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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-K

             Annual Report Pursuant to Section 13 or 15(d) of the
                       Securities Exchange Act of 1934

For the Fiscal Year Ended                                     Commission File
December 31, 2002                                                   1-8019-01

                           PFGI CAPITAL CORPORATION

Incorporated Under                                          IRS Employer I.D.
the Laws of Maryland                                           No. 04-3659419

                One East Fourth Street, Cincinnati, Ohio 45202
                    Phone: 1-800-851-9521 or 513-345-7102

Securities Registered Pursuant to Section 12(b) of the Act:
                                              Income PRIDES, $25 Stated Value

Securities Registered Pursuant to Section 12(g) of the Act:              None

Indicate  by check mark  whether  the  Registrant  (1) has filed all  reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months,  and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark if disclosure of  delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and need not be contained,  to
the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]

Indicate by check mark whether the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [x]

All common stock is held by affiliates  of the  registrant as of December 31,
2002. As of February 28, 2003,  5,940,000  shares of common stock at $.01 per
share par value were  outstanding.  The aggregate  market value of the common
stock held by non-affiliates of the registrant as of the close of business on
June 30, 2002 is 0.

                     Documents Incorporated by Reference:

Information  Statement for the 2003 Annual Meeting of Shareholders  (portions
which are incorporated by reference into Part III hereof).

                    Please address all correspondence to:

                             Anthony M. Stollings
                                  Controller
                           PFGI Capital Corporation
                            One East Fourth Street
                            Cincinnati, Ohio 45202

                           PFGI CAPITAL CORPORATION
                            INDEX TO ANNUAL REPORT
                                 ON FORM 10-K

PART I
   ITEM  1.  BUSINESS ....................................................  1
   ITEM  2.  PROPERTIES .................................................. 20
   ITEM  3.  LEGAL PROCEEDINGS ........................................... 20
   ITEM  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ......... 20
PART II
   ITEM  5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS ......................................... 21
   ITEM  6.  SELECTED FINANCIAL DATA ..................................... 22
   ITEM  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS ......................... 23
   ITEM  7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
             MARKET RISK ................................................. 29
   ITEM  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ................. 30
   ITEM  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE ......................... 46
PART III
   ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT .......... 46
   ITEM 11.  EXECUTIVE COMPENSATION ...................................... 46
   ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
             AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS .............. 46
   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .............. 46
   ITEM 14.  CONTROLS AND PROCEDURES ..................................... 46
PART IV
   ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
             ON FORM 8-K ................................................. 46
SIGNATURES ............................................................... 48
CERTIFICATIONS ........................................................... 49

                         FORWARD-LOOKING STATEMENTS

This Form 10-K contains certain  forward-looking  statements that are subject
to numerous  assumptions,  risks or  uncertainties.  The  Private  Securities
Litigation  Reform  Act of 1995  provides a safe  harbor for  forward-looking
statements. Actual results could differ materially from those contained in or
implied  by  such  forward-looking   statements  for  a  variety  of  factors
including: sharp and/or rapid changes in interest rates; prepayments of loans
with fixed interest rates  resulting in reinvestment of the proceeds in loans
with lower interest rates;  significant  changes in the anticipated  economic
scenario which could  materially  change  anticipated  credit quality trends;
adverse   economic  and  other   developments   in  states  where  loans  are
concentrated; the possible exchange of Series A Preferred Stock for preferred
shares of The Provident Bank at the direction of the Federal Reserve Board or
the Ohio Division of Financial  Institutions  if The  Provident  Bank becomes
undercapitalized;  the failure of PFGI  Capital  Corporation  to maintain its
status as a REIT for  federal  income tax  purposes;  significant  changes in
accounting,  tax, or regulatory practices or requirements;  and factors noted
in connection with  forward-looking  statements.  Additionally,  borrowers of
loan  participations  could suffer  unanticipated  losses  without  regard to
general  economic  conditions.  The result of these and other  factors  could
cause differences from expectations in the level of defaults, changes in risk
characteristics  of the loan  participation  portfolio,  and  changes  in the
provision for loan  participation  losses.  Forward-looking  statements speak
only as of the date made. PFGI Capital  Corporation  undertakes no obligation
to update any  forward-looking  statements to reflect events or circumstances
arising after the date on which they are made.

                           PFGI CAPITAL CORPORATION

                                    PART I

ITEM 1. BUSINESS
----------------

PFGI CAPITAL CORPORATION

General

PFGI  Capital   Corporation  (PFGI  Capital),   is  a  Maryland   corporation
incorporated on May 9, 2002. The principal business objective of PFGI Capital
is to  acquire,  hold and manage  commercial  mortgage  loan assets and other
authorized investments that will generate net income for distribution to PFGI
Capital's stockholders. As such, management views its financial condition and
results of operations as one business segment. PFGI Capital has elected to be
treated as a real  estate  investment  trust  (REIT) for  federal  income tax
purposes.  As a REIT,  PFGI Capital  generally will not be liable for federal
income tax to the extent that it distributes  its income to its  stockholders
and continues to meet a number of other requirements.

In general,  the information in this document  relative to The Provident Bank
(the Bank) and Provident Financial Group, Inc. (Provident) is provided by the
Bank and Provident.

PFGI Capital is  consolidated  as a direct  subsidiary of the Bank, as all of
PFGI  Capital's  common  stock  is  owned  by the  Bank.  The  Bank,  an Ohio
state-chartered  member bank of the Federal  Reserve  System,  is the primary
subsidiary  and only banking  subsidiary of Provident.  The Bank's  financial
statements and those of Provident's  are  substantially  the same.  Copies of
Provident's Form 10-K and all other SEC filings by Provident may be obtained,
without charge, by contacting  Investor  Relations at (513) 345-7102 or (800)
851-9521.  These  reports  may also be obtained  via the  Internet at the web
sites  of the Bank at  http://www.providentbank.com,  or the  Securities  and
Exchange Commission (SEC) at http://www.sec.gov.

PFGI Capital,  the Bank and Provident's  executive offices are located at One
East Fourth Street,  Cincinnati,  Ohio 45202.  Directors and officers of PFGI
Capital are:
  Christopher J. Carey - Director and President (Member of Executive Committee)
  James Berry - Director (Member of Audit and Compensation Committees)
  Dett Hunter - Director (Member of Audit and Compensation Committees)
  Mark E. Magee - Director and Secretary (Member of Executive Committee)
  Robert Pompey - Director
  J. David Rosenberg - Director (Member of Executive, Audit and Compensation
    Committees)
  John E. Rubenbauer - Director
  Anthony M. Stollings - Director and Controller
  Tayfun Tuzun - Director and Treasurer (Member of Compensation Committee)

The Registrar and Transfer Agent of PFGI Capital is:
  The Provident Bank
  One East Fourth Street
  Cincinnati, OH 45202
    Phone: 513-579-2384

                                     -1-

                           PFGI CAPITAL CORPORATION

In connection with the startup of business,  PFGI Capital  acquired  mortgage
assets from the Bank in an  aggregate  amount of  approximately  $330 million
pursuant  to a  participation  agreement.  These  assets  were  comprised  of
participation  interests in commercial  mortgage loans,  before the allowance
for loan losses.  Since acquiring  these assets,  PFGI Capital has met all of
the REIT qualification tests for federal income tax purposes.

Although PFGI Capital has the authority to acquire  interests in an unlimited
number of  mortgage  assets  from  unaffiliated  third  parties,  all of PFGI
Capital's  interests in mortgage and other assets held was acquired  from the
Bank,  pursuant  to the  participation  agreement  between  the Bank and PFGI
Capital.  The Bank either  originated the mortgage assets or acquired them as
part of the  acquisition of other  financial  institutions.  PFGI Capital may
also   acquire   from   time  to  time  a  limited   amount   of   additional
non-mortgage-related  securities.  PFGI  Capital  has  no  present  plans  or
expectations to purchase  mortgage  assets or other assets from  unaffiliated
third parties.

PFGI Capital's  participation interests do not entitle PFGI Capital to retain
any portion of any late  payment  charges or  penalties,  assumption  fees or
conversion  fees  collected and retained by the Bank in  connection  with the
loans underlying PFGI Capital's participation interests serviced by the Bank.

General  Description  of Mortgage  Assets and Other  Authorized  Investments;
Investment Policy

In order to qualify as a REIT under the Internal  Revenue  Code, at least 75%
of the total value of PFGI Capital's assets must,  broadly speaking,  consist
of  real  estate  assets,  which  includes  residential  mortgage  loans  and
commercial mortgage loans, including  participation  interests in residential
or commercial  or  residential  mortgage  loans;  mortgage-backed  securities
eligible  to  be  held  by  REITs;  cash;  cash  equivalents  which  includes
receivables  and government  securities;  and other real estate assets.  PFGI
Capital  refers  to these  types of assets as REIT  qualifying  assets.  PFGI
Capital may invest up to 25% of the value of its total  assets in other types
of securities  (within the meaning of the Investment  Company Act). Under the
Investment  Company Act, the term  "security" is defined  broadly to include,
among other things, any note, stock, treasury stock,  debenture,  evidence of
indebtedness,  or  certificate  of  interest or  participation  in any profit
sharing  agreement or a group or index of  securities.  The Internal  Revenue
Code also generally  requires that the value of any one issuer's  securities,
other than those  securities  included in the 75% test,  may not exceed 5% by
value of the total assets of PFGI  Capital.  In addition,  under the Internal
Revenue Code, PFGI Capital  generally may not own more than 10% of the voting
securities  nor more than 10% of the value of the  outstanding  securities of
any one issuer, other than those securities included in the 75% test.

                                     -2-

                           PFGI CAPITAL CORPORATION

As of December 31, 2002,  nearly 100% of PFGI Capital's  assets were invested
in REIT Qualifying Assets. PFGI Capital does not hold any securities nor does
PFGI Capital  intend to hold  securities  in any one issuer that exceed 5% of
PFGI Capital's total assets or more than 10% of the voting  securities of any
one issuer.  PFGI Capital's assets consisted of the following at December 31,
2002:

                                                                   Percentage
                                                     Amount         of Total
              Type of Asset                      (In Thousands)      Assets
-----------------------------------------------------------------------------
Commercial Loan Participations                       $ 325,005          99.0%
Reserve for Participation Losses                        (3,250)         (1.0)
Interest Bearing Deposit with Provident Bank             5,357           1.6
Interest Receivable on Loan Participations               1,107           0.3
Other Assets                                               296           0.1
                                                     ---------         -----
  Total Assets                                       $ 328,515         100.0%
                                                     =========         =====

REITs  generally  are  subject to tax at the  maximum  corporate  rate on any
income from foreclosure property,  other than income that would be qualifying
income for purposes of the 75% gross income test,  less  deductible  expenses
directly  connected with the production of such income.  Therefore,  prior to
foreclosure  of any  underlying  loan acquired by PFGI Capital from the Bank,
PFGI Capital currently  intends to try to sell the participation  interest in
the  underlying  loan back to the Bank.  The Bank will then bear all expenses
related to the foreclosure after that time.

Commercial  Mortgage  Loans:  PFGI Capital holds  participation  interests in
commercial  mortgage  loans that are secured by real  property such as office
buildings;  multi-family  properties  of  five  units  or  more;  industrial,
warehouse and self-storage  properties;  office and industrial  condominiums;
retail space; strip shopping centers; mixed use commercial properties; mobile
home parks; nursing homes; hotels and motels;  churches and farms. Commercial
mortgage  loans may not be fully  amortizing.  This  means that the loans may
have a significant  principal  balance or "balloon"  payment due on maturity.
Additionally,  apart from the Bank's  commercial  mortgage  loan  origination
guidelines,   there  is  no  requirement  regarding  the  percentage  of  any
commercial  real estate property that must be leased at the time PFGI Capital
acquires a  participation  interest in a commercial  mortgage loan secured by
such property nor are commercial  mortgage loans required to have third party
guarantees.  Commercial  properties,  particularly  industrial  and warehouse
properties,  generally are subject to relatively greater  environmental risks
than  non-commercial  properties.  This  gives  rise to  increased  costs  of
compliance with environmental laws and regulations.  The Bank may be affected
by environmental  liabilities related to the underlying real property,  which
could exceed the value of the real property. Although the Bank has exercised,
and  will  continue  to  exercise,   due  diligence  to  discover   potential
environmental   liabilities  prior  to  PFGI  Capital's  acquisition  of  any
participation  interests  in  loans  secured  by  such  property,   hazardous
substances  or wastes,  contaminants,  pollutants,  or their  sources  may be
discovered on properties during PFGI Capital's ownership of the participation
interests.  There can be no  assurance  that the Bank  would  not incur  full
recourse  liability  for the entire  cost of any  removal  and  clean-up on a
property it acquired in  foreclosure,  that the cost of removal and  clean-up
would not exceed the value of the property, or that the Bank could recoup any
of the costs from any third party.  Even though PFGI Capital  intends to sell
back to the Bank the participation interest in any loan prior to foreclosure,
the  discovery of these  liabilities  and any  associated  costs could have a

                                     -3-

                           PFGI CAPITAL CORPORATION

material  adverse  effect on the fair value of that loan,  and therefore PFGI
Capital may not recover any or all of its investment in the underlying loan.

The credit  quality of a commercial  mortgage loan may depend on, among other
factors:
o  the existence and structure of underlying leases;
o  the physical condition of the property,  including whether any maintenance
   has been deferred;
o  the creditworthiness of tenants;
o  the historical and anticipated level of vacancies;
o  rents on the property and on other  comparable  properties  located in the
   same region; o potential or existing environmental risks;
o  the  availability of credit to refinance the loan at or prior to maturity;
   and
o  the local and regional economic climate in general.

Foreclosures of defaulted  commercial mortgage loans generally are subject to
a number of complicating  factors,  including  environmental  considerations,
which are not  generally  present in  foreclosures  of  residential  mortgage
loans.

Other  Assets:  Cash and Due From Banks  represent  cash received by the Bank
from  borrowers for the payment of principal  and interest on the  underlying
loans  deposited in a demand  deposit  account of the Bank for PFGI  Capital.
These  funds are  available  for the  purchase  of  additional  participation
interests, payment of dividends and other operating expenses of PFGI Capital.

Other  assets also  include  accrued  interest on the loans  underlying  PFGI
Capital's  participation  interests,  which is  calculated by the Bank's loan
accounting systems.

Dividend Policy

PFGI Capital expects to distribute  annually an aggregate amount of dividends
with respect to its outstanding capital shares equal to approximately 100% of
its REIT taxable  income (as  determined  before any  deduction for dividends
paid and excluding any net capital gain).  In order to remain  qualified as a
REIT,  PFGI Capital is required to  distribute  annually at least 90% of such
REIT taxable income to its stockholders.

Dividends will be authorized and declared at the discretion of PFGI Capital's
board of  directors.  Factors  that would  generally  be  considered  by PFGI
Capital's board of directors in making this  determination are PFGI Capital's
distributable  funds,  financial  condition and capital needs,  the impact of
current and pending  legislation and regulations,  economic  conditions,  tax
considerations,  and PFGI Capital's  continued  qualification as a REIT. PFGI
Capital  currently  expects  that  both PFGI  Capital's  cash  available  for
distribution  and its REIT  taxable  income  will be in excess of the amounts
needed to pay dividends on all outstanding shares of preferred stock, even in
the event of a significant drop in interest rate levels because:
o  substantially  all of PFGI Capital's  mortgage assets and other authorized
   investments are interest-earning;
o  all outstanding shares of PFGI Capital's  preferred stock represent in the
   aggregate only approximately 50% of PFGI Capital's  capitalization and, as
   a result,  the  scheduled  distributions  to be paid to PFGI  Capital with

                                     -4-

                           PFGI CAPITAL CORPORATION

   respect to its participation interests will exceed the aggregate dividends
   to be paid on PFGI Capital Series A preferred stock;
o  with the prior  approval of PFGI  Capital's  independent  directors,  PFGI
   Capital may incur  indebtedness in an aggregate amount of no more than 20%
   of PFGI Capital's  stockholder's  equity as determined in accordance  with
   generally accepted accounting  principles:  provided that PFGI Capital may
   incur  indebtedness  in an aggregate  amount not to exceed  $10.0  million
   without such prior  approval so long as, at the time of incurrence of such
   indebtedness,  PFGI Capital's  outstanding common  stockholder's equity as
   determined in accordance with generally accepted accounting  principles is
   at least $150.0 million; and
o  PFGI  Capital  anticipates  that it will have cash  flows  from  principal
   payments on its commercial mortgage loan portfolio.

Accordingly, PFGI Capital expects that it will, after paying the dividends on
all series and classes of preferred stock, pay dividends to the holder of its
common stock in an amount  sufficient to comply with applicable  requirements
regarding qualification as a REIT and to ensure that there will be no federal
taxable income at the PFGI Capital level.

As an  alternative  to  distributing  a cash  dividend,  PFGI Capital has the
option  of  distributing  to its  common  shareholder,  a  dividend  using  a
procedure known as a "consent dividend",  as authorized by Section 565 of the
Internal Revenue Code. A consent  dividend  procedure is where a shareholder,
on the last day of a REIT's  tax  year,  agrees  to treat as a  dividend  the
amount  that the REIT so  designates,  without  any  distribution  of cash or
property actually  occurring.  The effect of the consent dividend is that the
REIT is  considered  to have paid a dividend on the last day of its tax year,
and the shareholder is treated as having received that amount and contributed
it back to the REIT.  The dollar amount of the consent  dividend is included,
as if it were distributed,  in the calculation to determine that at least 90%
of a REIT's taxable income has been  distributed  to its  shareholders.  PFGI
Capital,  as a REIT,  receives a deduction for dividends  paid,  reducing its
taxable income by the amount of the consent dividend, but without the need to
have cash  available to  distribute.  For the year ending  December 31, 2002,
PFGI  Capital  and its  common  shareholder  have  agreed to use the  consent
dividend  procedure.  As a result,  PFGI Capital will have  additional  funds
available for investment  purposes  and/or for  distribution to its preferred
shareholders  than if PFGI  Capital  had paid a cash  dividend  to the common
shareholder.

Under  certain  circumstances,  including any  determination  that the Bank's
relationship  with PFGI  Capital  results  in an unsafe and  unsound  banking
practice,  the  Federal  Reserve  Board and the Ohio  Division  of  Financial
Institutions  will have the authority to issue an order that  restricts  PFGI
Capital's ability to make dividend  payments to PFGI Capital's  stockholders,
including  holders of PFGI Capital Series A preferred  stock. The exercise of
these powers to restrict  dividends on PFGI Capital Series A preferred  stock
would  also have the  effect of  restricting  PFGI  Capital's  ability to pay
dividends on its common stock and affect its status as a REIT.

Conflict of Interests and Related Policies

The Bank  controls  90% of the  voting  power of PFGI  Capital's  outstanding
securities.  Accordingly,  the Bank will  continue to have the right to elect
all  of  PFGI  Capital's  directors,  including  PFGI  Capital's  independent
directors,  other than the two additional independent directors to be elected
by the holders of PFGI Capital Series A preferred stock if PFGI Capital fails

                                     -5-

                           PFGI CAPITAL CORPORATION

to pay  quarterly  dividends of $.484375  per share on PFGI Capital  Series A
preferred stock for at least six consecutive  dividend periods.  In addition,
PFGI  Capital's  officers and six of its  directors  are also officers of the
Bank or its affiliates.  Because of the nature of PFGI Capital's relationship
with  Provident  and the Bank,  it is likely that  conflicts of interest will
arise with respect to certain  transactions  because Provident,  the Bank and
their  affiliates  have  interests  which are not  identical to those of PFGI
Capital.

The Bank administers PFGI Capital's day-to-day  activities under the terms of
a management  agreement  between PFGI Capital and the Bank. Since the parties
to this  agreement  are  affiliated,  this  agreement  was not the  result of
arms-length negotiations. Any future modification of the management agreement
will  require  the  approval  of a  majority  of PFGI  Capital's  independent
directors.  However,  since the Bank,  through its  ownership  of all of PFGI
Capital's  common  stock,  controls  the  election  of all of PFGI  Capital's
directors,   including  PFGI  Capital's  independent   directors,   any  such
modification also would not be the result of arms-length negotiations.  Thus,
there  can be no  guarantee  that  future  modifications  will be on terms as
favorable  to PFGI  Capital  as those  that  could  have been  obtained  from
unaffiliated third parties.

Under the terms of the  management  agreement  between  PFGI  Capital and the
Bank,  PFGI Capital pays the Bank a monthly  management fee equal to (i) 1/12
multiplied by (ii) .10% multiplied by the average daily outstanding principal
balance  of the  loans of PFGI  Capital  during  each  such  calendar  month.
Similarly,  PFGI Capital pays the Bank a monthly servicing fee under the term
of the  participation  agreement  equal to (i) 1/12  multiplied by (ii) .125%
multiplied by the average daily outstanding principal balance of the loans of
PFGI  Capital  during each such  calendar  month.  PFGI  Capital and the Bank
believe the combined 22.5 annual basis point charge is below  current  market
rates that could be obtained for the management services and the servicing of
commercial mortgage loans from independent parties.

Provident,  the owner of all the Bank's common  shares,  may have  investment
goals and strategies  that differ from those of the holders of shares of PFGI
Capital Series A preferred stock. Nevertheless, PFGI Capital's investment and
operating  strategies  will largely be directed by Provident and the Bank. In
addition, neither Provident nor the Bank has a policy addressing treatment of
new business  opportunities.  Thus, new business opportunities  identified by
Provident or the Bank may be directed to affiliates other than PFGI Capital.

PFGI  Capital is  dependent  on the  diligence  and skill of the officers and
employees  of the  Bank  for  the  selection  and  structuring  of the  loans
underlying  PFGI Capital's  participation  interests and PFGI Capital's other
authorized  investments.  The Bank will select the amount, type, and price of
loan participation interests and other assets which PFGI Capital will acquire
from the Bank  and its  affiliates.  PFGI  Capital  anticipates  that it will
continue to acquire all or  substantially  all of its assets from the Bank or
its affiliates. To date, all participation interests have been transferred at
the Bank's carrying value, which the parties believe approximates fair value.
Carrying value is the principal  amount  outstanding  plus accrued  interest.
Approximately 90% of the loan  participations  are adjustable rate loans. All
of  the  loans   underlying   both  the  fixed  rate  and   adjustable   rate
participations are current on principal and interest  payments.  Neither PFGI
Capital nor the Bank has obtained any third-party  valuations,  nor does PFGI
Capital  intend to do so in the  future.  Although  PFGI  Capital has adopted
certain  policies to guide the acquisition  and disposition of assets,  these

                                     -6-

                           PFGI CAPITAL CORPORATION

policies may be revised or  exceptions  may be approved  from time to time at
the  discretion  of the board of directors  without a vote of PFGI  Capital's
stockholders.  Changes in or exceptions  made to these  policies could permit
PFGI Capital to acquire lower quality assets.

PFGI  Capital is also  dependent  on the Bank and others for  monitoring  and
servicing the loans underlying PFGI Capital's  participation  interests under
the terms of the  participation  agreement between the Bank and PFGI Capital.
Since the parties to this agreement are affiliated, this agreement is not the
result  of  arms-length   negotiations.   Any  future   modification  of  the
participation  agreement  will  require  the  approval  of a majority of PFGI
Capital's  independent  directors.  However,  since  the  Bank,  through  its
ownership of all of PFGI Capital's common stock, controls the election of all
of PFGI Capital's directors,  including PFGI Capital's independent directors,
any such  modification  would not be the result of  arms-length  negotiation.
Conflicts may arise as part of such servicing,  particularly  with respect to
loans that are placed on nonaccrual status.  While PFGI Capital believes that
the Bank will  diligently  pursue  collection of any  non-performing  assets,
there can be no guarantee  that this will be the case.  Conflicts of interest
between  PFGI Capital and the Bank may also arise in  connection  with making
decisions that bear upon the credit  arrangements that the Bank may have with
a borrower  under a loan.  The Bank could also seek to exercise its influence
over PFGI Capital's  affairs so as to cause the sale of PFGI Capital's assets
and their  replacement by lesser  quality  assets  purchased from the Bank or
elsewhere.  Although these potential  conflicts exist,  PFGI Capital believes
that the Bank will  service  the assets  with a view  toward  PFGI  Capital's
interests.

The  requirement  in PFGI  Capital's  charter that certain of PFGI  Capital's
actions be approved by a majority of PFGI Capital's  independent directors is
intended to ensure fair dealings between PFGI Capital and the Bank. There can
be no assurance, however, that such agreement or transaction will be on terms
as favorable to PFGI Capital as could have been  obtained  from  unaffiliated
third parties.

There  are no  provisions  in PFGI  Capital's  charter  limiting  any of PFGI
Capital's officers,  directors,  stockholders,  or affiliates from having any
direct or indirect pecuniary interest in any asset to be acquired or disposed
of by PFGI  Capital  or in any  transaction  in  which  PFGI  Capital  has an
interest or from engaging in acquiring,  holding, and managing PFGI Capital's
assets.  It is  expected  that the Bank and its  affiliates  will have direct
interests in transactions with PFGI Capital  including,  without  limitation,
the sale of assets to PFGI Capital;  however,  it is not anticipated that any
of PFGI  Capital's  officers or  directors  will have any  interests  in such
assets,  other than as  borrowers  or  guarantors  of loans  underlying  PFGI
Capital's  participation  interests,  in which  case such  loans  would be on
substantially  the same terms,  including  interest  rates and  collateral on
loans,  as those  prevailing  at the time for  comparable  transactions  with
others and would not involve more than the normal risk of  collectibility  or
present other unfavorable features.

Other Management Policies and Programs

General:  In administering PFGI Capital's  participation  interests and other
authorized investments, the Bank has a high degree of autonomy. PFGI Capital,
however, adopted certain policies to guide PFGI Capital's administration with
respect to the  acquisition  and  disposition  of assets,  use of capital and
leverage,  credit  risk  management  and  certain  other  activities.   These

                                     -7-

                           PFGI CAPITAL CORPORATION

policies,  which are discussed  below, may be amended or revised from time to
time at the discretion of PFGI  Capital's  board of directors and, in certain
circumstances  subject  to the  approval  of a  majority  of  PFGI  Capital's
independent  directors,  but without a vote of PFGI  Capital's  stockholders,
including holders of shares of PFGI Capital's Series A preferred stock.

Underwriting  Standards:  In connection  with the  acquisition  of commercial
mortgage loan  participations  by PFGI Capital,  the Bank  represents to PFGI
Capital  that   substantially  all  of  the  mortgage  loans  underlying  the
participation interests acquired by PFGI Capital were originated generally in
accordance with underwriting policies customarily employed by the Bank during
the period in which the commercial mortgage loans were originated.  It is the
policy  of the  Bank to  make  commercial  mortgage  loans  primarily  in the
geographic  areas in which the Bank is doing  business,  normally  a l00-mile
radius of Cincinnati,  Dayton,  Columbus and Cleveland,  Ohio;  Indianapolis,
Indiana; Pittsburgh,  Pennsylvania;  and Sarasota, Florida. However, the Bank
may lend in geographic areas beyond these areas,  provided the mortgage loans
otherwise  comply  with the  Bank's  investment  policies.  The  Bank  avoids
transactions  perceived to have  unacceptably high risk, as well as excessive
industry,  type of collateral and other  concentrations.  It is the policy of
the Bank that no more than two-thirds of the Bank's commercial mortgage loans
cover properties that are not stabilized at any one time.

Some of the loans,  however, were acquired by the Bank in connection with the
acquisition of other financial institutions. Prior to acquiring any financial
institution,  the Bank  performed  due diligence  procedures  to, among other
things,   assess  the  overall  quality  of  the  target  institution's  loan
portfolio.   These  procedures   included  the  examination  of  underwriting
standards used in the origination of loan products by the target institution,
the review of loan documents and the contents of selected loan files, and the
verification  of the  past due  status  and  payment  histories  of  selected
borrowers.  Through  its  due  diligence  procedures,  the  Bank  obtained  a
sufficient level of comfort pertaining to the underwriting  standards used by
the target  institution  and their influence on the quality of the portfolio.
Even though the Bank did not and does not warrant those  standards,  the Bank
found them  acceptable  in comparison  to its own  underwriting  standards in
cases where the Bank had made a favorable decision to acquire the institution
as a whole.

The  underwriting  standards  imposed  by the  Bank in  connection  with  the
origination of the commercial  mortgage  loans  underlying the  participation
interests  acquired by PFGI  Capital  include  careful  consideration  of the
borrower's overall  creditworthiness and capacity to service debt independent
of the income generated from the underlying property. In most instances, cash
equity is required in each  commercial  mortgage loan  transaction  to reduce
debt to a level where the income of the property can comfortably service that
debt. In other instances  where income from the underlying  property does not
provide  adequate debt service  coverage  margins,  additional  collateral is
required to offset any perceived deficiency.  In the case of properties where
the stability of the income stream may be in question,  such as  construction
and  development  situations,  the Bank requires the borrower to have met the
pre-leasing  and  pre-sale  standard  designated  by the Bank for the type of
property.

The  underwriting  procedures and  guidelines  taken into account by the Bank
include such factors as:
o  demographic factors, including population and employment trends;
o  current and projected vacancy, construction and absorption rates;

                                     -8-

                           PFGI CAPITAL CORPORATION

o  current  and  projected  lease  terms,  rental  rates  and  sales  prices,
   including concessions;
o  economic  indicators,  including trends and diversification of the lending
   area;
o  valuation trends, including discount and direct capitalization rates;
o  amount and credit rating of additional collateral;
o  the net worth and credit rating of the borrower,  as well as its operating
   and liquidity ratios;
o  the existence of a guarantee;
o  the management ability of the borrower,  including its business experience
   and financial soundness;
o  the characteristics of the specific project financed; and
o  such other economic,  demographic,  or other factors as in the judgment of
   the Bank might affect the value of the  collateral  and the ability of the
   borrower to service the loan.

Asset Acquisition and Disposition  Policies:  PFGI Capital adopted the policy
of  purchasing  from  the  Bank  or its  affiliates  participation  interests
generally in mortgage loans that:
o  are  performing,  meaning they have no more than two payments past due, if
   any,
o  are in accruing status,
o  are secured by real property such that they are REIT qualifying, and
o  have not been previously sold,  securitized or charged-off either in whole
   or in part.

PFGI Capital's  policy also will allow for investment in assets which are not
REIT  qualifying  assets up to but not exceeding  the  statutory  limitations
imposed on  organizations  that qualify as a REIT.  PFGI Capital,  under this
policy,  will have the  discretion  to purchase  other assets to maximize its
return to stockholders.

From time to time PFGI Capital acquires participation interests in additional
commercial  mortgage  loans  from  the  Bank  or its  affiliates  on a  basis
consistent  with secondary  market  standards  pursuant to the  participation
agreement.  These  acquisitions  are made out of  proceeds  received  by PFGI
Capital in connection with the repayment or disposition of loan participation
interests in PFGI Capital's portfolio.  Although PFGI Capital is permitted to
do so, PFGI Capital has no present plans or  intentions to purchase  loans or
loan participation  interests from unaffiliated  third parties.  PFGI Capital
currently  anticipates  that additional  participation  interests in mortgage
loans acquired by PFGI Capital will be of the types described above under the
heading  "Business:   General   Description  of  Mortgage  Assets  and  Other
Authorized  Investments;  Investment  Policy,"  although  PFGI Capital is not
precluded from  purchasing  additional  types of loans or loan  participation
interests.

PFGI Capital may acquire from time to time limited  amounts of  participation
interests  in  loans  that  are  not  commercial   mortgage  loans,  such  as
residential  mortgage loans and equipment  loans.  PFGI Capital also may from
time to time  acquire  a  limited  amount  of other  authorized  investments.
Although   PFGI   Capital   currently   does  not  intend  to   acquire   any
mortgage-backed securities representing interests in or obligations backed by
pools of mortgage loans that will be secured by single-family  residential or
multi-family  real estate  properties  located  throughout the United States,
PFGI Capital is not restricted from doing so. PFGI Capital does not intend to

                                     -9-

                           PFGI CAPITAL CORPORATION

acquire any interest-only or principal-only  mortgage-backed securities. PFGI
Capital  also  will  not  be  precluded  from  investing  in  mortgage-backed
securities  when the Bank is the  sponsor or issuer.  PFGI  Capital  does not
intend to acquire any mortgage-backed securities that are not backed by pools
of commercial real estate properties.

PFGI  Capital  currently  anticipates  that it will not  acquire the right to
service any loan underlying a participation  interest that it acquires in the
future and that the Bank will act as servicer of any such  additional  loans.
PFGI Capital anticipates that any future servicing  arrangement with the Bank
will contain fees and other terms that would be  substantially  equivalent to
or more  favorable  to PFGI  Capital  than those that would be  contained  in
servicing arrangements entered into with third parties unaffiliated with PFGI
Capital.

PFGI Capital has a policy of not acquiring any participation  interest in any
mortgage loan that  constitutes  more than 9% of the total book value of PFGI
Capital's assets at the time of acquisition.

PFGI  Capital has a policy of  reinvesting  the  proceeds  of PFGI  Capital's
assets in other  interest-earning  assets so that PFGI  Capital's  funds from
operations  over any period of four fiscal  quarters will be  anticipated  to
equal or exceed  140% of the amount that would be required to pay full annual
dividends  on  PFGI  Capital  Series  A  preferred  stock,  except  as may be
necessary to maintain PFGI Capital's status as a REIT. PFGI Capital's charter
provides that PFGI Capital cannot amend or change this policy with respect to
the  reinvestment of proceeds  without the consent or affirmative vote of the
holders  of at least two thirds of PFGI  Capital  Series A  preferred  stock,
voting as a separate class.

Credit Risk Management Policies:  The Bank represents to PFGI Capital that at
least  95%  of the  participation  interests  acquired  in  the  future  will
represent  commercial  mortgage  loans  in which  the  Bank has a first  lien
position and will be  originated  by the Bank,  one of its  affiliates  or an
unaffiliated  third party in the ordinary  course of its real estate  lending
activities  based  on the  underwriting  standards  generally  applied  by or
substantially similar to those applied by the Bank at the time of origination
for its own account.  The Bank also represents to PFGI Capital that all loans
will be  serviced  by or  through  the  Bank  pursuant  to the  participation
agreement,  which  requires  servicing in conformity  with any loan servicing
guidelines promulgated by PFGI Capital.

Other  Policies:  PFGI  Capital  intends to operate in a manner that will not
subject PFGI Capital to  regulation  under the  Investment  Company Act. PFGI
Capital does not intend to:
o  borrow money at any time other than indebtedness  incurred by PFGI Capital
   with the prior  approval of PFGI  Capital's  independent  directors  in an
   aggregate amount not to exceed 20% of PFGI Capital's  stockholders' equity
   as determined in accordance with generally accepted accounting principles;
   provided,  that PFGI Capital may incur indebtedness in an aggregate amount
   not to exceed $10.0 million without such prior approval so long as, at the
   time of incurrence of such indebtedness, PFGI Capital's outstanding common
   stockholder's equity is at least $150.0 million;
o  invest in the  securities  of other  issuers for the purpose of exercising
   control over such issuers;
o  underwrite securities of other issuers;
o  actively trade in loans or other investments;

                                    -10-

                           PFGI CAPITAL CORPORATION

o  offer securities in exchange for property; or
o  make loans to third parties,  including its officers,  directors, or other
   affiliates.

The  Investment  Company  Act  exempts  entities  that,  directly  or through
majority-owned  subsidiaries,  are  "primarily  engaged  in the  business  of
purchasing or otherwise  acquiring mortgages and other liens on and interests
in real  estate."  PFGI  Capital  refers  to these  interests  as  Qualifying
Interests. Under current interpretations by the staff of the SEC, in order to
qualify for this exemption,  PFGI Capital,  among other things, must maintain
at least 55% of its  total  assets in  Qualifying  Interests  and also may be
required to  maintain an  additional  25% of its total  assets in  Qualifying
Interests or other real  estate-related  assets. The assets that PFGI Capital
may acquire,  therefore,  may be limited by the  provisions of the Investment
Company  Act.  PFGI  Capital  established  a policy  of  limiting  authorized
investments which are not Qualifying Interests or real estate-related  assets
to no more than 20% of the value of PFGI Capital's total assets.

PFGI Capital may, under certain circumstances, purchase PFGI Capital Series A
preferred  stock and other stock in the open market or  otherwise.  Except to
the extent of any  remarketed  PFGI Capital  Series A preferred  stock,  PFGI
Capital has no present intention of repurchasing any of PFGI Capital's stock,
and any such action would be taken only in conformity with applicable federal
and state laws and regulations and the requirements for qualifying as a REIT.

PFGI Capital  intends to distribute to its  stockholders,  in accordance with
the Exchange Act, annual reports containing  financial statements prepared in
accordance  with generally  accepted  accounting  principles and certified by
PFGI Capital's independent auditors.  PFGI Capital's charter provides that it
will maintain PFGI Capital's status as a reporting company under the Exchange
Act  for so  long  as  any of  PFGI  Capital  Series  A  preferred  stock  is
outstanding and held by unaffiliated stockholders.

PFGI Capital  intends to make  investments and operate its business in such a
manner  consistent  with the  requirements  of the  Internal  Revenue Code to
qualify as a REIT and to elect to be treated as a REIT for federal income tax
purposes.   However,   future   economic,   market,   legal,   tax  or  other
considerations  may cause  PFGI  Capital's  board of  directors,  subject  to
approval by a majority of PFGI Capital's independent directors,  to determine
that it is in PFGI  Capital's  best  interest  and the best  interest of PFGI
Capital's  stockholders  to  revoke  PFGI  Capital's  status  as a REIT.  The
Internal  Revenue Code  prohibits  PFGI Capital from electing REIT status for
the four taxable years following the year of such revocation.

Servicing

The loans underlying PFGI Capital's  participation  interests are serviced by
the Bank  pursuant to the terms of the  participation  agreement  between the
Bank and PFGI Capital.

Under the participation  agreement,  the Bank has the right in its discretion
to give consents, waivers and modifications of the loan documents to the same
extent as if the loans were wholly owned by the Bank; provided, however, that
the  Bank  may not do the  following  without  the  written  consent  of PFGI
Capital:
o  waive any payment default;
o  extend the maturity of the loans;

                                    -11-

                           PFGI CAPITAL CORPORATION

o  reduce the rate or rates of interest with respect to the loans;
o  forgive or reduce the principal sum of the loans;
o  increase the lending formula or advance rates; or
o  amend or modify the financial covenants contained in the loan documents in
   any way that would make such financial covenants less restrictive.

The Bank has the right to accept payment or prepayment of the whole principal
sum and accrued  interest in  accordance  with the terms of the loans,  waive
prepayment charges in accordance with the Bank's policy for loans in which no
participation  interest has been granted and accept  additional  security for
the loans. No specific term is specified in the participation  agreement. The
participation  agreement may be terminated by mutual agreement of the parties
at any time,  without penalty.  Due to the relationship  between the Bank and
PFGI  Capital,  PFGI  Capital  does not  anticipate  that  the  participation
agreement will be terminated by either party in the foreseeable future.

The  Bank,  in its role as  servicer  under  the  terms of the  participation
agreement,  receives a servicing  fee designed as a  reimbursement  for costs
incurred to service the  underlying  loans.  PFGI Capital will pay the Bank a
monthly  servicing fee equal to (i) 1/12 multiplied by (ii) .125%  multiplied
by the  average  daily  outstanding  principal  balance  of the loans of PFGI
Capital  during  each such  calendar  month.  Based on these  formulas,  PFGI
Capital paid the Bank servicing  compensation of $221,000 for the period from
June 12,  2002  (commencement  of  operations)  to  December  31,  2002.  The
participation  agreement  does not limit or cap the servicing fees payable to
the Bank.  Other than the  compensation  referred to in this  paragraph,  the
management  fee  referred to in  "Business:  Other  Management  Policies  and
Programs - Management",  PFGI Capital pays no other  compensation to the Bank
or its affiliates.  The Bank does, however,  receive certain non-compensation
benefits from its relationship with PFGI Capital.

The participation agreement requires the Bank to service the loans underlying
PFGI Capital's  participation  interests in a manner substantially similar to
work performed by the Bank for  transactions  on its own behalf.  The Bank or
its affiliates  collect and remit principal and interest  payments,  maintain
perfected  collateral  positions and submit and pursue insurance claims.  The
Bank and its  affiliates  also  provide  accounting  and  reporting  services
required by PFGI Capital for PFGI  Capital's  participation  interests.  PFGI
Capital also may direct the Bank to dispose of any mortgage loans at the time
the real  property  securing the mortgage  loan becomes  classified as a OREO
property,  the  mortgage  loan is in  default  or placed in a  non-performing
status,  or, when any other  development  occurs that  adversely  affects the
value of the mortgaged  property,  the borrower's  financial condition or its
ability  to  repay  the loan in  accordance  with its  terms,  including  any
renegotiation  of  loan  terms  due to  the  financial  deterioration  of the
borrower. The Bank is required to pay all expenses related to the performance
of its duties under the participation agreement, including any payment to its
affiliates for servicing the loans.  The Bank or its affiliates may institute
foreclosure proceedings at the direction of PFGI Capital,  exercise any power
of sale contained in any mortgage or deed of trust,  obtain a deed in lieu of
foreclosure or otherwise acquire title to a mortgaged  property  underlying a
mortgage loan by operation of law or otherwise in  accordance  with the terms
of the participation agreement.

Prior  to  foreclosure  of  any  commercial  mortgage  loan  underlying  PFGI
Capital's  participation  interests  acquired  by it  from  the  Bank  or its
affiliates,  PFGI Capital  currently intends to try to sell the participation

                                    -12-

                           PFGI CAPITAL CORPORATION

interest in the  underlying  commercial  mortgage loan back to the Bank.  The
Bank will then bear all expenses related to the foreclosure after that time.

Management

The  day-to-day  operations  of PFGI Capital will be managed  pursuant to the
terms of the  management  agreement  between the Bank and PFGI  Capital.  The
Bank,  in its role as manager  under the terms of the  management  agreement,
will receive a management fee designed as a reimbursement  for costs incurred
to manage PFGI Capital.  The Bank is required to pay all expenses  related to
the performance of its duties under the management  agreement,  including any
payment to its  affiliates  for managing PFGI Capital.  PFGI Capital will pay
the Bank a monthly  management fee equal to (i) 1/12  multiplied by (ii) .10%
multiplied by the average daily outstanding principal balance of the loans of
PFGI Capital during each such calendar month.  Based on these formulas,  PFGI
Capital paid the Bank management  compensation of approximately  $177,000 for
the period from June 12, 2002  (commencement  of  operations) to December 31.
2002.  No specific  term is specified in the  management  agreement,  and the
management  agreement may be terminated by mutual agreement of the parties at
any time, without penalty.  Due to the relationship between the Bank and PFGI
Capital,  PFGI Capital does not anticipate that the management agreement will
be terminated by either party in the foreseeable future.

Employees

PFGI Capital has four  executive  officers.  PFGI Capital does not anticipate
that PFGI Capital will require any  employees  because  employees of the Bank
and its  affiliates  are  servicing  the loans and  managing  the  day-to-day
operations and affairs of PFGI Capital under the participation and management
agreements. All of PFGI Capital's officers are also officers and/or employees
of  Provident  and/or the Bank.  PFGI Capital  intends to maintain  corporate
records and audited  financial  statements  that are  separate  from those of
Provident and the Bank.

Although there are no restrictions or limitations contained in PFGI Capital's
charter or bylaws,  PFGI  Capital  does not  anticipate  that PFGI  Capital's
officers or directors will have any direct or indirect  pecuniary interest in
any asset to be acquired or disposed of by PFGI Capital or in any transaction
in which PFGI  Capital has an interest or will engage in  acquiring,  holding
and managing  assets,  other than as borrowers or  guarantors  of  commercial
mortgage loans underlying PFGI Capital's  participation  interests,  in which
case such commercial mortgage loans would be on substantially the same terms,
including interest rates and collateral,  as those prevailing at the time for
comparable transaction with others and would not involve more than the normal
risk of collectibility or present other unfavorable features.

Competition

In order to qualify as a REIT under the Internal  Revenue Code,  PFGI Capital
cannot engage in the business of originating loans. PFGI Capital  anticipates
that it will  continue to possess  participation  interests  in mortgage  and
other  loans  in  addition  to  those  in  the  current  portfolio  and  that
substantially  all of these  loans will be owned by the Bank,  although  PFGI
Capital may purchase loans from unaffiliated third parties. Accordingly, PFGI
Capital does not expect to compete with mortgage conduit programs, investment
banking  firms,  savings  and  loan  associations,  banks,  thrift  and  loan
associations,  finance companies,  mortgage bankers or insurance companies in
acquiring loans.

                                    -13-

                           PFGI CAPITAL CORPORATION

Regulatory Matters

The Bank, an Ohio state-chartered  member bank of the Federal Reserve System,
and its subsidiaries,  including PFGI Capital, are subject to supervision and
examination by applicable  federal and state banking agencies,  including the
Federal  Reserve,  FDIC and the Ohio Division of Financial  Institutions.  In
addition to the impact of federal and state regulation,  the Bank is affected
significantly  by the actions of the Federal  Reserve Board as it attempts to
control the money supply and credit  availability  in order to influence  the
economy.

Overview of the Prides

PFGI Capital and Provident issued 6,600,000 units of PRIDES to the public for
$165,000,000.  The proceeds of this issuance were used to purchase commercial
mortgage  loan  participations  from the Bank.  Each PRIDES is comprised of a
unit consisting of:
(1) a forward purchase  contract  pursuant to which (a) the holder will agree
to purchase,  and Provident  will agree to sell, for $25, newly issued shares
of Provident common stock on August 17, 2005, the number or fraction of which
will be  determined  by the  settlement  rate  described  below,  based on an
average trading price of Provident  common stock for a period  preceding that
date; and (b) Provident will make unsecured contract  adjustment  payments to
the holder at a rate of 1.25% of the stated amount per year,  paid quarterly,
subject to Provident's right to defer these payments, and
(2) one share of PFGI  Capital  Series A preferred  stock with a  liquidation
preference   of  $25,  on  which  PFGI  Capital  will  pay   dividends  on  a
non-cumulative basis at the rate of 7.75%.

Each forward  purchase  contract  obligates  the holder to buy, on August 17,
2005, for $25.00,  a number of newly issued shares of Provident  common stock
equal to the  settlement  rate.  The  settlement  rate will be  calculated as
follows:

o  if the  applicable  market value of Provident  common stock is equal to or
   greater than $29.0598, the settlement rate will be .8603;

o  if the  applicable  market  value of  Provident  common  stock is  between
   $29.0598  and  $24.42,  the  settlement  rate will be equal to the  $25.00
   stated amount divided by the applicable market value; and

o  if the  applicable  market  value is less  than or equal  to  $24.42,  the
   settlement rate will be 1.0238.

"Applicable  market value" is defined as the average of the closing price per
share of  Provident  common stock on each of the twenty  consecutive  trading
days ending on the fifth trading day immediately preceding August 17, 2005.

Holders of PFGI Capital's  Series A preferred  stock are entitled to receive,
if, when,  and as  authorized  and declared by the board of directors  out of
legally available assets,  non-cumulative cash dividends at the rate of 7.75%
per annum of the  initial  liquidation  preference  which is $25.00 per share
($1.9375 per share).  Dividends on the  preferred  stock will be payable,  if
authorized and declared,  quarterly in arrears on February 17, May 17, August
17 and November 17 of each year, or if any such day is not a business day, on
the next  business  day. The  preferred  stock will rank senior to the common
stock of PFGI  Capital as to  dividend  rights and rights  upon  liquidation,
winding up or dissolution.

                                    -14-

                           PFGI CAPITAL CORPORATION

In connection  with the  settlement of the Purchase  Contract,  Provident has
engaged a remarketing  agent to remarket the PFGI Capital  preferred stock on
behalf  of the  holders,  at  which  time the PFGI  preferred  stock  will be
permanently  detached from the Purchase Contract.  Once the Purchase Contract
is settled,  there will be two separate and distinct securities  outstanding:
PFGI  Capital  preferred  stock and  Provident  common  stock.  The  proceeds
received from the remarketing  will be used by the holders of preferred stock
to fulfill their commitment under the terms of the Purchase Contract.

Upon a  successful  remarketing  of  shares of the PFGI  Capital's  preferred
stock,  the  applicable  dividend rate on the shares of preferred  stock that
have  been  purchased  in the  remarketing  will be reset to the  reset  rate
described  below. The dividend rate of shares of preferred stock that are not
remarketed will not be reset and will continue to be 7.75%.

The reset rate will be determined by the reset agent as the dividend rate the
preferred stock should bear for the preferred stock to have a market value on
the fifth business day immediately preceding August 17, 2005 of 100.5% of the
aggregate  liquidation  preference of the preferred stock,  plus declared and
unpaid dividends, if any.

Each share of PFGI Capital's preferred stock will be automatically  exchanged
for one  newly  issued  share  of Bank  Series  A  preferred  stock  upon the
occurrence of an exchange event. An exchange event occurs when:
o  the  Bank  becomes  less  than  "adequately   capitalized"   according  to
   regulations  established  by the  Federal  Reserve  Board  pursuant to the
   Federal Deposit Insurance  Corporation  Investment Act or as determined by
   the Ohio Division of Financial  Institutions  pursuant to the Ohio Banking
   Code and regulations thereunder;
o  the Bank is placed into conservatorship or receivership;
o  the Federal Reserve Board, in its sole discretion, or the Ohio Division of
   Financial Institutions,  in its sole discretion,  directs such exchange in
   writing,  and,  even  if  Provident  Bank  is not  less  than  "adequately
   capitalized,"  the Federal Reserve Board or the Ohio Division of Financial
   Institutions,  as the case may be, anticipates the Bank becoming less than
   "adequately capitalized" in the near term; or
o  the Federal Reserve Board, in its sole discretion, or the Ohio Division of
   Financial Institutions,  in its sole discretion,  directs such exchange in
   writing in the event that the Bank has a Tier 1 risk-based  capital  ratio
   of less than 5.0%.

RISK FACTORS

CHANGE IN THE PRICE OF PROVIDENT COMMON STOCK.

The market value of the shares of Provident common stock that the holder will
receive on settlement of a forward  purchase  contract on August 17, 2005 may
be materially different from the effective price per share paid by the holder
on  settlement  as a result of a variety of factors.  If the average  trading
price of Provident  common stock on the  settlement  date is less than $24.42
per share, the holder will, on settlement,  be required to purchase shares of
common stock at a loss.  Accordingly,  a holder of PRIDES  assumes the entire
risk that the market value of Provident common stock may decline.

The aggregate  market value of the shares of Provident  common stock that the
holder will receive upon settlement of a forward purchase contract  generally
will exceed the stated  amount of $25 only if the average  closing  price per

                                    -15-

                           PFGI CAPITAL CORPORATION

share of Provident  common  stock over the  20-trading  day period  preceding
settlement equals or exceeds $29.0598,  which is referred to as the threshold
appreciation  price. If the average  closing price exceeds  $24.42,  which is
referred  to  as  the  reference   price,   but  falls  below  the  threshold
appreciation  price,  the  holder  will  realize  no equity  appreciation  on
Provident  common  stock for the  period  during  which the  holder  owns the
forward purchase  contract.  Furthermore,  if the applicable  average closing
price exceeds the threshold  appreciation  price, the value of the shares the
holder will receive under the forward purchase contract will be approximately
84% of the value of the shares the holder could have purchased with $25.

U.S. FEDERAL INCOME TAX LAWS AND CONSEQUENCES

No statutory,  judicial or administrative  authority  directly  addresses the
treatment  of PRIDES or  instruments  similar  to PRIDES  for  United  States
federal  income tax purposes.  As a result,  the United States federal income
tax  consequences  of the purchase,  ownership and  disposition of the PRIDES
(including  the timing and the character of a holder's  gain,  income or loss
with respect to the PRIDES) are unclear.

No assurance can be given that PFGI Capital will be able to operate in such a
manner so as to remain  qualified as a REIT for United States  federal income
tax  purposes.  Qualification  as a REIT involves the  application  of highly
technical  and complex tax law  provisions  for which there are only  limited
judicial or administrative  interpretations  and involves the satisfaction of
various factual  requirements not entirely within PFGI Capital's control.  No
assurance  can be given  that new  legislation,  regulations,  administrative
interpretations,  or court  decisions will not  significantly  change the tax
laws with  respect  to  qualification  as a REIT or the  federal  income  tax
consequences  of  such  qualification  in a way  that  would  materially  and
adversely affect PFGI Capital's ability to operate. Any such new legislation,
regulation,  interpretation,  or  decision  could be the basis of a Tax Event
that would,  with the prior written approval of the Federal Reserve Board and
the Ohio  Division of Financial  Institutions,  permit PFGI Capital to redeem
PFGI Capital Series A preferred stock.

If PFGI  Capital  were to fail to qualify as a REIT,  the  dividends  on PFGI
Capital's stock,  including PFGI Capital Series A preferred stock,  would not
be  deductible  by PFGI  Capital for  federal  income tax  purposes  and PFGI
Capital  would be  subject  to  federal  income  tax in the same  manner as a
regular,  domestic  corporation.  Thus PFGI  Capital (or, in the likely event
that  PFGI  Capital  also  became  part of the  consolidated  group  of which
Provident is the parent, such consolidated group) likely would face a greater
tax liability and the amount of income  available for distribution to holders
of PFGI Capital Series A preferred stock would be reduced.

If in any taxable year PFGI Capital  fails to qualify as a REIT,  unless PFGI
Capital is  entitled  to relief  under  certain  statutory  provisions,  PFGI
Capital  would also be  disqualified  from  treatment  as a REIT for the four
taxable years following the year PFGI Capital's qualification was lost.

To qualify as a REIT, PFGI Capital will,  broadly speaking,  be required each
year to distribute as dividends to PFGI Capital's  stockholders  at least 90%
of PFGI Capital's taxable income,  excluding capital gains. Failure to comply
with this  requirement  would result in PFGI Capital  being subject to tax at
regular  corporate  rates. In addition,  PFGI Capital will be subject to a 4%
nondeductible  excise  tax on  the  amount  by  which  certain  distributions

                                    -16-

                           PFGI CAPITAL CORPORATION

considered as paid by PFGI Capital with respect to any calendar year are less
than the sum of:
o  85% of PFGI Capital's ordinary income for the calendar year,
o  95% of PFGI Capital's capital gains net income for the calendar year, and
o  100% of undistributed taxable income from prior periods.

Although PFGI Capital  currently  intends to operate in a manner  designed to
qualify  it  as  a  REIT,  future  economic,  market,  legal,  tax  or  other
considerations  may cause PFGI  Capital to  determine  that it is in its best
interests and the best  interests of holders of PFGI  Capital's  common stock
and preferred stock to revoke the REIT election.  Any such  determination  by
PFGI Capital may be made  without  stockholder  approval  but, as long as any
share of REIT  Series A preferred  stock are  outstanding,  will  require the
approval of a majority of PFGI Capital's independent directors.

POTENTIAL DIVIDEND RESTRICTIONS BY BANK REGULATORS

Because  PFGI  Capital  is  a  direct  subsidiary  of  the  Bank,  regulatory
authorities  will have the right to examine PFGI  Capital and PFGI  Capital's
activities and, under certain  circumstances,  to impose  restrictions on the
Bank or PFGI Capital.  Such restrictions  could impact PFGI Capital's ability
to  conduct  business  pursuant  to PFGI  Capital's  business  plan and could
adversely   affect  PFGI  Capital's   financial   condition  and  results  of
operations.

If the Federal  Reserve Board or the Ohio Division of Financial  Institutions
determines  that the  Bank's  relationship  with PFGI  Capital  results in an
unsafe and unsound banking practice, the Bank's regulators have the authority
to:
o  restrict PFGI Capital's ability to transfer assets;
o  restrict PFGI Capital's ability to make distributions to its stockholders,
   including  dividends  to  holders  of  shares  of PFGI  Capital  Series  A
   preferred stock;
o  restrict PFGI Capital's ability to redeem its preferred stock; or
o  require the Bank to sever its relationship with PFGI Capital or divest its
   ownership of PFGI Capital.

Some of these  actions by the Federal  Reserve  Board or the Ohio Division of
Financial  Institutions  would likely  result in a failure of PFGI Capital to
qualify as a REIT.

Payment of dividends of PFGI Capital'  Series A preferred stock could also be
subject  to   regulatory   limitations   if  the  Bank   becomes   less  than
"well-capitalized"  for purposes of regulations issued by the Federal Reserve
Board.  Under  these   regulations,   the  Bank  will  be  deemed  less  than
"well-capitalized"  if it has a total  risk-based  capital ratio of less than
10.0%;  a Tier 1 risk-based  capital ratio of less than 6.0%;  and a leverage
ratio of less than 5.0%.  At December 31, 2002,  the Bank's total  risk-based
capital ratio was 11.36%,  its Tier 1 risk-based  capital ratio was 8.19% and
its leverage ratio was 6.77%.  While the Bank intends to maintain its capital
ratios in excess of the  "well-capitalized"  levels under these  regulations,
there can be no  assurance  that the Bank will be able to do so. The exercise
of the Federal  Reserve  Board's power to restrict  dividends on PFGI Capital
Series A preferred stock would,  however, also have the effect of restricting
the payment of  dividends on PFGI  Capital's  common stock and all series and
classes of preferred  stock. The inability to pay dividends on PFGI Capital's
common  stock  would   prevent  PFGI  Capital  from  meeting  the   statutory

                                    -17-

                           PFGI CAPITAL CORPORATION

requirement in effect for a REIT to distribute 90% of its taxable income and,
therefore,  would cause PFGI Capital to fail to qualify for the favorable tax
treatment accorded to REITs.

If PFGI  Capital had to be treated for tax purposes in the same manner as the
other  consolidated  subsidiaries  of the Bank,  rather than as a REIT,  PFGI
Capital's loss of tax benefits would be directly and immediately felt by PFGI
Capital's stockholders.

Provident  has  restated  its  operating  results  for  prior  periods.   The
restatement  was a result  of  unintentional  errors  in the  accounting  for
certain leases.  The results of the restatement are reflected for all periods
reported upon in Provident's Form 10-K for the year ended December 31, 2002.

Legal and  regulatory  limitations  on the payment of  dividends  by the Bank
could also affect PFGI  Capital's  ability to pay  dividends to  unaffiliated
third  parties,  including  the  holders of shares of PFGI  Capital  Series A
preferred  stock.  Regulatory  approval  is  required  prior  to  the  Bank's
declaration of any dividends in excess of available  retained  earnings.  The
amount of  dividends  that may be  declared  without  regulatory  approval is
further  limited to the sum of net income for the current  year and  retained
net income  for the  preceding  two years,  less any  required  transfers  to
surplus or common stock.  At December 31, 2002,  the Bank could without prior
regulatory  approval  and  absent  contrary   supervisory   guidance  declare
dividends in 2003 of  approximately  $30.2 million plus an additional  amount
equal to its net income through the date of  declaration in 2003.  Since PFGI
Capital is a member of the Bank's consolidated  group,  payment of common and
preferred  dividends by the Bank and/or any member of its consolidated  group
to unaffiliated third parties,  including PFGI Capital's payment of dividends
to the  holders of shares of PFGI  Capital  Series A preferred  stock,  would
require  regulatory  approval if aggregate  dividends on a consolidated basis
exceed these limitations.

CONFLICT OF INTERESTS

PFGI  Capital  has no  employees.  The Bank  performs  all of PFGI  Capital's
business operations. All of PFGI Capital's officers and six of PFGI Capital's
directors are also  officers of the Bank or its  affiliates.  PFGI  Capital's
common  officers  with the Bank devote less than 5% of their time to managing
PFGI Capital's  business.  Three directors are independent  directors who are
not  employed by or  otherwise  affiliated  with PFGI  Capital,  nor are they
officers,  directors or other  affiliates of Provident or the Bank.  The Bank
controls 90% of the voting power of PFGI Capital's  outstanding  shares. As a
result,  the Bank has the  right to elect  all of PFGI  Capital's  directors,
including PFGI Capital's independent directors, except for the two additional
independent  directors to be elected by the holders of PFGI Capital  Series A
preferred stock if PFGI Capital fails to pay dividends on PFGI Capital Series
A preferred stock for at least six consecutive dividend periods. The Bank and
its  affiliates  have interests that are not identical to PFGI Capital's and,
therefore,  conflicts  of  interest  may arise with  respect to  transactions
between or among Provident, the Bank and PFGI Capital.

PFGI  Capital is  dependent  on the  diligence  and skill of the officers and
employees  of the  Bank  for  the  selection  and  structuring  of the  loans
underlying  PFGI Capital's  participation  interests and PFGI Capital's other
authorized  investments.  The Bank will select the amount, type, and price of
loan participation  interests and other assets that PFGI Capital will acquire
from the Bank.  Although  these  purchases  are made  within  the  investment

                                    -18-

                           PFGI CAPITAL CORPORATION

policies of PFGI Capital,  which are described under the caption  "Business -
Other  Management  Policies and Programs - Asset  Acquisition and Disposition
Policies,"  neither PFGI  Capital nor the Bank has  obtained any  third-party
valuations,  nor does PFGI  Capital  intend to do so in the future.  Although
PFGI  Capital  has adopted  certain  policies  to guide the  acquisition  and
disposition  of assets,  these  policies may be revised or exceptions  may be
approved  from  time to time at the  discretion  of the  board  of  directors
without a vote of PFGI Capital's stockholders.  Changes in or exceptions made
to these policies could permit PFGI Capital to acquire lower quality assets.

The Bank may seek to exercise its influence over PFGI Capital's affairs so as
to cause the sale of PFGI  Capital's  assets and their  replacement by lesser
quality assets  purchased from the Bank or its affiliates or elsewhere.  This
could adversely affect PFGI Capital's  business and PFGI Capital's ability to
pay dividends on PFGI Capital Series A preferred stock.

CHANGES IN INTEREST RATES AND COLLATERAL VALUES

A substantial  portion of PFGI Capital's income consists of interest payments
on the commercial  mortgage  loans  underlying  PFGI Capital's  participation
interests.  At  December  31,  2002,  89% of the  commercial  mortgage  loans
underlying  PFGI  Capital's  participation  interests,  as  measured  by  the
aggregate  outstanding  principal amount,  bore interest at adjustable rates,
and the  remainder  bore  interest  at fixed  rates.  Adjustable  rate  loans
decrease the risks to a lender  associated with changes in interest rates but
involve  other  risks.  As interest  rates rise,  the payment by the borrower
rises to the extent  permitted  by the terms of the loan,  and the  increased
interest  obligation  increases the potential for default.  At the same time,
the  marketability  of the underlying  property may be adversely  affected by
higher interest rates. In a declining interest rate environment, there may be
an  increase  in   prepayments  on  the  loans   underlying   PFGI  Capital's
participation  interests as the borrowers  refinance their mortgages at lower
interest  rates.  Under these  circumstances,  PFGI  Capital may find it more
difficult to purchase  additional  participation  interests in mortgage loans
bearing  interest at rates sufficient to support the payment of the dividends
on PFGI Capital Series A preferred stock. Because the rate at which dividends
are  required to be paid on PFGI Capital  Series A preferred  stock is fixed,
there can be no assurance that a declining  interest rate  environment  would
not  adversely  affect PFGI  Capital's  ability to pay full, or even partial,
dividends on PFGI Capital Series A preferred stock.

At  December  31,  2002,  88% of the  properties  underlying  the  commercial
mortgage loan  participation  interests of PFGI Capital were located in Ohio,
Florida  and  Kentucky.  Because  of  the  concentration  of  PFGI  Capital's
interests in those  states,  in the event of adverse  economic,  political or
business  conditions or natural  hazards in those states,  PFGI Capital would
likely  experience  higher rates of loss and  delinquency  on PFGI  Capital's
mortgage loan participation  interests than if the underlying loans were more
geographically diversified.

As measured by aggregate  outstanding  principal  amount,  100% of the assets
acquired  from the Bank  consisted of  participation  interests in commercial
mortgage  loans.  Commercial  mortgage  loans  generally tend to have shorter
maturities than residential  mortgage loans and may not be fully  amortizing,
meaning  that they may have a  significant  principal  balance  or  "balloon"
payment due on maturity.  Commercial real estate properties tend to be unique
and are more difficult to value than  single-fami1y  residential  real estate
properties.  They are also subject to relatively greater  environmental risks

                                    -19-

                           PFGI CAPITAL CORPORATION

and to the corresponding  burdens and costs of compliance with  environmental
laws and regulations.  Due to these risks, PFGI Capital may experience higher
rates of default on PFGI  Capital's  participation  interests  in  commercial
mortgage  loans  than  PFGI  Capital  would if PFGI  Capital's  participation
interests were more  diversified  and included a greater number of underlying
residential and other loans.

In its capacity as servicer,  the Bank, at the direction of PFGI Capital, may
be forced to foreclose on an  underlying  commercial  mortgage loan where the
borrower  has  defaulted  on its  obligation  to  repay  the  loan.  The Bank
classifies  this type of foreclosed  property as Other Real Estate Owned,  or
OREO  property.  It is possible that the Bank and PFGI Capital may be subject
to  environmental  liabilities,  particularly  on  industrial  and  warehouse
properties,  which are generally subject to relatively greater  environmental
risks  than  non-commercial  properties.  In  addition,  the Bank may find it
difficult  or  impossible  to sell  the  property  prior to or  following  an
environmental cleanup.  Furthermore,  in certain circumstances,  the Bank, in
its  capacity as  servicer,  or PFGI  Capital may decide not to  foreclose on
property as a result of  environmental  conditions.  Even though PFGI Capital
intends to sell to the Bank PFGI Capital's participation interest in any loan
prior to  foreclosure,  the  discovery  of these  types of  liabilities,  any
associated   costs  for   remediation   of  hazardous   substances,   wastes,
contaminants,  or pollutants,  and difficulty in selling the underlying  real
estate or a decision not to foreclose on the  underlying  loan,  could have a
material adverse effect on the fair value of that loan and,  therefore,  PFGI
Capital may not recover any or all of its investment in the underlying loan.

Generally, neither PFGI Capital nor the Bank obtains credit enhancements such
as borrower bankruptcy  insurance or obtains special hazard insurance for the
loans underlying PFGI Capital's participation interests,  other than standard
hazard  insurance  typically  required by Provident Bank,  which will in each
case only relate to individual loans.

PFGI Capital is not required to limit its  investments to assets of the types
presently in PFGI Capital's  portfolio.  Assets such as non-mortgage  related
securities,  equipment  loans or real estate may involve  different risks not
described in this  report.  PFGI Capital is not required to, and there can be
no assurance  that PFGI Capital will,  maintain the levels or asset  coverage
that currently exist relative to the amount of PFGI Capital's preferred stock
and obligations senior to it.

ITEM 2. PROPERTIES
------------------

None

ITEM 3. LEGAL PROCEEDINGS
-------------------------

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

None in the fourth quarter

                                    -20-

                           PFGI CAPITAL CORPORATION

                                   ITEM II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-----------------------------------------------------------------------------

There is no public trading market for PFGI Capital's common stock as the Bank
owns all of the  5,940,000  shares of its  outstanding  common  stock.  As an
alternative to  distributing a common  dividend in cash, PFGI Capital has the
option of  distributing  to the Bank, a dividend using a procedure known as a
"consent  dividend",  as  authorized  by Section 565 of the Internal  Revenue
Code. A consent dividend procedure is where a shareholder, on the last day of
a REIT's tax year,  agrees to treat as a dividend the amount that the REIT so
designates,  without any distribution of cash or property actually occurring.
The effect of the  consent  dividend is that the REIT is  considered  to have
paid a  dividend  on the last day of its tax  year,  and the  shareholder  is
treated as having  received that amount and  contributed it back to the REIT.
PFGI Capital,  as a REIT,  receives a deduction for dividends paid,  reducing
its  taxable  income by the amount of the consent  dividend,  but without the
need to have cash available to distribute.  For the year ending  December 31,
2002,  PFGI  Capital  and the Bank have  agreed to use the  consent  dividend
procedure. As a result, PFGI Capital will have additional funds available for
investment  purposes and/or for  distribution  to its preferred  shareholders
than if PFGI Capital had paid a cash dividend to the common shareholder.

PFGI  Capital has  6,600,000  shares of Series A Preferred  Stock  issued and
outstanding.  The  proceeds  of this  issuance  were used by PFGI  Capital to
purchase  commercial mortgage loan participations from the Bank. One share of
Series A  Preferred  Stock is  included  within each PRIDES and is not traded
separately  from the  PRIDES.  For more  information  regarding  the Series A
Preferred  Stock and the Prides,  see the section  entitled  "Overview of the
Prides"  included in ITEM 1. During 2002,  PFGI Capital paid dividends on the
Series A Preferred Stock of $5,541,000 and Provident paid contract adjustment
payments of $894,000.  On February 18, 2003,  dividends of  $3,197,000  and a
contract  adjustment  payment of $516,000 were paid on the Series A Preferred
Stock.  A  discussion  of  limitations  and  restrictions  on the  payment of
dividends by PFGI Capital is contained under ITEM 1 "Business - Risk Factors"
and Note 8 included in "Notes to Financial Statements."

The PRIDES are traded on the New York Stock  Exchange  under the symbol  "PCE
PrI". The following table sets forth,  for the periods  indicated,  the high,
low and period end  closing  sales  prices as  reported on the New York Stock
Exchange.

                                                        2002
                                       --------------------------------------
                                        Fourth     Third       From June 12
                                       Quarter    Quarter    to June 30, 2002
-----------------------------------------------------------------------------
High Close                             $ 27.70    $ 29.40        $ 28.25
Low Close                                23.05      24.55          25.00
Period End Close                         26.30      25.65          28.25

At March 14, 2003, there were 558 holders of record of the PRIDES.

A discussion of limitations  and  restrictions on the payment of dividends is
provided in ITEM 1. "Business: Risk Factors" and Note 8 included in "Notes to
Financial Statements."

                                    -21-

                           PFGI CAPITAL CORPORATION

ITEM 6. SELECTED FINANCIAL DATA

The information  presented below represents  selected financial data relative
to  PFGI  Capital  for  the  period  from  June  12,  2002  (commencement  of
operations)  to December  31, 2002 and as of  December  31, 2002  (dollars in
thousands except per share data).

Statement of Income:
  Interest Income                                                    $ 10,065
  Noninterest Expense                                                     448
  Net Income Before Preferred Dividends                                 9,617
  Net Income Available to Common Shares                                 4,076
  Net Income Per Common Share                                            0.69
  Preferred Stock Cash Dividends Paid                                   5,541
  Common Stock Cash Dividends Paid                                          -
  Average Yield on Earning Assets                                        5.51%

Balance Sheet:
  Commercial Mortgage Loan Participation Interests,
   Net of Reserve for Loan Participation Losses                      $321,755
  All Other Assets                                                      6,760
  Total Assets                                                        328,515
  Series A Preferred Stock                                            165,000
  Common Stock and Other Equity Items                                 163,515

                                    -22-

                           PFGI CAPITAL CORPORATION
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND
-----------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

INTRODUCTION

PFGI Capital's  principal business objective is to acquire,  hold, and manage
mortgage  assets and other  authorized  investments  that will  generate  net
income for distribution to its  shareholders.  Since operations  commenced in
June 2002,  PFGI Capital has been  operating as a REIT for federal income tax
purposes.

PFGI Capital is a subsidiary of the Bank, which is owned by Provident. All of
PFGI  Capital's  day-to-day   activities  and  the  servicing  of  the  loans
underlying its participation interests are administered by the Bank.

The  participation  agreement  between the Bank and PFGI Capital requires the
Bank to service PFGI Capital's loan portfolio in a manner  substantially  the
same as for similar work  performed by the Bank for  transactions  on its own
behalf.  The Bank  collects  and remits  principal  and  interests  payments,
maintains perfected collateral  positions,  and submits and pursues insurance
claims.  The Bank also  provides to PFGI  Capital  accounting  and  reporting
services as required. The Bank is required to pay all expenses related to the
performance of its duties under the participation agreement.

SUMMARY

PFGI  Capital  began its  operations  on June 12, 2002.  PFGI Capital  issued
5,940,000  shares of Common Stock to the Bank in exchange for $165,000,000 of
commercial mortgage loan participations. As part of the PRIDES issuance, PFGI
Capital  also  issued  6,600,000  shares of Series A  Preferred  Stock to the
public for  $165,000,000.  Such  proceeds were used to purchase an additional
$165,000,000  of outstanding  principal  balance of commercial  mortgage loan
participations  from the Bank.  Management views its financial  condition and
results of operations as one operating segment.

PFGI  Capital  reported  net  income  available  to  common  shareholders  of
$4,076,000,  or $.69 earnings per common share,  for the period from June 12,
2002  (commencement  of operations)  to December 31, 2002.  Cash dividends of
$5,541,000,  or  $.8396  per  share,  were  paid to the  Series  A  Preferred
shareholders  during this time  period.  No cash  dividends  were paid to the
common shareholders during 2002.

At December 31, 2002,  PFGI Capital had total assets of  $328,515,000.  These
assets  were   primarily   comprised   of  net   commercial   mortgage   loan
participations  totaling  $321,755,000.  These loan  participations  were all
acquired  from the Bank.  Equity  for PFGI  Capital  was  $328,515,000  as of
December 31, 2002.  Equity  consisted  of  $330,000,000  from the issuance of
Common and Preferred  Stock,  net income of $9,617,000,  net of $5,541,000 of
dividends  paid to  preferred  shareholders  and  $5,561,000  for the cost of
issuing the Preferred Stock.

                                    -23-

                           PFGI CAPITAL CORPORATION
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Interest Income

PFGI Capital's primary source of revenue is interest income on its commercial
mortgage  loan  participations.  A  secondary  source of  interest  income is
interest  earned on a deposit  account held at the Bank.  PFGI Capital has no
interest-bearing  liabilities and no related interest expense. Total interest
income was  $10,065,000  for the period from June 12 to December 31, 2002 and
its average yield on total earnings assets was 5.51%.

The following table provides an average balance sheet, along with its related
interest  income and average rate earned for earning  assets,  for the period
from June 12 to December 31, 2002.

                                                   Average     Interest  Average
(Dollars in Thousands)                             Balance      Earned     Rate
-------------------------------------------------------------------------------
ASSETS:
  Interest Earning Assets:
    Commercial Mortgage Loan Participations      $ 317,668    $   9,967    5.64%
    Deposit Account at Provident Bank               11,045           98    1.60%
                                                   -------    ---------    ----
  Total Interest Earning Assets                    328,713    $  10,065    5.51%
                                                              =========    ====
  Reserve for Loan Participation Losses             (3,130)
  Other Noninterest Earning Assets                   1,760
                                                 ---------
    Total Assets                                 $ 327,343
                                                 =========

LIABILITIES AND SHAREHOLDERS' EQUITY:
  Noninterest Bearing Liabilities                $     760
  Shareholders' Equity                             326,583
                                                 ---------
    Total Liabilities and Shareholders' Equity   $ 327,343
                                                 =========

Provision For Loan Participation Losses

The  provision  for loan  participation  losses  is the  charge  to  earnings
necessary to maintain the  allowance  for loan losses at a level  adequate to
absorb management's estimate of inherent losses in the loan portfolio.  There
was no provision for loan  participation  losses from June 12 to December 31,
2002 as all loan  participations  were  transferred  with a reserve and there
were no charge-offs.

Noninterest Income and Expense

PFGI Capital did not record any  noninterest  income from June 12 to December
31, 2002.  Noninterest  expense of $448,000 was  recognized  during this time
period.  Noninterest  expense was comprised primarily of compensation paid to
the Bank for loan  servicing and management  fees which totaled  $221,000 and
$177,000,  respectively. On an annual basis, loan servicing fees are assessed
at a rate of .125% of the average daily outstanding  principal balance of the
loan participations and management fees are assessed at a rate of .10% of the
average daily outstanding balance of loan participations.

                                     -24-

                           PFGI CAPITAL CORPORATION
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

Income Taxes

PFGI  Capital  has  elected to be treated  as a REIT for  federal  income tax
purposes and intends to maintain  compliance  with the provisions of the Code
and therefore is not subject to income taxes.

FINANCIAL CONDITION

Commercial Mortgage Loan Participations

As of December 31, 2002, PFGI Capital had $321,755,000 of commercial mortgage
loan  participations,  net  of  reserves.  The  participation  portfolio  was
acquired  from the Bank.  In order to qualify as a REIT, at least 75% of PFGI
Capital's assets must consist of real estate assets.

The following table shows the geographic distribution of the loans underlying
the commercial mortgage loan participations as of December 31, 2002:

                                               Aggregate          Percentage
                                               Principal         by Aggregate
                                Number           Balance            Principal
  State                        of Loans       (In Thousands)         Balance
----------------------------------------------------------------------------
Ohio                               156          $ 258,582             79.56%
Florida                             12             17,375              5.35
Kentucky                             9              9,672              2.98
All Others                          16             39,376             12.11
                                   ---          ---------            ------
  Total                            193          $ 325,005            100.00%
                                   ===          =========            ======

The following  table shows the  composition of the  commercial  mortgage loan
participations by property type at December 31, 2002:

                                                    Aggregate       Percentage
                                                    Principal      by Aggregate
                                      Number         Balance         Principal
  Property Type                      of Loans    (In Thousands)      Balance
-------------------------------------------------------------------------------
Shopping / Retail                        42           $ 98,572          30.33%
Office / Warehouse                       53             67,014          20.62
Hotel / Motel                             9             44,268          13.62
Apartments                               33             37,959          11.68
Residential Development                  17             18,416           5.67
Healthcare Facilities                     2              7,275           2.24
Auto Sales and Service Related            4              2,277           0.70
Churches                                  7              1,936           0.60
Other Commercial Properties              26             47,288          14.54
                                        ---          ---------         ------
  Total                                 193          $ 325,005         100.00%
                                        ===          =========         ======

                                     -25-

                           PFGI CAPITAL CORPORATION
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

Some of the loans underlying the commercial mortgage loan participations bear
interest at fixed rates,  and some bear interest at adjustable rates based on
indices such as LIBOR and the prime rate. The following tables show data with
respect to interest rates of the loans  underlying  the  commercial  mortgage
loan participations at December 31, 2002:

                             Fixed Rate                         Adjustable Rate
                  -----------------------------------   -------------------------------------
                             Aggregate    Percentage                Aggregate     Percentage
                  Number     Principal   by Aggregate   Number      Principal    by Aggregate
                    of        Balance      Principal      of         Balance       Principal
Interest Rate     Loans   (In Thousands)    Balance      Loans   (In Thousands)     Balance
---------------------------------------------------------------------------------------------
Under 5.00%           1      $  1,141         3.28%         75      $193,996         66.85%
5.00% to 5.99%        2         7,054        20.25          20        12,111          4.17
6.00% to 6.99%        2           826         2.37          25        30,721         10.59
7.00% to 7.99%        6         9,440        27.10          34        25,086          8.65
8.00% to 8.99%        5        16,369        47.00          23        28,261          9.74
                     --      --------       ------         ---      --------        ------
                     16      $ 34,830       100.00%        177      $290,175        100.00%
                     ==      ========       ======         ===      ========        ======

                                      Aggregate        Percentage     Weighted
                          Number      Principal       by Aggregate     Average
                            of         Balance         Principal      Interest
Interest Type             Loans     (In Thousands)      Balance         Rate
----------------------------------------------------------------------------
Fixed Rate Loans             16       $  34,830           10.72%         7.23%
Adjustable Rate Loans       177         290,175           89.28          5.11
                            ---       ---------          ------          ----
  Total                     193       $ 325,005          100.00%         5.34%
                            ===       =========          ======          ====

Other Assets

As of December 31, 2002,  PFGI Capital had cash of  $5,357,000 in an interest
bearing deposit account at the Bank. As of year-end, the account was yielding
a rate of 1.25%.

Additionally,  PFGI Capital had interest  receivable of $1,107,000,  accounts
receivable of $279,000 and prepaid expenses of $17,000.

INTEREST RATE RISK MANAGEMENT

PFGI Capital's income consists  primarily of interest income on participation
interests in commercial  mortgage loans.  PFGI Capital does not intend to use
any  derivative  products  to manage its  interest  rate risk.  If there is a
decline in market interest rates,  PFGI Capital may experience a reduction in
interest income on its participation  interests and a corresponding  decrease
in funds  available  to be  distributed  to  shareholders.  The  reduction in
interest  income may result from  downward  adjustments  of the indices  upon
which the  interest  rates on loans are based and from  prepayments  of loans
with fixed  interest  rates,  resulting  in  reinvestment  of the proceeds in
lower-yielding  participation interests. Further information regarding market
risk can be found under "Item 7A.  Quantitative  and Qualitative  Disclosures
About Market Risk" of this report.

                                     -26-

                           PFGI CAPITAL CORPORATION
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

The objective of maintaining  liquidity  within PFGI Capital is to ensure the
availability of sufficient cash flows to meet all of PFGI Capital's financial
and dividend  commitments.  In managing  liquidity,  PFGI Capital  takes into
account various legal limitations placed on a REIT.

PFGI  Capital's   principal   liquidity   needs  are  to  maintain  the  loan
participation portfolio size through the acquisition of additional commercial
mortgages as loans currently in the portfolio mature,  or prepay,  and to pay
dividends to the holders of Preferred Stock and Common Stock. The acquisition
of  additional  commercial  mortgage  loan  participations  is intended to be
funded with the proceeds obtained from the repayment of principal balances by
individual  borrowers.  PFGI Capital does not anticipate any material capital
expenditures.

Holders  of PFGI  Capital's  Preferred  Stock are  entitled  to  receive,  if
authorized and declared by the board of directors,  non-cumulative  dividends
at the rate of 7.75% per annum, or $1.9375 per share. As 6,600,000  shares of
Preferred Stock is outstanding, cash dividends of $12,788,000 are expected to
be paid during 2003.

As an alternative to distributing a common dividend in cash, PFGI Capital has
the option of distributing to the Bank, a dividend using a procedure known as
a "consent  dividend",  as authorized by Section 565 of the Internal  Revenue
Code. For information  regarding the consent dividend procedure,  see ITEM 5.
For the year ending  December 31, 2002, PFGI Capital and the Bank have agreed
to use the consent dividend  procedure.  As a result,  PFGI Capital will have
additional funds available for investment purposes and/or for distribution to
its preferred  shareholders  than if PFGI Capital had paid a cash dividend to
the common shareholder.

A discussion of limitations  and  restrictions on the payment of dividends is
provided in ITEM 1. "Business: Risk Factors" and Note 8 included in "Notes to
Financial Statements."

CRITICAL ACCOUNTING POLICIES

Note 1 to the "Notes to Financial  Statements" lists  significant  accounting
policies  used  in  the  development   and   presentation  of  its  financial
statements.  However,  the "Reserve for Loan Participation  Losses" policy is
considered to be critical due to the level of sensitivity and subjectivity of
its underlying accounting estimates.

PFGI  Capital's  exposure  to  credit  risk  is  managed  through  its use of
consistent  underwriting  standards that emphasize  "in-market" lending while
avoiding  excessive property type and business activity  concentrations.  The
Bank's credit  administration  function  employs  extensive  risk  management
techniques to ensure that loans adhere to corporate  policy and problem loans
are promptly identified. These procedures provide executive management of the
Bank and PFGI Capital  with the  information  necessary  to implement  policy
adjustments  where  necessary,  and take  corrective  actions on a  proactive
basis.  These procedures also include  evaluating the adequacy of the reserve

                                     -27-

                           PFGI CAPITAL CORPORATION
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

for loan participation losses, which includes an analysis of specific credits
and the application of relevant reserve factors that represent relative risk,
based  on  portfolio  trends,  current  and  historic  loss  experience,  and
prevailing economic conditions, to specific portfolio segments.

Concentration  of credit risk generally  arises with respect to participation
interests  when a number  of  underlying  loans  have  borrowers  in the same
geographical  region or with similar property types.  Concentration of credit
risk may increase the relative  sensitivity  of  performance to both positive
and negative  developments  affecting a particular  region or property  type.
PFGI Capital's balance sheet exposure to geographic  concentrations  directly
affects  the credit risk of the  underlying  loans  within the  participation
interests.  Approximately  88%  of the  loans  underlying  the  participation
interests  are  located in Ohio,  Florida  and  Kentucky.  Consequently,  the
portfolio  may  experience  a higher  default  rate in the  event of  adverse
economic,  political,  or business  developments  or natural hazards in these
states and may affect the ability of borrowers to make  payments of principal
and  interest on the  underlying  loans.  "Shopping  / Retail"  and  "Office"
property  types  represent  approximately  30%  and  21%  of the  total  loan
participation  balance,  respectively.  As a result,  the  portfolio may also
experience  a  higher   default  rate  in  the  event  of  adverse   business
developments  related to these property types.  Borrowers  obligated in loans
underlying PFGI Capital's participation interests,  however, do not represent
a particular concentration of similar business activity.

The following table shows a progression of the reserve for loan participation
losses from June 12, 2002  (commencement  of operations) to December 31, 2002
(in thousands):

Balance at Beginning of Period                                      $       -
Transferred Reserves, Net                                               3,250
Provision for Loan Losses                                                   -
Loans Charged Off                                                           -
Recoveries                                                                  -
                                                                    ---------
  Balance at End of Period                                          $   3,250
                                                                    =========
Net Charge-Offs to Average Commercial
 Mortgage Loan Participations                                            0.00%
                                                                         ====
Reserve for Loan Participation Losses to
 Commercial Mortgage Loan Participations                                 1.00%
                                                                         ====

Non-performing assets consist of underlying loans that are no longer accruing
interest and property acquired through foreclosure. Commercial mortgage loans
are placed on non-accrual  status and stop accruing  interest when collection
of principal or interest is in doubt or generally when the  underlying  loans
are 90 days past due. When interest accruals are suspended,  accrued interest
income is reversed  with prior period  accruals  charged to  earnings.  As of
December 31, 2002, no loans had been placed on non-accrual status nor had any
property   been  acquired   through   foreclosure.   Additionally,   no  loan
participations were delinquent thirty or more days as of December 31, 2002.

                                     -28-

                           PFGI CAPITAL CORPORATION

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

Management  is concerned  with the timing and  magnitude of the  repricing of
assets and  liabilities.  It is management's  objective to attempt to control
risks  associated  with interest rate  movements.  Market risk is the risk of
loss from adverse  changes in market prices and interest  rates.  Market risk
arises  primarily  from  interest  rate risk  inherent  in lending  and other
related activities. Management actively monitors interest rate risk exposure.
Management  reviews,  among  other  things,  the  sensitivity  of assets  and
liabilities,  as  applicable,  to interest rate changes,  the book and market
values of assets and liabilities,  unrealized gains and losses,  purchase and
sale activity,  maturities of investments and anticipated loan  participation
pay-offs. PFGI Capital's  interest-rate-sensitive assets consisted largely of
participation  interests in commercial  mortgage loans. At December 31, 2002,
11% of PFGI Capital's loan participation  portfolio had fixed interest rates.
Such loans tend to increase  interest rate risk.  At December 31, 2002,  PFGI
Capital did not have any interest-rate-sensitive liabilities.

As indicated  earlier,  PFGI Capital's income consists  primarily of interest
income from participation interests. If there is a decline in market interest
rates  resulting  from  downward  adjustments  in the indices  upon which the
interest rates on loans are based, PFGI Capital may experience a reduction in
interest  income  and  a  corresponding   decrease  in  funds  available  for
distribution to holders of Preferred  Stock. A decline in interest income can
also be realized from prepayments,  including  pay-offs,  of loans with fixed
interest  rates,  resulting  in  reinvestment  of proceeds in  lower-yielding
participation  interests.  The borrower has the ability to prepay a loan with
or without  premium  or  penalty  depending  on the  provisions  found in the
underlying  loan  agreements.  The level of underlying  loan  prepayments  is
influenced by several factors,  including the interest rate environment,  the
real  estate  market  in   particular   geographic   areas,   the  timing  of
transactions, and circumstances related to individual borrowers and loans.

An  earnings  simulation  model  is  provided  by the  Bank to  analyze  PFGI
Capital's net interest income sensitivity to movements in interest rates. The
model evaluates the effect on net interest income by running various interest
rate scenarios up and down from a flat rate scenario. Based on the results of
the simulation  model, net interest income would change by the following over
the next 12-month  period:  increase  5.12% for each 100 basis point increase
and decrease 5.12% for each 100 basis point decrease.

In order for PFGI  Capital to have  sufficient  cash flows to meet  projected
expenses and scheduled  dividend payments to holders of Preferred Stock, loan
participations of PFGI Capital cannot yield lower than  approximately  4.20%.
As of December 31, 2002, the average  weighted  yield on loan  participations
was 5.34%.  Assuming that the investment in  participation  interests  remain
level, yields on loan participations would have to decrease by over 100 basis
points before cash flows would be insufficient to cover the regular  dividend
payments to holders of Preferred Stock.

                                     -29-

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------

                        INDEX TO FINANCIAL STATEMENTS

Report of Ernst $amp; Young LLP, Independent Auditors ........................ 31

Financial Statements:

PFGI Capital Corporation:
    Balance Sheet ........................................................ 32
    Statement of Income .................................................. 33
    Statement of Changes in Shareholders' Equity ......................... 34
    Statement of Cash Flows .............................................. 35
    Notes to Financial Statements ........................................ 36

Supplementary Data:

Quarterly Results of Operations (unaudited) .............................. 45

                                    -30-

              REPORT OF ERNST $amp; YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and Shareholders
PFGI Capital Corporation

We have audited the accompanying balance sheet of PFGI Capital Corporation as
of  December  31,  2002,  and the  related  statement  of income,  changes in
shareholders'  equity  and cash flows for the  period  from June 12,  2002 to
December 31, 2002. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our audit in  accordance  with  auditing  standards  generally
accepted  in the United  States.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial  statements.  An  audit  also  includes  assessing  the  accounting
principles  used and  significant  estimates made by  management,  as well as
evaluating the overall financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects,  the financial position of PFGI Capital Corporation at
December 31, 2002,  and the results of its  operations and its cash flows for
the period  from June 12, 2002 to  December  31,  2002,  in  conformity  with
accounting principles generally accepted in the United States.

                                                /s/ ERNST $amp; YOUNG LLP

Cincinnati, Ohio
April 11, 2003

                                     -31-

                           PFGI CAPITAL CORPORATION
                                BALANCE SHEET
                              December 31, 2002
                 (Dollars In Thousands Except Per Share Data)

                              ASSETS
Commercial Mortgage Loan Participations                              $325,005
Reserve for Loan Participation Losses                                  (3,250)
                                                                     --------
  Net Commercial Mortgage Loan Participations                         321,755
Cash and Due From Banks                                                 5,357
Interest Receivable                                                     1,107
Accounts Receivable - The Provident Bank                                  279
Other Assets                                                               17
                                                                     --------
          Total Assets                                               $328,515
                                                                     ========

               LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
  Total Liabilities                                                  $      -
Shareholders' Equity:
  Series A Preferred Stock, $25 Stated Value,
    6,600,000 Shares Authorized, Issued and Outstanding               165,000
  Common Stock, $.01 Par Value, 5,940,000 Shares
    Authorized, Issued and Outstanding                                     59
  Capital Surplus                                                     159,380
  Retained Earnings                                                     4,076
                                                                     --------
      Total Shareholders' Equity                                      328,515
                                                                     --------
          Total Liabilities and Shareholders' Equity                 $328,515
                                                                     ========

See notes to financial statements.

                                    -32-

                           PFGI CAPITAL CORPORATION
                             STATEMENT OF INCOME
                PERIOD FROM JUNE 12, 2002 TO DECEMBER 31, 2002
                     (In Thousands Except Per Share Data)

Interest Income:
  Interest on Loan Participations                                     $ 9,967
  Interest on Cash Deposit                                                 98
                                                                      -------
     Total Interest Income                                             10,065

Provision for Loan Participation Losses                                     -
                                                                      -------
Net Interest Income After Provision
 for Loan Participation Losses                                         10,065

Noninterest Expense:
  Loan Servicing Fees                                                     221
  Management Fees                                                         177
  Other Noninterest Expense                                                50
                                                                      -------
                                                                          448
                                                                      -------
Income Before Income Taxes                                              9,617

Income Taxes                                                                -
                                                                      -------
Net Income / Comprehensive Income                                     $ 9,617
                                                                      =======

Preferred Stock Dividends                                             $ 5,541
                                                                      =======
Net Income Available to Common Shares                                 $ 4,076
                                                                      =======

Per Common Share:
  Basic                                                               $  0.69
  Diluted                                                             $  0.69
  Dividends                                                           $     -

See notes to financial statements.

                                    -33-

                           PFGI CAPITAL CORPORATION
                 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                     (In Thousands Except Per Share Data)

                                     Preferred   Common     Capital    Retained
                                       Stock     Stock      Surplus    Earnings       Total
-------------------------------------------------------------------------------------------
Balance at June 12, 2002              $      -     $  -   $       -     $     -         $ -

Issuance of Common Stock
 (5,940,000 Shares)                                  59     164,941                 165,000

Issuance of Preferred Stock
 (6,600,000 Shares)                    165,000                                      165,000

Offering Costs of Preferred Stock                            (5,561)                 (5,561)

Preferred Stock Dividends
 ($.8396 Per Share)                                                      (5,541)     (5,541)

Net Income                                                                9,617       9,617
                                      --------     ----   ---------     -------   ---------
Balance at December 31, 2002          $165,000     $ 59   $ 159,380     $ 4,076   $ 328,515
                                      ========     ====   =========     =======   =========

See notes to financial statements.

                                    -34-

                           PFGI CAPITAL CORPORATION
                           STATEMENT OF CASH FLOWS
                PERIOD FROM JUNE 12, 2002 TO DECEMBER 31, 2002
                                (In Thousands)

Operating Activities:
  Net Income                                                        $  9,617
  Adjustments to Reconcile Net Income to
   Net Cash Provided by Operating Activities:
    Increase in Interest Receivable                                   (1,107)
    Increase in Accounts Receivable and Other Assets                    (296)
                                                                    --------
      Net Cash Provided by Operating Activities                        8,214

Investing Activities:
  Net Increase in Loan Participations                               (156,755)

Financing Activities:
  Proceeds from Issuance of Preferred Stock                          165,000
  Offering Costs of Preferred Stock                                   (5,561)
  Cash Dividends Paid                                                 (5,541)
                                                                    --------
    Net Cash Provided by Financing Activities                        153,898
                                                                    --------
Increase in Cash and Cash Equivalents                                  5,357
Cash at Beginning of Period                                                -
                                                                    --------
     Cash and Cash Equivalents at End of Period                     $  5,357
                                                                    ========

Supplemental Disclosures of Cash Flow Information:
  Cash Paid for:
   Interest                                                         $      -
   Income Taxes                                                            -
Non-Cash Activity:
  Exchange of Common Stock for Loan Participations                   165,000

See notes to financial statements.

                                    -35-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

NOTE 1. ACCOUNTING POLICIES
---------------------------

The  following  is a summary  of  significant  accounting  policies  for PFGI
Capital:

ORGANIZATION:   PFGI  Capital   Corporation  (PFGI  Capital)  is  a  Maryland
corporation that was incorporated on May 9, 2002 and began operations on June
12, 2002. All of PFGI  Capital's  Common Stock is owned by The Provident Bank
(the Bank) while its Series A Preferred Stock is owned by outside  investors.
The principal  business  objective of PFGI Capital is to acquire,  hold,  and
manage commercial mortgage loan assets and other authorized  investments that
will generate net income for  distribution  to PFGI  Capital's  stockholders.
PFGI  Capital  has elected to be treated as a real  estate  investment  trust
(REIT).  As a REIT,  PFGI Capital  generally is not liable for federal income
tax to the extent  that it  distributes  its income to its  stockholders  and
continues to meet a number of other requirements.

The Bank, an Ohio state-chartered  member bank of the Federal Reserve System,
is the main subsidiary of Provident  Financial  Group,  Inc.  (Provident) and
provides full-service retail and commercial banking operations.

BASIS OF PRESENTATION:  The  accompanying  financial  statements  include the
accounts of PFGI Capital.  PFGI Capital has no equity  ownership in any other
entities or interest in "special  purpose  entities".  Certain  estimates are
required  to be  made  by  management  in the  preparation  of the  financial
statements. Actual results may differ from those estimates.

STATEMENT OF CASH FLOWS:  For cash flow purposes,  cash  equivalents  include
deposit accounts at banks.

BUSINESS SEGMENTS: As PFGI Capital's operations consist of acquiring, holding
and managing  commercial mortgage loan  participations,  management views its
financial condition and results of operations as one business segment.

COMMERCIAL   MORTGAGE   LOAN   PARTICIPATIONS:   Commercial   mortgage   loan
participations  are  generally  stated at the principal  amount  outstanding.
Interest on loans is  computed on the  outstanding  principal  balance.  Late
charges and other loan fees are not transferred to PFGI Capital,  but rather,
kept by the Bank as part of its loan servicing  fees. Any premium or discount
applicable to specific loans  purchased is amortized over the remaining lives
of such  loans  using the  interest  method.  Loans are  generally  placed on
nonaccrual  status when the payment of  principal  or interest is past due 90
days or more.  However,  loans that are well  secured  and in the  process of
collection may not be placed on nonaccrual  status.  When a loan is placed on
nonaccrual  status,  any interest income  previously  recognized that has not
been  received is reversed.  Future  interest  income is recorded only when a
payment is received and  collection  of principal  is  considered  reasonably
assured.

PFGI Capital considers a loan to be an impaired loan when it is probable that
all amounts due will not be collected  according to the contractual  terms of
the loan agreement. PFGI Capital measures the value of an impaired loan based
on the present value of expected  future cash flows  discounted at the loan's
effective  interest  rate or, if more  practical,  at the  loan's  observable
market price, or the fair value of the  collateral.  Income on impaired loans
is generally recognized on a cash basis.

                                    -36-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

RESERVE FOR LOAN  PARTICIPATION  LOSSES:  The reserve for loan  participation
losses is  maintained at a level  necessary to absorb losses  inherent in the
loan participation portfolio. When PFGI Capital purchases loan participations
from the Bank, a reserve for loan  participation  losses is transferred  from
the Bank to PFGI  Capital.  The reserve is increased by  provisions  for loan
participation losses whenever further  deterioration of the credit quality of
the portfolio occurs. Loans deemed uncollectible are charged off and deducted
from the reserve and  recoveries  on loans  previously  charged off are added
back to the  reserve.  Loans  sold  back to the  Bank  are  accompanied  by a
transfer of the reserve for those loans from PFGI Capital to the Bank.

Management's  determination  of the  adequacy  of the  reserve is based on an
assessment  of  potential  losses  given the  conditions  at the  time.  This
assessment  consists of certain loans being evaluated on an individual basis,
as well as all  loans  being  categorized  based  on  common  characteristics
related to the reserve factors and being evaluated as a group. Loans reviewed
on an  individual  basis include  large  non-homogeneous  credits where their
internal credit rating is at or below a predetermined  classification.  Loans
not  individually  reviewed are segmented by  characteristics  related to the
reserve  factors.  Analyses are performed on segments of the portfolio  based
upon trends in  delinquencies,  charge-offs,  economic  factors and  business
strategies.  Adequacy  factors may be  adjusted  based on changes in expected
potential losses in a particular segment.

OFFERING  COSTS:  Costs  incurred in  connection  with the raising of capital
through the sale of Series A Preferred  Stock were taken as an  adjustment to
the capital surplus account of PFGI Capital.

DIVIDENDS: Dividends on the Series A Preferred Stock are non-cumulative. Upon
authorization of the Board of Directors, dividends are payable in arrears and
paid  quarterly  on February  17, May 17,  August 17 and  November 17 of each
year,  or if any such day is not a business  day, on the next  business  day.
Dividends  are paid at a rate of 7.75% per annum of the  initial  liquidation
preference which is $25.00 per share.

Common  stockholders  are  entitled  to  receive  dividends  when,  as and if
declared by the Board of Directors out of funds available after the preferred
dividends have been paid.  Both the Common and Preferred  Stock dividends are
treated as ordinary income to the shareholders.

As an  alternative  to  distributing  a cash  dividend,  PFGI Capital has the
option  of  distributing  to its  common  shareholder,  a  dividend  using  a
procedure known as a "consent dividend",  as authorized by Section 565 of the
Internal Revenue Code. A consent  dividend  procedure is where a shareholder,
on the last day of a REIT's  tax  year,  agrees  to treat as a  dividend  the
amount  that the REIT so  designates,  without  any  distribution  of cash or
property actually  occurring.  The effect of the consent dividend is that the
REIT is  considered  to have paid a dividend on the last day of its tax year,
and the shareholder is treated as having received that amount and contributed
it back to the REIT.  The dollar amount of the consent  dividend is included,
as if it were distributed,  in the calculation to determine that at least 90%
of a REIT's taxable income has been  distributed  to its  shareholders.  PFGI
Capital,  as a REIT,  receives a deduction for dividends  paid,  reducing its
taxable income by the amount of the consent dividend, but without the need to
have cash  available to  distribute.  For the year ending  December 31, 2002,
PFGI  Capital  and its  common  shareholder  have  agreed to use the  consent
dividend  procedure.  As a result,  PFGI Capital will have  additional  funds

                                    -37-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

available for investment  purposes  and/or for  distribution to its preferred
shareholders  than if PFGI  Capital  had paid a cash  dividend  to the common
shareholder.

LOAN FORECLOSURES: Prior to foreclosure of any commercial mortgage loan, PFGI
Capital  intends to sell the  participation  interest in the underlying  loan
back to the  Bank.  The Bank  will  then  bear all  expenses  related  to the
foreclosure after that time.

INCOME  TAXES:  PFGI  Capital has elected to be treated as a REIT for Federal
income tax purposes and intends to comply with the provisions of the Internal
Revenue Code and therefore is not subject to income  taxes.  No provision for
income taxes is included in the accompanying financial statements.

ACCOUNTING  PRONOUNCEMENTS  EFFECTIVE FOR FUTURE PERIODS:  In April 2002, the
Financial Accounting Standards Board issued Statement No. 145, "Rescission of
FASB  Statements  No.  4,  44,  and  64,  Amendment  No.  13,  and  Technical
Corrections."  Under Statement 4, all gains and losses from extinguishment of
debt were required to be aggregated and classified as an extraordinary  item,
net of related income tax effect. As a result of the elimination of Statement
4,  gains  and  losses  from  extinguishment  of debt will be  classified  as
extraordinary  items only if they meet the  criteria  in APB  Opinion No. 30.
Applying the provisions of APB 30 will distinguish transactions that are part
of an entity's recurring operations from those that are unusual or infrequent
or that  meet the  criteria  for  classification  of an  extraordinary  item.
Additionally,  Statement 13 is amended to require  sale-leaseback  accounting
for certain lease  modifications  that have economic effects that are similar
to  sale-leaseback  transactions.  Statement 145 becomes effective January 1,
2003.

In June 2002,  Statement 146,  "Accounting for Costs  Associated with Exit or
Disposal Activities" was issued. Statement 146 addresses financial accounting
and  reporting  for costs  associated  with exit or disposal  activities  and
nullifies  Emerging  Issues Task Force  ("EITF")  Issue 94-3.  Statement  146
requires  that a  liability  for a cost  associated  with an exit or disposal
activity be  recognized  when the  liability is incurred.  Under EITF 94-3, a
liability  for an  exit  cost  was  recognized  at the  date  of an  entity's
commitment to an exit plan. Statement 146 becomes effective January 1, 2003.

In October 2002, the Financial  Accounting  Standards Board issued  Statement
No. 147, "Acquisitions of Certain Financial Institutions an amendment of FASB
Statements  No. 72 and 144 and FASB  Interpretation  No.  9."  Statement  147
provides  guidance  on the  accounting  for the  acquisition  of a  financial
institution and applies to all acquisitions  except those between two or more
mutual enterprises.  The excess of the fair value of liabilities assumed over
the fair value of tangible and identifiable  intangible  assets acquired as a
business combination represents goodwill and will no longer be amortized, but
rather,  be subject to  impairment  tests as prescribed by Statement No. 142,
"Goodwill and Other  Intangible  Assets."  Statement 147 became  effective on
October 1, 2002.

In December 2002, Statement No. 148, Accounting for Stock-Based  Compensation
- Transition and Disclosure,  was issued.  Statement 148 amends Statement No.
123,  "Accounting  for  Stock-Based  Compensation",  to  provide  alternative
methods  of  transition  to  Statement  123's  fair  value  based  method  of
accounting for stock-based employee  compensation.  Statement 148 also amends
the disclosure  provisions of Statement 123 and APB Opinion No. 28,  "Interim

                                    -38-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

Financial  Reporting,"  to require  disclosure in the summary of  significant
accounting  policies  of the effects of an  entity's  accounting  policy with
respect to  stock-based  employee  compensation  on  reported  net income and
earnings  per share in annual and  interim  financial  statements.  While the
Statement  does not amend  Statement 123 to require  companies to account for
employee stock options using the fair value method, the disclosure provisions
of Statement 148 are  applicable to all companies with  stock-based  employee
compensation,  regardless of whether they account for that compensation using
the fair value method of Statement 123 or the  intrinsic  value method of APB
Opinion No. 25. PFGI Capital has not issued any stock-based compensation.

The adoption of Statements No. 145, 146, 147 and 148 are not expected to have
any impact on PFGI Capital's results of operations or financial condition.

Note 2. LOAN PARTICIPATIONS AND RESERVE FOR LOAN PARTICIPATION LOSSES
---------------------------------------------------------------------

Participations  in loans are generally  purchased from the Bank at the Bank's
carrying  value,  which  approximates  fair  value.  Carrying  value  is  the
principal  amount  outstanding  plus  accrued  interest.  A reserve  for loan
participation losses is transferred from the Bank to PFGI Capital at the time
participations  are transferred.  Loans sold back to the Bank are accompanied
by a transfer of the  reserve for those loans from PFGI  Capital to the Bank.
The reserve for loan participation losses reflects  management's  judgment as
to the level  considered  appropriate to absorb  inherent  losses in the loan
participation  portfolio.  PFGI  did not  have any  nonperforming  assets  or
impaired loans during 2002.

At  December  31,  2002,  88% of the  properties  underlying  the  commercial
mortgage loan  participation  interests of PFGI Capital were located in Ohio,
Florida  and  Kentucky.  Because  of  the  concentration  of  PFGI  Capital's
interests in those  states,  in the event of adverse  economic,  political or
business  conditions or natural  hazards in those states,  PFGI Capital would
likely  experience  higher rates of loss and  delinquency  on PFGI  Capital's
mortgage loan participation  interests than if the underlying loans were more
geographically diversified.

The  following  table  sets  forth  an  analysis  of  the  reserve  for  loan
participation  losses  for the period  from June 12,  2002  (commencement  of
operations) to December 31, 2002 (in thousands):

Balance at Beginning of Period                                         $    -
Transferred Reserves, Net                                               3,250
Provision for Loan Losses                                                   -
Loans Charged Off                                                           -
Recoveries                                                                  -
                                                                       ------
  Balance at End of Period                                             $3,250
                                                                       ======

                                    -39-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

NOTE 3. EARNINGS PER COMMON SHARE
---------------------------------

Basic  earnings  per common  share is the amount of  earnings  for the period
available  to each share of Common  Stock  outstanding  during the  reporting
period. Diluted earnings per common share is the amount of earnings available
to each  share of  Common  Stock  outstanding  during  the  reporting  period
adjusted  for the  potential  issuance  of common  shares for stock  options,
convertible  debt, etc. The earnings  available to each share of Common Stock
has been reduced by Series A Preferred Stock  dividends.  PFGI Capital has no
stock options or convertible debt or other potential dilutive instruments and
therefore  basic and diluted  earnings per share are  calculated  on the same
basis.  The Bank owns all of the issued and outstanding  Common Stock of PFGI
Capital.

The following table sets forth the computation of basic and diluted  earnings
per common  share for the period from June 12, 2002 to December  31, 2002 (in
thousands, except per share data):

Net Income                                                             $9,617
Less Preferred Stock Dividends                                         (5,541)
                                                                       ------
  Income Available to Common Shareholder                               $4,076
                                                                       ======

Weighted-Average Common Shares Outstanding                              5,940

Basic and Diluted Earnings Per Share                                   $ 0.69

NOTE 4. REGISTRATION AND ISSUANCE OF PRIDES
-------------------------------------------

Provident  and  PFGI  Capital  registered  6,000,000  PRIDES  pursuant  to  a
Registration  Statement filed with the Securities Exchange Commission,  which
was  declared   effective  on  June  6,  2002.  In  addition,   the  managing
underwriter,  Merrill  Lynch  $amp;  Co.,  was  permitted  to  purchase  up to an
additional  600,000  PRIDES  to  cover  over-allotments.  Provident  and PFGI
Capital sold the 6,000,000  original  PRIDES  effective June 12, 2002 and the
600,000  over-allotment  PRIDES  effective  July 2, 2002.  The  offering  was
subsequently terminated as all registered PRIDES had been sold.

Gross  proceeds from the sale of PRIDES were $165 million.  The  underwriting
discount  and  expenses  incurred  from the  issuance  of the PRIDES  totaled
$6,542,000 of which 85%, or  $5,561,000,  was allocated to PFGI Capital.  The
remaining  15%  was  allocated  to  Provident  as its  share  of  the  PRIDES
transaction.

PFGI Capital  used all of the net  proceeds it received  from the sale of the
PRIDES for the purchase of  participation  interests in  commercial  mortgage
loans  from  the  Bank.  The  Bank  used  the  proceeds  from the sale of the
participation  interests for general  corporate  purposes,  including working
capital and funding of asset growth.

NOTE 5. DESCRIPTION OF PRIDES
-----------------------------

Each PRIDES has a stated  amount of $25.00 per unit and is  comprised  of two
components - a 3-year forward purchase commitment (the Purchase Contract) and
PFGI Capital Series A Preferred Stock.

                                    -40-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

Each Purchase  Contract  obligates the holder to buy, on August 17, 2005, for
$25.00,  a number of newly issued  shares of Provident  Common Stock equal to
the settlement rate. The settlement rate will be calculated as follows:
o  if the  applicable  market value of Provident  Common Stock is equal to or
   greater than $29.0598, the settlement rate will be .8603;
o  if the  applicable  market  value of  Provident  Common  Stock is  between
   $29.0598  and  $24.42,  the  settlement  rate will be equal to the  $25.00
   stated amount divided by the applicable market value; and
o  if the  applicable  market  value is less  than or equal  to  $24.42,  the
   settlement rate will be 1.0238.

"Applicable  market value" is defined as the average of the closing price per
share of  Provident  Common Stock on each of the twenty  consecutive  trading
days ending on the fifth trading day immediately preceding August 17, 2005.

Under the Purchase  Contract,  Provident  will also make  quarterly  contract
adjustment  payments to the PRIDES holders at an annualized  rate of 1.25% of
the stated amount ($0.3125 per share).

Holders of PFGI Capital's  Series A Preferred Stock are entitled to one-tenth
of one vote per share on all matters submitted to a vote of the shareholders,
voting as a single  class with the  holders of Common  Stock.  The holders of
Preferred Stock will be entitled to receive,  if, when, and as authorized and
declared  by  the  board  of  directors  out  of  legally  available  assets,
non-cumulative  cash  dividends at the rate of 7.75% per annum of the initial
liquidation  preference  which is  $25.00  per  share  ($1.9375  per  share).
Dividends on the Preferred Stock will be payable, if authorized and declared,
quarterly  in arrears on February  17, May 17,  August 17 and  November 17 of
each year,  or if any such day is not a business  day,  on the next  business
day. The Preferred Stock will rank senior to the Common Stock of PFGI Capital
as to dividend rights and rights upon liquidation, winding up or dissolution.

In connection  with the  settlement of the Purchase  Contract,  Provident has
engaged a remarketing  agent to remarket the PFGI Capital  Preferred Stock on
behalf  of the  holders,  at  which  time the PFGI  Preferred  Stock  will be
permanently  detached from the Purchase Contract.  Once the Purchase Contract
is settled,  there will be two separate and distinct securities  outstanding:
PFGI  Capital  Preferred  Stock and  Provident  Common  Stock.  The  proceeds
received from the remarketing  will be used by the holders of Preferred Stock
to fulfill their commitment under the terms of the Purchase Contract.

Upon a  successful  remarketing  of  shares of the PFGI  Capital's  Preferred
Stock,  the  applicable  dividend rate on the shares of Preferred  Stock that
have  been  purchased  in the  remarketing  will be reset to the  reset  rate
described  below. The dividend rate of shares of Preferred Stock that are not
remarketed will not be reset and will continue to be 7.75%.

The reset rate will be determined by the reset agent as the dividend rate the
Preferred Stock should bear for the Preferred Stock to have a market value on
the fifth business day immediately preceding August 17, 2005 of 100.5% of the
aggregate  liquidation  preference of the Preferred Stock,  plus declared and
unpaid dividends, if any.

Each share of PFGI Capital's Preferred Stock will be automatically  exchanged
for one  newly  issued  share  of Bank  Series  A  Preferred  Stock  upon the
occurrence of an exchange event. An exchange event occurs when:

                                    -41-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

o  the  Bank  becomes  less  than  "adequately   capitalized"   according  to
   regulations  established  by the  Federal  Reserve  Board  pursuant to the
   Federal Deposit Insurance  Corporation  Investment Act or as determined by
   the Ohio Division of Financial  Institutions  pursuant to the Ohio Banking
   Code and regulations thereunder;
o  the Bank is placed into conservatorship or receivership;
o  the Federal Reserve Board, in its sole discretion, or the Ohio Division of
   Financial Institutions,  in its sole discretion,  directs such exchange in
   writing,  and,  even  if  Provident  Bank  is not  less  than  "adequately
   capitalized,"  the Federal Reserve Board or the Ohio Division of Financial
   Institutions,  as the case may be, anticipates the Bank becoming less than
   "adequately capitalized" in the near term; or
o  the Federal Reserve Board, in its sole discretion, or the Ohio Division of
   Financial Institutions,  in its sole discretion,  directs such exchange in
   writing in the event that the Bank has a Tier 1 risk-based  capital  ratio
   of less than 5.0%.

NOTE 6. RELATED PARTY TRANSACTIONS
----------------------------------

PFGI  Capital  holds a 95%  participation  interest  through a  participation
agreement  with  the Bank in  certain  loans  originated  by the Bank and its
subsidiaries.  Generally,  the  participation  interests  are  in  commercial
mortgage   loans  secured  by  real   property  that  were  either   directly
underwritten  by the Bank and its  subsidiaries or acquired by the Bank. PFGI
Capital expects to continue to purchase such interests in the future from the
Bank under the terms of the participation agreement.

The  participation  agreement  also  provides  for the  Bank to  service  the
commercial  mortgage loans underlying the participations held by PFGI Capital
in a manner substantially the same for similar work performed by the Bank for
transactions  on its own behalf.  The  servicing fee that the Bank charges is
..125% per year of the average  daily  outstanding  principal  balances of the
commercial  mortgage  loans  underlying  the  participation  interests.  Loan
servicing costs incurred by PFGI Capital totaled $221,000 for the period from
June 12 to December 31, 2002.

A summary of loan  participation  activity  between the Bank and PFGI Capital
for the period from June 12 to December 31, 2002 follows (in thousands):

Loan Participations Transferred at Issuance of PRIDES and Common Stock    $328,558
Subsequent Transfers of Loan Participations from Bank to PFGI Capital      147,868
Loan Participation Advances                                                  6,185
Transfer of Loan Participations from PFGI Capital to the Bank              (87,082)
Loan Participation Payments                                                (70,524)
                                                                          --------
                                                                          $325,005
                                                                          ========

                                    -42-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

The day-to-day  operations of PFGI Capital are managed  pursuant to the terms
of a management agreement between the Bank and PFGI Capital. The Bank, in its
role as  manager  under the terms of the  management  agreement,  receives  a
management fee designed as a reimbursement  for costs incurred to manage PFGI
Capital.  The Bank is required to pay all expenses related to the performance
of its duties under the  management  agreement,  including any payment to its
affiliates  for  managing  PFGI  Capital.  The  management  fee that the Bank
charges is .10% per year of the average daily outstanding  principal balances
of the commercial  mortgage loans  underlying  the  participation  interests.
Management  fees incurred by PFGI Capital total  $177,000 for the period from
June 12 to December 31, 2002.

The Bank owns 100% of the Common Stock of PFGI Capital. Accordingly, the Bank
is entitled to all common dividends paid by PFGI Capital.

As of December 31, 2002, PFGI Capital had an interest-bearing deposit account
of $5,357,000 at the Bank and a net receivable of $279,000 from the Bank.

NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
-------------------------------------------

Carrying values and estimated fair values for certain  financial  instruments
as of December 31 are shown in the  following  table.  In cases where  quoted
market  prices are not  available,  fair values are based on estimates  using
present  value  or  other   valuation   techniques.   Those   techniques  are
significantly  affected by the assumptions used,  including the discount rate
and  estimates of future cash flows.  Because no secondary  market exists for
most of PFGI  Capital's  assets,  the  derived  fair  values  are  calculated
estimates,  and the fair values provided herein do not necessarily  represent
the  actual  values  which  may be  realized  in  the  disposition  of  these
instruments.  The aggregate fair value amounts presented do not represent the
underlying value of PFGI Capital.  What is presented below is a point-in-time
valuation that is affected, in part, by unrealized gains and losses resulting
from  management's  implementation  of its program to manage overall interest
rate risk.  It is not  management's  intention  to  immediately  dispose of a
significant portion of its financial instruments.  As a result, the following
fair value  information  should not be  interpreted  as a forecast  of future
earnings and cash flows.

                                                    Carrying            Fair
(In Thousands)                                        Value            Value
-----------------------------------------------------------------------------
Financial Assets:
  Commercial Mortgage Loan Participations           $325,005         $327,831
  Less: Reserve for Loan Participation Losses         (3,250)               -
                                                    --------         --------
    Net Commercial Mortgage Loan Participations      321,755          327,831

  Cash and Due From Banks                              5,357            5,357

The following  methods and  assumptions  were used by Provident in estimating
its fair value disclosures for financial instruments:
o  Commercial  mortgage  loan   participations:   For  adjustable-rate   loan
   participations  that reprice  frequently and with no significant change in
   credit risk, fair values are based on carrying values. The fair values for
   other  loan  participations  are  estimated  using  discounted  cash  flow
   analyses and interest rates currently being offered for loans with similar
   terms to borrowers of similar credit quality.

                                    -43-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

o  Cash and due from  banks:  The  carrying  amounts  reported in the balance
   sheet for cash and due from banks approximate those assets' fair values.

NOTE 8. DIVIDEND RESTRICTIONS
-----------------------------

Because  PFGI  Capital  is  a  direct  subsidiary  of  the  Bank,  regulatory
authorities  will have the right to examine PFGI  Capital and PFGI  Capital's
activities and, under certain  circumstances,  to impose  restrictions on the
Bank or PFGI  Capital.  If the Federal  Reserve Board or the Ohio Division of
Financial  Institutions  determines  that the Bank's  relationship  with PFGI
Capital  results  in an unsafe  and  unsound  banking  practice,  the  Bank's
regulators  have the  authority to restrict  PFGI  Capital's  ability to make
distributions to its stockholders,  including  dividends to holders of shares
of PFGI Capital Series A preferred stock.

Payment of dividends on PFGI Capital'  Series A preferred stock could also be
subject  to   regulatory   limitations   if  the  Bank   becomes   less  than
"well-capitalized"  for purposes of regulations issued by the Federal Reserve
Board.  Under  these   regulations,   the  Bank  will  be  deemed  less  than
"well-capitalized"  if it has a total  risk-based  capital ratio of less than
10.0%;  a Tier 1 risk-based  capital ratio of less than 6.0%;  and a leverage
ratio of less than 5.0%.  At December 31, 2002,  the Bank's total  risk-based
capital ratio was 11.36%,  its Tier 1 risk-based  capital ratio was 8.19% and
its leverage  ratio was 6.77%.  The exercise of the Federal  Reserve  Board's
power to restrict  dividends on PFGI Capital Series A preferred  stock would,
however, also have the effect of restricting the payment of dividends on PFGI
Capital's  common  stock and all series and classes of preferred  stock.  The
inability to pay dividends on PFGI Capital's  common stock would prevent PFGI
Capital  from  meeting  the  statutory  requirement  for a REIT in  effect to
distribute 90% of its taxable income and, therefore, would cause PFGI Capital
to fail to qualify for the favorable tax treatment accorded to REITs.

Legal and  regulatory  limitations  on the payment of  dividends  by the Bank
could also affect PFGI  Capital's  ability to pay  dividends to  unaffiliated
third  parties,  including  the  holders of shares of PFGI  Capital  Series A
preferred  stock.  Regulatory  approval  is  required  prior  to  the  Bank's
declaration of any dividends in excess of available  retained  earnings.  The
amount of  dividends  that may be  declared  without  regulatory  approval is
further  limited to the sum of net income for the current  year and  retained
net income  for the  preceding  two years,  less any  required  transfers  to
surplus or common stock. At December 31, 2002, the Bank could,  without prior
regulatory  approval  and  absent  contrary  supervisory  guidance,   declare
dividends in 2003 of  approximately  $30.2 million plus an additional  amount
equal to its net income through the date of  declaration in 2003.  Since PFGI
Capital is a member of the Bank's consolidated  group,  payment of common and
preferred  dividends by the Bank and/or any member of its consolidated  group
to unaffiliated third parties,  including PFGI Capital's payment of dividends
to the  holders of shares of PFGI  Capital  Series A preferred  stock,  would
require  regulatory  approval if aggregate  dividends on a consolidated basis
exceed these limitations.

NOTE 9. LEGAL CONTINGENCIES
---------------------------

As of December 31, 2002, there was no litigation involving PFGI Capital.

                                    -44-

                           PFGI CAPITAL CORPORATION
                        NOTES TO FINANCIAL STATEMENTS

NOTE 10. QUARTERLY RESULTS OF OPERATIONS - (Unaudited)
------------------------------------------------------

The following are  quarterly  results of operations  for PFGI Capital for the
period from June 12, 2002 (commencement of operations) to December 31, 2002:

                                           Fourth     Third      June 12 to
(In Thousands, Except Per Share Data)     Quarter    Quarter    June 30, 2002
-----------------------------------------------------------------------------
Interest Income                           $ 4,331    $ 4,846       $   888
Provision for Loan Participation Losses         -          -             -
                                          -------    -------       -------
Net Interest Income After Provision
 for Loan Participation Losses              4,331      4,846           888
Noninterest Expense                          (195)      (197)          (56)
                                          -------    -------       -------
Income Before Income Taxes                  4,136      4,649           832
Income Taxes                                    -          -             -
                                          -------    -------       -------
Net Income                                $ 4,136    $ 4,649       $   832
                                          =======    =======       =======

Preferred Stock Dividends                 $ 5,541    $     -       $     -
                                          =======    =======       =======

Net Income Available to Common Shares     $(1,405)   $ 4,649       $   832
                                          =======    =======       =======

Per Common Share:
  Basic and Diluted                       $ (0.24)   $  0.78       $  0.14
  Dividends                               $     -    $     -       $     -

Quarterly  earnings  per  share do not  necessarily  add to the  year-to-date
amounts due to rounding.

                                    -45-

                           PFGI CAPITAL CORPORATION

ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
-----------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------

None

                                   PART III

Items  10  through  13  are  incorporated  by  reference  to  PFGI  Capital's
definitive  information statement to be filed with the Commission pursuant to
Regulation 14C within 120 days after the close of PFGI Capital's  fiscal year
ending December 31, 2002:

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------

ITEM 11. EXECUTIVE COMPENSATION
-------------------------------

ITEM 12. SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT AND
-----------------------------------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

ITEM 14. CONTROLS AND PROCEDURES
--------------------------------

An evaluation was performed under the supervision and with the  participation
of management,  including the principal executive and financial officers,  of
the  effectiveness  of the design and operation of PFGI Capital's  disclosure
controls and  procedures as of December 31, 2002.  Based on that  evaluation,
management,   including  the  principal  executive  and  financial  officers,
concluded  that  PFGI  Capital's  disclosure  controls  and  procedures  were
effective  with  no  significant   weaknesses  noted.   There  have  been  no
significant  changes in PFGI Capital's  internal controls or in other factors
that could  significantly  affect these  internal  controls after the date of
their evaluation.

                                   PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
------------------------------------------------------------------------

(a) 1. See Index to Financial Statements on page 30 for a list of all
       financial statements filed as a part of this report.

    2. Schedules to the financial statements required by Article
       9 of Regulation S-X have been omitted as they are not required, not
       applicable or the information required thereby is set forth in the
       related financial statements.

    3. Exhibits:

     1.0 Underwriting Agreement incorporated by reference to Exhibit 1 to
         PFGI Capital's Amended Registration Statement on Form S-3/A
         (Registration No. 333-88446) Filed June 6, 2002.

     3.1 By-Laws incorporated by reference to Exhibit 3.2 to PFGI Capital's
         Registration Statement on Form S-3 (Registration No. 333-88446)
         Filed May 16, 2002.

                                    -46-

                           PFGI CAPITAL CORPORATION

     3.2 Amended and Restated Articles of Incorporation incorporated by
         reference to Exhibit 3.5 to PFGI Capital's Amended Registration
         Statement on Form S-3/A (Registration No. 333-88446) Filed June 6,
         2002.

     4.1 Forward Purchase Contract Agreement incorporated by reference to
         Exhibit 4.2 to PFGI Capital's Amended Registration Statement on
         Form S-3/A (Registration No. 333-88446) Filed June 6, 2002.

     4.2 Income PRIDES incorporated by reference to Exhibit A to Exhibit 4.2
         to PFGI Capital's Amended Registration Statement on Form S-3/A
         (Registration No. 333-88446) Filed June 6, 2002.

     4.3 Pledge Agreement incorporated by reference to Exhibit 4.4 to PFGI
         Capital's Amended Registration Statement on Form S-3/A (Registration
         No. 333-88446) Filed June 6, 2002.

     4.4 Series A Preferred Stock Certificate incorporated by reference to
         Exhibit 4.5 to PFGI Capital's Amended Registration Statement on Form
         S-3/A (Registration No. 333-88446) Filed June 6, 2002.

     4.5 Remarketing Agreement incorporated by reference to Exhibit 4.6 to
         PFGI Capital's Amended Registration Statement on Form S-3/A
         (Registration No. 333-88446) Filed June 6, 2002.

    10.1 Master Participation and Servicing Agreement incorporated by
         reference to Exhibit 10.1 to PFGI Capital's Amended Registration
         Statement on Form S-3/A (Registration No. 333-88446) Filed June 6,
         2002.

    10.2 Management Agreement incorporated by reference to Exhibit 10.2 to
         PFGI Capital's Amended Registration Statement on Form S-3/A
         (Registration No. 333-88446) Filed June 6, 2002.

    10.3 Exchange Agreement incorporated by reference to Exhibit 10.3 to
         PFGI Capital's Amended Registration Statement on Form S-3/A
         (Registration No. 333-88446) Filed June 6, 2002.

    23.0 Consent of Independent Auditors attached to this report.

(b)  Reports on Form 8-K:

     None.

                                    -47-

                           PFGI CAPITAL CORPORATION

                                  Signatures

Pursuant to the requirements of Section 13 of the Securities  Exchange Act of
1934,  PFGI Capital  Corporation  has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                    PFGI Capital Corporation

                                                    /s/Christopher J. Carey
                                                    -----------------------
                                                      Christopher J. Carey
                                                           President
                                                         April 10, 2003

Pursuant to the  requirements  of the Securities  Exchange Act of 1934,  this
report  has been  signed  below by the  following  persons  on behalf of PFGI
Capital Corporation and in the capacities and on the dates indicated.

       Signature                  Capacity                         Date
       ---------                  --------                         ----

/s/Christopher J. Carey     Director and President           April 10, 2003
-----------------------      (Principal Executive Officer)
  Christopher J. Carey

   /s/James Berry           Director                         April 10, 2003
-----------------------
     James Berry

   /s/Dett Hunter           Director                         April 10, 2003
-----------------------
     Dett Hunter

  /s/Mark E. Magee          Director and Secretary           April 10, 2003
-----------------------
    Mark E. Magee

  /s/Robert Pompey          Director                         April 10, 2003
-----------------------
    Robert Pompey

 /s/J. David Rosenberg      Director                         April 10, 2003
-----------------------
  J. David Rosenberg

 /s/John E. Rubenbauer      Director                         April 10, 2003
-----------------------
  John E. Rubenbauer

/s/Anthony M. Stollings     Director and Controller          April 10, 2003
-----------------------      (Chief Financial Officer)
  Anthony M. Stollings

    /s/Tayfun Tuzun         Director and Treasurer           April 10, 2003
-----------------------
      Tayfun Tuzun

                                    -48-

                           PFGI CAPITAL CORPORATION

                 Certification of Principal Executive Officer
          Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
           and Securities and Exchange Commission Release 34-46427

I,  Christopher  J. Carey,  the principal  executive  officer of PFGI Capital
Corporation ("PFGI Capital"), certify that:

1. I have reviewed this annual report on Form 10-K of PFGI Capital;
2. Based on my  knowledge,  this  annual  report  does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the  circumstances  under which such
   statements were made, not misleading with respect to the period covered by
   this annual report;
3. Based on my  knowledge,  the  financial  statements,  and other  financial
   information included in this annual report, fairly present in all material
   respects the financial condition,  results of operations and cash flows of
   the  registrant  as of, and for,  the  periods  presented  in this  annual
   report;
4. The  registrant's  other  certifying  officer  and I are  responsible  for
   establishing  and  maintaining  disclosure  controls  and  procedures  (as
   defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
   have:
   a) designed  such  disclosure  controls  and  procedures  to  ensure  that
      material  information   relating  to  the  registrant,   including  its
      consolidated  subsidiaries,  is made known to us by others within those
      entities, particularly during the period in which this annual report is
      being prepared;
   b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      annual report (the "Evaluation Date"); and
   c) presented in this annual report our conclusions about the effectiveness
      of the disclosure controls and procedures based on our evaluation as of
      the Evaluation Date;
5. The registrant's other certifying  officer and I have disclosed,  based on
   our most recent  evaluation,  to the  registrant's  auditors and the audit
   committee of  registrant's  board of directors (or persons  performing the
   equivalent function):
   a) all  significant  deficiencies  in the design or  operation of internal
      controls  which  could  adversely  affect the  registrant's  ability to
      record,   process,   summarize  and  report  financial  data  and  have
      identified  for the  registrant's  auditors any material  weaknesses in
      internal controls; and
   b) any fraud,  whether or not material,  that involves management or other
      employees  who have a  significant  role in the  registrant's  internal
      controls; and
6. The  registrant's  other  certifying  officer and I have indicated in this
   annual report  whether or not there were  significant  changes in internal
   controls or in other  factors  that could  significantly  affect  internal
   controls  subsequent to the date of our most recent evaluation,  including
   any  corrective  actions  with  regard  to  significant  deficiencies  and
   material weaknesses.

Date: April 10, 2003                              /s/Christopher J. Carey
                                               -----------------------------
                                                    Christopher J. Carey
                                                         President
                                               (Principal Executive Officer)

                                    -49-

                           PFGI CAPITAL CORPORATION

                 Certification of Principal Financial Officer
          Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
           and Securities and Exchange Commission Release 34-46427

I, Anthony M.  Stollings,  the  principal  financial  officer of PFGI Capital
Corporation ("PFGI Capital"), certify that:

1. I have reviewed this annual report on Form 10-K of PFGI Capital;
2. Based on my  knowledge,  this  annual  report  does not contain any untrue
   statement of a material fact or omit to state a material fact necessary to
   make the statements made, in light of the  circumstances  under which such
   statements were made, not misleading with respect to the period covered by
   this annual report;
3. Based on my  knowledge,  the  financial  statements,  and other  financial
   information included in this annual report, fairly present in all material
   respects the financial condition,  results of operations and cash flows of
   the  registrant  as of, and for,  the  periods  presented  in this  annual
   report;
4. The  registrant's  other  certifying  officer  and I are  responsible  for
   establishing  and  maintaining  disclosure  controls  and  procedures  (as
   defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
   have:
   a) designed  such  disclosure  controls  and  procedures  to  ensure  that
      material  information   relating  to  the  registrant,   including  its
      consolidated  subsidiaries,  is made known to us by others within those
      entities, particularly during the period in which this annual report is
      being prepared;
   b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      annual report (the "Evaluation Date"); and
   c) presented in this annual report our conclusions about the effectiveness
      of the disclosure controls and procedures based on our evaluation as of
      the Evaluation Date;
5. The registrant's other certifying  officer and I have disclosed,  based on
   our most recent  evaluation,  to the  registrant's  auditors and the audit
   committee of  registrant's  board of directors (or persons  performing the
   equivalent function):
   a) all  significant  deficiencies  in the design or  operation of internal
      controls  which  could  adversely  affect the  registrant's  ability to
      record,   process,   summarize  and  report  financial  data  and  have
      identified  for the  registrant's  auditors any material  weaknesses in
      internal controls; and
   b) any fraud,  whether or not material,  that involves management or other
      employees  who have a  significant  role in the  registrant's  internal
      controls; and
6. The  registrant's  other  certifying  officer and I have indicated in this
   annual report  whether or not there were  significant  changes in internal
   controls or in other  factors  that could  significantly  affect  internal
   controls  subsequent to the date of our most recent evaluation,  including
   any  corrective  actions  with  regard  to  significant  deficiencies  and
   material weaknesses.

Date: April 10, 2003                             /s/Anthony M. Stollings
                                               -----------------------------
                                                   Anthony M. Stollings
                                                        Controller
                                               (Principal Financial Officer)

                                    -50-

                           PFGI CAPITAL CORPORATION

                   CERTIFICATION OF CHIEF EXECUTIVE OFFICER
          Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the filing with the Securities and Exchange  Commission of
the Annual Report of PFGI Capital  Corporation  ("PFGI Capital") on Form 10-K
for the period ending  December 31, 2002 (the  "Report"),  I,  Christopher J.
Carey, President (Chief Executive Officer) of PFGI Capital, certify, pursuant
to 18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d)
    of the Securities Exchange Act of 1934; and

(2) The information  contained in the Report fairly presents, in all material
    respects,  the  financial  condition  and results of  operations  of PFGI
    Capital.

/s/Christopher J. Carey
-----------------------
Christopher J. Carey
President (Chief Executive Officer)

April 10, 2003

                                    -51-

                           PFGI CAPITAL CORPORATION

                   CERTIFICATION OF CHIEF FINANCIAL OFFICER
          Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the filing with the Securities and Exchange  Commission of
the Annual Report of PFGI Capital  Corporation  ("PFGI Capital") on Form 10-K
for the  period  ending  December  31,  2002 (the  "Report"),  I,  Anthony M.
Stollings,  Controller  (Chief Financial  Officer) of PFGI Capital,  certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d)
    of the Securities Exchange Act of 1934; and

(2) The information  contained in the Report fairly presents, in all material
    respects,  the  financial  condition  and results of  operations  of PFGI
    Capital.

/s/Anthony M. Stollings
-----------------------
Anthony M. Stollings
Controller (Chief Financial Officer)

April 10, 2003

                                    -52-
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