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 ~~The~~SECURITIES ~~Fiscal~~EXCHANGE ~~Year~~ACT ~~Ended~~OF ~~December~~1934 ~~31, 2008 Commission File 1-08019-01~~

For The Fiscal Year Ended December 31, 2009

Commission File 1-08019-01

PFGI CAPITAL CORPORATION

Incorporated Under

The Laws of Maryland

IRS Employer I.D.

No. 04-3659419

~~1900~~249 ~~East~~Fifth ~~Ninth Street~~Avenue, ~~Cleveland~~Pittsburgh, ~~Ohio 44114~~ ~~Phone:~~Pennsylvania ~~(800) 622~~15222-~~4204~~2707

~~Securities registered pursuant to section 12(b) of the Act~~Phone: ~~Series A Preferred Stock Securities registered pursuant to section 12~~(g412)-762-2000 ~~of the Act: None~~

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark~~to ifsection ~~the~~12(b) ~~registrant is a well-known seasoned issuer, as defined in Rule 405~~ of the ~~Securities~~ Act~~. YES o NO þ~~ : None

~~Indicate~~Securities byregistered ~~check mark if the registrant is not required to file reports~~ pursuant to ~~Section 13~~section ~~or Section 15~~12(dg) of the Act~~. YES o NO þ~~ : Series A Preferred Stock

Indicate by check mark ~~whether~~if the registrant ~~(1) has~~is ~~filed~~a ~~all~~well-known ~~reports~~seasoned ~~required~~issuer, toas bedefined ~~filed~~in byRule ~~Section 13~~405 ~~or 15(d)~~ of the Securities ~~Exchange~~ Act ~~of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days~~. YES þ ¨ NO o x

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent filers pursuant to Item 405 of Regulation S-K~~ is ~~not~~ ~~contained herein, and will~~ not berequired ~~contained,~~ to ~~the~~file ~~best~~reports ~~of registrant’s knowledge, in~~pursuant ~~definitive~~to ~~proxy~~Section 13 or ~~information statements incorporated by reference in Part~~Section ~~III~~15(d) of ~~this~~the ~~From~~Act. YES ¨ NO x ~~10-K or any amendment o this Form 10-K þ~~

Indicate by check mark whether the registrant is(1) has afiled ~~large~~all ~~accelerated~~reports ~~filer,~~required anto ~~accelerated~~be ~~filer,~~filed aby ~~non-accelerated~~Section 13 ~~filer~~or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or afor ~~smaller~~such ~~reporting~~shorter ~~company.~~period ~~See~~that the ~~definitions~~registrant ofwas ~~“large~~required ~~accelerated~~to ~~filer,”~~file ~~“accelerated~~such ~~filer”~~reports), and ~~“smaller~~(2) has ~~reporting~~been ~~company”~~subject into ~~Rule~~such ~~12b-2~~filing ofrequirements for the ~~Exchange~~past ~~Act~~90 days. YES x NO ¨ ~~(Check one):~~

~~Large~~Indicate ~~accelerated~~by ~~filer~~check omark ~~Accelerated~~whether ~~filer~~the oregistrant ~~Non~~has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-~~accelerated~~T ~~filer~~during othe preceding 12 months (Door ~~not~~for ~~check~~such ifshorter aperiod ~~smaller~~that ~~reporting~~the ~~company)~~registrant ~~Smaller~~was ~~reporting~~required ~~company~~to þsubmit and post such files). YES ¨ NO ¨

Indicate by check mark ~~whether~~if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s isknowledge, ain ~~shell~~definitive ~~company~~proxy ~~(as~~or ~~defined~~information statements incorporated by reference in ~~Rule 12b-2~~Part III of ~~the Exchange~~this ~~Act). YES o NO þ~~ Form 10-K or any amendment to this Form 10-K x

~~The~~Indicate ~~aggregate~~by ~~market~~check ~~value~~mark ofwhether the ~~Common~~registrant ~~Stock~~is ~~held~~a bylarge accelerated filer, an accelerated filer, a non-~~affiliates~~accelerated offiler, ~~the~~or ~~registrant~~a assmaller ofreporting company. See the ~~close~~ definitions of ~~business~~“large onaccelerated filer”, ~~June 30~~“accelerated filer”, ~~2008~~and ~~was~~“smaller $0reporting company” in Rule 12b-2 of the Exchange Act.

~~Indicate~~Large ~~the~~accelerated ~~number~~filer of¨ ~~shares~~Accelerated ~~outstanding~~filer of¨ ~~each~~Non-accelerated offiler ~~the~~x ~~issuer’s~~Smaller ~~classes~~reporting ofcompany ~~common stock and preferred stock, as of February 27, 2009.~~ ¨

~~Common~~Indicate ~~Stock,~~by ~~$.01~~check ~~Par~~mark ~~Value~~whether —the ~~5,940,000 Series A~~registrant ~~Preferred~~is ~~Stock,~~a ~~$25.00~~shell ~~Stated~~company ~~Value~~(as —defined ~~3,950,484 Series B~~in ~~Preferred~~Rule ~~Stock,~~12b-2 ~~$.01~~of ~~Par~~the ~~Value~~Exchange —Act). YES ¨ NO x ~~105~~

The aggregate market value of the Common Stock held by non-affiliates of the registrant as of the close of business on June 30, 2009 was zero.

The number of shares outstanding of each of the registrant’s classes of common stock and preferred stock, as of February 26, 2010.

Common Stock, $.01 Par Value - 5,940,000

Series A Preferred Stock, $25.00 Stated Value - 3,950,484

Series B Preferred Stock, $.01 Par Value - 105

Documents Incorporated by Reference:

Portions of the registrant’s definitive information statement to be filed with the Commission pursuant to Regulation 14C within 120 days after the close of registrant’s fiscal year ~~ending~~ ended December 31, ~~2008~~2009 are incorporated by reference into Item 10. Directors, Executive Officers and Corporate Governance; 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, and Director Independence; and Item 14. Principal Accounting Fees and Services, of Part III. of this Form 10-K.

LOGO

Year Ended December 31, ~~2008~~ 2009

Financial Report ~~and~~ ~~Form 10-K~~

2 and Form 10-K

FINANCIAL REPORT AND FORM 10-K INDEX TO ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	4
Average Balance Sheets/Interest/Rates		5
Loan Participations		6
Risk Elements of Loan Participation Portfolio		6-7
Item 1A.	Risk Factors (Note 1)
Item 1B.	Unresolved Staff Comments — None
Item 2.	Properties — None
Item 3.	Legal Proceedings — None
Item 4.	Submission of Matters to a Vote of Security Holders — None
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (Note 2)	7-9
Item 6.	Selected Financial Data (Note 1)
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4-9
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk (Note 1)
Item 8.	Financial Statements and Supplementary Data	10-20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure — None
Item 9A(T).	Controls and Procedures	21
Item 9B.	Other Information — None
Part III
Item 10.	Directors, Executive Officers and Corporate Governance (Note 2)
Item 11.	Executive Compensation (Note 2)
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (Note 2)
Item 13.	Certain Relationships and Related Transactions, and Director Independence (Note 2)
Item 14.	Principal Accountant Fees and Services (Note 2)
Part IV
Item 15.	Exhibits and Financial Statement Schedules	10-20, 22
Signature		23
EX-23
EX-24
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Note 1: Omitted pursuant to smaller reporting company regulatory relief and simplification rules.

Note 2: Item is 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, 2008.

Financial Statement Schedules — Omitted due to inapplicability or because required information is shown in the financial statements or the notes thereto.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~ FINANCIAL ~~CONDITION~~REPORT AND ~~RESULTS~~FORM OF10-K ~~OPERATIONS~~

~~BUSINESS~~ INDEX TO ANNUAL REPORT ON FORM 10-K

~~PFGI~~YEAR ~~Capital’s~~ENDED ~~principal~~DECEMBER ~~business objective is to acquire~~31, ~~hold,~~2009 and manage mortgage assets and other authorized investments that will generate net income for distribution to its stockholders. PFGI Capital is operating 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.

~~All~~TABLE ofOF ~~PFGI~~CONTENTS Capital’s common stock is owned by National City Bank (the Bank). Prior to December 31, 2008, National City Bank was a wholly-owned subsidiary of National City Corporation (National City), a financial holding company headquartered in Cleveland, Ohio. On December 31, 2008, National City Corporation was acquired by The PNC Financial Services Group, Inc. (NYSE: PNC), a financial holding company headquartered in Pittsburgh, Pennsylvania. Accordingly, on this date, National City Bank became a wholly-owned subsidiary of The PNC Financial Services Group, Inc. Upon the merger of the Bank into PNC Bank, National Association, which is expected to occur by December 31, 2009, all of PFGI Capital’s common stock will be owned by PNC Bank, National Association. As described in Note 1 to the financial statements, the financial statements of PFGI Capital have been prepared using the historical basis of accounting of PFGI Capital prior to National City Corporation’s acquisition by PNC on December 31, 2008.

PFGI Capital’s Series A preferred stock is owned by outside investors and its Series B preferred stock is owned by present and former employees of the Bank or PNC.


		Page
Part I
Item 1.	Business	5
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments – None
Item 2.	Properties – None
Item 3.	Legal Proceedings - None
Item 4.	Reserved
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	9
Item 6.	Selected Financial Data	9
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8.	Financial Statements and Supplementary Data	15
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure – None
Item 9A (T).	Controls and Procedures	29
Item 9B.	Other Information – None
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	31
Item 11.	Executive Compensation	31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	31
Item 13.	Certain Relationships and Related Transactions, and Director Independence	31
Item 14.	Principal Accounting Fees and Services	31
Part IV
Item 15.	Exhibits, Financial Statement Schedules	31
	Signatures	32

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 interest 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.

PFGI Capital does not 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 PNC and/or the Bank.

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.

EARNINGS SUMMARY

PFGI Capital reported net income available to common stockholders of $9.7 million, or $1.63 per common diluted share for 2008, compared to $12.3 million, or $2.07 per common diluted share for 2007. Cash dividends of $7.7 million were paid to preferred stockholders during 2008 and 2007. No cash dividends have been paid to the common stockholder since the inception of PFGI Capital as a consent dividend procedure has been used in its place. Consent dividends of $11.2 million and $12.2 million were considered to be paid to the common shareholders and contributed back to PFGI Capital for 2008 and 2007, respectively. For further information concerning the consent dividend, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” of this report. The decrease in net income available for common shareholders primarily reflects an increase in the provision for loan participation losses combined with a decrease in interest income during 2008 as compared to 2007.

At December 31, 2008 and 2007, PFGI Capital had total assets of $306.5 million and $296.7 million, respectively. These assets were primarily comprised of net loan participations totaling $297.7 million and $288.1 million as of these same dates. These loan participations were acquired from the Bank. Equity for PFGI Capital was $306.4 million and $296.7 million as of December 31, 2008 and 2007, respectively.

PART I

This Annual Report on Form 10-K (Report) contains certain forward-looking statements that are subject to numerous assumptions, risks or uncertainties. You should review our Risk Factors in Item 1A and Cautionary Statement Regarding Forward-Looking Information included in Item 7 of this Report.

ITEM 1.

BUSINESS

PFGI Capital Corporation (PFGI Capital) is a Maryland corporation incorporated on May 9, 2002. PFGI Capital’s current principal business objective is to acquire, hold, and manage residential mortgage-backed agency securities and other authorized investments that will generate net income for distribution to its stockholders. Prior to September 29, 2009, the principal business objective of PFGI Capital was to acquire, hold, and manage commercial mortgage loan assets and other authorized investments that generated net income for distribution to PFGI Capital’s stockholders. PFGI Capital operates 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.

Prior to November 6, 2009, all of PFGI Capital’s common stock was owned by National City Bank (NCB), which formerly was a wholly-owned subsidiary of National City Corporation. On December 31, 2008, National City Corporation was acquired by The PNC Financial Services Group, Inc. (NYSE: PNC) and NCB became a wholly-owned subsidiary of PNC. As of November 6, 2009, NCB merged into PNC Bank, National Association (PNC Bank), a wholly-owned subsidiary of PNC.

Unless specifically stated otherwise, references in this Report to ‘the Bank’ refer to NCB prior to November 6, 2009 and PNC Bank thereafter.

On August 13, 2009, PFGI Capital’s Board of Directors (the Board of Directors) approved the sale of all the loan participations held by PFGI Capital to the Bank, and the purchase of securities from the Bank by PFGI Capital primarily funded by the loan participation sale. On September 29, 2009, a special stockholders’ meeting was held during which stockholders approved this loan participation sale involving PFGI Capital and the Bank. On September 29, 2009, PFGI Capital sold all of the loan participations to the Bank at their market value plus related accrued interest as of August 31, 2009, and recognized a loss on the sale. The final purchase price was based on the market value and related accrued interest for the loan participations as of September 29, 2009. During October 2009, PFGI Capital paid the Bank the difference between the estimated purchase price and the final purchase price. PFGI Capital used the proceeds from this sale as its primary source of funds to purchase residential mortgage-backed agency securities issued by Federal National Mortgage Association (FNMA) and previously owned by the Bank. The purchase price of these securities was equal to their market value. As a result of these activities, PFGI Capital’s primary asset is now residential mortgage-backed agency securities.

PFGI Capital’s Series A Preferred Stock is owned by outside investors and its Series B Preferred Stock is owned by present and former employees of the Bank. PFGI Capital’s executive offices are located at 249 Fifth Avenue, Pittsburgh, PA 15222.

PFGI Capital does not require any employees because employees of PNC and its affiliates are managing the day-to-day operations and affairs of PFGI Capital under the management agreement. All of PFGI Capital’s officers are also officers or employees of PNC or its affiliates, including the Bank. The Bank also provides to PFGI Capital accounting and reporting services as required.

Prior to September 29, 2009, the servicing of the loans underlying PFGI Capital’s participation interests was administered by the Bank. The participation agreement between the Bank and PFGI Capital required 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 collected and remitted principal and interest payments, maintained perfected collateral positions, and submitted and pursued insurance claims. The Bank was required to pay all expenses related to the performance of its duties under the participation agreement. The participation agreement was terminated as a result of the loan participation sale on September 29, 2009.

Additional information regarding PFGI Capital’s business is included in Item 7 of this Report and is incorporated herein by reference.

ITEM 1A.

RISK FACTORS

U.S FEDERAL INCOME TAX LAWS AND CONSEQUENCES

No assurance can be given that PFGI Capital will be able to operate in such a manner 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. 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 Office of the Comptroller of the Currency (OCC), permit PFGI Capital to redeem the Series A Preferred Stock.

If PFGI Capital were to fail to qualify as a REIT, the dividends on PFGI Capital’s stock, including the Series A Preferred Stock and Series B 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 The PNC Financial Services Group, Inc. is the parent) likely would face a greater tax liability and the amount of income available for distribution to holders of Series A Preferred Stock and Series B Preferred Stock would be reduced.

In the event PFGI Capital fails to qualify as a REIT, 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, unless relief was obtained under statutory provisions.

To remain qualified as a REIT, PFGI Capital is, broadly speaking, required each year to distribute as dividends to PFGI Capital’s stockholders at least 90% of its taxable income, excluding capital gains. Failure to comply with this requirement would result in PFGI Capital failing to qualify as a REIT. In addition, PFGI Capital would 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:

•

85% of PFGI Capital’s ordinary income for the calendar year,

•

95% of PFGI Capital’s capital gains net income for the calendar year, and

•

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 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 is 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 have the right to examine PFGI Capital and its 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 its business plan and could adversely affect PFGI Capital’s financial condition and results of operations.

If the OCC 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 transfer assets;

•

restrict PFGI Capital’s ability to make distributions to its stockholders, including dividends to holders of shares of PFGI Capital’s Series A Preferred Stock and Series B Preferred Stock;

•

restrict PFGI Capital’s ability to redeem its Series A Preferred Stock and Series B Preferred Stock; or

•

require the Bank to sever its relationship with PFGI Capital or divest its ownership of PFGI Capital.

Some of these actions by the OCC could result in a failure of PFGI Capital to qualify as a REIT.

Payment of dividends related to PFGI Capital’s 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 OCC. 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, 2009, the Bank’s total risk-based capital ratio was 14.4%, its Tier 1 risk-based capital ratio was 10.9% and, and its leverage ratio was 9.3%. 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. An exercise of the OCC’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 other series and classes of preferred stock. An inability to pay dividends on PFGI Capital’s common stock would prevent PFGI Capital from meeting the statutory requirement that a REIT distribute at least 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 Series A Preferred Stock and Series B 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 retained earnings for the current year and for the preceding two years, less any required transfers to surplus or common stock. At December 31, 2009, the Bank could, without prior regulatory approval and absent contrary supervisory guidance, declare dividends of approximately $378 million. Since PFGI Capital is a member of the Bank’s consolidated group, payment of common and preferred dividends by the Bank and any member of its consolidated group to unaffiliated third parties, including PFGI Capital’s payment of dividends to the holders of shares of Series A Preferred Stock and Series B Preferred Stock, would require prior regulatory approval if the Bank’s aggregate dividends, on a consolidated basis, exceed these limitations.

CONFLICT OF INTERESTS

PFGI Capital has no employees since the Bank performs all of PFGI Capital’s business operations. All of PFGI Capital’s officers and five of PFGI Capital’s directors are also officers of PNC or its affiliates. PFGI Capital’s common officers with PNC devote, on average, less than 10% of their time to managing PFGI Capital’s business. Four directors are independent directors, who are not employed by or otherwise affiliated with PFGI Capital, nor are they an officer, director or otherwise affiliated with PNC. The Bank controls 94% 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 its independent directors, except for the two additional independent directors to be elected by the holders of Series A Preferred Stock if PFGI Capital fails to pay dividends on the Series A Preferred Stock for at least six consecutive dividend periods. Because the Bank and its affiliates have interests that are not identical to those of PFGI Capital, conflicts of interest may arise with respect to transactions between the Bank and PFGI Capital.

PFGI Capital is dependent on the diligence and skill of the officers and employees of PNC for the selection and purchase of residential mortgage-backed agency securities and PFGI Capital’s other authorized investments. The Bank has and will select the amount, type, and price of the residential mortgage-backed agency securities and other assets that have been or will be acquired from the Bank. Although these purchases are made within the investment policies of PFGI Capital, 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 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 its ability to pay dividends on the Series A Preferred Stock and Series B Preferred Stock.

NON-DIVERSIFICATION OF ASSETS; CHANGES IN REGULATORY ENVIRONMENT; RISKS OF UNDERLYING MORTGAGES

PFGI Capital’s assets are concentrated in residential mortgage-backed agency securities. The payments PFGI Capital expects to receive on these mortgage pass-through certificates depend upon a steady stream of payments on the mortgages underlying the securities. Full and timely payment of both principle and interest is guaranteed by FNMA. As of December 31, 2009, PFGI Capital’s assets were entirely comprised of three residential mortgage-backed agency securities with the following CUSIP numbers: 31410KAX2, 31416BP85, and 31416HWU5. Risks and other information associated with each of these securities may be found in disclosures accessible through FNMA’s website at www.fanniemae.com. We have included this web address as an inactive textual

reference only. Neither PNC nor PFGI are responsible for the accuracy of the information on FNMA’s website and the content of FNMA’s website is not a part of and is not being incorporated by reference into this Report.

PFGI Capital may acquire additional residential mortgage-backed agency securities in the future backed by the Federal Home Loan Mortgage Corporation (FHLMC). FNMA and FHLMC are U.S. government-sponsored enterprises, but their guarantees are not backed by the full faith and credit of the United States. FNMA and FHLMC have suffered significant losses and, in September 2008, FNMA and FHLMC were placed into federal conservatorship. The terms of the conservatorship were amended in May 2009. Although the U.S. government continued to commit capital to FNMA and FHLMC, there can be no assurance that the credit facilities and other capital infusions will be adequate for their needs. Despite the financial support, the companies continue to suffer losses and could ultimately default on their guarantee obligations, which would materially and adversely affect the value of the residential mortgage-backed agency securities and could materially and adversely affect the related payment. Future legislation could further change the relationship between FNMA, FHLMC, and the U.S. government, and could nationalize or eliminate such entities entirely. Any changes to the nature of these government-sponsored entities or the guarantees provided by them could materially and adversely affect PFGI Capital’s business, operations and financial condition.

All of the loans underlying the residential mortgage-backed agency securities bear a fixed interest rate. Therefore, changes in the interest rate environment will not have a direct or material impact on the earnings of PFGI Capital. However, in a declining interest rate environment, there may be an increase in prepayments on the loans underlying the residential mortgage-backed agency securities as the borrowers refinance their mortgages at lower interest rates. Under these circumstances, PFGI Capital may find it more difficult to purchase additional residential mortgage-backed agency securities with income streams sufficient to support the payment of the dividends on the Series A Preferred Stock and Series B Preferred Stock. Because the rate at which dividends are required to be paid on the Series A Preferred Stock and Series B Preferred Stock is fixed, there can be no assurance that a sustained decline in the interest rate environment would not adversely affect PFGI Capital’s ability to pay full dividends on PFGI Capital’s Series A Preferred Stock and Series B Preferred Stock.

PFGI Capital is not required to limit its investments to assets of the types presently in PFGI Capital’s portfolio. There can be no assurance that PFGI Capital will maintain the level of asset or earnings coverage that currently exists relative to the dividends distributions on PFGI Capital’s preferred stock. Such other asset types may involve different risks not described in this Report. Furthermore, should PFGI Capital determine that it is desirable to change the nature of its investments, it may be difficult at that time to find a buyer for the residential mortgage-backed agency securities. This liquidity risk could hinder PFGI Capital’s ability to implement its desired change in investment strategy, or may force PFGI Capital to sell the residential mortgage-backed agency securities at a discount to market value.

EXCHANGE OF SERIES A PREFERRED STOCK

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

•

the Bank becomes less than “adequately capitalized” according to regulations established by the OCC;

•

the Bank is placed into conservatorship or receivership;

•

the OCC, in its sole discretion, directs such exchange in writing, and, even if the Bank is not less than “adequately capitalized”, the OCC anticipates the Bank becoming less than “adequately capitalized” in the near term; or

•

the OCC, 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%.

Since the Bank Series A Preferred Stock represents an investment in the Bank, the risks of ownership would differ from those described in this Report.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

There is no established trading market for PFGI Capital’s Common Stock as the Bank owns all of the issued and outstanding shares.

During 2009 and 2008, PFGI Capital used a consent dividend procedure as an alternative to an actual cash dividend distribution to its common stockholder. The consent dividend was $7.8 million and $11.2 million for PFGI Capital’s tax years 2009 and 2008, respectively. The consent dividend for tax year 2009 was recorded in the first quarter of 2010. See the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Conditions and Results of Operations on page 12 for a further discussion on the consent dividend procedure and possible restrictions on PFGI Capital’s ability to pay dividends to its common and preferred stockholders.

ITEM 6.

SELECTED FINANCIAL DATA


(In Thousands, Except Per Share Amounts)	2009			2008			2007			2006			2005
Statements of Income
Interest Income	$	15,719		$	19,651		$	20,667		$	19,946		$	19,348
Provision (Benefit) for Loan Participation Losses (a)		8,700			1,501			(62	)		(68	)		(405	)
Noninterest Expense		808			790			771			828			859
Net Income		6,211			17,360			19,958			19,186			18,894
Net (Loss) Income Available to Common Stockholder	$	(1,443	)	$	9,706		$	12,304		$	11,532		$	8,561
Basic and Diluted Net (Loss) Income Per Common Share	$	(.24	)	$	1.63		$	2.07		$	1.94		$	1.44
Series A and Series B Preferred Stock Cash Dividend Paid		7,654			7,654			7,654			7,654			10,333
Series A Preferred Stock Dividends paid per Share		1.9375			1.9375			1.9375			1.9375			1.9375
Series B Preferred Stock Dividends paid per Share		5.0000			5.0000			5.0000			3.7500			—
Average Yield on Earnings Assets		5.02	%		6.51	%		7.12	%		7.17	%		6.48	%
Balance Sheets
Loan Participations, Net of Allowance for Loan Participation Losses	$	—		$	297,702		$	288,128		$	275,583		$	264,090
Securities Available for Sale		299,677			—			—			—			—
Total Assets		322,489			306,460			296,707			285,443			272,907
Series A Preferred Stock		98,762			98,762			98,762			98,762			98,762
Total Stockholders’ Equity		322,314			306,405			296,699			284,395			272,853

(a)	2009 includes an additional provision of $5.7 million related to the sale of all loan participations held by PFGI Capital to the Bank.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS SUMMARY

PFGI Capital reported a net loss available to common stockholder of $1.4 million, or $0.24 per common diluted share, for 2009, compared to net income available to common stockholder of $9.7 million, or $1.63 per common diluted share for 2008, and $12.3 million, or $2.07 per common diluted share for 2007. The decrease in net income available to common stockholder in 2009 was primarily due to an increase in the provision for loan participation losses of $7.2 million, which included a $5.7 million provision related specifically to the loss associated with the loan participation sale on September 29, 2009. Interest income decreased by $3.9 million in 2009 as compared to the prior year, primarily due to a reduction in the average yield on the loan participations in 2009 due to the generally lower interest rate environment. Cash dividends of $7.7 million were paid to preferred stockholders during 2009, 2008 and 2007.

PFGI Capital’s assets were primarily comprised of securities available for sale totaling $299.7 million as of December 31, 2009 and net loan participations totaling $297.7 million as of December 31, 2008. These assets were acquired from the Bank. Total stockholders’ equity was $322.3 million and $306.4 million as of December 31, 2009 and 2008, respectively.

RESULTS OF OPERATIONS

Interest Income

Subsequent to September 29, 2009, PFGI Capital’s primary source of revenue consists of interest income earned on its ~~loan~~residential mortgage-backed agency securities. Prior to September 29, 2009, PFGI Capital’s primary source of revenue consisted of interest income earned on its 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 therefore no related interest expense. Total interest income was $1915.7 million for ~~2008~~2009 compared to $2019.7 million for ~~2007~~2008. The decrease in interest income was primarily due to lower ~~rates earned on earning assets during 2008 as compared to 2007. The lower rates in 2008 reflect a decline in~~ market interest rates. ~~The average~~applicable ~~rate~~to ~~earned on loan participations declined by 55 basis points while~~ the ~~rate~~earning ~~earned~~assets ~~on deposits declined by 305 basis points. Higher average loan participations outstanding~~ during ~~2008~~ 2009 as compared to ~~2007 partially offset~~ the ~~impact~~prior ~~of lower interest rates~~year. ~~The average balances and interest earned for 2008 and 2007 are shown in the following table:~~

	For the Years Ended December 31,
	2008								2007
(Dollars in Thousands)	Average Balance			Interest Earned		Average Rate			Average Balance			Interest Earned		Average Rate
Assets:
Loan participations	$	294,039		$	19,500		6.63	%	$	282,953		$	20,314		7.18	%
Deposit account with Bank		7,967			151		1.90			7,135			353		4.95
Total earning assets		302,006		$	19,651		6.51	%		290,088		$	20,667		7.12	%
Allowance for loan participation losses		(932	)							(479	)
Other nonearning assets		980								1,113
Total assets	$	302,054							$	290,722
Liabilities and stockholders’ equity:
Noninterest bearing liabilities	$	682							$	735
Stockholders’ equity		301,372								289,987
Total liabilities and stockholders’ equity	$	302,054							$	290,722

Total interest income was $20.7 million for 2007. The decrease in interest income in 2008 as compared to 2007 was primarily due to lower rates earned on earning assets. The lower rates in 2008 reflect a decline in market interest rates. The average rate earned on loan participations declined by 55 basis points from 2007 to 2008 while the rate earned on deposits declined by 305 basis points. Higher average loan participations outstanding during 2008 as compared to 2007 partially offset the impact of lower interest rates.

The average balances and interest earned for 2009, 2008, and 2007 are shown in the following table:


	2009							2008							2007
(Dollars in Thousands)	Average Balance			Interest Earned		Average Rate		Average Balance			Interest Earned		Average Rate		Average Balance			Interest Earned		Average Rate
Assets:
Securities available for sale	$	80,459		$	3,341	4.15	%
Loan participations		224,640			12,363	5.50		$	294,039		$	19,500	6.63	%	$	282,953		$	20,314	7.18	%
Deposit account with Bank		7,884			15	0.19			7,967			151	1.90			7,135			353	4.95
Total earning assets	$	312,983		$	15,719	5.02	%	$	302,006		$	19,651	6.51	%	$	290,088		$	20,667	7.12	%
Allowance for loan participation losses		(3,132	)						(932	)						(479	)
Securities available for sale fair value adjustment		(13	)						—							—
Other nonearning assets		3,319							980							1,113
Total assets	$	313,157						$	302,054						$	290,722

Liabilities and stockholders’ equity:
Noninterest bearing liabilities	$	993						$	682						$	735
Stockholders’ equity		312,164							301,372							289,987
Total liabilities and stockholders’ equity	$	313,157						$	302,054						$	290,722

Provision (Benefit) For Loan Participation Losses

The provision for loan participation losses iswas the charge ~~or credit~~ to earnings necessary to maintain the allowance for loan participation losses at a level adequate to absorb management’s estimate of probable credit losses in the loan participation portfolio. ~~The~~A provision/ (benefit) for loan participation losses ~~was~~of $3.0 million, $1.5 million, ~~in 2008 compared to~~ and $(62) thousand inwas ~~2007.~~recognized ~~The provision~~during ~~for~~2009, ~~loan~~2008, ~~participation~~and ~~losses~~2007, inrespectively, ~~2008~~reflecting ~~reflects~~the general deterioration inon the general credit environment for commercial real estate loans. ~~All~~On ~~loan~~September 29, ~~participations~~2009, ~~are~~PFGI ~~transferred~~Capital tosold ~~PFGI~~all of its loan ~~Capital~~participations ~~with~~to the Bank and recognized an ~~allowance~~additional provision/loss on the sale of $5.7 million. No provision for loan participation losses ~~believed~~will ~~adequate~~be necessary subsequent to ~~absorb~~the ~~anticipated losses~~sale of the loan participations. PFGI Capital had no credit losses during 2009, 2008, or 2007.

Noninterest ~~Income and~~ Expense

~~PFGI Capital recorded no noninterest income during 2008 and 2007.~~ Noninterest expense ~~of $790 thousand and $771 thousand~~ was ~~recognized during 2008 and 2007, respectively. Noninterest expense was~~ comprised primarily of compensation paid to the Bank for loan servicing and management fees. For 2009, 2008, and 2007, loan servicing fees totaled $282 thousand, $368 thousand, and $354 thousand, respectively, while management fees totaled $300 thousand, $294 thousand, and $283 thousand, respectively. OnPrior anto ~~annual~~September 29, ~~basis~~2009, annual loan servicing and management fees ~~are~~were assessed at a rate of 0.125% and 0.10%, respectively, of the average daily outstanding principal balance of the loan participations. ~~and~~Subsequent ~~management~~to ~~fees~~September 29, ~~are~~2009, ~~assessed~~PFGI atCapital ano ~~rate~~longer ofpays ~~0.10%~~loan ofservicing fees due to the ~~average~~loan ~~daily~~participation sale, and ~~outstanding~~management ~~principal~~fees ~~balance~~are ofassessed ~~loan~~at ~~participations~~$300 thousand per year.

~~Other~~10 ~~noninterest expense was $128 thousand and $134 thousand for 2008 and 2007, respectively. Other noninterest expense was lower in 2008 compared to 2007 due to lower third party service fees incurred.~~

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 Internal Revenue Code and therefore is not subject to income taxes.

Other noninterest expense was $226 thousand, $128 thousand, and $134 thousand for 2009, 2008, and 2007, respectively. The increase in other noninterest expense in 2009 reflects an increase in audit and other professional fees during that year.

Income Taxes

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

FINANCIAL CONDITION

Securities

As of December 31, 2009, PFGI Capital held $299.7 million of residential mortgage-backed agency securities. These securities were acquired from the Bank on September 29, 2009. To qualify as a REIT, at least 75% of PFGI Capital’s assets must consist of real estate assets. PFGI Capital’s investment in the securities qualifies as real estate assets for this purpose.

Loan Participations

As of December 31, ~~2008~~2009 ~~and 2007,~~ PFGI Capital ~~had~~did ~~$297.7 million~~not ~~and~~have ~~$288.1 million,~~any ~~respectively, of~~ loan participations, ~~net~~outstanding as a result of anthe ~~allowance~~sale ~~for~~of all loan ~~participation~~participations ~~losses~~to ofthe ~~$1.9 million~~Bank ~~and~~on ~~$435 thousand~~September 29, ~~respectively~~2009. ~~The~~On ~~participation~~December 31, 2008, ~~portfolio~~PFGI ~~was~~Capital ~~acquired~~had ~~from the Bank~~$297.7 Inmillion ~~order~~of toloan ~~qualify as~~participations ~~a REIT~~outstanding, atnet ~~least 75%~~ of ~~PFGI~~an ~~Capital’s~~allowance ~~assets~~for ~~must~~loan ~~consist~~participation losses of ~~real~~$1.9 ~~estate assets~~million. AsThe ~~of December 31,~~loan ~~2008,~~participation ~~100%~~portfolio ofhad ~~PFGI~~previously ~~Capital’s~~been ~~loan~~acquired ~~participations~~from ~~were~~the ~~invested in commercial mortgage loans~~Bank.

The following table shows the composition of the loan participations by property type at December 31, 2008:

			Aggregate Principal		Percentage by
			Balance		Aggregate Principal
Property Type	Number of Loans		(In Thousands)		Balance
Nonresidential Real Estate		134	$	111,801		37.31	%
Commercial		85		59,873		19.98
Office/Warehouse		29		35,417		11.82
Apartments		20		27,995		9.34
Shopping/Retail		13		17,955		5.99
Healthcare Facilities		6		20,598		6.87
Industrial Facilities		15		10,248		3.42
Educational/Religious Facilities		6		6,636		2.21
Other Commercial Properties		5		9,128		3.06
Total		313	$	299,651		100.00	%

Some of the loans underlying the loan participations bear interest at fixed rates, and some bear interest at variable 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 loan participations at December 31, 2008:

	Fixed Rate							Variable Rate
			Aggregate Principal		Percentage by					Aggregate Principal		Percentage by
			Balance		Aggregate Principal					Balance		Aggregate Principal
Interest Rate	Number of Loans		(In Thousands)		Balance			Number of Loans		(In Thousands)		Balance
Under 5.00%		2	$	663		.36	%		75	$	82,499		71.00	%
5.00% to 5.99%		21		19,664		10.72			9		11,285		9.71
6.00% to 6.99%		68		56,849		30.99			8		8,076		6.95
7.00% to 7.99%		80		88,660		48.33			13		7,968		6.86
Over 8.00%		26		17,623		9.60			11		6,364		5.48
Total		197	$	183,459		100.00	%		116	$	116,192		100.00	%

			Aggregate Principal		Percentage by
			Balance		Aggregate Principal			Weighted Average
Interest Type	Number of Loans		(In Thousands)		Balance			Interest Rate
Fixed Rate Loans		197	$	183,459		61.22	%		7.02	%
Variable Rate Loans		116		116,192		38.78			4.40
Total		313	$	299,651		100.00	%		6.05	%

Other Assets and Liabilities

As of December 31, ~~2008~~2009 and ~~2007~~2008, PFGI Capital had cash of $721.5 million and $7.1 5 million, respectively, in an interest bearing deposit account atheld with the Bank. As of December 31, ~~2008~~2009, the account was yielding a rate of 0.~~0275~~15%. Additionally, PFGI Capital had interest receivable of $1.3 ~~million~~ ~~and $1.4~~ million asrelated ofto ~~December 31,~~the ~~2008~~residential ~~and~~mortgage-backed ~~2007,~~agency ~~respectively~~securities. ~~Accounts~~As ~~payable and other liabilities were $55 thousand and $8 thousand as~~ of December 31, 2008 ~~and~~there ~~2007,~~was ~~respectively~~also $1. ~~Accounts~~3 ~~receivable~~million ~~were~~of ~~$108~~accrued ~~thousand~~interest related asto ofcommercial ~~December 31,~~mortgage ~~2007~~loan participations.

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 stockholders. 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.

CREDIT QUALITY

Prior to September 29, 2009, PFGI Capital’s exposure to credit risk iswas managed through the ~~use~~Bank’s ~~of consistent~~ underwriting standards that emphasize “in-market” lending while avoiding excessive property type and business activity concentrations. The Bank’s credit and risk management function ~~employs~~employed ~~extensive~~ risk management techniques to ensure that loans ~~adhere~~adhered to corporate policy and problem loans ~~are~~ were promptly identified. These procedures ~~provide~~provided ~~executive~~ management of the Bank ~~and PFGI Capital~~ with the information necessary to implement policy adjustments where necessary, and to take corrective ~~actions~~ action on a proactive basis. These procedures also ~~include~~included evaluating the adequacy of the allowance for loan participation losses, which ~~includes~~included an analysis of specific credits and the application of relevant allowance factors ~~that represent~~ relative to risk, ~~based on~~ portfolio trends, current and historic loss experience, and prevailing economic conditions~~, to specific portfolio segments~~.

Concentration of credit risk generally ~~arises~~arose with respect to participation interests when a number of underlying loans ~~have~~had 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~~affected the credit risk of the underlying loans within the participation interests. As of December 31, 2008, approximately 81% of the loans underlying the participation interests are located in Ohio, compared with 82% as of December 31, 2007. 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 such factors may affect the ability of borrowers to make payments of principal and interest on the underlying loans. Nonresidential Real Estate, Office/Warehouse, and Commercial property types represent approximately 69% of the total loan participation balance at December 31, 2008. As a result, the portfolio may also experience a higher default rate in the event of adverse business developments related to these property types. Refer to page 6 for further breakdown of the loan participation portfolio by property type. Borrowers obligated in loans underlying PFGI Capital’s participation interests, however, do not represent a particular concentration of similar business activity.

The following table shows a progression of the allowance for loan participation ~~losses for the~~ ~~periods indicated~~losses:

	December 31,
(In Thousands)	2009			2008
(In Thousands)	2008			2007
Balance at January 1	$	1,949		$	435
Balance at Beginning of Period	$	435		$	483
Transferred Allowance, Net		13			13
Transferred Allowance, Net		13			14
Provision for Loan Participation Losses		3,011			1,501
Provision (Benefit) for Loan Participation Losses		1,501			(62	)
Provision Adjustment Related to Loan Participation Sale		5,689			—
Loans Charged Off		—			—
Transferred Allowance Related to Loan Participation Sale		(10,662	)		—
Recoveries		—			—
Balance at December 31	$	—		$	1,949
Balance at End of Period	$	1,949		$	435
Net Charge-Offs to Average Loan Participations		N/A			N/A
Net Charge-Offs to Average Loan Participations		.00	%		.00	%
Allowance for Loan Participations Losses to Loan Participations		N/A			.65	%
Allowance for Loan Participations Losses to Loan Participations		.65	%		.15	%

AThere ~~larger~~was ~~provision~~no allowance for loan participation losses ~~was recognized during 2008~~ as ~~compared~~of toDecember 31, ~~the prior~~2009 ~~year~~ due to the ~~deterioration~~sale ~~in the general credit environment for commercial real estate loans. Nonperforming assets consist~~ of underlying loans that are no longer accruing interest and property acquired trough foreclosure. 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~~loan ~~are~~participations ~~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, 2008 and 2007, no loans had been placed on non-accrual status or were delinquent, nor had any property been acquired through foreclosure. It is PFGI’s practice to sell loans back to the Bank ifon ~~such loans become past due~~September 29, ~~however, the Bank is not required to repurchase any such loans~~2009.

The loan participations were placed on non-accrual status when collection of principal or interest was in doubt or generally when the underlying loans were 90 days past due. When interest accruals were suspended, accrued interest income was reversed with prior

period accruals charged to earnings. As of December 31, 2008, no loans had been placed on non-accrual status or were delinquent, nor had any property been acquired through foreclosure. It was PFGI Capital’s practice to sell individual loan participations back to the Bank as such loans became past due. It was the Bank’s practice to repurchase such loan participations; however, the Bank was not contractually required to do so.

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~~addresses its principal liquidity needs ~~are~~by tomaintaining ~~maintain~~its ~~the~~level ~~loan~~of ~~participation~~interest ~~portfolio~~earning ~~size through~~assets. ~~the~~Because ~~acquisition~~such ofassets ~~additional~~are ~~loans~~reduced asover ~~loans~~time ~~currently~~according into ~~the~~their ~~portfolio~~amortization ~~mature~~schedules, or ~~prepay, and~~due to ~~pay~~pre-payments ~~dividends to the holders of preferred stock~~ and ~~common~~pay-offs, ~~stock.~~PFGI ~~The~~Capital ~~acquisition~~intends ~~of additional loan participations is intended~~ to beperiodically ~~funded~~reinvest ~~with the proceeds obtained from the~~in ~~repayment~~additional ofreal ~~principal~~estate ~~balances~~related ~~by individual borrowers~~assets. PFGI Capital does not anticipate any material capital expenditures.

Sufficient liquidity is also needed to pay dividends to the holders of PFGI Capital’s preferred and common stock. 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 funds, non-cumulative dividends at the rate of 7.75% per annum on the $25.00 liquidation value per share ($1.9375 per share). Holders of Series B Preferred Stock are entitled to receive, if, when and as authorized and declared by the Board of Directors out of legally available funds, non-cumulative cash dividends at a rate of 5.00% per annum on the $100 liquidation preference per share ($5.00 per share). Cash dividends of $7.7 million were paid to the preferred stockholders during 2009, 2008, and 2007. On February 17, 2010, total cash dividends of $1.9 million were paid on the Series A Preferred Stock and Series B Preferred Stock.

The OCC also has authority to restrict PFGI Capital’s dividend payments to stockholders if they determine that the Bank’s relationship with PFGI Capital results in an unsafe and unsound banking practice. Restrictions on PFGI Capital’s ability to pay dividends to its preferred stockholders may also result in an inability to pay common dividends. If PFGI Capital were unable to distribute at least 90% of its taxable income through preferred and common dividends, it would fail to qualify for the favorable tax treatment accorded to REITs, causing the income of PFGI Capital to be subject to taxation.

PFGI Capital has an authorization by the Board of Directors for the repurchase of up to 3,000,000 shares of Series A Preferred Stock from third-party investors. There were no share repurchases during 2009 or 2008. As of December 31, 2009, PFGI Capital had a remaining authorization to repurchase up to 358,484 shares of its Series A Preferred Stock. There is no expiration date on this repurchase program authorization. Currently PFGI Capital has no plan to repurchase Series A Preferred Stock under this Board authorization.

To remain qualified as a REIT, PFGI Capital is required to distribute at least 90% of its taxable income to its stockholders. PFGI Capital expects that, after paying the dividends on all series and classes of preferred stock, it will authorize dividends to the holder of its common stock in an amount sufficient to comply with this requirement.

As an alternative to an actual distribution of cash to its common stockholder, PFGI Capital has the option of distributing a dividend using a procedure known as a “consent dividend”, as authorized by Section 565 of the Internal Revenue Code, under which a stockholder, on or before a REIT files its tax return, 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, and the stockholder is treated as having received that dividend 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 stockholders. PFGI Capital, as a REIT, receives a deduction for dividends paid, reducing its taxable income by the amount of the consent dividend. PFGI Capital and its common stockholder utilize the consent dividend procedure. The consent dividend was $7.8 million, $11.2 million, and $12.2 million, for PFGI Capital’s tax years 2009, 2008, and 2007, respectively. The consent dividend of $7.8 million for tax year 2009 was recorded in the first quarter of 2010.

~~Holders~~To ofavoid ~~PFGI~~restrictions ~~Capital’s~~on ~~Series A~~its ~~preferred~~ability ~~stock are entitled~~ to ~~receive,~~pay ifdividends ~~authorized~~or ~~and declared~~make byother ~~the~~distributions ~~board~~on ofits common ~~directors~~stock, ~~non-cumulative~~PFGI ~~dividends~~Capital atis ~~the~~required ~~rate~~to ofperiodically ~~7.75%~~reinvest ~~per~~proceeds ~~annum,~~from ~~or $1.9375~~its ~~per~~existing ~~share.~~assets ~~Cash~~in ~~dividends~~newly ofacquired ~~$7.7 million~~interest ~~were~~earning ~~paid~~assets ~~during~~so ~~2008~~that ~~and 2007.~~its ~~Holders~~aggregate offunds ~~Series B~~from ~~preferred~~operations ~~stock are entitled to receive~~(FFO), ~~if, when and~~ as ~~authorized~~projected ~~and declared~~for by the ~~board~~following offour ~~directors out of legally available assets~~quarters, ~~non-cumulative~~is ~~cash dividends~~expected atto aequal ~~rate~~or ofexceed ~~5.00~~140% ~~per annum~~ of the ~~$100~~full ~~liquidation~~annual ~~preference~~dividends ~~per~~payable ~~share~~on ~~($5~~the ~~per~~Series ~~share). Dividends~~A onPreferred ~~the~~Stock. ~~Series B~~This ~~preferred~~requirement ~~stock~~can ~~are~~not ~~payable,~~be ifamended ~~authorized~~without ~~and~~the ~~declared,~~consent ~~quarterly~~or ~~in arrears,~~affirmative onvote of the ~~same~~holders ~~dates~~of as the Series A ~~preferred~~Preferred ~~stock~~Stock, voting as separate class. OnAs ~~January~~of December 2131, 2009, PFGI ~~declared~~Capital’s ~~a dividend~~annualized ofFFO ~~$1.9 million~~coverage ~~for~~is ~~holders~~estimated ofat ~~Series A and B preferred stock, payable on February 17, 2009~~166%.

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 2.82%. At December 31, 2008, the average weighted interest rate on loan participations was 6.05%. Assuming that the investment in participation interests remains level, yields on loan participations would have to decrease by 323 basis points before cash flows would be insufficient to cover the regular dividend payments to holders of preferred stock.

As a direct subsidiary of the Bank, PFGI Capital is required to seek advance regulatory approval prior to the declaration of any dividends in excess of the Bank’s available retained earnings. Additionally, the Office of the Comptroller of the Currency requires that dividends declared by the Bank, or any of its direct subsidiaries, cannot exceed the sum of the Bank’s net income for the current year, plus retained net income for the preceding two years, less any required transfers to surplus or common stock. As of December 31, 2008, the Bank did not have sufficient retained earnings to allow PFGI Capital to declare its normal quarterly dividend without regulatory approval. PFGI Capital obtained advance approval from the Office of the Comptroller of the Currency to declare shareholder dividends during 2008 and to date in 2009. If the Bank does not have sufficient net income in future periods of more than $5.3 billion, PFGI Capital will be required to seek advance approval from the Office of the Comptroller of the Currency prior to declaration of future dividends. The Office of the Comptroller of the Currency also has authority to restrict PFGI Capital’s dividend payments to stockholders if they determine that the Bank’s relationship with PFGI Capital results in an unsafe and unsound banking practice. Restrictions on PFGI Capital’s ability to pay dividends to its preferred shareholders may also result in an inability to pay common dividends. If PFGI Capital is unable to distribute 90% of its taxable income through preferred and common dividends, it will fail to qualify for the favorable tax treatment accorded to REITs and accordingly, the net income of PFGI Capital will be subject to taxation.

PFGI Capital has an authorization by the Board for the repurchase of up to 3,000,000 shares of Series A preferred stock from third-party investors. There was no repurchase activity in 2008. As of December 31, 2008, 358,484 shares of Series A preferred stock remain authorized for repurchase. There is no expiration date on this repurchase program.

PFGI Capital expects to distribute annually an aggregate amount of dividends with respect to its outstanding 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. 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 to its common shareholder, PFGI Capital has the option of distributing 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 when 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 stockholders. 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. PFGI Capital and its common shareholder used the consent dividend procedure in both 2008 and 2007. The consent dividend was $11.2 million and $12.2 million for the years ended 2008 and 2007, respectively. As a result, PFGI Capital has additional funds available for investment purposes and/or for distribution to its preferred stockholders.

PFGI Capital has a policy of reinvesting the proceeds of PFGI Capital’s assets in other interest-earning assets so that PFGI Capital’s income 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 preferred stock, except as may be necessary to maintain PFGI Capital’s status as a REIT. PFGI Capital’s charter provides that PFGI Capital cannot amend or change this policy with respect to the reinvestment of proceeds without the consent or affirmative vote of the holders of at least two thirds of PFGI Capital Series A preferred stock, voting as a separate class. For the period ending December 31, 2008, the trailing four quarter net income to projected preferred dividend ratio stands at 227%.

There is no public trading market or stock price for PFGI Capital’s common stock as the Bank owns all of the 5,940,000 shares of its outstanding common stock.

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 Capital has no long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

See Note 2 of the financial statements in Item 8 of this Report for a description of PFGI Capital’s accounting policies. ~~The allowance for loan participation losses is the only accounting policy deemed critical.~~

~~Allowance for Loan Participation Losses:~~ The ~~allowance~~following ~~for~~accounting ~~loan participation losses is maintained~~policies atare a level management estimates is necessary to absorb probable credit losses in the loan participation portfolio. When PFGI Capital purchases loan participations from the Bank, an allowance for loan participation losses is transferred from the Bank to PFGI Capital. The allowance is increased whenever further deterioration of the credit quality of the portfolio occurs and decreased whenever credit quality improves. Loans deemed ~~uncollectible~~critical are charged off and deducted from the allowance and recoveries on loans previously charged off are added back to the allowance. Loans sold back to the Bank are accompanied by a transfer of the allowance for ~~those loans from~~ PFGI Capital toas ~~the~~these ~~Bank.~~policies Itcontain issignificant ~~PFGI’s~~estimates ~~practice~~or ~~to sell loans back to the Bank if such loans become past due, however, the Bank is not required to repurchase any such loans~~judgments.

~~Management’s~~Fair ~~determination~~Value Measurements: ofPFGI ~~the~~Capital ~~adequacy~~uses offair ~~the~~value ~~allowance~~measurements ~~for~~to ~~loan~~record ~~participation~~certain ~~losses~~financial ~~considers individually~~instruments. The ~~impaired~~Financial ~~loans,~~Accounting ~~pools~~Standards ofBoard ~~homogenous~~(FASB) ~~loans~~ASC ~~with~~820, ~~similar~~Fair ~~risk~~Value ~~characteristics~~Measurements and ~~imprecision~~ inDisclosures, ~~estimating~~defines ~~losses.~~fair Anvalue ~~allowance~~as isthe ~~established~~price ~~for~~that would ~~probable~~be ~~credit~~received ~~losses~~to ~~on impaired~~sell ~~loans,~~an ~~when~~asset ~~necessary.~~or Athe ~~loan~~price ispaid ~~impaired~~to ~~when,~~transfer ~~based~~a liability on ~~current~~the ~~information~~measurement ~~and~~date. ~~events, it~~The isstandard ~~probable~~focuses ~~that~~on ~~all~~the ~~amounts~~exit ~~contractually~~price ~~due~~in ~~will~~the ~~not~~principal beor ~~collectible.~~most Asadvantageous ofmarket ~~December 31,~~for ~~2008 and~~the ~~2007,~~asset ~~PFGI~~or ~~Capital~~liability ~~had~~in noan ~~impaired~~orderly ~~loans.~~transaction ~~Pools~~between willing ofmarket ~~homogenous~~participants. ~~loans,~~FASB ~~representing~~ASC ~~loans~~820 ~~not individually~~establishes ~~evaluated~~a ~~for~~three-level ~~impairment,~~hierarchy ~~are~~for ~~also~~disclosure ~~assessed~~of ~~for~~assets ~~probable~~and ~~loss~~liabilities ~~using~~recorded aat ~~loss~~fair ~~migration analysis~~value. The ~~loss~~classification ~~migration~~of ~~analysis~~assets ~~utilizes~~and ~~average~~liabilities ~~historic~~within ~~loss~~the ~~ratios~~hierarchy ~~which~~is ~~are~~based ~~derived~~on ~~from~~ whether the ~~Bank’s~~inputs ~~portfolio~~to ofthe valuation ~~commercial~~methodology ~~mortgage~~used ~~loans.~~in Anthe ~~allowance~~measurement isare ~~also~~observable ~~established~~or ~~for imprecision~~unobservable. ~~inherent~~Observable ininputs ~~these~~reflect ~~loss~~market-driven ~~migration~~or ~~models.~~market-based ~~Imprecision~~information ~~occurs~~obtained ~~because~~from ~~historic~~independent ~~loss patterns~~sources, ~~may~~while ~~not~~unobservable beinputs ~~representative~~reflect ofour ~~current~~estimates ~~losses~~about inmarket ~~the portfolio~~data. The three-level hierarchy is noted below.

Level 1 – Quoted market prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other then Level 1 such as: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated to observable market data for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities carried at fair value inherently result in a higher degree of financial statement volatility. In accordance with FASB ASC 820, it is PFGI Capital’s practice to maximize the use of observable inputs and to minimize the use of unobservable inputs when developing fair value measurements. Fair values and the information used to record valuation adjustments for certain assets and liabilities are based on either quoted market prices or are provided by other independent third-party sources, when available. When such third-party information is not available, fair values are estimated primarily by using cash flow and other financial modeling techniques.

PFGI Capital’s available for sale securities are classified as Level 2 measurements as their fair value reflects observable market prices in active markets for similar securities.

See Note 10 of the financial statements in Item 8 of this Report for further information regarding fair value measurements.

Allowance for Loan Participation Losses: Prior to September 29, 2009, management determined the adequacy of the allowance for loan participation losses based on periodic evaluations of the loan portfolio and other relevant factors. This evaluation was inherently subjective as it required material judgments and estimates, which may be susceptible to significant change. This assessment considered individually impaired loans and pools of homogenous loans with similar risk characteristics. An allowance was established for probable credit losses on impaired loans, when necessary. As of December 31, 2008, PFGI Capital had no impaired loans. While allocations could be made to specific loans, the total reserve was available for all credit losses.

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

Note 3 toof the ~~consolidated~~ financial statements ~~discusses~~in ~~new~~Item 8 ~~accounting~~of ~~policies~~this ~~adopted~~Report bydiscusses the ~~PFGI~~ ~~Capital during 2008 and the~~ expected impact of ~~accounting policies~~ recently issued oraccounting ~~proposed~~policies that ~~but~~have not yet ~~required~~been ~~to be~~ adopted. To the extent the adoption of new accounting standards are expected to materially ~~affects~~affect the financial condition, results of operations, or liquidity position of PFGI Capital, the impacts are discussed in the applicable section(s) of this financial review and notes to the ~~consolidated~~ financial statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING ~~STATEMENTS~~ INFORMATION

~~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, will, and similar expressions and by the context in which they are used. Such statements are based upon current expectations and speak only as of the date made. Actual results and future events could differ materially from those ~~contained~~that inwe oranticipate ~~implied~~in byour ~~such~~ forward-looking statements for a variety of factors including: sharp and/or rapid changes in interest rates; prepayments of ~~loans~~securities with fixed interest rates, resulting in reinvestment of the proceeds in ~~loans~~securities with lower effective 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 Bank at the direction of ~~the~~ ~~Office of~~ the ~~Comptroller~~OCC ~~of the Currency~~ if the Bank becomes undercapitalized; the failure of PFGI Capital to maintain its status as a REIT for federal income tax purposes; and 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 undertakes no obligations to update any forward-looking statements ~~to reflect events or circumstances arising after the date on which they are made~~.

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

Market risk is the risk of loss from adverse changes in market prices and interest rates. Management actively monitors interest rate risk exposure and reviews, among other things, the impact of interest rate changes on the market value of its assets and liabilities, unrealized gains and losses, and the expected amortization of its investment portfolio.

Beginning September 29, 2009, PFGI Capital’s income consists primarily of interest income earned on the residential mortgage-backed agency securities. The interest earned on these securities is based on a fixed rate, and therefore will generally not fluctuate due to changes in the interest rate environment. Changes in the interest rate environment may result in a change in the fair value of the residential mortgage-backed agency securities. Such unrealized gains and losses not deemed other-than-temporary are reported in accumulated other comprehensive income. PFGI Capital has no interest-bearing liabilities, and the dividend yield paid on both series of preferred stock is fixed. Therefore, neither the net income nor the net income available to common stockholder of PFGI Capital should be materially impacted by market risk.

~~PFGI~~ITEM ~~Capital Corporation is responsible for the preparation, integrity, and fair presentation of the financial statements included in this annual report~~8. ~~The~~FINANCIAL ~~financial~~STATEMENTS ~~statements~~AND ~~and~~SUPPLEMENTARY ~~notes have been prepared in conformity with United States generally accepted accounting principles and necessarily include some amounts that are based on management’s best estimates and judgments.~~ DATA

AsREPORT ~~management~~OF ofINDEPENDENT ~~PFGI~~REGISTERED ~~Capital~~PUBLIC ~~Corporation,~~ACCOUNTING weFIRM are responsible for establishing and maintaining effective internal control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability by internal audit. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

~~Management~~To ~~assessed~~ the ~~system~~Board of ~~internal~~Directors control over financial reporting as of December 31, 2008, in relation to criteria for effective internal control over financial reporting as described in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2008, its system of internal control over financial reporting is effective and ~~meets~~Shareholders ~~the criteria~~ of ~~the “Internal Control — Integrated Framework.”~~

~~This~~PFGI ~~annual~~Capital ~~report~~Corporation: does not include an attestation report of the company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

~~-s-~~We ~~SUSAN~~have M.audited ~~KINSEY~~the accompanying balance sheet of PFGI ~~Susan~~Capital MCorporation as of December 31, 2009, and the related statements of income, cash flows and changes in stockholders’ equity for the year then ended. ~~Kinsey~~These financial statements are the responsibility of the Company’s management. ~~President~~ Our responsibility is to express an opinion on these financial statements based on our audit.

~~-s-~~We ~~DORIS~~conducted M.our ~~MALINOWSKI~~audit in ~~Doris~~accordance Mwith the standards of the Public Company Accounting Oversight Board (United States). ~~Malinowski~~Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material ~~Chief~~misstatement. ~~Financial~~An ~~Officer~~audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

~~Cleveland~~In our opinion, ~~Ohio March~~the financial statements referred to above present fairly, in all material respects, the financial position of PFGI Capital Corporation at December 631, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

10 /s/ PricewaterhouseCoopers LLP

New York, NY

March 30, 2010

~~Board~~REPORT ofOF ~~Directors~~INDEPENDENT ~~and~~REGISTERED ~~Stockholders PFGI~~PUBLIC ~~Capital~~ACCOUNTING ~~Corporation~~ FIRM

Board of Directors and Stockholders

PFGI Capital Corporation

We have audited the accompanying balance sheets of PFGI Capital Corporation as of December 31, 2008 and 2007, and the related statements of income, changes in stockholders’ equity and cash flows for the years then ended. 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. As described in Note 1, the accompanying financial statements have been prepared using the historical basis of accounting of PFGI Capital Corporation prior to National City Corporation’s acquisition by The PNC Financial Services Group, Inc. on December 31, 2008.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide 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, 2008 and 2007, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Cleveland, Ohio ~~March 6,~~ ~~2009~~

11 March 6, 2009

FINANCIAL STATEMENTS

BALANCE SHEETS

	December 31,
(Dollars in Thousands)	2008			2007
Assets
Loan Participations	$	299,651		$	288,563
Allowance for Loan Participation Losses		(1,949	)		(435	)
Net Loan Participations		297,702			288,128
Cash and Due from Banks		7,476			7,085
Interest Receivable		1,282			1,386
Other Assets		—			108
Total Assets	$	306,460		$	296,707
Liabilities
Accounts Payable and Accrued Liabilities	$	55		$	8
Stockholders’ Equity
Series A Preferred Stock, $25 Stated Value, 6,600,000 Shares Authorized and Issued, 3,950,484 Shares Outstanding		98,762			98,762
Series B Preferred Stock, $.01 Par Value, 125 Shares Authorized, 105 Shares Issued and Outstanding		—			—
Common Stock, $.01 Par Value, 5,940,000 Shares Authorized, Issued and Outstanding		59			59
Capital Surplus		204,852			193,645
Retained Earnings		2,732			4,233
Total Stockholders’ Equity		306,405			296,699
Total Liabilities and Stockholders’ Equity	$	306,460		$	296,707

PFGI CAPITAL CORPORATION

See notes to financial statements.


(Dollars in Thousands)	December 31, 2009			December 31, 2008
Assets
Cash and Due from Banks	$	21,499		$	7,476
Securities Available for Sale, at Fair Value		299,677			—
Loan Participations		—			299,651
Allowance for Loan Participation Losses		—			(1,949	)
Net Loan Participations		—			297,702
Interest Receivable		1,313			1,282
Total Assets	$	322,489		$	306,460

Liabilities
Accounts Payable and Accrued Liabilities	$	175		$	55
Stockholders’ Equity
Series A Preferred Stock, $25 Stated Value, 6,600,000 Shares Authorized and Issued, 3,950,484 Shares Outstanding		98,762			98,762
Series B Preferred Stock, $.01 Par Value, 125 Shares Authorized, 105 Shares Issued and Outstanding		—			—
Common Stock, $.01 Par Value, 5,940,000 Shares Authorized, Issued and Outstanding		59			59
Capital Surplus		222,352			204,852
Retained Earnings		1,289			2,732
Accumulated Other Comprehensive Loss		(148	)		—
Total Stockholders’ Equity		322,314			306,405
Total Liabilities and Stockholders’ Equity	$	322,489		$	306,460

12 See Notes to Financial Statements.

STATEMENTS OF INCOME

	For the Year Ended
	December 31,
(In Thousands, Except Per Share Data)	2008		2007
Interest Income
Interest on Loans Participations	$	19,500	$	20,314
Interest on Cash Deposit		151		353
Total Interest Income		19,651		20,667
Provision (Benefit) for Loan Participation Losses		1,501		(62	)
Net Interest Income After Provision (Benefit) for Loan Participation Losses		18,150		20,729
Noninterest Expense
Loan Servicing Fees		368		354
Management Fees		294		283
Other Noninterest Expense		128		134
Total Noninterest Expense		790		771
Income Before Income Taxes		17,360		19,958
Income Taxes		—		—
Net Income		17,360		19,958
Preferred Stock Dividends		7,654		7,654
Net Income Available to Common Shareholders	$	9,706	$	12,304
Per Common Share
Basic	$	1.63	$	2.07
Diluted		1.63		2.07
Consent Dividends		1.89		2.06

PFGI CAPITAL CORPORATION

See notes to financial statements


	For the Year Ended December 31
(In Thousands, Except Per Share Data)	2009			2008		2007
Interest Income
Interest on Securities	$	3,342
Interest on Loan Participations		12,363		$	19,500	$	20,314
Interest on Cash Deposit		14			151		353
Total Interest Income		15,719			19,651		20,667
Provision (Benefit) for Loan Participation Losses		8,700			1,501		(62	)
Noninterest Expense
Loan Servicing Fees		282			368		354
Management Fees		300			294		283
Other Noninterest Expense		226			128		134
Total Noninterest Expense		808			790		771
Net Income	$	6,211		$	17,360	$	19,958
Preferred Stock Dividends		7,654			7,654		7,654
Net (Loss) Income Available to Common Stockholder	$	(1,443	)	$	9,706	$	12,304
Net (Loss) Income Per Common Share
Basic	$	(.24	)	$	1.63	$	2.07
Diluted		(.24	)		1.63		2.07
Average Common Shares Outstanding
Basic and Diluted		5,940			5,940		5,940

13 See Notes to Financial Statements.

STATEMENTS OF CASH FLOWS

	For the Year Ended
	December 31,
(In Thousands)	2008			2007
Operating Activities
Net Income	$	17,360		$	19,958
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision (Benefit) for Loan Participation Losses		1,501			(62	)
Decrease in Interest Receivable		104			89
Decrease (Increase) in Accounts Receivable		108			(108	)
Increase (Decrease) in Accrued Liabilities and Other Liabilities		47			(1,040	)
Net Cash Provided by Operating Activities		19,120			18,837
Investing Activities
Net Increase in Loan Participations		(11,075	)		(12,483	)
Net Cash Used in Investing Activities		(11,075	)		(12,483	)
Financing Activities
Dividends Paid to Preferred Stockholders		(7,654	)		(7,654	)
Net Cash Used In Financing Activities		(7,654	)		(7,654	)
Net Increase (Decrease) in Cash and Cash Equivalents		391			(1,300	)
Cash and Cash Equivalents at Beginning of Period		7,085			8,385
Cash and Cash Equivalents at End of Period	$	7,476		$	7,085
Supplemental Disclosures for Cash Flow Information
Cash Paid for:
Interest		—			—
Income Taxes		—			—
Noncash Transactions:
Contribution of Common Stock Consent Dividend	$	11,207		$	12,242

PFGI CAPITAL CORPORATION

See notes to financial statements.


	For the Year Ended December 31
(In Thousands)	2009			2008			2007
Operating Activities
Net Income	$	6,211		$	17,360		$	19,958
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision (Benefit) for Loan Participation Losses		8,700			1,501			(62	)
(Increase) Decrease in Interest Receivable		(31	)		104			89
(Increase) Decrease in Other Assets		—			108			(108	)
Increase (Decrease) in Accounts Payable and Accrued Liabilities		120			47			(1,040	)
Net Cash Provided by Operating Activities		15,000			19,120			18,837
Investing Activities
Net Increase in Loan Participations		(2,891	)		(11,075	)		(12,483	)
Proceeds from Final Sale of Loan Participations		291,893			—			—
Purchases of Residential Mortgage-backed Agency Securities		(315,452	)		—			—
Decrease in Residential Mortgage-backed Agency Securities		15,627			—			—
Net Cash Used in Investing Activities		(10,823	)		(11,075	)		(12,483	)
Financing Activities
Dividends Paid to Preferred Stockholders		(7,654	)		(7,654	)		(7,654	)
Capital Contribution by the Bank		17,500			—			—
Net Cash Provided by (Used In) Financing Activities		9,846			(7,654	)		(7,654	)
Net Increase (Decrease) in Cash and Cash Equivalents		14,023			391			(1,300	)
Cash and Cash Equivalents at Beginning of Period		7,476			7,085			8,385
Cash and Cash Equivalents at End of Period	$	21,499		$	7,476		$	7,085
Supplemental Disclosures for Cash Flow Information
Cash Paid for:
Interest	$	—		$	—		$	—
Income Taxes		—			—			—
Noncash Transaction:
Contribution of Common Stock Consent Dividends	$	—		$	11,207		$	12,242

14 See Notes to Financial Statements.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In Thousands)	PreferredStock		CommonStock		CapitalSurplus		RetainedEarnings			Total
Balance at December 31, 2006	$	98,762	$	59	$	181,403	$	4,171		$	284,395
Net Income/Comprehensive Income								19,958			19,958
Dividends Paid on Preferred Stock ($1.9375 Per Series A Share and $5.00 Per Series B Share)								(7,654	)		(7,654	)
Common Stock Consent Dividend								(12,242	)		(12,242	)
Contribution of Consent Dividend						12,242					12,242
Balance at December 31, 2007	$	98,762	$	59	$	193,645	$	4,233		$	296,699
Net Income/Comprehensive Income								17,360			17,360
Dividends Paid on Preferred Stock ($1.9375 Per Series A Share and $5.00 Per Series B Share)								(7,654	)		(7,654	)
Common Stock Consent Dividend								(11,207	)		(11,207	)
Contribution of Consent Dividend						11,207					11,207
Balance at December 31, 2008	$	98,762	$	59	$	204,852	$	2,732		$	306,405

PFGI CAPITAL CORPORATION

See notes to financial statements.


(In Thousands)	Preferred Stock		Common Stock		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at January 1, 2007	$	98,762	$	59	$	181,403	$	4,171					$	284,395
Net Income/Comprehensive Income								19,958						19,958
Dividends Paid on Preferred Stock ($1.9375 Per Series A Share and $5.00 Per Series B Share)								(7,654	)					(7,654	)
Common Stock Consent Dividend								(12,242	)					(12,242	)
Contribution of Consent Dividend						12,242								12,242
Balance at December 31, 2007	$	98,762	$	59	$	193,645	$	4,233					$	296,699
Net Income/Comprehensive Income								17,360						17,360
Dividends Paid on Preferred Stock ($1.9375 Per Series A Share and $5.00 Per Series B Share)								(7,654	)					(7,654	)
Common Stock Consent Dividend								(11,207	)					(11,207	)
Contribution of Consent Dividend						11,207								11,207
Balance at December 31, 2008	$	98,762	$	59	$	204,852	$	2,732					$	306,405
Comprehensive Income:
Net Income								6,211						6,211
Other Comprehensive Income:
Net Unrealized Losses on Securities										$	(148	)		(148	)

Total Comprehensive Income														6,063
Capital Contribution by the Bank						17,500								17,500
Dividends Paid on Preferred Stock ($1.9375 Per Series A Share and $5.00 Per Series B Share)								(7,654	)					(7,654	)
Balance at December 31, 2009	$	98,762	$	59	$	222,352	$	1,289		$	(148	)	$	322,314

See Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

PFGI Capital Corporation (PFGI Capital) is a Maryland corporation incorporated on May 9, 2002. The current principal business objective of PFGI Capital is to acquire, hold, and manage ~~commercial~~residential mortgage ~~loan~~-backed ~~assets~~agency securities and other authorized investments that ~~will~~ generate net income for distribution to PFGI Capital’s stockholders. ~~PFGI~~Prior ~~Capital has elected~~ to beSeptember 29, ~~treated~~2009, asthe aprincipal ~~real~~business ~~estate~~objective ~~investment~~of ~~trust (REIT) for~~PFGI ~~federal~~Capital ~~income~~was ~~tax~~to ~~purposes.~~acquire, ~~As a REIT~~hold, ~~PFGI~~and ~~Capital~~manage ~~generally~~commercial ismortgage ~~not~~loan ~~liable~~assets ~~for~~and ~~federal income~~other ~~tax~~authorized toinvestments ~~the extent~~ that itgenerated ~~distributes its~~ net income tofor ~~its~~distribution ~~stockholders and continues~~ to ~~meet~~PFGI ~~a number~~Capital’s ~~of other requirements~~stockholders.

~~All of~~ PFGI Capital’s ~~common~~has ~~stock~~elected isto ~~owned~~be bytreated ~~National~~as ~~City~~a ~~Bank~~real ~~(the Bank). PFGI Capital’s~~estate ~~Series A~~investment ~~preferred~~trust ~~stock~~(REIT) isfor ~~owned~~federal byincome ~~outside~~tax ~~investors and its Series B Preferred stock is owned by present and former employees of National City Bank or PNC~~purposes. ~~The~~As ~~Bank,~~ a ~~nationally chartered bank~~REIT, is aPFGI ~~wholly-owned~~Capital ~~subsidiary~~generally ofis ~~The~~not ~~PNC~~liable ~~Financial~~for ~~Services~~federal ~~Group,~~income ~~Inc.~~tax ~~PFGI~~to ~~Capital’s~~the ~~executive offices~~extent ~~are~~that ~~located~~it atdistributes ~~1900~~its ~~East~~income ~~Ninth~~to ~~Street,~~its ~~Cleveland,~~stockholders ~~Ohio 44114,~~ and ~~its~~continues ~~Investors~~to ~~Relations telephone~~meet a number isof ~~(800) 622-4204~~other requirements.

OnPrior ~~December~~to November 316, ~~2008~~2009, ~~National~~all ~~City~~of ~~Corporation~~PFGI ~~was~~Capital’s ~~acquired~~common bystock ~~The~~was ~~PNC~~owned ~~Financial~~by ~~Services Group, Inc. (NYSE: PNC) and~~ National City Bank ~~became~~(NCB), which formerly was a wholly-owned subsidiary of ~~The~~National ~~PNC~~City ~~Financial Services Group, Inc~~Corporation. ~~Prior~~On to December 31, 2008, ~~all~~National ofCity ~~PFGI~~Corporation ~~Capital’s~~was ~~common~~acquired ~~stock~~by ~~was~~The ~~owned~~PNC ~~by National~~Financial ~~City~~Services ~~Bank~~Group, Inc. (~~the~~PNC, ~~Bank~~NYSE: PNC), and NCB became a wholly-owned subsidiary of ~~National~~PNC. ~~City~~The accompanying ~~Corporation~~financial ~~(National City)~~statements as December 31, a2008 ~~financial~~and ~~holding~~the ~~company~~two ~~headquartered~~years in ~~Cleveland,~~the ~~Ohio.~~period ~~The~~then ~~accompanying~~ended ~~financial statements~~ were prepared from the books and records of ~~the~~ PFGI Capital prior to National City’s Corporation’s acquisition by PNC, and ~~utilize~~accordingly, were based on PFGI Capital’s historical- basis of accounting.

As of November 6, 2009, NCB merged into PNC Bank, National Association (PNC Bank), a wholly-owned subsidiary of PNC. Unless specifically stated otherwise, references in these Notes to Financial Statements to ‘the Bank’ refer to NCB prior to November 6, 2009 and PNC Bank thereafter.

On August 13, 2009, the Board of Directors approved the sale of all loan participations held by PFGI Capital to the Bank, and the purchase of residential mortgage-backed agency securities from the Bank by PFGI Capital primarily funded by the proceeds from the loan participation sale. On September 29, 2009, a special stockholders’ meeting was held, during which stockholders approved this

loan participation sale involving PFGI Capital and the Bank. On September 29, 2009, PFGI Capital sold all of the loan participations to the Bank at their market value plus related accrued interest, and recognized provision expense of $5.7 million related to the loss on sale. In October 2009, PFGI paid the Bank $3.8 million, which represented the difference between the estimated purchase price and the final purchase price.

On September 29, 2009, PFGI Capital used the proceeds from this sale, along with cash on hand and a portion of the $17.5 million capital contribution from the Bank, to purchase residential mortgage-backed agency securities issued by the Federal National Mortgage Association (FNMA) and previously owned by the Bank. The purchase price of $316.7 million was equal to the market value of the securities plus related accrued interest. These securities earn a fixed rate of 5.5% per annum and are backed by 30-year 1-4 family fixed-rate mortgages, all of which were originated in compliance with FNMA standards. As a result of these activities, PFGI Capital’s primary assets are now comprised of securities rather than loan participations.

PFGI Capital’s Series A Preferred Stock is owned by outside investors and its Series B Preferred Stock is owned by present or former employees of the Bank or PNC. PFGI Capital’s executive offices are located at 249 Fifth Avenue, Pittsburgh, PA 15222.

NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying financial statements include accounts of PFGI Capital., ~~PFGI Capital~~which has no equity ownership in any other entities or interests in “variable interest entities.”

~~Use~~Effective ofJuly 1, ~~Estimates:~~2009, FASB issued FASB ASC 105-10. The ~~accounting~~FASB ~~and~~Accounting ~~reporting~~Standards ~~policies~~Codification ofTM (FASB ~~PFGI~~ASC) ~~Capital~~will ~~conform~~be ~~with~~the ~~U.S.~~ single source of authoritative nongovernmental generally accepted accounting principles (GAAP) in the United States of America. The ~~preparation~~FASB ofASC was effective for financial statements ~~in conformity~~that ~~with~~cover ~~GAAP~~interim ~~requires~~and ~~management~~annual toperiods ~~make~~ending after ~~estimates~~September 15, ~~assumptions,~~2009. ~~and~~Other ~~judgments~~than ~~that~~resolving ~~affect the~~certain ~~amounts~~minor ~~reported~~inconsistencies in current GAAP, the ~~financial~~FASB ~~statements~~ASC is not intended to change GAAP, but rather to make it easier to review and ~~accompanying~~research ~~notes.~~GAAP ~~Actual~~applicable ~~realized~~to ~~amounts could~~a ~~differ~~particular ~~materially~~transaction ~~from~~or specific ~~those~~accounting ~~estimates~~issue.

Subsequent Events: In the first quarter of 2010, PFGI Capital recorded a consent dividend for tax year 2009, for which no cash was transferred. PFGI Capital is deemed to have paid an earnings dividend of $7.8 million to the Bank, its sole common stockholder. The Bank is deemed to have made an equal capital contribution to PFGI Capital.

Use of Estimates: The accounting and reporting policies of PFGI Capital conform with U.S. GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual realized amounts could differ materially 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 ~~loan participations~~securities, management views its financial condition and results of operations as one business segment. Prior to September 29, 2009, PFGI Capital’s operations consisted of acquiring, holding and managing loan participations, and management viewed its financial condition and results of operations as one business segment.

~~Loan Participations~~Securities: ~~PFGI~~Investments ~~Capital holds participation interests~~ in ~~commercial~~debt ~~mortgage~~securities ~~loans~~with ~~that~~readily ~~are~~determinable ~~secured~~fair byvalues, ~~real~~other ~~property~~than ~~such~~those classified as ~~office~~principal ~~buildings;~~investments ~~multi-family~~or ~~properties~~accounted offor ~~five~~under ~~units~~the cost or ~~more;~~ ~~industrial~~equity method, ~~warehouse~~are ~~and~~accounted ~~self-storage~~for ~~properties;~~under ~~office~~FASB ~~and~~ASC ~~industrial~~320, ~~condominiums;~~Investments-Debt ~~retail space;~~and ~~strip~~Equity ~~shopping~~Securities. ~~centers;~~FASB ~~mixed~~ASC ~~use~~320 ~~commercial~~requires ~~properties; mobile home parks; nursing homes;~~investments ~~hotels~~to ~~and~~be ~~motels;~~classified ~~churches~~within ~~and~~one ~~farms.~~of ~~Loan~~three ~~participations~~categories ~~are~~(trading, ~~generally~~held ~~stated~~to atmaturity, ~~the~~or ~~principal amount~~available ~~outstanding.~~for ~~Interest~~sale) onbased ~~loan participations is computed~~ on the ~~outstanding~~type ~~principal balance.~~of ~~Late~~security ~~charges~~ and ~~other~~management’s ~~loan~~ability ~~fees~~and ~~are~~intent ~~not~~with ~~transferred~~regard to ~~PFGI~~selling ~~Capital,~~ the security.

15Securities purchased with the intention of realizing short-term profits, or that are used to manage risk in other balance sheet assets and liabilities carried at fair value, are considered trading securities and are carried at fair value.

Debt securities are classified as held to maturity when management has both the intent and ability to hold the securities to maturity. Securities classified as held to maturity are carried at amortized cost.

Debt securities not classified as held to maturity or trading are classified as available for sale. Securities available for sale are carried at fair value with unrealized gains and losses not deemed other-than-temporary reported in accumulated other comprehensive income.

Declines in the fair value of available for sale securities that are deemed other-than-temporary and are attributable to credit deterioration are recognized on the income statement in the period in which the determination is made. Other–than-temporary declines in fair value attributable to factors other than credit deterioration are recognized in accumulated other comprehensive income (loss) on the balance sheet. Interest on securities, including amortization of premiums using the effective interest method over the period to maturity, are included in interest income. Realized gains and losses on the sale of securities and other-than-temporary impairment charges are determined using the specific-identification method. Purchases and sales of securities are recognized on a trade date basis.

~~but~~Loan ~~rather~~Participations: Prior to September 29, 2009, PFGI Capital held a 95% participation interest in commercial mortgage loans secured by real property such as office buildings, multi-family properties of five units or more, industrial warehouse and self-storage properties, retail space, and other types of commercial properties. Loan participations were generally stated at the principal amount outstanding. Interest on loan participations was computed on the outstanding principal balance. Late charges and other loan fees were not transferred to PFGI Capital, but kept by the Bank as part of its loan servicing fees. Any premium or discount applicable to specific loans purchased iswas amortized over the remaining lives of such loans using the interest method. Loans ~~are~~were generally placed on nonaccrual status when the payment of principal or interest is was past due 90 days or more. However, loans that ~~are~~were well secured and in the process of collection may not behave been placed on nonaccrual status. When a loan iswas placed on nonaccrual status, any interest ~~income~~ income previously recognized that ~~has~~had not been received iswas reversed. Future interest income is was recorded only when a payment iswas received and collection of principal iswas considered reasonably assured.

PFGI Capital ~~considers~~considered a loan to be an impaired loan when it iswas probable that all amounts due ~~will~~ would not be collected according to the contractual terms of the loan agreement. PFGI Capital ~~measures~~ measured 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 iswas recognized on a cash basis.

Loan Foreclosures: Prior to September 29, 2009, before foreclosure of any commercial mortgage loan, PFGI Capital ~~intends~~sold ~~to sell~~ the participation interest in the underlying loan back to the Bank. The Bank ~~will~~ then ~~bear~~ incurred all expenses related to the foreclosure.

Allowance for Loan Participation Losses: ~~The~~Prior to September 29, 2009, the allowance for loan participation losses iswas maintained at a level management ~~estimates~~estimated isto be necessary to absorb probable credit losses in the loan participation portfolio. When PFGI Capital ~~purchases~~purchased loan participations from the Bank, an ~~allowance~~ allowance for loan participation losses iswas transferred from the Bank to PFGI Capital. The allowance is was increased whenever further deterioration of the credit quality of the portfolio ~~occurs~~occurred and decreased whenever credit quality ~~improves~~improved. Loans deemed uncollectible ~~are~~were charged off and deducted from the allowance and recoveries on loans previously charged off ~~are~~were added back to the allowance. Loans sold back to the Bank ~~are~~were accompanied by a transfer of the allowance for those loans from ~~PFGI~~ PFGI Capital to the Bank. It iswas PFGI Capital’s practice to sell ~~loans~~individual loan participations back to the Bank ifas such loans ~~become~~ became past due,. It was the Bank’s practice to repurchase such past due loan participations; however, the Bank is was not required to ~~repurchase~~do ~~any such loans~~so.

Management’s determination of the adequacy of the allowance for loan participations ~~considers~~considered individually impaired loans, and pools of homogenous loans with similar risk characteristics ~~and imprecision in estimating losses~~. An allowance iswas established for probable credit losses on impaired loans, when necessary. A loan iswas impaired when, based on current information and events, it iswas probable that all amounts contractually due ~~will~~would not be collectible. As of December 31, 2008 ~~and 2007~~, PFGI Capital had no impaired loans. Pools of homogenous loans, representing loans not individually evaluated for impairment, ~~are~~were also assessed for probable loss ~~using a loss migration analysis~~. The loss migration analysis utilizes average historic loss ratios which are derived from the Bank’s portfolio of commercial mortgage loans. An allowance is also established for imprecision inherent in these loss migration models. Imprecision occurs because historic loss patterns may not be representative of current losses in the portfolio.

Dividends: Dividends on the Series A Preferred Stock and Series B ~~preferred~~Preferred ~~stock~~Stock are ~~non-cumulative. Upon~~ ~~authorization~~discussed ~~of the Board of Directors, dividends are payable~~ in ~~arrears~~Note 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 on the Series A preferred stock are paid at a rate of 7.~~75%~~ per annum of the initial liquidation preference of $25 per share. Dividends on the Series B preferred stock are paid at a rate of 5.00% per annum of the initial liquidation preference of $100 per share. See Note 9 for potential restrictions on PFGI Capital’s ability to pay ~~shareholder~~ dividends.

Common stockholder ~~stockholders~~is ~~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~~common and ~~Preferred~~ preferred stock dividends are treated as ordinary income to the stockholders.

As an alternative to ~~distributing~~an aactual distribution of cash ~~dividend~~to its common stockholder, PFGI Capital has the option of distributing ~~to its common stockholder~~ a dividend using a procedure known as a “consent dividend”, as authorized by Section 565 of the Internal Revenue Code., Aunder ~~consent~~which ~~dividend procedure is where~~ a stockholder, on ~~the~~ ~~last~~or ~~day~~before of a REIT’s files its tax ~~year~~return, 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 stockholder is treated as having received that dividend ~~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 stockholders. 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 years ended December 31, 2008 and 2007,~~ PFGI Capital and its common stockholder ~~used~~utilize the consent dividend procedure. AsThe aconsent ~~result~~dividend was $7.8 million, ~~PFGI~~$11.2 ~~Capital~~million, ~~has~~and ~~additional~~$12.2 ~~funds available~~million, for ~~investment~~PFGI ~~purposes~~Capital’s tax year 2009, 2008, and~~/or~~ ~~for~~2007, ~~distribution~~respectively. toThe ~~its~~consent ~~preferred~~dividend ~~stockholders~~of ~~than~~$7.8 ~~if PFGI~~million ~~Capital~~for ~~had~~tax ~~paid~~year a2009 ~~cash~~was ~~dividend~~recorded toin the ~~common~~first ~~stockholder~~quarter of 2010.

Income Taxes: PFGI Capital has elected to be treated as a REIT for Federal income tax purposes and intends to comply with the related provisions of the Internal Revenue Code, and ~~therefore~~ is therefore not subject to income taxes. NoTherefore, no provision for income taxes is included in the accompanying financial statements.

16In 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; residential mortgage-backed securities eligible to be held by

~~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~~SEC’s Investment Company Act of 1940). 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~~ 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.

As of December 31, ~~2008~~2009, ~~100%~~all of PFGI Capital’s assets were invested in REIT qualifying assets. PFGI Capital does not hold any securities, as defined above, 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 or value of outstanding securities of any one issuer.

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~~sold ~~to sell~~ the participation interest in the underlying loan back to the Bank. The Bank ~~will~~incurred ~~then bear~~ all expenses related to the foreclosure after that time.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

Fair Value Measurements: In September 2006, the ~~Financial Accounting Standards Board (~~FASB) issued ~~SFAS~~ ~~157,~~guidance on Fair Value Measurements, which ~~replaces~~established ~~the different definitions of fair value in existing accounting literature with~~ a ~~single definition, sets out a~~ framework for measuring fair value, and ~~requires~~required additional disclosures about fair value measurements. The statement clarifies that fair value is the price that would be received to sell an asset or the price paid to transfer a liability in the most advantageous market available to the entity and emphasizes that fair value is a market-based measurement and should be based on the assumptions market participants would use. The statement also creates a three level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation. This hierarchy is the basis for the disclosure requirements, with fair value estimates based on the least reliable inputs requiring more extensive disclosures about the valuation method used and the gains and losses associated with those estimates. SFAS 157 is required to be applied whenever another financial accounting standard requires or permits an asset or liability to be measured at fair value. The statement does not expand the use of fair value to any new circumstances. PFGI Capital adopted ~~SFAS~~this ~~157~~new onguidance on January 1, 2008, and the adoption did not have a material impact on its financial condition, results of operations, or liquidity. This guidance was subsequently codified into ASC Topic 820, Fair Value Measurements and Disclosures.

Fair Value Option —– In February 2007, the FASB issued ~~SFAS~~guidance ~~No. 159,~~on The Fair Value Option for Financial Assets and Financial Liabilities. This ~~standard~~guidance allows a company to elect to measure certain financial assets and financial liabilities at fair value. ~~This standard also requires disclosure of additional information to identify the effects of a company’s fair value election on its earnings.~~ Management did not elect the fair value option for any of PFGI Capital’s financial assets. As such, this standard did not impact PFGI Capital’s financial condition, results of operations, or liquidity ~~in 2008~~.

NOTE 4. SECURITIES ~~LOAN~~AVAILABLE ~~PARTICIPATIONS AND ALLOWANCE~~ FOR ~~LOAN~~SALE ~~PARTICIPATION LOSSES~~

Participations in loans are generally purchased from and sold to the Bank at the Bank’s carrying value, which approximates fair value. Carrying value is the principal amount outstanding plus accrued interest less allowance for loan participation losses. An allowance 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 allowance for those loans from PFGI Capital to the Bank. The allowance for loan participation losses reflects management’s judgment as to the level considered appropriate to absorb inherent losses in the loan participation portfolio. It is PFGI’s practice to sell loans back to the Bank if such loans become past due, however, the Bank is not

(In Thousands)

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair

Value

December 31, 2009

Residential Mortgage-backed Agency Securities

299,825

—

(148

)

299,677

Total Securities

299,825

—

(148

)

299,677

17 There were no available for sale securities outstanding as of December 31, 2008.

The fair value of securities is impacted by interest rates, credit spreads, market volatility and illiquidity. Net unrealized losses in the securities available for sale portfolio not deemed other-than-temporary are included in stockholders’ equity as accumulated other comprehensive loss unless credit-related. There were no other-than-temporary impairment charges recognized for the year ended December 31, 2009. In addition, since the securities were purchased on September 29, 2009, there were no securities in an unrealized loss position for 12 months or more.

All of PFGI Capital’s residential mortgage-backed agency securities have a maturity of greater than 10 years. The weighted average yield of these securities was 4.64% at December 31, 2009.

There were no proceeds from sales of securities or gross securities gains (losses) during 2009.

NOTE 5. LOAN PARTICIPATIONS AND ALLOWANCE FOR LOAN PARTICIPATION LOSSES

Prior to September 29, 2009, PFGI Capital maintained an allowance for loan participation losses which reflected management’s judgment as to the level of reserves considered appropriate to absorb inherent losses in the loan participation portfolio. Participations in loans were generally purchased from and sold to the Bank at the Bank’s carrying value, which approximated fair value. Carrying value is the principal amount outstanding plus accrued interest less allowance for loan participation losses. An allowance for loan participation losses was transferred from the Bank to PFGI Capital at the time participations were transferred. It was PFGI Capital’s practice to sell participations in loans back to the Bank as such loans became past due. It was the Bank’s practice to repurchase such

past due loan participations; however, the Bank was not contractually required to ~~repurchase~~do ~~any~~so. Participations in such ~~loans.~~past ~~PFGI~~due ~~Capital~~loans ~~did~~sold ~~not~~back ~~have~~to ~~any nonperforming~~the ~~assets~~Bank orwere ~~impaired~~accompanied ~~loans~~by asa transfer of ~~December 31,~~the allowance ~~2008~~for orthose ~~2007~~loans.

~~The~~On ~~following~~September 29, ~~table~~2009, ~~sets~~PFGI ~~forth~~Capital ansold ~~analysis~~all of the ~~allowance~~loan ~~for~~participations ~~loan~~to ~~participation~~the ~~losses~~Bank ~~for~~at ~~the~~their ~~periods~~estimated ~~indicated:~~ fair value at that time and recognized additional provision/loss on the sale of $5.7 million.

	December 31,
(In Thousands)	2008		2007
Balance at Beginning of Period	$	435	$	483
Transferred Allowance, Net		13		14
Provision (Benefit) for Loan Participation Losses		1,501		(62	)
Loans Charged Off		—		—
Recoveries		—		—
Balance at End of Period	$	1,949	$	435

The following table sets forth the activity in the allowance for loan participation losses for the periods indicated:

NOTE 5. EARNINGS PER COMMON SHARE


(In Thousands)	2009			2008
Balance at January 1	$	1,949		$	435
Transferred Allowance, Net		13			13
Provision for Loan Participation Losses		3,011			1,501
Provision Adjustment Related to Loan Participation Sale		5,689			—
Transferred Allowance Related to Loan Participation Sale		(10,662	)		—
Balance at December 31	$	—		$	1,949

~~Basic~~NOTE ~~earnings per common share is the amount of earnings for the period available to each share of common stock outstanding during the reporting period~~6. ~~The~~EARNINGS ~~Bank~~PER ~~owns~~COMMON ~~all~~SHARE of the issued and outstanding common stock. The earnings available to each share of common stock have been reduced by any preferred stock dividend. 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 stock for stock options, convertible debt, etc. PFGI Capital has no stock options or convertible debt or other potential equity 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. 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, after preferred dividends. 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 stock such as for stock options or convertible debt. PFGI Capital has no stock options, convertible debt or other potential equity instruments and therefore basic and diluted earnings per share are calculated on the same basis.

The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:

	For the Year Ended December 31,
(In Thousands, Except Per Share Data)	2009			2008			2007
(In Thousands, Except Per Share Data)	2008			2007
Net Income	$	6,211		$	17,360		$	19,958
Net Income	$	17,360		$	19,958
Less Preferred Stock Dividends		(7,654	)		(7,654	)		(7,654	)
Less Preferred stock Dividends		(7,654	)		(7,654	)
Net (Loss) Income Available to Common Stockholder	$	(1,443	)	$	9,706		$	12,304
Net Income Available to Common Stockholders	$	9,706		$	12,304
Weighted Average Common Shares Outstanding		5,940			5,940			5,940
Weighted Average Common Shares Outstanding		5,940			5,940
Basic and Diluted (Loss) Earnings Per Share	$	(.24	)	$	1.63		$	2.07
Basic and Diluted Earnings Per Share	$	1.63		$	2.07

NOTE 67. ~~PREFERRED~~STOCKHOLDERS’ ~~STOCK~~ EQUITY

Preferred Stock: Holders of Series A ~~preferred~~Preferred ~~stockholders~~Stock are entitled to receive, if, when, and as authorized and declared by the ~~board~~Board of ~~directors~~Directors out of legally available ~~assets~~funds, non-cumulative cash dividends at the rate of 7.75% per annum of the $25 per share initial liquidation preference ($1.9375 per share). Holders of Series B ~~preferred~~Preferred ~~stockholders~~Stock are ~~entitle~~entitled to receive, if, when, and as authorized and declared by the ~~board~~Board of ~~directors~~Directors out of legally available funds, non-cumulative cash dividends at a rate of 5% per annum of the $100 liquidation preference per share ($5.00 per share). Dividends on both the Series A Preferred Stock and Series B ~~preferred stock~~Preferred Stock are 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. See Note 9 for potential restrictions on PFGI Capital’s ability to pay ~~shareholder~~ stockholder dividends.

The Series A ~~preferred~~Preferred ~~stock~~Stock ~~will~~ranks ~~rank~~ senior to the common stock and Series B ~~preferred~~Preferred ~~stock~~Stock of PFGI Capital as to dividend rights and rights upon liquidation, winding up or dissolution. Holders of ~~PFGI~~the ~~Capital’s~~ Series A ~~preferred~~Preferred ~~stock~~Stock are entitled to one-tenth of one vote per share on all matters submitted to a vote of the stockholders, voting as a single class with the holders of common stock. The Series B ~~preferred~~Preferred ~~stock~~Stock ~~will~~ranks ~~rank~~ senior to the common stock of PFGI Capital as to dividend rights and rights upon liquidation, winding up or dissolution, but junior to the Series A ~~preferred~~Preferred ~~stock~~Stock. Holders of Series B Preferred ~~preferred~~Stock ~~stock~~ have no voting rights.

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

• the Bank becomes less than “adequately capitalized” according to regulations established by the ~~Office of the Comptroller of the Currency~~OCC; • the Bank is placed into conservatorship or receivership; • the Office of the Comptroller of the Currency, in its sole discretion, directs such exchange in writing, and, even if the Bank is not less than “adequately capitalized,” the Office of the Comptroller of the Currency anticipates the Bank becoming less than “adequately capitalized” in the near term; or • the Office of the Comptroller of the Currency, 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%.

18 • the Bank is placed into conservatorship or receivership;

•

In• ~~addition to~~ the ~~above events~~OCC, ~~PFGI~~in ~~Capital~~its orsole ~~the Bank will have the right~~discretion, ~~with~~directs ~~the~~such ~~prior written~~exchange ~~approval~~in ofwriting ~~the~~in ~~Federal Reserve Board and~~ the ~~Office~~event ofthat the ~~Comptroller~~Bank ofhas ~~the Currency, to redeem the PFGI Capital Series A and Series B preferred stock at~~ a ~~redemption~~ ~~price~~Tier of1 ~~$25~~risk-based ~~per~~capital ~~share~~ratio of ~~Series A~~less ~~preferred~~than ~~stock and $100 per share of Series B preferred stock plus the authorized and unpaid dividends to the date of redemption on and after August 17, 2009~~5. 0%.

Since August 17, 2009, PFGI Capital’s ~~Board~~or ofthe ~~Directors~~Bank has ~~authorized~~the right, with the ~~repurchase~~prior written approval of upthe OCC, to ~~3 million~~redeem ~~shares~~the ~~of its~~ Series A ~~preferred~~Preferred ~~stock.~~Stock ~~There~~at ~~were~~a noredemption ~~share~~price ~~repurchases~~of ~~during~~$25 ~~2008~~per share, and ~~2007.~~the AsSeries ofB ~~December 31,~~Preferred ~~2008,~~Stock ~~PFGI~~at ~~Capital~~a ~~has~~redemption ~~authorization~~price toof ~~repurchase~~$100 ~~another~~per ~~358~~share,~~484~~ ~~shares~~along ofwith ~~its~~any ~~Series A preferred~~authorized ~~stock~~and unpaid dividends to the date of redemption.

~~NOTE~~PFGI 7Capital’s Board of Directors has authorized the repurchase of up to 3 million shares of its Series A Preferred Stock from third party investors. ~~RELATED~~There ~~PARTY~~were ~~TRANSACTIONS~~no share repurchases during 2009 or 2008. As of December 31, 2009, PFGI Capital had a remaining authorization to repurchase up to 358,484 shares of its Series A Preferred Stock. PFGI Capital currently has no plan to repurchase Series A Preferred Stock under this Board authorization.

~~PFGI~~Other ~~Capital~~Comprehensive ~~holds a 95% participation interest through a participation agreement with the Bank in~~Income: ~~certain~~The ~~loans~~following ~~originated~~table bysets ~~the~~forth ~~Bank and its subsidiaries. Generally,~~ the ~~participation~~activity ~~interests are~~ in ~~commercial~~accumulated ~~mortgage~~other ~~loans~~comprehensive ~~secured~~income byfor ~~real property that were either directly underwritten by~~ the ~~Bank~~periods ~~and~~indicated: ~~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 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 balance of the loans underlying the participation interests. Loan servicing costs incurred by PFGI Capital totaled $368 thousand and $354 thousand for the years ended December 31, 2008 and 2007, respectively.


(In Thousands)	2009			2008		2007
Accumulated Other Comprehensive Income (Loss) at January 1	$	—		$	—	$	—
Net Unrealized Losses for the Period		(148	)		—		—
Accumulated Other Comprehensive (Loss) at December 31	$	(148	)	$	—	$	—

NOTE 8. RELATED PARTY TRANSACTIONS

Prior to September 29, 2009, PFGI Capital held a 95% participation interest in certain loans originated by the Bank and its subsidiaries. Generally, the participation interests were in commercial mortgage loans secured by real property that were either directly underwritten by the Bank and its subsidiaries or acquired by the Bank. On September 29, 2009, the loan participations were sold by PFGI Capital to the Bank. PFGI Capital used the proceeds from this sale, along with cash on hand and a portion of a $17.5 million capital contribution from the Bank, to purchase securities from the Bank. Upon completion of these transactions, the primary earning asset now held by PFGI Capital is residential mortgage-backed agency securities.

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. 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. Prior to the loan participation sale on September 29, 2009, the management fee was calculated as 0.10% per year of the average daily outstanding principal balance of the loans underlying the participation interests. After the loan participation sale, the related management fee paid by PFGI Capital to the Bank is $300 thousand per year. Management fees incurred by PFGI Capital totaled $300 thousand, $294 thousand, and $283 thousand for the years ended December 31, 2009, 2008, and 2007, respectively.

Prior to September 29, 2009, the participation agreement provided for the Bank to service the loans underlying the participations held by PFGI Capital in a manner substantially the same as similar servicing performed by the Bank for transactions on its own behalf. The servicing fee that the Bank charged was .125% per year of the average daily outstanding principal balance of the loans underlying the participation interests. Loan servicing costs incurred by PFGI Capital totaled $282 thousand, $368 thousand, and $354 thousand for the years ended December 31, 2009, 2008, and 2007, respectively. As a result of the loan participation sale, the participation agreement between PFGI Capital and the Bank was terminated in 2009.

A summary of loan participation activity between the Bank and PFGI Capital follows:

	For the Year Ended
(In Thousands)	2009			2008
	December 31,
Principal Balance at January 1	$	299,651		$	288,563
(In Thousands)	2008			2007
Transfers of Loan Participations from the Bank to PFGI Capital		122,907			185,229
Principal Balance at Beginning of Period	$	288,563		$	276,066
Transfers of Past Due Loan Participations from PFGI Capital to the Bank		(92,212	)		(106,145	)
Transfers of Loan Participations from the Bank to PFGI Capital		185,229			148,904
Loan Participation Principle Payments Received		(27,790	)		(67,996	)
Transfers of Loan Participations from PFGI Capital to the Bank		(~~106~~302,~~145~~556	)		~~(61,026~~—	)
Loan Participation Payments		(67,996	)		(75,381	)
Principal Balance at December 31	$	—		$	299,651
Principal Balance at End of Period	$	299,651		$	288,563

The ~~day-to-day~~Bank ~~operations~~owns of100% ~~PFGI Capital are managed pursuant to the terms~~ of ~~a management agreement between~~ the ~~Bank~~common ~~and~~stock of PFGI Capital. ~~The Bank~~Accordingly, ~~in its role as manager under~~ the ~~terms~~Bank ~~of the~~will ~~management~~receive ~~agreement,~~all ~~receives~~common adividends ~~management~~paid ~~fee~~by ~~designed as a reimbursement for costs incurred to manage~~ PFGI Capital. ~~The~~As ~~Bank~~of isDecember 31, ~~required~~2009, ~~to pay~~ all ~~expenses related to the performance~~ of ~~its duties under~~ the ~~management~~Series ~~agreement,~~B ~~including~~Preferred ~~any~~Stock continues ~~payment~~ to ~~its~~be ~~affiliates~~held ~~for~~by ~~managing~~current ~~PFGI Capital.~~or ~~The~~former ~~management~~employees ~~fee that the Bank charges is .10% per year~~ of ~~the~~PNC ~~average~~or ~~daily outstanding principal balance of~~ the ~~loans underlying the participation interests~~Bank. ~~Management fees incurred by PFGI Capital totaled $294 thousand and $283 thousand for the years ended December 31, 2008 and 2007, respectively.~~

~~The~~25 Bank owns 100% of the common stock of PFGI Capital. Accordingly, the Bank will receive all common dividends paid, if any, by PFGI Capital. In early 2006, 105 shares of Series B preferred stock were issued to National City or Bank employees. The Bank contributed $10.5 thousand of capital for the issuance of these shares. As of December 31, 2008 substantially all of the outstanding shares of the Series B preferred stock are owned by current employees of the Bank or National City and the remaining shares are owned by former employees. Some of PFGI Capital’s directors, who are also employees of the Bank or The PNC Financial Services Group, Inc., own one share of Series B preferred stock. In each case, these shares were acquired prior to becoming a director.

As of December 31, 2008 and 2007, PFGI Capital had an interest-bearing deposit account with the Bank of $7.5 million and $7.1 million, respectively. PFGI Capital had a net payable to the Bank of $55 thousand as of December 31, 2008. PFGI Capital had a net receivable from the Bank of $108 thousand as of December 31, 2007.

NOTE 8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates are made as of a specific point in time based on the characteristics of the financial instruments and relevant market data. 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~~As of ~~its~~December 31, ~~program~~2009 toand ~~manage overall~~2008, ~~interest~~PFGI ~~rate~~Capital ~~risk.~~had Itan isinterest-bearing ~~not~~deposit ~~management’s~~account with ~~intention~~the toBank ~~immediately dispose~~ of ~~a significant~~$21.5 ~~portion~~million ofand ~~its~~$7.5 ~~financial~~million, ~~instruments~~respectively. AsPFGI Capital had a ~~result,~~net payable to the ~~following~~Bank ~~fair~~of ~~value~~$50 ~~information should~~thousand ~~not~~and be$55 ~~interpreted~~thousand as aof ~~forecast~~December 31, of2009 ~~future~~and ~~earnings~~2008, respectively, related to the management and ~~cash~~loan ~~flows.~~servicing agreements described above.

	December 31,
(In Thousands)	2008					2007
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Financial Assets
Commercial Mortgage Loan Participations	$	299,651		$	254,008	$	288,563		$	301,984
Less: Allowance for Loan Participation Losses		(1,949	)		—		(435	)		—
Net Commercial Mortgage Loan Participations	$	297,702		$	254,008	$	288,128		$	301,984
Cash and Due From Banks	$	7,476		$	7,476	$	7,085		$	7,085

The following methods and assumptions were used in estimating its fair value disclosures for financial instruments:

• Loan participations: The fair values for 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. • 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 its activities and, under certain circumstances, to impose ~~restrictions~~ restrictions on the Bank or PFGI Capital. If the ~~Office~~OCC ~~of the Comptroller of the Currency~~ 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 PFGI Capital’s preferred stock.

~~The~~Prior ~~Office~~approval ofby the ~~Comptroller~~OCC ofis ~~the~~required ~~Currency~~for ~~requires~~any ~~that~~ dividends declared by the Bank, or any of its direct subsidiaries, ~~cannot~~that would exceed the sum of the Bank’s ~~net~~retained ~~income~~earnings for the current year, plus retained ~~net~~earnings ~~income~~ for the preceding two years, less any required transfers to surplus or common stock. AsThroughout of2008 ~~December 31,~~and ~~2008~~until mid-2009, the Bank did not have sufficient retained earnings to allow PFGI Capital to declare its ~~normal~~ quarterly ~~dividend~~dividends without such regulatory approval., which PFGI Capital ~~obtained~~ ~~advance~~received ~~approval~~ from the ~~Office~~OCC. ofAs ~~the Comptroller~~ of ~~the~~December 31, ~~Currency to declare shareholder dividends during 2008 and to date during~~ 2009., If the Bank ~~does not have sufficient net income in future periods~~could, ofwithout ~~more~~prior ~~than~~regulatory ~~$5.3 billion, PFGI Capital will be required to seek advance~~ approval ~~from~~ the Office of the Comptroller of the Currency prior to declaration of future dividends. Restrictions on PFGI Capital’s ability to pay dividends to its preferred shareholders may also result in an inability to pay common dividends. If PFGI Capital is unable to distribute 90% of its taxable income through preferred and ~~common~~absent ~~dividends,~~contrary itsupervisory ~~will fail to qualify for the favorable tax treatment accorded to REITs and accordingly~~guidance, ~~the~~declare ~~net~~dividends ~~income~~ of ~~PFGI~~approximately ~~Capital~~$378 ~~will be subject to taxation~~million.

Payment of dividends on PFGI Capital’s preferred stock could also be subject to regulatory limitations if the Bank becomes less than “well-capitalized” for purposes of regulations issued by ~~the~~ ~~Office of~~ the ~~Comptroller of the Currency~~OCC. Under these regulations, the Bank ~~will~~would 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, ~~2008~~2009, the Bank’s total risk-based capital ratio was 1314.814%, its Tier 1 risk-based capital ratio was 910.739%, and its leverage ratio was 89.423%. ~~The~~An exercise of the ~~Office of the Comptroller of the Currency~~OCC’s ~~power~~authority to restrict dividends on PFGI Capital’s 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.

20Restrictions on PFGI Capital’s ability to pay dividends to its preferred stockholders may also result in an inability to pay common dividends. If PFGI Capital were unable to distribute at least 90% of its taxable income through preferred and common dividends, it would fail to qualify for the favorable tax treatment accorded to REITs, causing the income of PFGI Capital to be subject to taxation.

NOTE 10. FAIR VALUE

Fair Value Measurement

PFGI Capital uses fair value measurements to record certain financial instruments. FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or the price paid to transfer a liability on the measurement date. The standard focuses on the exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. FASB ASC 820 establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used in the measurement are observable or unobservable. Observable inputs reflect market-driven or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data. The three-level hierarchy is noted below.

Level 1 – Quoted market prices in active markets for identical assets or liabilities

Level 2 – Observable inputs other than Level 1 such as: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated to observable market data for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the assets or liabilities.

Following is a description of the valuation methodologies used for financial instruments measured at fair value on a recurring basis:

Securities Available for Sale: Under FASB ASC 320, Investments-Debt and Equity Securities, securities available for sale are carried at fair value with unrealized changes in value recorded through other comprehensive income within stockholders’ equity. The securities in the available for sale portfolio are priced using an independent third-party pricing service provided by Barclay’s Capital Index, formerly known as the Lehman Index. Barclay’s Capital Index prices are set with reference to market activity for mortgage-backed agency securities.

All of PFGI Capital’s available for sale securities are classified as Level 2 in the fair value hierarchy at December 31, 2009.

PFGI Capital has no other assets or liabilities measured at fair value on a recurring basis at December 31, 2009 or 2008. In addition, PFGI Capital does not have any assets or liabilities measured at fair value on a nonrecurring basis.

Fair Value of Financial Instruments

Fair value estimates are made as of a specific point in time based on the characteristics of the financial instruments and relevant market data. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques that are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The aggregate fair value amounts presented below do not represent the underlying value of PFGI Capital, and is a point-in-time valuation. 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.


	December 31, 2009
(In Thousands)	Cost Basis		Fair Value
Financial Assets
Securities Available for Sale	$	299,825	$	299,677
Cash and Due from Banks	$	21,499	$	21,499

The following methods and assumptions were used in estimating fair value disclosures for financial instruments:

•

Securities available for sale: The fair values for securities are determined using independent third-party pricing services based primarily upon observable market inputs.

•

Cash and due from banks: The carrying amounts reported for cash and due from banks approximate fair value of those assets.

NOTE 11. QUARTERLY RESULTS OF OPERATIONS – (Unaudited)

The following table summarizes the quarterly results of operations for PFGI Capital for the years ended December 31, 2009 and 2008:


(In Thousands, Except Per Share Amounts)	First		Second			Third			Fourth			Full Year
2009:
Interest Income	$	4,298	$	4,117		$	4,047		$	3,257		$	15,719
Provision for Loan Participation Losses		941		3,216			4,543	(a)		—	(b)		8,700
Noninterest Expense		200		207			317			84			808
Net Income (Loss)	$	3,157	$	694		$	(813	)	$	3,173		$	6,211

Preferred Stock Dividends	$	1,914	$	1,913		$	1,914		$	1,913		$	7,654

Net Income (Loss) Available to Common Shares	$	1,243	$	(1,219	)	$	(2,727	)	$	1,260		$	(1,443	)

Per Common Share:
Basic and Diluted Net Income (Loss)	$	.21	$	(.21	)	$	(.46	)	$	.22		$	(.24	)

2008:
Interest Income	$	5,021	$	4,872		$	4,933		$	4,825		$	19,651
Provision for Loan Participation Losses		79		790			119			513			1,501
Noninterest Expense		198		189			204			199			790
Net Income	$	4,744	$	3,893		$	4,610		$	4,113		$	17,360

Preferred Stock Dividends	$	1,914	$	1,914		$	1,913		$	1,913		$	7,654

Net Income Available to Common Shares	$	2,830	$	1,979		$	2,697		$	2,200		$	9,706

Per Common Share:
Basic and Diluted Net Income	$	.48	$	.33		$	.45		$	.37		$	1.63
Dividends		—		—			—			1.89			1.89

(a)

Includes an additional provision of $5.7 million related to the sale of all loan participations held by PFGI Capital to the Bank.

(b)

No provision for loan losses is necessary due to sale of loan participations in the third quarter of 2009.

Corporate Information

All reports filed electronically by PFGI Capital ~~Corporation (PFGI Capital)~~ with the United States Securities and Exchange Commission (SEC), including the ~~Annual~~annual ~~Report~~report on Form 10-K, quarterly reports on Form 10-Q, and current ~~event~~ reports on Form 8-K, as well as any amendments to those reports, are accessible at no cost onat ~~National~~www.NationalCity.com. ~~City~~During ~~Corporation’s~~2010 ~~Web~~it ~~site~~is atexpected ~~NationalCity~~that this website will be migrated to a new address.~~com.~~ You will be directed to the new address automatically at the time of migration. These filings are also accessible on the SEC’s Web site at www.sec.gov.

PFGI Capital and ~~National City Bank~~PNC’s executive offices are located at ~~1900~~249 ~~East~~Fifth ~~Ninth~~Avenue, ~~Street~~Pittsburgh, ~~Cleveland,~~ ~~Ohio~~Pennsylvania ~~44114~~15222-2707. ~~Directors and officers of PFGI Capital are:~~

T. James Berry		Director (Member of Audit and Compensation Committees)
Scott L. Saari		Director and Vice President
Linda K. Erkkila		Director and Secretary (Member of Executive Committee)
Robert P. Hipskind		General Auditor
Dett P. Hunter		Director (Member of Audit and Compensation Committees)
Daniel J. DeMoss		Director, Vice President and Assistant Secretary
Susan M. Kinsey		Director and President (Member of Executive Committee)
Doris M. Malinowski		Director, Chief Financial Officer and Treasurer
J. David Rosenberg		Director (Member of Executive, Audit and Compensation Committees)
John E. Rubenbauer		Director
The Registrar and Transfer Agent of PFGI Capital is:
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
Phone: 1-800-622-6757

Directors and officers of PFGI Capital are:

~~CONTROLS~~T. ~~AND~~James ~~PROCEDURES~~ Berry Director (Member of Audit and Compensation Committees) Lisa Kovac Director and Vice President Nathan W. Herring Director Laura Long Secretary (Member of Executive Committee) Robert P. Hipskind General Auditor Dett P. Hunter Director (Member of Audit and Compensation Committees) Beth Adams Director, Vice President and Assistant Secretary Randall C. King Director and President (Member of Executive Committee) Kevin R. Glass Director, Chief Financial Officer and Treasurer J. David Rosenberg Director (Member of Executive, Audit and Compensation Committees) John E. Rubenbauer Director

The Registrar, Transfer Agent, and Dividend Disbursing Agent of PFGI Capital is:

Computershare Investor Services, LLC

250 Royall Street

Canton, MA 02021

800-982-7652

ITEM 9A (T).

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of December 31, ~~2008~~2009, an evaluation was performed under the supervision and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of PFGI Capital’s disclosure controls and procedures. Based on that evaluation, management concluded that disclosure controls and procedures as of December 31, ~~2008~~2009 were effective in ensuring material information required to be disclosed in this Annual Report on Form 10-K was recorded, processed, summarized, and reported on a timely basis. ~~Additionally, there were no changes in PFGI Capital~~Management’s ~~internal~~Report ~~control~~on ~~over~~Internal ~~financial reporting~~Control ~~that~~Over ~~occurred~~Financial ~~during~~Reporting ~~the~~appears ~~quarter~~on ~~ended~~page ~~December 31,~~29 ~~2008~~and ~~that~~is ~~have~~incorporated ~~materially~~herein ~~affected, or~~by ~~are reasonably likely to materially affect, PFGI Capital’s internal control over financial reporting~~reference.

~~Management’s~~Changes ~~Report~~in on Internal Control ~~Over~~over Financial Reporting

~~Management’s~~There ~~responsibilities~~were ~~related~~no ~~to establishing and maintaining effective disclosure controls~~changes ~~and procedures include maintaining effective internal controls over financial reporting that are designed to produce reliable financial statements~~ in accordance with accounting principles generally accepted in the United States. As disclosed in the Report on Management’s Assessment of Internal Control Over Financial Reporting on page 10 and is incorporated herein by reference, management assessed PFGI Capital’s ~~system~~internal ofcontrols ~~internal~~that ~~control~~occurred ~~over~~during ~~financial~~the ~~reporting~~quarter asended of December 31, ~~2008,~~2009 inthat ~~relation~~have tomaterially ~~criteria for effective internal control over financial reporting as described in “Internal Control — Integrated Framework~~affected,” ~~issued~~or byare ~~the~~reasonably ~~Committee~~likely ofto ~~Sponsoring Organizations~~materially ~~of the Treadway Commission. Based on this assessment~~affect, ~~management~~PFGI ~~believes~~Capital’s ~~that, as of December 31, 2008, its system of~~ internal control over financial reporting ~~met those criteria and is effective~~.

~~Changes~~29 ~~in Internal Control Over Financial Reporting~~

There have been no significant changes in PFGI Capital’s internal controls or in other factors that could significantly affect internal controls subsequent to December 31, 2008.

~~ITEM~~Management’s 6.Report ~~EXHIBITS~~ on Internal Control over Financial Reporting

Exhibit
Number		Exhibit Description
1.0		Underwriting Agreement incorporated by reference to Exhibit 1 to PFGI Capital’s Amended Registration Statement on Form S-3/A (Registration No. 333-88446) Filed June 6, 2002.
3.1		By-Laws incorporated by reference to Exhibit 3.2 to PFGI Capital’s Registration Statement on Form S-3 (Registration No. 333-88446) Filed May 16, 2002.
3.2		Articles of Amendment and Restatement of PFGI Capital Corporation incorporated by reference to Exhibit 3.2 to PFGI Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
3.3		Articles Supplementary incorporated by reference to Exhibit 3.3 to PFGI Capital’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
4.1		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, as related to stockholder rights.
4.2		Articles of Amendment and Restatement of PFGI Capital Corporation incorporated by reference to Exhibit 3.2 to PFGI Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as related to stockholder rights.
4.3		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.
4.4		Certificate of Designation Rights and Preferences of the Series B Non-Voting Preferred stock incorporated by reference to Exhibit 4 to PFGI Capital’s Current Report on Form 8-K filed on January 30, 2006.
4.5		Articles Supplementary incorporated by reference to Exhibit 3.3 to PFGI Capital’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, as related to stockholder rights.
10.1		Master Participation and Servicing Agreement as amended and restated as of October 20, 2004 incorporated by reference to Exhibit 10.1 to PFGI Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
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.
11.0		Statement re computation of per share earnings incorporated by reference to Note 5 of the Notes to Financial Statements of this report.
14.0		PFGI Capital Corporation Code of Ethics incorporated by reference to Exhibit 14.1 to PFGI Capital’s Current Report on Form 8-K filed on November 20, 2005.
23.0		Consent of Independent Registered Public Accounting Firm.
24.0		Power of Attorney.
31.1		Chief Executive Officer Sarbanes-Oxley Act 302 Certification dated March 6, 2009 for PFGI Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
31.2		Chief Financial Officer Sarbanes-Oxley Act 302 Certification dated March 6, 2009 for PFGI Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
32.1		Chief Executive Officer Sarbanes-Oxley Act 906 Certification dated March 6, 2009 for PFGI Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.
32.2		Chief Financial Officer Sarbanes-Oxley Act 906 Certification dated March 6, 2009 for PFGI Capital Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008.

PFGI Capital Corporation is responsible for the preparation, integrity, and fair presentation of the financial statements included in this annual report. The financial statements have been prepared in conformity with United States generally accepted accounting principles and necessarily include some amounts that are based on management’s best estimates and judgments.

22As management of PFGI Capital Corporation, we are responsible for establishing and maintaining effective internal control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability by internal audit. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the system of internal control over financial reporting as of December 31, 2009, in relation to criteria for effective internal control over financial reporting as described in “Internal Control – Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2009, its system of internal control over financial reporting is effective and meets the criteria of the “Internal Control – Integrated Framework.”

This Report does not include an attestation report of PFGI Capital’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by PFGI Capital’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit PFGI Capital to provide only management’s report in this annual report.

/s/ RANDALL C. KING

Randall C. King

President

/s/ KEVIN R. GLASS

Kevin R. Glass

Chief Financial Officer

Pittsburgh, PA

March 30, 2010

~~SIGNATURE~~ PART III

~~Pursuant~~In accordance with General Instructions G(3) to Form 10-K, the ~~requirements~~information ofrequired ~~the~~by ~~Section~~Item 1310 or(Directors, 15Executive Officers and Corporate Governance), Item 11 (dExecutive Compensation), Item 12 (Security Ownership of ~~the~~Certain ~~Securities~~Beneficial ~~Exchange~~Owners ~~Act~~and ofManagement ~~1934~~and Related Stockholder Matters), ~~the~~Item 13 (Certain Relationships and Related Transactions, and Director Independence), and ~~Registrant~~Item 14 ~~has~~(Principal ~~duly~~Accounting ~~caused~~Fees ~~this~~and ~~report~~Services) is incorporated herein by reference from PFGI Capital’s definitive information statement to be ~~signed~~filed onwith ~~its~~the ~~behalf~~SEC bywithin 120 days after the ~~undersigned~~close ~~thereunto~~of ~~duly~~PFGI Capital’s fiscal year ended ~~authorized~~December 31, 2009.

	PFGI Capital Corporation
	(Registrant)
Date: March 6, 2009	/s/ Doris M. Malinowski
	Doris M. Malinowski
	Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) Duly Authorized Officer

PART IV

~~Pursuant~~ITEM to15. ~~the requirements of the Securities Exchange Act of 1934~~EXHIBITS, ~~this~~FINANCIAL ~~report~~STATEMENT ~~has been signed below by the following persons on behalf of PFGI Capital Corporation and in the capacities and on the dates indicated.~~ SCHEDULES

Signature	Capacity	Date .
/s/ Susan M. Kinsey * Susan M. Kinsey	Director and President (Principal Executive Officer)	March 6, 2009
/s/ T. James Berry *	Director	March 6, 2009
T. James Berry
/s/ Dett P. Hunter *	Director	March 6, 2009
Dett P. Hunter
/s/ Linda K. Erkkila *	Director and Secretary	March 6, 2009
Linda K. Erkkila
/s/ Scott Saari *	Director, Vice President	March 6, 2009
Scott Saari
/s/ J. David Rosenberg *	Director	March 6, 2009
J. David Rosenberg
/s/ John E. Rubenbauer *	Director	March 6, 2009
John E. Rubenbauer
/s/ Doris M. Malinowski * Doris M. Malinowski	Director (Principal Financial Officer and Principal Accounting Officer)	March 6, 2009
/s/ Daniel DeMoss * Daniel DeMoss	Director, Vice President and Assistant Secretary	March 6, 2009

Our financial statements are included in Item 8 of this Report. The exhibits listed on the Exhibit Index on page 33 of this Report are incorporated by reference or filed herewith in response to this item. Financial statement schedules are omitted due to inapplicability or because required information is shown in the financial statements or the notes thereto.

* Linda31 K. Erkkila, as attorney-in-fact, signs this report on behalf of the above-named officers and directors pursuant to powers of attorney duly executed by such officers and directors empowering Linda K. Erkkila, Susan M. Kinsey or Doris M. Malinowski to sign on their behalf.

/s/Table Lindaof K. Erkkila Linda K. Erkkila, attorney-in-factContents

23 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


PFGI Capital Corporation
(Registrant)

Date: March 30, 2010	By:	/s/ Kevin R. Glass
		Kevin R. Glass
		Chief Financial Officer and Treasurer

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 indicated on March 30, 2010.


Signature		Capacity

/s/ Randall C. King *		Director and President
Randall C. King		(Principal Executive Officer)

/s/ Kevin R. Glass		Director, Chief Financial Officer and Treasurer
Kevin R. Glass		(Principal Financial Officer and Principal Accounting Officer)

/s/ T. James Berry *		Director
T. James Berry

/s/ Dett P. Hunter *		Director
Dett P. Hunter

/s/ Lisa Kovac *		Director
Lisa Kovac

/s/ J. David Rosenberg *		Director
J. David Rosenberg

/s/ John E. Rubenbauer *		Director
John E. Rubenbauer

/s/ Nathan W. Herring *		Director
Nathan Herring

*	Kevin R. Glass, as attorney-in-fact, signs this Report on behalf of the above-named officers and directors pursuant to powers of attorney duly executed by such officers and directors empowering Laura Long, Randall C. King or Kevin R. Glass to sign on their behalf.

/s/ Kevin R. Glass

Kevin R. Glass, attorney-in-fact

EXHIBIT INDEX


Exhibit Number		Exhibit Description

3.1		Articles of Amendment and Restatement of PFGI Capital incorporated by reference to Exhibit 3.2 to PFGI Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

3.2		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.

3.3		Articles Supplementary incorporated by reference to Exhibit 3.3 to PFGI Capital’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.

4.1		Articles of Amendment and Restatement of PFGI Capital Corporation defining the rights of the Series A Preferred Stock incorporated by reference to Exhibit 3.1 hereof.

4.2		Certificate of Designation Rights and Preferences of the Series B Non-Voting Preferred stock incorporated by reference to Exhibit 4 to PFGI Capital’s Current Report on Form 8-K filed on January 30, 2006.

10.1		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.

10.2		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.

10.3		Purchase and Sale Agreement, dated as of September 29, 2009 by and between PFGI Capital Corporation and National City Bank, with respect to the CRE Loan Participations incorporated by reference to Exhibit 10.1 to PFGI Capital’s Current Report on Form 8-K filed on October 5, 2009.

10.4		Purchase and Sale Agreement, dated as of September 29, 2009 by and between PFGI Capital Corporation and National City Bank, with respect to certain residential mortgage-backed agency securities incorporated by reference to Exhibit 10.2 to PFGI Capital’s Current Report on Form 8-K filed on October 5, 2009.

10.5		Amendment to Management Agreement, dated as of September 29, 2009 by and between PFGI Capital Corporation and National City Bank incorporated by reference to Exhibit 10.3 to PFGI Capital’s Current Report on Form 8-K filed on October 5, 2009.

12.0		Computation of Ratio of Earnings to Fixed Charges.

23.1		Consent of Independent Registered Public Accounting Firm.

23.2		Consent of Independent Registered Public Accounting Firm.

24.0		Power of Attorney.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

/s/Table Lindaof K. Erkkila Linda K. Erkkila, attorney-in-factContents

Table of Contents

Filing Compare · PFGI CAPITAL CORP