Crystal River Reports Second Quarter 2008 Financial Results

Market Wire, August, 2008

Crystal River Capital, Inc. (NYSE: CRZ) -

Crystal River's management will host a dial-in teleconference to review its second quarter 2008 financial results on August 11, 2008, at 11:00 a.m. (EDT). The teleconference can be accessed by dialing 888-259-8387 or 913-312-0836 (International). A replay of the recorded teleconference will be available through August 25, 2008. The replay can be accessed by dialing 888-203-1112 or 719-457-0820 (International) and entering passcode 9477479. A live audio webcast of the call will be accessible on the Company's website, www.crystalriverreit.com , via a link from the Investor Relations section. A replay of the audio webcast will be archived in the Investor Relations section of the Company's website.

Crystal River Capital, Inc. ("Crystal River" or the "Company") (NYSE: CRZ) today announced its results for the quarter ended June 30, 2008.

Separately, the Company announced that its Board of Directors has declared a third quarter dividend of $0.10 per share.

For additional information, please refer to Crystal River's letter to stockholders, which has been posted to the Investor Relations section of the Company's website at www.crystalriverreit.com .

I. SECOND QUARTER UPDATE

- Liquidity and leverage update: Crystal River continued its focus on reducing leverage by paying down its repurchase agreement debt to $22.1 million at June 30, 2008 from $408.7 million at March 31, 2008 and decreasing the outstanding debt under its secured revolving credit facility to $38.4 million at June 30, 2008 from $48.2 million at March 31, 2008. At the time of this release, the Company had further reduced its outstanding repurchase debt balance to $14.0 million, while holding the amount drawn under its revolving credit facility at $38.9 million.

- Operating results: The net loss for the quarter ended June 30, 2008 totaled $75.5 million, or $3.04 per share. Operating Earnings (defined below) for the quarter ended June 30, 2008 totaled $16.6 million, or $0.67 per share, compared to $16.8 million, or $0.67 per share, for the second quarter of 2007 and $19.5 million, or $0.79 per share, for the first quarter of 2008. The decrease over the first quarter was primarily attributable to lower interest income resulting from the first quarter sale of Crystal River's Agency MBS portfolio partially offset by lower interest expense on the debt supporting the remainder of the portfolio.

- Book value: Crystal River's GAAP book value decreased to $2.46 at June 30, 2008 from $5.37 at March 31, 2008.

- Portfolio activity and subsequent events: During the second quarter, Crystal River sold whole loans for $78.2 million that the Company had designated for sale in the first quarter of 2008. The remaining loans that had been designated for sale in the first quarter were sold in July 2008 for $27.1 million. Also following the end of the second quarter of 2008, the Company's $9.6 million investment in the Birchwood Acres construction loan matured. The investment, which paid off at par, had a floating-rate coupon of LIBOR plus 3.1%. The proceeds from the sales and the loan repayment were used to repay debt.

Discussion of Results

Net Investment Income (defined below) for the quarter ended June 30, 2008 totaled $21.6 million, or $0.87 per share, compared to Net Investment Income of $20.0 million, or $0.80 per share, for the second quarter of 2007 and Net Investment Income of $24.6 million, or $0.99 per share, for the first quarter of 2008. The decrease over the first quarter of 2008 was primarily attributable to lower interest income resulting from the first quarter sale of the Company's Agency MBS portfolio partially offset by lower interest expense on the debt supporting the remainder of the portfolio.

The net loss for the quarter ended June 30, 2008, totaled $75.5 million, or $3.04 per share, compared to a net loss of $9.1 million, or $0.36 per share, for the second quarter of 2007 and a net loss of $137.7 million, or $5.56 per share, for the first quarter of 2008. The primary contributors to the second quarter 2008 net loss were impairment charges and mark-to-market adjustments totaling $87.7 million. Finally, the Company also recorded a $7.4 million loan loss allowance on its real estate loan holdings during the quarter ended June 30, 2008.

The following table details the Company's impairment charges and mark-to-market adjustments on its available for sale securities by type and by sector and its CDO liabilities for the quarter ended June 30, 2008:

Impairment charges and mark-to-market adjustments of assets and liabilities:

CDO Assets and Liabilities:

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                                    Prime  Subprime      Liabil-
($ in millions)           CMBS(4)  RMBS(5)     RMBS        ities     Total
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Cash flows(1)          $   (24.7) $  (8.1) $   (4.5) $         -  $  (37.3)
Yield-spread
 widening(2)                (6.9)    (0.4)     (2.9)           -     (10.2)
MTM(3) assets                4.0        -      (0.1)           -       3.9
MTM liabilities                -        -         -        (25.8)    (25.8)
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Total                  $   (27.6) $  (8.5) $   (7.5) $     (25.8) $  (69.4)
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(1) Accounting rule EITF 99-20 refers to changes in cash flow assumptions on
    underlying assets.
(2) Accounting rule EITF 99-20 refers to excessive yield-spread widening on
    underlying assets.
(3) Mark-to-market adjustments under SFAS 159 ("MTM").
(4) Commercial mortgage-backed securities ("CMBS").
(5) Residential mortgage-backed securities ("RMBS").


Non-CDO Assets:

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                                    Prime    Subprime  Preferred
($ in millions)          CMBS        RMBS        RMBS      Stock     Total
---------------------------------------------------------------------------
Cash flows            $  (5.6) $     (7.3) $     (2.3) $       -  $  (15.2)
Yield-spread widening    (1.3)       (0.7)       (1.0)      (0.1)     (3.1)
---------------------------------------------------------------------------
Total                 $  (6.9) $     (8.0) $     (3.3) $    (0.1) $  (18.3)
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