
                            ®
Structured Finance Business – Industry Dynamics

                         Lender and Rediscount Finance            Real Estate
  Liquidity                         Medium                              High
  Competition                       Stable                             Stable
  Market Demand                      High                               High
  Credit Environment                Stable                             Stable
  Asset Valuations                  Stable                              High
  Market Growth                      High                               High
  New Entrants                      Limited                            Stable


                         Well-Positioned Leader          Strong, Defensible Niche
                         Scalable Business               Positions
                         Unparalleled Resources and      Deliver Creative, On-Balance
  OUTLOOK
                         Platform                        Sheet Financing
                                                         Strong National Originations
                                                         Team
                                                                    Annual Conference for Debt & Equity Investors
                                              72                                             September 21, 2005
                     ®
                 ®




Financial Overview
Outline For Financial Overview Discussion
   Review of Performance Since IPO
   Funding Sources and Liquidity
   Capital Planning
   Leverage Considerations
   Interest Rate Sensitivity




                                            Annual Conference for Debt & Equity Investors
                                     74                              September 21, 2005
                ®
Performance Since the IPO – Ending Portfolio Balance

            $6.0

                                                                                  $5.07 $5.20
            $5.0                                                       $4.72
                                                           R   $4.28
                                                      C AG
                                                68% $3.78
            $4.0
  ($Billions)




                                              $3.30
            $3.0                      $2.75
                           $2.42
                   $1.99
            $2.0



            $1.0
                   3Q03        4Q03   1Q04    2Q04      3Q04   4Q04    1Q05         2Q05           8/31/05

                                                                               Annual Conference for Debt & Equity Investors
                                                       75                                               September 21, 2005
                           ®
Performance Since the IPO – Net Portfolio Growth

              $600
                                                 $548

                                                         $482    $491
              $500
                                 $430                                      $443

              $400
                                         $336                                                $352
          )
 ($Millions




              $300
                     $246

              $200


              $100


                $0
                     3Q 03       4Q 03   1Q 04   2Q 04   3Q 04   4Q 04     1Q 05             2Q 05

                                                                         Annual Conference for Debt & Equity Investors
                                                    76                                            September 21, 2005
                             ®
          Performance Since the IPO – Delivering Superior Financial Results
                               Portfolio Growth and…                                                        Growing into our Leverage…
              $6.0                                                                         5.0x
                                                                             $5.07                                                                                4.17x
              $5.0                                                   $4.72                                                                     3.93x     3.95x
                                                             $4.28                         4.0x
                                                                                                                                      3.41x
                                                     $3.78
($Billions)




              $4.0                                                                                                           3.04x
                                             $3.30
                                                                                           3.0x
              $3.0                   $2.75                                                                           2.39x
                             $2.42
                                                                                                            1.93x
                     $1.99                                                                 2.0x
              $2.0                                                                                  1.53x


              $1.0                                                                         1.0x
                     3Q03    4Q03    1Q04    2Q04    3Q04    4Q04    1Q05    2Q05                   3Q03    4Q03     1Q04    2Q04     3Q04     4Q04      1Q05     2Q05


                                                        Have Driven Strong and Growing Returns
                                     35%                                      Pre-Tax ROE
                                                                                                                                 29.33%
                                     30%                                                          27.35%        27.20%
                                                                              26.17%
                                     25%
                                                               21.45%
                                     20%         17.84%

                                     15%
                                                 1Q04           2Q04           3Q04               4Q04              1Q05             2Q05
                                                                                                                                Annual Conference for Debt & Equity Investors
                                                                                      77                                                                 September 21, 2005
                                             ®
CapitalSource Proven Track Record – EPS Performance

                                                                                         $0.39
$0.40


                                                 IP   O
$0.35                                         ce          $0.33   $0.33
                                      R   Sin
                                  G
                               CA
                           %
$0.30                 4 2.4       $0.29


                    $0.24
$0.25

        $0.20
$0.20


$0.15
        1Q 04       2Q 04         3Q 04                   4Q 04   1Q 05                 2Q 05
                                                                    Annual Conference for Debt & Equity Investors
                                               78                                            September 21, 2005
                ®
Diluted EPS Growth Has Met or Exceed Consensus Estimates

                                                                      $0.39
$0.40
                                                                             Actual


                                                                             Final Consensus
$0.35                                    $0.33   $0.33

                                                                             Initial Consensus
                            $0.29
$0.30


                    $0.24
$0.25

        $0.20
$0.20



$0.15
        1Q 04       2Q 04   3Q 04        4Q 04   1Q 05                2Q 05

                                                     Annual Conference for Debt & Equity Investors
                                    79                                        September 21, 2005
                ®
Diverse, Stable, Low Cost Funding Sources
              Diverse Funding Sources                                   Demonstrated Capital Markets Access
                                                                        Equity Markets
                   Total: $5.4 billion                                      $367 million IPO – August ’03
                                                                            $430 million Secondary Offering – February ’04
                                                      Credit            Convertible Market
     Equity                                           Facilities            $225 million 1.25% - March ’04
                                                                            $330 million 3.50% - July ’04
                     19%               24%                              Term Debt Securitizations
                                                                            Over $4.2 billion in Proceeds from Seven
                                                                            Oversubscribed Transactions
              10%                                                       $2.5B in Credit Facility Capacity
                                                                            6 Credit Facilities with 11 Banks

                                                                          Attractive Financial Characteristics
                                47%
                                                                        Cost of Funds:
                                                                            2003: 3.32%; 211 bps Spread to Libor
Convertible                                           Term Debt             2004: 3.08%; 155 bps Spread to Libor
                                                                            YTD05: 3.99%; 111 bps Spread to Libor
Debentures
                                                                        All Financings Accounted for on Balance Sheet
                Debt/Equity: 4.17x                                          No Gain on Sale Recognized

 Note: Financial information is as of June 30, 2005                     Largely Interest Rate Insensitive


                                                                                                  Annual Conference for Debt & Equity Investors
                                                                   80                                                      September 21, 2005
                            ®
Past Achievements - Borrowing Spread Improvements
   In the Last 24 Months, CapitalSource has Substantially Broadened and
   Improved its Funding Platform on All Fronts
      Secured Credit Facilities
          Increased Number of Facilities
          Broadened Banking Relationships
          Improved Terms
      Term Securitizations
          Increased Size of Transactions
          Improved Execution & Improved Efficiency of Structures
          Reduced Transaction Costs
      Unsecured Funding
          Issued 2 Series of Convertible Debentures in 2004
          Obtained Initial Investment Grade Rating from Fitch in 2005
   These Improvements have Increased Financial Flexibility and Decreased Costs



                                                                        Annual Conference for Debt & Equity Investors
                                            81                                                   September 21, 2005
                ®
Secured Credit Facility Improvements
   Main Credit Facility:
      Increased Commitment Size to $826 Million from $700 Million
      Added Bank of America as a Participant
      Added Class B Tranche Increasing Maximum Advance Rate to 80%
      Reduced Pricing (Drawn Margin) on A Tranche to 75 bps
   Structured New Secured Credit Facility with JP Morgan
      $300 Million Commitment
      Brings New Financing Flexibility and Leverages Non Loan Collateral
                                               Credit Facility Capacity & Margins
                        $3.0                                                                                                   1.20%

                        $2.5                                                                                                   1.10%

                        $2.0                                                                                                   1.00%




                                                                                                                                        Margin (%)
             Capacity




                        $1.5                                                                                                   0.90%

                        $1.0                                                                                                   0.80%

                        $0.5                                                                                                   0.70%

                        $0.0                                                                                                   0.60%
                               Q1-2 0 0 4   Q2 -2 0 0 4       Q3 -2 0 0 4        Q4 -2 0 0 4      Q1-2 0 0 5    Q2 -2 0 0 5

                                                  Cred it Facility Cap acity          Cred it FacilityMarg in


                                                                                                                              Annual Conference for Debt & Equity Investors
                                                                            82                                                                         September 21, 2005
                         ®
CapitalSource Has Deep Access To The Secured Term Debt Market
                                                                                                                      Advance Rate
$1,500
                           Transaction Size ($Millions)
                                                                                                         (Offered Notes as % of Transaction Size)
                                                                                         100%
                                                                       $1,250                      Including BB Notes
$1,250                                                                                   95%       Including BBB Notes
                                                             $1,108                                                                                                  91.35%
                                                                                                   To Single-A Line                                       90.25%
                                                                                         90%                                        86.5%      87.5%
$1,000
                                                    $875
                                                                                         85%     82.5%     82.5%         82.5%
 $750                                                                                    80%
                                          $500                                           75%
 $500                           $450
                                                                                                                                                          85.5%      84.8%
                    $325                                                                                                           82.0%       83.0%
          $275                                                                           70%
 $250                                                                                    65%
                                                                                         60%
   $0
                                                                                                2002-1    2002-2     2003-1        2003-2     2004-1     2004-2     2005-1
         2002-1    2002-2      2003-1    2003-2    2004-1    2004-2    2005-1

                                 Initial Pricing                                         CapitalSource’s Term Debt Financings have Improved by
         basis        (Weighted Average Spread to LIBOR)
   100   points                                                                          Every Measure
                     86.5                                     Including BB Notes
                                 81.0                         Including BBB Notes        Since 2002 we have…
           74.2                            72.9
    75                                                        To Single-A Line               Broadened and Deepened Our Investor Base
                                                                                             Successfully Offered BBB-Rated Securities
    50                                                43.6                                   Completed Larger Transactions at Tighter Levels
                                                               33.7
                                                                         31.4
                                           63.2                                              Reduced Other Financing Fees
    25
                                                     36.4                                In the Future we will look to…
                                                               25.6      19.3
                                                                                                Continue Broadening Investor Base
     0
          2002-1    2002-2      2003-1    2003-2    2004-1   2004-2     2005-1                  Add Reinvestment Feature & Small Pre-Funding
                                                                                                Further Reduce the Costs of Funds


                                                                                                                                 Annual Conference for Debt & Equity Investors
                                                                                    83                                                                    September 21, 2005
                                    ®
Cost of Funds and 1 Month LIBOR
                             Cost of Funds vs Avg 1mo LIBOR


   4.50%

   4.00%

   3.50%

   3.00%

   2.50%

   2.00%

   1.50%

   1.00%                                                                      COF
                                                                              Avg LIBOR
   0.50%

   0.00%
           2Q03       3Q03    4Q03   1Q04        2Q04   3Q04   4Q04        1Q05            2Q05

                                                                      Annual Conference for Debt & Equity Investors
                                            84                                                 September 21, 2005
                  ®
Past Achievements - Borrowing Spread Improvements
                         Borrowing Spread vs. 1 Month LIBOR


   2.50%

   2.25%

   2.00%

   1.75%

   1.50%

   1.25%

   1.00%

   0.75%

   0.50%
           2Q03       3Q03   4Q03   1Q04        2Q04   3Q04   4Q04     1Q05            2Q05

                                                                 Annual Conference for Debt & Equity Investors
                                           85                                             September 21, 2005
                  ®
Future Capital Plans
    Continue Securitizations of Asset-Based and Cash Flow Loans
       Periodic Securitizations Demonstrate Market-Acceptance of Asset
       Considering Enhancements to Further Improve Efficiency and Reduce
       Costs
    Increase Unsecured Funding Base
       Unsecured Bank Facility
       Term Unsecured Issuance
    Deposit-Based Funding with CapitalSource Bank
    Developing Additional Financing Appropriate for Additional New Products
    Increased Equity Capital Markets Activity
       CapitalSource has not Raised Primary Equity since IPO in August 2003
       REIT Election Increases Requirement for Additional Equity Capital



                                                            Annual Conference for Debt & Equity Investors
                                        86                                           September 21, 2005
                ®
What Is The Right Level Of Leverage?
   Asset Considerations:
      Return Profile - High Risk-Adjusted Returns
      Credit Profile - “Credit First” Approach with Demonstrated Credit
      Performance
   Business/Franchise Considerations:
      Stable Return on Assets
      Scale and Mix of Business
   Funding & Liquidity Considerations:
      Diverse Sources of Financing Balanced with Desire to Maintain Strong and
      Liquid Balance Sheet
      Substantial Credit Facility Capacity Able to Support at Least One Year of
      Growth
      Leverage Below Traditional C-Corp Commercial Finance Firms &
      Regional Banks
                                                             Annual Conference for Debt & Equity Investors
                                         87                                           September 21, 2005
               ®
Our View of Leverage By Asset Type

                                         CapitalSource's
                 Core Products:               View
          Senior Secured Cash Flow         3.0x - 4.0x
      Senior Secured Asset Based Loans     4.5x - 5.7x
            First Mortgage Loans           4.0x - 5.0x
              Mezzanine Loans                 1.0x

                  Investments                  1.0x




                                             Annual Conference for Debt & Equity Investors
                                  88                                  September 21, 2005
             ®
Interest Rate Risk
    CapitalSource is Generally a Floating Rate Lender and Floating Rate Borrower
        93% of Loans are Based on Prime or LIBOR
        Liabilities are Based on LIBOR or CP Rates
    61% of Loans have Interest Rate Floors as of June 30, 2005
        Just 4% of those Loans have “In The Money” Floors
        Therefore, CapitalSource will benefit from Rising Short-Term Interest
        Rates
    Historically, CapitalSource had a Greater Exposure to “In the Money” Floors
        We Have Effectively Grown out of Exposure as Rates Have Risen Since
        Mid-2004
    During 2005 and 2006, We Expect to Be Slightly Asset Sensitive
    Short-Term Rates Have Risen 244 basis points since June 30, 2004
    We Expect Short-Term Rates to Rise Further



                                                             Annual Conference for Debt & Equity Investors
                                        89                                            September 21, 2005
                ®
Interest Rate Sensitivity at June 30, 2005
                                                     Static Pool Shock Rate Analysis ($Millions)
                            $20
                                                                                                                              $17.0

                            $15
 Change in Net Interest Income




                                                                                                            $12.6

                            $10                                                                $8.2

                                        $4.5                                           $3.9
                                 $5

                                                                                $0.0
                                 $0
                                       -2.00%   1.50%    -1.00%   -0.50%    0.00%      0.50%   1.00%        1.50%            2.00%
                                                 -$2.2            -$2.9
                                 -$5                     -$4.0


                    -$10                                          Change in Short Term Rates

                                                                                                   Annual Conference for Debt & Equity Investors
                                                                           90                                               September 21, 2005
                                                ®
Short-Term Rates Have Risen But Are Expected To Plateau

                                      1-Month LIBOR (Historical & Forward Curve)
 5.00%
                 Actual

                 Forw ard Curve
                                                                                                               4.19%
                                                                          4.07%

 4.00%
                                                          3.72%




 3.00%




 2.00%




 1.00%
     Jan-04 Apr-04   Jul-04       Oct-04 Jan-05 Apr-05 Jul-05     Oct-05 Jan-06 Apr-06   Jul-06    Oct-06 Jan-07 Apr-07 Jul-07




                                                                                                  Annual Conference for Debt & Equity Investors
                                                                91                                                         September 21, 2005
                          ®
          ®




Wrap-Up
CapitalSource Is Performing Extremely Well
   Growth and Financial Performance have Been at the High End of Our
   Expectations
   We are Very Pleased with Our Performance and have Never Felt More
   Positively About the Business
   We are Managing Our Growth Well from Every Aspect
       Operationally
       Credit
       Funding
   We Look Forward to Leveraging Our Highly Successful Model Into an Even
   Better Structure
   We will Continue to Manage CapitalSource Consistent with Our Guiding
   Business Principles




                                                         Annual Conference for Debt & Equity Investors
                                     93                                           September 21, 2005
               ®
Principle #1 – Economic Goal
   Our Long-Term Economic Goal is to Manage Our Business to Achieve a
   Return on Invested Equity of Approximately 20%, Regardless of Economic
   Conditions.




                                                          Annual Conference for Debt & Equity Investors
                                      94                                           September 21, 2005
               ®
Principle #2 – Business Plan
    Our Business is Principally Originating Loans and Investing in Debt- or Credit-
    Related Securities. It is Our View that the Most Direct Way to Achieve Our
    Long-Term Economic Goal is by Building Lending Platforms which Originate
    Loans that have Superior Risk-Adjusted Returns.
    Put Another Way, we Seek to Originate Loans that have High Returns Relative
    to their Risk Profile. In General, this is Achieved if the Lending Platforms
    Target Inefficiencies in the Debt Markets, are Staffed with Experienced
    Professionals, Deliver a Superior Product to the Customer, are Executed
    Efficiently Against their Strategy, and Maintain a Strong and Disciplined Credit
    Culture.




                                                                Annual Conference for Debt & Equity Investors
                                         95                                              September 21, 2005
                 ®
Principle #3 – Employees
   Our People are Our Single Greatest Asset, and we Work Hard to Reward them
   with a Good Working Environment.
   We are a Meritocracy and Seek to Advance Talent at a Rapid Pace. We Allow
   Original Ideas—Driven by Smart, Creative People—to Shape Out-of-the-Box
   Solutions for Our Customers.




                                                          Annual Conference for Debt & Equity Investors
                                      96                                           September 21, 2005
               ®
Principle #4 – Customer Service
   Our Current Lending Platforms Offer Two Distinct Services to Our Clients.
   First, we Try to Act, in All Respects, Faster than Our Competition. We Believe
   Speed is a Virtue in Commercial Finance, and the Orientation of the Company
   is to Respond as Quickly as we can to Our Clients.
   Second, we Deliver Unique Solutions to Our Borrowers. We Call this “the
   Original Path to Yes.”
   In Addition to these Core Elements of Our Service, we Focus on Providing Our
   Customers with the Highest Level of Courtesy, Service and Professionalism.
   Unless it Compromises Credit Quality, Asset Value or Our Business Principles,
   No Request from a Customer should be Denied.




                                                             Annual Conference for Debt & Equity Investors
                                        97                                            September 21, 2005
                ®
Principle #5 – Credit
    We Operate with a “Credit First” Approach and Always Stress that the First
    Order of Business is to Maintain a Good Credit Culture.
    Good Credit Work will be Achieved by:
       Sticking to Our Lending Discipline
       Making Decisions Based on Complete and Accurate Information
    The Company’s Lending Discipline is to Make Loans Only when they are
    Secured by Either a:
       Business, at a Discount to the Enterprise Value of that Business in All
       Market Conditions, or
       An Asset, at a Discount to the Liquidation Value of that Asset in All Market
       Conditions
    We have Created a Series of Completely Independent Checks and Balances in
    Each Step of the Credit and Investment Process.




                                                               Annual Conference for Debt & Equity Investors
                                         98                                             September 21, 2005
                 ®
Principle #6 – Risk Management
   We Manage Risk in Our Business through Strict Financial Controls, through an
   Independent Series of Checks and Balances in the Credit Process, and through
   the Creation of a Culture of Transparency Related to the Underwriting and
   Portfolio Management Process.
   It is Our View that “Group Think” is the Most Successful Orientation for a
   Business that has Risk Management at its Core.
   We, therefore, Force Active Discourse on All Credit Decisions from Groups
   within the Business that have a Different Orientation on Risk and Return.




                                                            Annual Conference for Debt & Equity Investors
                                       99                                            September 21, 2005
               ®
Principle #7 – Use of Leverage
    We will Limit Leverage to a Level Below what we could Obtain from the Debt
    Capital Markets.
    While this will Limit Returns, we Believe Our Business (Unlike a Depository)
    will Always be Dependent Upon the Capital Markets. From Time to Time, the
    Capital Markets Experience Disruptions that Cannot be Predicted.
    The Only Way we Know to Manage through these Disruptions is to Maintain an
    Adequate Cushion in Our Balance Sheet.




                                                            Annual Conference for Debt & Equity Investors
                                       100                                           September 21, 2005
                ®
Principle #8 – Corporate Governance
   We will Engage in Best Practices with Respect to Financial Reporting,
   Corporate Governance and Overall Business Ethics.
   We Try, on a Regular Basis, to be Frank About the Relative Strengths and
   Weaknesses of Our Business, Since Both will Exist in Varying Degrees at All
   Times.




                                                            Annual Conference for Debt & Equity Investors
                                       101                                           September 21, 2005
               ®
Principle #9 – Business Ethics
    We Take Great Pride in the Integrity of the Firm.
    Honesty and Fair Dealings Drive the Daily Activities of Our Staff.




                                                               Annual Conference for Debt & Equity Investors
                                         102                                            September 21, 2005
                 ®
Principle #10 – Our Work
   We Take Great Pride in the Quality of Our Work.
   Our People Make a Significant Effort to do the Best Work they can in All
   Situations.




                                                             Annual Conference for Debt & Equity Investors
                                       103                                            September 21, 2005
                ®
®

				
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