# 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, 2003         | 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, 2003. As of
February 27, 2004, 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, 2003 is 0.

# Documents Incorporated
by Reference:

Information
Statement for the 2004 Annual Meeting of Shareholders (portions which are incorporated by
reference into Part III hereof).

Please address all
correspondence to:

Anthony M. Stollings
Chief Financial Officer and Treasurer
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                                                 | 21
|ITEM  3.  LEGAL PROCEEDINGS                                          | 21
|ITEM  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS        | 21
|PART II                                                             
|ITEM  5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
|MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES                    | 22
|ITEM  6.  SELECTED FINANCIAL DATA                                    | 23
|ITEM  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL         
|CONDITION AND RESULTS OF OPERATIONS                                  | 24
|ITEM  7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT            
|MARKET RISK                                                          | 31
|ITEM  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                | 32
|ITEM  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON          
|ACCOUNTING AND FINANCIAL DISCLOSURE                                  | 50
|ITEM  9A. CONTROLS AND PROCEDURES                                    | 50
|PART III                                                            
|ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT         | 50
|ITEM 11.  EXECUTIVE COMPENSATION                                     | 50
|ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS           
|AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                       | 50
|ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS             | 50
|ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES                     | 50
|PART IV                                                             
|ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS       
|ON FORM 8-K                                                          | 50
|SIGNATURES                                                           | 53

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.  Forward-looking  statements  may be
 identified  by words such as  estimates,  anticipates,  projects,  plans, expects,
 intends,  believes, should and similar expressions and by the context in which they are
used. Such statements are based upon current  expectations of the company and speak only
as of the date made.  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.  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.

On  February  17,  2004,  Provident
 announced  that it had  signed a  definitive  agreement  to merge with  National  City
Corporation.  National City Corporation is a financial  holding company  headquartered
 in Cleveland,  Ohio. Under terms of the agreement,  Provident  shareholders will receive
1.135 shares of National City Corporation  common stock for each share of Provident
 common stock in a tax-free  exchange.  Subject to regulatory and  stockholder
 approvals,  the transaction is expected to close in the second quarter of 2004.

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)
T. 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, Vice President and Chief Operations Officer
J. David Rosenberg - Director (Member of Executive, Audit and Compensation Committees)
John E. Rubenbauer - Director   Anthony M. Stollings - Director, Chief Financial Officer and Treasurer
Tayfun Tuzun - Director and Vice President
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1

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PFGI CAPITAL CORPORATION

The Registrar and
Transfer Agent of PFGI Capital is:

| | The
Provident Bank   One East Fourth Street   Cincinnati, OH 45202     Phone: 513-579-2384
| | ------------------------------------------------------------------------------------------

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 were 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 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

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PFGI CAPITAL CORPORATION

As of December 31, 2003,  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, 2003:

|Type of Asset                                | Amount
(In Thousands) | Percentage
of Total
Assets
|-------------------------------------------- | --------------------- | --------------------------
|Commercial Loan Participations               |                       |                           
|Reserve for Participation Losses             |                       |                           
|Interest Bearing Deposit with Provident Bank |                       |                           
|Interest Receivable on Loan Participations   |                       |                           
|Other Assets                                 |                       |                           
|                                             |                       |                           
|Total Assets                                 |                       |                           
|                                             |                       |                           

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 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.

3

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PFGI CAPITAL CORPORATION

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 respect to its participation interests will
exceed the aggregate dividends to be paid on PFGI Capital Series A preferred stock;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

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PFGI CAPITAL CORPORATION

|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 accounting principles generally accepted in the United
States 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 ended December 31, 2003 and the period from June 12 to 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 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.

5

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PFGI CAPITAL CORPORATION

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 92% 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 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.

6

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PFGI CAPITAL CORPORATION

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
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.

7

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PFGI CAPITAL CORPORATION

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; and Pittsburgh, Pennsylvania. 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

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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 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.

9

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PFGI CAPITAL CORPORATION

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. As of December 31, 2003 this ratio
stands at 132% due to the impact of the lower interest rate environment on the adjustable
rate mortgage contracts. Management does not believe the shortfall constitutes a
significant risk or has a negative impact on its ability to meet its dividend commitments,
but is nevertheless, reviewing its options to correct this shortfall. 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;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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PFGI CAPITAL CORPORATION

|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;
|- | ---------------------------------------------

|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:

11

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PFGI CAPITAL CORPORATION

|o | waive
any payment default;
|- | --------------------------

|o | extend
the maturity of the loans;
|- | ---------------------------------

|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 $401,000 and $221,000 for the year ended December 31, 2003 and the period
from June 12, 2002 (commencement of operations) to December 31, 2002, respectively. The
participation agreement does not limit or cap the servicing fees payable to the Bank.
Other than the compensation referred to in this paragraph, and 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.

12

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PFGI CAPITAL CORPORATION

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 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 $320,000 and
$177,000 for the year ended December 31, 2003 and the period from June 12, 2002
(commencement of operations) to December 31, 2002, respectively. 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

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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

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PFGI CAPITAL CORPORATION

In connection with the settlement of
the forward 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 forward purchase contract. Once the forward
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 forward 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%.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As discussed in other parts of this
report, Provident will merge with National City Corporation (National City) subject to
regulatory and stockholder approvals. National City will be required to expressly assume
Providents obligations under the forward purchase contract and certain related
agreements. As Provident shareholders will be receiving 1.135 shares of National City
Common Stock for each share of Provident Common Stock, the settlement rate of the forward
purchase contract will be calculated as follows:

15

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PFGI CAPITAL CORPORATION

|o | if
the market value of National City Common Stock is equal to or greater than $25.6033,  the
settlement  rate will be 0.9764;
|- | -----------------------------------------------------------------------------------------------------------------------------

|o | if
the market value of National City Common Stock is between $25.6033 and $21.5154, the
settlement rate will be equal to the $25 stated amount divided by the applicable market
value; and
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | if
the applicable market value is less than or equal to $21.5154, the settlement rate will
be 1.1620.
|- | -----------------------------------------------------------------------------------------------------

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 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.

16

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PFGI CAPITAL CORPORATION

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 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;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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PFGI CAPITAL CORPORATION

|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, 2003 and 2002, the Banks total risk-based capital ratio
was 12.26% and 11.36%, respectively, its Tier 1 risk-based capital ratio was 9.12% and
8.19%, respectively, and its leverage ratio was 7.00% and 6.77%, respectively. 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 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.

Early in 2003, Provident 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 years ended December 31, 2003
and 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, 2003, the Bank
could without prior regulatory approval and absent contrary supervisory guidance declare
dividends in 2004 of approximately $95.1 million plus an additional amount equal to its
net income through the date of declaration in 2004. 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.

18

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PFGI CAPITAL CORPORATION

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 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, 2003, 92% 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.

19

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PFGI CAPITAL CORPORATION

At December 31, 2003, 93% of the
properties underlying the commercial mortgage loan participation interests of PFGI Capital
were located in Ohio. Because of the concentration of PFGI Capitals interests in
Ohio, in the event of adverse economic, political or business conditions or natural
hazards in Ohio, 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 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.

20

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PFGI CAPITAL CORPORATION

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

On May 3, 2003, a purported class
action was filed in the U.S. District Court for the Southern District of Ohio by
shareholder Silverback Master Ltd. As amended August 22, 2003 the case names as defendants
Provident, PFGI Capital, Providents President, Robert L. Hoverson and
Providents Chief Financial Officer, Christopher J. Carey, and is allegedly, on
behalf of all purchasers of PRIDES in or traceable to a June 6, 2002 offering of those
securities registered with the Securities and Exchange Commission and extending to March
5, 2003. This action is based upon circumstances involved in a restatement of earnings
announced by Provident on March 5, 2003. It alleges violations of securities laws by the
defendants in Providents financial disclosures during the period from March 30, 1998
through March 5, 2003 and in the June 2002 offering. It seeks an unspecified amount of
compensatory damages.

This action and other class actions
have been consolidated before Judge S. Arthur Spiegel of the United States District Court
for the Southern District of Ohio under the caption, Merzin v. Provident Financial Group,
Inc., consolidated Civil Action Master File No. C-1-03-165. PFGI Capital and other
Defendants filed a Motion to Dismiss the Complaint on November 5, 2003. The motion was
granted on March 9, 2004 and the Court dismissed all claims except those relating to the
June 6, 2002 offering of 6,600,000 PRIDE securities. However, the Courts order
confined any later finding of damages to $0.70 per PRIDE security.

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

None in the fourth quarter

21

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PFGI CAPITAL CORPORATION

# ITEM II

ITEM 5. MARKET FOR
REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES

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 ended December 31,
2003 and the period from June 12 to 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. For the year ended December 31, 2003 and the period from June 12, 2002 to December
31, 2002, PFGI Capital paid dividends on the Series A Preferred Stock of $12,788,000 and
$5,541,000, respectively, and Provident paid contract adjustment payments of $2,062,000
and $894,000, respectively. On February 18, 2004, 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 9 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.

|                 | 2003 | 2002 |   |      
|---------------- | ---- | ---- | - | -----
|
|High Close       |      |      | $ | 31.00
|Low Close        |      |      |   | 27.75
|Period End Close |      |      |   | 30.76

At March 1, 2004, there were 806
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 9 included in Notes to Financial Statements.

A report of purchases of equity
securities is not required for this period.

22

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PFGI CAPITAL CORPORATION

ITEM 6. SELECTED
FINANCIAL DATA

The information presented below represents
selected financial data relative to PFGI Capital for the year ended December 31, 2003 and
the period from June 12, 2002 (commencement of operations) to December 31, 2002 and as of
December 31, 2003 and 2002.

|(Dollars in Thousands Except Per Share Amounts)   | 2003 | 2002
|------------------------------------------------- | ---- | ----
|Earnings for Period Ended:                        |      |     
|Interest Income                                   |      |     
|Provision                                         |      |     
|Noninterest Expense                               |      |     
|Net Income Before Preferred Dividends             |      |     
|Net Income Available to Common Shares             |      |     
|Net Income Per Common Share                       |      |     
|Preferred Stock Cash Dividends Paid               |      |     
|Common Stock Consent Dividends                    |      |     
|Average Yield on Earning Assets                   |      |     
|Selected Balances at December 31:                 |      |     
|Commercial Mortgage Loan Participation Interests, |      |     
|Net of Reserve for Loan Participation Losses      |      |     
|All Other Assets                                  |      |     
|Total Assets                                      |      |     
|Series A Preferred Stock                          |      |     
|Common Stock and Other Equity Items               |      |     

23

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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 and
net income available to common shareholders of $16,869,000 and $4,081,000, respectively,
for the year ended December 31, 2003 and $9,617,000 and $4,076,000, respectively, for the
period from June 12, 2002 (commencement of operations) to December 31, 2002. Earnings per
common share were $0.69 for both periods. Cash dividends of $12,788,000 and $5,541,000
were paid to the Series A Preferred shareholders during these time periods. Consent
dividends of $2,427,000 and $2,633,000 were considered to be paid to the common
shareholders and contributed back to the REIT for the year ended December 31, 2003 and the
period from June 12, 2002 to December 31, 2002.

At December 31, 2003 and 2002, PFGI
Capital had total assets of $332,910,000 and $328,515,000, respectively. These assets were
primarily comprised of net commercial mortgage loan participations totaling $323,762,000
and $321,755,000 at year-end 2003 and 2002, respectively. All loan participations were
acquired from the Bank. Equity for PFGI Capital was $332,596,000 and $328,515,000 as of
December 31, 2003 and 2002, respectively.

24

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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 $16,073,000 and $10,065,000 for the year ended December 31, 2003 and
the period from June 12 to December 31, 2002, respectively. Provident Capitals
average yield on total earnings assets was 4.83% and 5.51% during these periods.

The following table provides average
balances, along with their related interest income and average rate earned for earning
assets, for the year ended December 31, 2003 and for the period from June 12 to December
31, 2002.

|                                      | Year Ended December 31, 2003 | June 12 to December 31, 2002 |   |        
|------------------------------------- | ---------------------------- | ---------------------------- | - | -------
|
|ASSETS:                               |                              |                              |   |        
|Interest Earning Assets:              |                              |                             
|Commercial Mortgage                   |                              |                             
|Loan Participations                   |                              |                              | $ | 320,289
|Deposit Account at Provident Bank     |                              |                              |   | 12,149 
|                                      |                              |                              |   |        
|Total Interest Earning Assets         |                              |                              |   | 332,438
|Reserve for Loan Participation Losses |                              |                              |   | (3,203 
|Other Noninterest Earning Assets      |                              |                              |   | 845    
|                                      |                              |                              |   |        
|Total Assets                          |                              |                              | $ | 330,080
|                                      |                              |                              |   |        
|LIABILITIES AND SHAREHOLDERS' EQUITY: |                              |                             
|Noninterest Bearing Liabilities       |                              |                              | $ | 5      
|Shareholders' Equity                  |                              |                              |   | 330,075
|                                      |                              |                              |   |        
|Total Liabilities and                 |                              |                             
|Shareholders' Equity                  |                              |                              | $ | 330,080
|                                      |                              |                              |   |        

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. PFGI had a negative provision for loan participation losses of $1,654,000 for
2003 as it was determined that, after eighteen months of operations and loan loss
experience, the reserve for participation losses was higher than needed based on
managements estimate of inherent losses. There was no provision for loan
participation losses for the period from June 12 to December 31, 2002.

Noninterest Income and
Expense

PFGI Capital did not record any
noninterest income for the year ended December 31, 2003 or from June 12 to December 31,
2002. Noninterest expense of $858,000 and $448,000 was recognized during these periods.
Noninterest expense was comprised primarily of compensation paid to the Bank for loan
servicing and management fees. For the year ended December 31, 2003 and from June 12 to
December 31, 2002, loan servicing fees were $401,000 and $221,000, respectively, and
management fees were $320,000 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.

25

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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, 2003 and 2002,
PFGI Capital had $323,762,000 and $321,755,000 of commercial mortgage loan participations,
net of reserves, respectively. 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
composition of the commercial mortgage loan participations by property type at December
31, 2003:

|Property Type               | Number
of Loans | Aggregate
Principal
Balance
(In Thousands) | Percentage
by Aggregate
Principal
Balance
|--------------------------- | --------------- | ------------------------------------------ | -----------------------------------------
|Office / Warehouse          |                 |                                            |                                          
|Shopping / Retail           |                 |                                            |                                          
|Apartments                  |                 |                                            |                                          
|Hotel / Motel               |                 |                                            |                                          
|Residential Development     |                 |                                            |                                          
|Healthcare Facilities       |                 |                                            |                                          
|Other Commercial Properties |                 |                                            |                                          
|                            |                 |                                            |                                          
|Total                       |                 |                                            |                                          
|                            |                 |                                            |                                          

26

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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, 2003:

|               | Fixed Rate | Adjustable Rate |  |   
|-------------- | ---------- | --------------- |  | --
|
|Under 5.00%    |            |                 |  | 1 
|5.00% to 5.99% |            |                 |  | 3 
|6.00% to 6.99% |            |                 |  | 1 
|7.00% to 7.99% |            |                 |  | 4 
|8.00% to 8.99% |            |                 |  | 5 
|               |            |                 |  |   
|               |            |                 |  | 14
|               |            |                 |  |   

|Interest Type         | Number
of
Loans | Aggregate
Principal
Balance
(In Thousands) | Percentage
by Aggregate
Principal
Balance | Weighted
Average
Interest
Rate
|--------------------- | --------------- | ------------------------------------------ | ----------------------------------------- | ------------------------------
|Fixed Rate Loans      |                 |                                            |                                           | 14                            
|Adjustable Rate Loans |                 |                                            |                                           | 175                           
|                      |                 |                                            |                                           |                               
|Total                 |                 |                                            |                                           | 189                           
|                      |                 |                                            |                                           |                               

Other Assets and
Liabilities

As of December 31, 2003 and 2002,
PFGI Capital had cash of $8,088,000 and $5,357,000, respectively, in an interest bearing
deposit account at the Bank. As of year-end 2003, the account was yielding a rate of
1.00%.

Additionally, PFGI Capital had
interest receivable of $1,019,000 and $1,107,000, accounts receivable/(payable) of
($314,000) and $279,000, and prepaid expenses of $41,000 and $17,000 as of December 31,
2003 and 2002, respectively.

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.

27

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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 are outstanding, cash dividends of $12,788,000 are
expected to be paid during 2004.

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 ended December 31, 2003 and for the period from June
12 to 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 9 included in Notes to Financial Statements.

OFF-BALANCE SHEET
ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

PFGI Capital does not have any
off-balance sheet arrangements, such as guarantees, retained or contingent interests,
derivative instruments, or variable interests.

No table is provided for contractual
obligations as PFGI has no long-term debt obligations, capital lease obligations,
operating lease obligations, purchased obligations or other long-term liabilities.

28

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

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 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 93%
of the loans underlying the participation interests are located in Ohio as of December 31,
2003. Consequently, the portfolio may experience a higher default rate in the event of
adverse economic, political, or business developments or natural hazards in Ohio and may
affect the ability of borrowers to make payments of principal and interest on the
underlying loans. Office / Warehouse and Shopping / Retail
property types represent approximately 31% and 29% of the total loan participation
balance, respectively, as of year-end 2003. 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.

29

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

The following table shows a
progression of the reserve for loan participation losses for the year ended December 31,
2003 and from June 12, 2002 (commencement of operations) to December 31, 2002:

|(In Thousands)                           | Year Ended
December 31,
2003 | June 12 to
December 31,
2002
|---------------------------------------- | ---------------------------- | ----------------------------
|Balance at Beginning of Period           |                              |                             
|Transferred Reserves, Net                |                              |                             
|Provision for Loan Losses                |                              |                             
|Loans Charged Off                        |                              |                             
|Recoveries                               |                              |                             
|                                         |                              |                             
|Balance at End of Period                 |                              |                             
|                                         |                              |                             
|Net Charge-Offs to Average Commercial    |                              |                             
|Mortgage Loan Participations             |                              |                             
|                                         |                              |                             
|Reserve for Loan Participation Losses to |                              |                             
|Commercial Mortgage Loan Participations  |                              |                             
|                                         |                              |                             

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, 2003 and 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, 2003 and 2002.

30

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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, 2003, 8%
of PFGI Capitals loan participation portfolio had fixed interest rates. Such loans
tend to increase interest rate risk. At December 31, 2003, 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:

|                          | 2003 | 2002
|------------------------- | ---- | ----
|100 Basis Points Decrease |      |     
|100 Basis Points Increase |      |     
|200 Basis Points Decrease |      |     
|200 Basis Points Increase |      |     

Due to the current low interest rate
environment, nothing beyond a 100 basis point decrease was simulated.

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, 2003, the average weighted yield on loan
participations was 4.80%. Assuming that the investment in participation interests remain
level, yields on loan participations would have to decrease by 60 basis points before cash
flows would be insufficient to cover the regular dividend payments to holders of Preferred
Stock.

31

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PFGI CAPITAL CORPORATION

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL
STATEMENTS

|                                                  | 
|------------------------------------------------- | 
|Report of Ernst & Young LLP, Independent Auditors | 
|Financial Statements:                             | 
|PFGI Capital Corporation:                         | 
|Balance Sheets                                    | 
|Statements of Income                              | 
|Statements of Changes in Shareholders' Equity     | 
|Statements of Cash Flows                          | 
|Notes to Financial Statements                     | 
|Supplementary Data:                               | 
|Quarterly Results of Operations (unaudited)       | 

---

PFGI CAPITAL CORPORATION

REPORT OF ERNST &
YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and
Shareholders PFGI Capital Corporation

We have audited the accompanying balance
sheets of PFGI Capital Corporation as of December 31, 2003 and 2002, and the related
statements of income, changes in shareholders equity and cash flows for year ended
December 31, 2003 and 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 audits 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 audits 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, 2003 and 2002, and the results of its
operations and its cash flows for the year ended December 31, 2003 and the period from
June 12, 2002 to December 31, 2002, in conformity with accounting principles generally
accepted in the United States.

| | /s/ERNST & YOUNG LLP
| | --------------------

Cincinnati, Ohio
February 20, 2004

33

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PFGI CAPITAL CORPORATION

BALANCE SHEETS

|                                                    | December 31, | 
|--------------------------------------------------- | ------------ | 
|
|ASSETS:                                             |              | 
|Commercial Mortgage Loan Participations             |              | 
|Reserve for Loan Participation Losses               |              | 
|                                                    |              | 
|Net Commercial Mortgage Loan Participations         |              | 
|Cash and Due From Banks                             |              | 
|Interest Receivable                                 |              | 
|Accounts Receivable - The Provident Bank            |              | 
|Other Assets                                        |              | 
|                                                    |              | 
|TOTAL ASSETS                                        |              | 
|                                                    |              | 
|LIABILITIES AND SHAREHOLDERS' EQUITY:               |              | 
|Liabilities:                                        |              | 
|Accounts Payable - The Provident Bank               |              | 
|Shareholders' Equity:                               |              | 
|Series A Preferred Stock, $25 Stated Value,         |              | 
|6,600,000 Shares Authorized, Issued and Outstanding |              | 
|Common Stock, $.01 Par Value, 5,940,000 Shares      |              | 
|Authorized, Issued and Outstanding                  |              | 
|Capital Surplus                                     |              | 
|Retained Earnings                                   |              | 
|                                                    |              | 
|Total Shareholders' Equity                          |              | 
|                                                    |              | 
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          |              | 
|                                                    |              | 
|See notes to financial statements                   |              | 

34

---

PFGI CAPITAL CORPORATION  STATEMENTS OF INCOME

|(In Thousands Except Per Share Data)    | Year Ended
December 31,
2003 | June 12 to
December 31,
2002
|--------------------------------------- | ---------------------------- | ----------------------------
|Interest Income:                        |                              |                             
|Interest on Loan Participations         |                              |                             
|Interest on Cash Deposit                |                              |                             
|                                        |                              |                             
|Total Interest Income                   |                              |                             
|Provision for Loan Participation Losses |                              |                             
|                                        |                              |                             
|Net Interest Income After Provision     |                              |                             
|for Loan Participation Losses           |                              |                             
|Noninterest Expense:                    |                              |                             
|Loan Servicing Fees                     |                              |                             
|Management Fees                         |                              |                             
|Other Noninterest Expense               |                              |                             
|                                        |                              |                             
|                                        |                              |                             
|                                        |                              |                             
|Income Before Income Taxes              |                              |                             
|Income Taxes                            |                              |                             
|                                        |                              |                             
|Net Income / Comprehensive Income       |                              |                             
|                                        |                              |                             
|Preferred Stock Dividends               |                              |                             
|                                        |                              |                             
|Net Income Available to Common Shares   |                              |                             
|                                        |                              |                             
|Basic Earnings Per Common Share         |                              |                             
|Diluted Earnings Per Common Share       |                              |                             
|Consent Dividends Per Common Share      |                              |                             
|See notes to financial statements       |                              |                             

35

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

|                                  | Preferred
Stock | Common
Stock | Capital
Surplus | Retained
Earnings | Total
|--------------------------------- | --------------- | ------------ | --------------- | ----------------- | -----
|Balance at June 12, 2002          |                 |              | $               | --                |      
|Issuance of Common Stock          |                 |             
|(5,940,000 Shares)                |                 |              |                 |                   |      
|Issuance of Preferred Stock       |                 |             
|(6,600,000 Shares)                |                 |              |                 | 165,000           |      
|Offering Costs of Preferred Stock |                 |              |                 |                   |      
|Preferred Stock Dividends         |                 |             
|($0.8396 Per Share)               |                 |              |                 |                   |      
|Common Stock Consent Dividend     |                 |             
|($0.4433 Per Share)               |                 |              |                 |                   |      
|Contribution of Consent Dividend  |                 |              |                 |                   |      
|Net Income                        |                 |              |                 |                   |      
|                                  |                 |              |                 |                   |      
|Balance at December 31, 2002      |                 |              |                 | 165,000           |      
|Preferred Stock Dividends         |                 |             
|($1.9375 Per Share)               |                 |              |                 |                   |      
|Common Stock Consent Dividend     |                 |             
|($0.4087 Per Share)               |                 |              |                 |                   |      
|Contribution of Consent Dividend  |                 |              |                 |                   |      
|Net Income                        |                 |              |                 |                   |      
|                                  |                 |              |                 |                   |      
|Balance at December 31, 2003      |                 |              | $               | 165,000           |      
|                                  |                 |              |                 |                   |      
|See notes to financial statements |                 |             

# 36

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PFGI CAPITAL CORPORATION
                                                      STATEMENTS OF CASH FLOWS

|(In Thousands)                                      | Year Ended
December 31,
2003 | June 12 to
December 31,
2002
|--------------------------------------------------- | ---------------------------- | ----------------------------
|Operating Activities:                               |                              |                             
|Net Income                                          |                              |                             
|Adjustments to Reconcile Net Income to              |                              |                             
|Net Cash Provided by Operating Activities:          |                              |                             
|Provision for Loan Participation Losses             |                              |                             
|(Increase) Decrease in Interest Receivable          |                              |                             
|(Increase) Decrease in Accounts Receivable          |                              |                             
|and Other Assets                                    |                              |                             
|Increase in Accounts Payable                        |                              |                             
|                                                    |                              |                             
|Net Cash Provided by Operating Activities           |                              |                             
|Investing Activities:                               |                              |                             
|Net Increase in Loan Participations                 |                              |                             
|Financing Activities:                               |                              |                             
|Proceeds from Issuance of Preferred Stock           |                              |                             
|Offering Costs of Preferred Stock                   |                              |                             
|Cash Dividends Paid                                 |                              |                             
|                                                    |                              |                             
|Net Cash Provided by (Used in) Financing Activities |                              |                             
|                                                    |                              |                             
|Increase in Cash and Cash Equivalents               |                              |                             
|Cash at Beginning of Period                         |                              |                             
|                                                    |                              |                             
|Cash and Cash Equivalents at End of Period          |                              |                             
|                                                    |                              |                             
|Supplemental Disclosures of Cash Flow Information:  |                              |                             
|Cash Paid for:                                      |                              |                             
|Interest                                            |                              |                             
|Income Taxes                                        |                              |                             
|Non-Cash Activity:                                  |                              |                             
|Exchange of Common Stock for Loan Participations    |                              |                             
|See notes to financial statements                   |                              |                             

37

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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 variable interest
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 recognized
on a cash basis.

38

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

RESERVE FOR LOAN PARTICIPATION
LOSSES: The reserve for loan participation losses is maintained at a level management
estimates as 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 the inherent loss potential 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 ended December 31, 2003 and the period from June 12 to 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.

39

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

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.

NOTE 2. RECENT ACCOUNTING
PRONOUNCEMENTS

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 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.

In April 2003, the Financial
Accounting Standards Board (FASB) issued Statement No. 149 Amendment of Statement
133 on Derivative Instruments and Hedging Activities. Statement 149 amends and
clarifies financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities under
Statement 133 Accounting for Derivative Instruments and Hedging Activities.
Statement 149 amends Statement 133 for decisions made (1) as part of the Derivatives
Implementation Group process that effectively required amendments to Statement 133, (2) in
connection with other FASB projects dealing with financial instruments, and (3) in
connection with implementation issues raised in relation to the application of the
definition of a derivative. Statement 149 is effective for contracts entered into or
modified after June 30, 2003, and hedging relationships designated after June 30, 2003.
However, the provisions of Statement 149 that merely represent the codification of
previous Derivatives Implementation Group decisions were already effective and were
applied in accordance with their prior respective effective dates. The adoption of
Statement No. 149 did not have any significant impact on PFGI Capitals results of
operations or financial condition.

In May 2003, the FASB issued
Statement 150 Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity. Statement 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability. Many of those instruments were previously classified as
equity. Statement 150 is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise became effective as of July 1, 2003. The adoption of
Statement No. 150 did not have any significant impact on PFGI Capitals results of
operations or financial condition.

40

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

In December 2003, the FASB issued
revised FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46, which is an interpretation of Accounting Research
Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by
business enterprises of variable interest entities (VIEs). A VIE exists when (1) the
equity investment at risk is not sufficient to permit the entity to finance its activities
without additional subordinated financial support; (2) equity investors do not have the
ability to make decisions about the entitys activities through voting rights or do
not have the obligation/right to absorb expected losses/residual returns of the entity; or
(3) equity investors have voting rights that are not proportionate to their economic
interests and the activities of the entity are conducted on behalf of an investor with a
disproportionately small voting interest. FIN 46 requires VIEs to be consolidated by their
primary beneficiaries. The primary beneficiary of a VIE is the party that absorbs a
majority of the entitys expected losses and/or receives a majority of its expected
residual returns as a result of holding variable interests. FIN 46 becomes effective for
entities that have interest in special purpose entities for periods ending after December
15, 2003, and for all other types of VIEs for periods ending after March 15, 2004. As of
December 31, 2003, PFGI Capital did not hold any interest in VIEs, and therefore, the
adoption of FIN 46 is not expected to have a material impact on PFGI Capitals
results of operations or financial condition.

Note 3. 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 2003 or 2002.

At December 31, 2003 and 2002, 93%
and 80%, respectively, of the properties underlying the commercial mortgage loan
participation interests of PFGI Capital were located in Ohio. Because of the concentration
of PFGI Capitals interests in Ohio, in the event of adverse economic, political or
business conditions or natural hazards in Ohio, 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.

41

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PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

The following table sets forth an
analysis of the reserve for loan participation losses for the year ended December 31, 2003
and the period from June 12, 2002 (commencement of operations) to December 31, 2002:

|(In Thousands)                 | Year Ended
December 31,
2003 | June 12 to
December 31,
2002
|------------------------------ | ---------------------------- | ----------------------------
|Balance at Beginning of Period |                              |                             
|Transferred Reserves, Net      |                              |                             
|Provision for Loan Losses      |                              |                             
|Loans Charged Off              |                              |                             
|Recoveries                     |                              |                             
|                               |                              |                             
|Balance at End of Period       |                              |                             
|                               |                              |                             

NOTE 4. 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 year ended December 31,
2003 and the period from June 12, 2002 to December 31, 2002:

|(In Thousands, Except Per Share Data)      | Year Ended
December 31,
2003 | June 12 to
December 31,
2002
|------------------------------------------ | ---------------------------- | ----------------------------
|Net Income                                 |                              |                             
|Less Preferred Stock Dividends             |                              |                             
|                                           |                              |                             
|Income Available to Common Shareholder     |                              |                             
|                                           |                              |                             
|Weighted-Average Common Shares Outstanding |                              |                             
|Basic and Diluted Earnings Per Share       |                              |                             

NOTE 5. 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 & 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.

42

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

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 6. 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
contract and PFGI Capital Series A Preferred Stock.

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.

Under the forward 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.

43

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

In connection with the settlement of
the forward 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 forward purchase contract. Once the forward
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 forward 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%.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As discussed in Note 11 of the
Notes to Financial Statements, Provident will merge with National City
Corporation (National City) subject to regulatory and stockholder approvals. National City
will be required to expressly assume Providents obligations under the forward
purchase contract and certain related agreements. As Provident shareholders will be
receiving 1.135 shares of National City Common Stock for each share of Provident Common
Stock, the settlement rate of the forward purchase contract will be calculated as follows:

|o | if
the market value of National City Common Stock is equal to or greater than $25.6033,  the
settlement  rate will be 0.9764;
|- | -----------------------------------------------------------------------------------------------------------------------------

|o | if
the market value of National City Common Stock is between $25.6033 and $21.5154, the
settlement rate will be equal to the $25 stated amount divided by the applicable market
value; and
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

44

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

|o | if
the applicable market value is less than or equal to $21.5154, the settlement rate will
be 1.1620.
|- | -----------------------------------------------------------------------------------------------------

NOTE 7. 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 $401,000 and $221,000 for the year ended December 31,
2003 and for the period from June 12 to December 31, 2002, respectively.

A summary of loan participation
activity between the Bank and PFGI Capital for the year ended December 31, 2003 and the
period from June 12 to December 31, 2002 follows:

|(In Thousands)                              | Year Ended
December 31,
2003 | June 12 to
December 31,
2002
|------------------------------------------- | ---------------------------- | ----------------------------
|Balance at Beginning of Period              |                              |                             
|Loan Participations Transferred at          |                              |                             
|Issuance of PRIDES and Common Stock         |                              |                             
|Subsequent Transfers of Loan Participations |                              |                             
|From Bank to PFGI Capital                   |                              |                             
|Loan Participation Advances                 |                              |                             
|Transfer of Loan Participations             |                              |                             
|From PFGI Capital to the Bank               |                              |                             
|Loan Participation Payments                 |                              |                             
|                                            |                              |                             
|Balance at End of Period                    |                              |                             
|                                            |                              |                             

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 was $320,000 and
$177,000 for the year ended December 31, 2003 and for the period from June 12 to December
31, 2002, respectively.

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

45

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

As of December 31, 2003 and 2002,
PFGI Capital had an interest-bearing deposit account of $8,088,000 and $5,357,000,
respectively, at the Bank and a net receivable/(payable) of ($314,000) and $279,000,
respectively, from the Bank.

NOTE 8. FAIR VALUE OF
FINANCIAL INTRUMENTS

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.

|                                            | 2003 | 2002 |  
|------------------------------------------- | ---- | ---- | -
|
|Financial Assets:                           |      |      |  
|Commercial Mortgage Loan Participations     |      |      | $
|Less: Reserve for Loan Participation Losses |      |      |  
|                                            |      |      |  
|Net Commercial Mortgage Loan Participations |      |      |  
|Cash and Due From Banks                     |      |      |  

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.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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 9. 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.

46

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

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%; or a leverage ratio of less
than 5.0%. At December 31, 2003 and 2002, the Banks total risk-based capital ratio
was 12.26% and 11.36%, respectively, its Tier 1 risk-based capital ratio was 9.12% and
8.19%, respectively, and its leverage ratio was 7.00% and 6.77%, respectively. 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, 2003, the Bank
could, without prior regulatory approval and absent contrary supervisory guidance, declare
dividends in 2004 of approximately $95.1 million plus an additional amount equal to its
net income through the date of declaration in 2004. 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 10. LEGAL
CONTINGENCIES

On May 3, 2003, a purported class
action was filed in the U.S. District Court for the Southern District of Ohio by
shareholder Silverback Master Ltd. As amended August 22, 2003 the case names as defendants
Provident, PFGI Capital, Providents President, Robert L. Hoverson and
Providents Chief Financial Officer, Christopher J. Carey, and is allegedly, on
behalf of all purchasers of PRIDES in or traceable to a June 6, 2002 offering of those
securities registered with the Securities and Exchange Commission and extending to March
5, 2003. This action is based upon circumstances involved in a restatement of earnings
announced by Provident on March 5, 2003. It alleges violations of securities laws by the
defendants in Providents financial disclosures during the period from March 30, 1998
through March 5, 2003 and in the June 2002 offering. It seeks an unspecified amount of
compensatory damages.

47

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

This action and other class actions
have been consolidated before Judge S. Arthur Spiegel of the United States District Court
for the Southern District of Ohio under the caption, Merzin v. Provident Financial Group,
Inc., consolidated Civil Action Master File No. C-1-03-165. PFGI Capital and other
Defendants filed a Motion to Dismiss the Complaint on November 5, 2003. The motion was
granted on March 9, 2004 and the Court dismissed all claims except those relating to the
June 6, 2002 offering of 6,600,000 PRIDE securities. However, the Courts order
confined any later finding of damages to $0.70 per PRIDE security.

NOTE 11. SUBSEQUENT EVENT

On February 17, 2004, Provident
announced that it had signed a definitive agreement to merge with National City
Corporation. National City Corporation is a financial holding company headquartered in
Cleveland, Ohio. Under terms of the agreement, Provident shareholders will receive 1.135
shares of National City Corporation common stock for each share of Provident common stock
in a tax-free exchange. Subject to regulatory and stockholder approvals, the transaction
is expected to close in the second quarter of 2004.

48

---

PFGI CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS

NOTE 12. QUARTERLY
RESULTS OF OPERATIONS - (Unaudited)

The following are quarterly results
of operations for PFGI Capital for the year ended December 31, 2003 and for the period
from June 12, 2002 (commencement of operations) to December 31, 2002:

|(In Thousands, Except Per Share Data)   | Fourth
Quarter | Third
Quarter | Second
Quarter | First
Quarter
|--------------------------------------- | -------------- | ------------- | -------------- | -------------
|2003:                                   |                |               |                |              
|Interest Income                         |                |               | $              | 3,825        
|Provision for Loan Participation Losses |                |               |                | 1,654        
|                                        |                |               |                |              
|Net Interest Income After Provision     |                |              
|for Loan Participation Losses           |                |               |                | 5,479        
|Noninterest Expense                     |                |               |                | (211         
|                                        |                |               |                |              
|Income Before Income Taxes              |                |               |                | 5,268        
|Income Taxes                            |                |               |                | --           
|                                        |                |               |                |              
|Net Income                              |                |               | $              | 5,268        
|                                        |                |               |                |              
|Preferred Stock Dividends               |                |               | $              | 3,197        
|                                        |                |               |                |              
|Net Income Available to Common Shares   |                |               | $              | 2,071        
|                                        |                |               |                |              
|Per Common Share:                       |                |              
|Basic and Diluted Earnings              |                |               | $              | 0.35         
|Dividends                               |                |               | $              | 0.41         

|                                        | Fourth
Quarter | Third
Quarter | June 12 to
June 30, 2002 |       
|--------------------------------------- | -------------- | ------------- | ------------------------ | ------
|2002:                                   |                |               |                          |       
|Interest Income                         |                |               | $                        | 4,331 
|Provision for Loan Participation Losses |                |               |                          | --    
|                                        |                |               |                          |       
|Net Interest Income After Provision     |                |              
|for Loan Participation Losses           |                |               |                          | 4,331 
|Noninterest Expense                     |                |               |                          | (195  
|                                        |                |               |                          |       
|Income Before Income Taxes              |                |               |                          | 4,136 
|Income Taxes                            |                |               |                          | --    
|                                        |                |               |                          |       
|Net Income                              |                |               | $                        | 4,136 
|                                        |                |               |                          |       
|Preferred Stock Dividends               |                |               | $                        | 5,541 
|                                        |                |               |                          |       
|Net Income Available to Common Shares   |                |               | $                        | (1,405
|                                        |                |               |                          |       
|Per Common Share:                       |                |              
|Basic and Diluted Earnings              |                |               | $                        | (0.24 
|Dividends                               |                |               | $                        | 0.44  

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

49

---

PFGI CAPITAL CORPORATION

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

None

ITEM 9A. 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, 2003. 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 has been no change in PFGI Capitals internal
control over financial reporting that occurred during PFGI Capitals quarter ended
December 31, 2003 that has materially affected, or is reasonably likely to materially
affect, PFGI Capitals internal control over financial reporting.

# PART III

Items 10 through 14 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, 2003:

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. PRINCIPAL
ACCOUNTANT FEES AND SERVICES

# PART IV

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

|(a) | 1.  
See Index to Financial Statements on page 32 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.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

50

---

PFGI CAPITAL CORPORATION

|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.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

|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.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14.0 |  | Code
of Conduct and Ethics is provided in the investor relations page of Providents web
site at www.providentbank.com and is available in print to any shareholder upon request.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|23.0 |  | Consent
of Independent Auditors attached to this report.
|---- |  | --------------------------------------------------------

|31.1 |  | Rule
13a-14(a)/15d-14(a), Certification of Principal Executive Officer attached to this
report.
|---- |  | -----------------------------------------------------------------------------------------------

|31.2 |  | Rule
13a-14(a)/15d-14(a), Certification of Principal Financial Officer attached to this
report.
|---- |  | -----------------------------------------------------------------------------------------------

|32.1 |  | Section
1350 Certification of Principal Executive Officer attached to this report.
|---- |  | ----------------------------------------------------------------------------------

51

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PFGI CAPITAL CORPORATION

|32.2 |  | Section
1350 Certification of Principal Financial Officer attached to this report.
|---- |  | ----------------------------------------------------------------------------------

(b)    
          Reports on Form 8-K:

| | Form
8-K (Items 7 and 12) filed on October 27, 2003  Announcement of Third Quarter 2003
Financial Results and Confirmation of Dividend Payment
| | -----------------------------------------------------------------------------------------------------------------------------------------------

| | Form
8-K (Items 7 and 12) filed on January 22, 2004  Announcement of Fourth Quarter 2003
Financial Results and Confirmation of Dividend Payment
| | ------------------------------------------------------------------------------------------------------------------------------------------------

52

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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. CareyChristopher J. Carey President March 9, 2004
| | -------------------------------------------------------------------

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        | March 9, 2004
|Christopher J. Carey    | (Principal Executive Officer)
|                       
|/s/T. James Berry       | Director                      | March 9, 2004
|T. James Berry         
|                       
|/s/Dett Hunter          | Director                      | March 9, 2004
|Dett Hunter            
|                       
|/s/Mark E. Magee        | Director and Secretary        | March 9, 2004
|Mark E. Magee          
|                       
|/s/Robert Pompey        | Director, Vice President      | March 9, 2004
|Robert Pompey           | and Chief Operations Officer 
|                       
|/s/J. David Rosenberg   | Director                      | March 9, 2004
|J. David Rosenberg     
|                       
|/s/John E. Rubenbauer   | Director                      | March 9, 2004
|John E. Rubenbauer     
|                       
|/s/Anthony M. Stollings | Director, Chief Financial     | March 9, 2004
|Anthony M. Stollings    | Officer and Treasurer        
|                       
|/s/Tayfun Tuzun         | Director and Vice President   | March 9, 2004
|Tayfun Tuzun           

53