UPDATE 1-CapitalSource swings to Q1 loss

* Q1 loss $0.36/shr vs. est loss $0.24

* Q1 provision for loan losses $155 mln

* Says liquidly remains adequate to meet anticipated needs

May 7 (Reuters) - CapitalSource Inc (CSE.N), which transformed itself from a real estate investment trust to a bank in January, posted a wider-than-expected quarterly loss, hurt by a convertible debt for equity exchange.

Loss on debt extinguishment was $57 million for the first quarter, mainly due to the convertible debt exchange during the period, the company said.

"Our capital position is strong and liquidly remains adequate to meet anticipated needs," Chief Financial Officer Donald Cole said in a statement.

CapitalSource reported a quarterly net loss of $104 million, or 36 cents per share, compared with a net income of $5.2 million, or 2 cents a share, a year ago.

Analysts on average expected the company to post a loss of 24 cents per share, according to Reuters Estimates.

The company's provision for loan losses was $155 million for the quarter, a decrease of $290 million from the fourth quarter. The CapitalSource Bank segment added $25 million to its provision for loan losses in the quarter.

Chief Executive John Delaney said that capital levels at CapitalSource Bank were "very strong" and significantly exceeded regulatory requirements.

Shares of the Chevy Chase, Maryland-based company closed at $3.90 Wednesday on the New York Stock Exchange. The shares have lost more than 75 percent in the last 12 months.

For alerts, please double-click [ID:nWNAB5137] (Reporting by Santosh Nadgir in Bangalore; Editing by Himani Sarkar)