UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20552

                                  FORM 10 - QSB


[X]   QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                  For the quarterly period ended June 30, 2003

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT


                 For the transition period from ______ to ______

                         Commission File Number 0-32623
                         ------------------------------

                             Nittany Financial Corp.
             (Exact name of registrant as specified in its charter)

           Pennsylvania                                           23-2925762
(State or other jurisdiction of                                  (IRS Employer
incorporation or organization)                               Identification No.)

            2541 E. College Avenue, State College, Pennsylvania 16801
                    (Address of principal executive offices)

                                (814) 272 - 2265
              (Registrant's telephone number, including area code)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or 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 X No

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:

                  Class: Common Stock, par value $.10 per share
                    Outstanding at August 11, 2003: 1,560,898

         Transitional Small Business Issuer Format (check one) Yes No X

<PAGE>

                            NITTANY FINANCIAL CORP.

                                      INDEX



                                                                           Page
                                                                          Number
                                                                          ------

PART I  -  FINANCIAL INFORMATION

      Item 1.  Financial Statements

               Consolidated Balance Sheet (Unaudited) as of                  3
                  June 30, 2003 and December 31, 2002

               Consolidated Statement of Income (Unaudited)
                  for the Three and Six Months ended June 30, 2003
                  and 2002                                                   4

               Consolidated Statement of Changes in Stockholders'
                  Equity (Unaudited) for the Six Months ended
                  June 30, 2003                                              5

               Consolidated Statement of Cash Flows (Unaudited)
                  for the Six Months ended June 30, 2003 and 2002            6

               Notes to Unaudited Consolidated Financial Statements          7

      Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations              11

      Item 3.  Controls and Procedures                                       16

PART II  -  OTHER INFORMATION

      Item 1.  Legal Proceedings                                             17

      Item 2.  Changes in Securities                                         17

      Item 3.  Defaults Upon Senior Securities                               17

      Item 4.  Submission of Matters to a Vote of Security Holders           17

      Item 5.  Other Information                                             17

      Item 6.  Exhibits and Reports on Form 8 - K                            17

SIGNATURES                                                                   19
<PAGE>
                             NITTANY FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                        June 30,         December 31,
                                                                                         2003                2002
                                                                                     -------------      -------------
                                                                                               (unaudited)
<S>                                                                                  <C>                <C>
ASSETS
     Cash and due from banks                                                         $     278,978      $     618,937
     Interest-bearing deposits with other banks                                         12,977,478          5,233,136
     Investment securities available for sale                                            4,967,169          6,024,009
     Investment securities held to maturity (estimated
       market value of $42,807,220 and $38,727,663)                                     42,451,514         38,359,925
     Loans receivable (net of allowance for loan losses
       of $1,440,799 and $1,177,141)                                                   153,329,470        124,254,560
     Premises and equipment                                                              2,028,433          1,941,009
     Federal Home Loan Bank stock                                                        1,241,000          1,175,400
     Goodwill                                                                            1,763,231            799,217
     Accrued interest receivable and other assets                                        1,933,527          1,252,839
                                                                                     -------------      -------------
             TOTAL ASSETS                                                            $ 220,970,800      $ 179,659,032
                                                                                     =============      =============
LIABILITIES
     Deposits:
         Noninterest-bearing demand                                                  $   7,809,067      $   6,159,204
         Interest-bearing demand                                                        21,115,869         18,717,951
         Money market                                                                   32,794,857         27,517,955
         Savings                                                                       109,631,769         86,498,462
         Time                                                                           19,149,732         17,958,397
                                                                                     -------------      -------------
            Total deposits                                                             190,501,294        156,851,969
     Short-term borrowings                                                               5,267,883          1,141,104
     Other borrowings                                                                   10,871,890         10,615,650
     Accrued interest payable and other liabilities                                        800,557          1,145,853
                                                                                     -------------      -------------
             TOTAL LIABILITIES                                                         207,441,624        169,754,576
                                                                                     -------------      -------------
STOCKHOLDERS' EQUITY
     Serial preferred stock, no par value; 5,000,000 shares
       authorized, none issued                                                                   -                  -
     Common stock, $.10 par value; 10,000,000 shares
       authorized, 1,560,898 and 1,367,225 issued and outstanding                          156,090            136,723
     Additional paid-in capital                                                         13,989,501         11,045,912
     Retained deficit                                                                     (613,862)        (1,268,694)
     Accumulated other comprehensive loss                                                   (2,553)            (9,485)
                                                                                     -------------      -------------
             TOTAL STOCKHOLDERS' EQUITY                                                 13,529,176          9,904,456
                                                                                     -------------      -------------
             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $ 220,970,800      $ 179,659,032
                                                                                     =============      =============
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.


                                       3
<PAGE>
                             NITTANY FINANCIAL CORP.
                        CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                            Three-Months Ended June 30,    Six-Months Ended June 30,
                                                                2003           2002            2003           2002
                                                             -----------    -----------    -----------     -----------
                                                                   (unaudited)                   (unaudited)
<S>                                                          <C>            <C>            <C>             <C>
INTEREST AND DIVIDEND INCOME
    Loans, including fees                                    $ 2,302,577    $ 1,639,586    $ 4,410,790     $ 3,088,854
    Interest-bearing deposits with other banks                    13,037         43,072         39,905          64,563
    Investment securities                                        377,023        448,495        746,334         902,983
                                                             -----------    -----------    -----------     -----------
           Total interest and dividend income                  2,692,637      2,131,153      5,197,029       4,056,400
                                                             -----------    -----------    -----------     -----------
INTEREST EXPENSE
    Deposits                                                   1,056,983        945,944      2,119,605       1,780,875
    Short-term borrowings                                         12,878         48,222         24,988         100,293
    Other borrowings                                             130,218        118,671        261,641         230,059
                                                             -----------    -----------    -----------     -----------
           Total interest expense                              1,200,079      1,112,837      2,406,234       2,111,227
                                                             -----------    -----------    -----------     -----------

NET INTEREST INCOME                                            1,492,558      1,018,316      2,790,795       1,945,173

Provision for loan losses                                        188,000        118,000        278,000         268,000
                                                             -----------    -----------    -----------     -----------

NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                                 1,304,558        900,316      2,512,795       1,677,173
                                                             -----------    -----------    -----------     -----------
NONINTEREST INCOME
    Service fees on deposit accounts                             126,632        116,525        245,457         213,319
    Investment security gain                                           -              -          6,691           7,630
    Asset management fees                                        150,526              -        489,670               -
    Other                                                         77,851         34,375         86,945          57,078
                                                             -----------    -----------    -----------     -----------

           Total noninterest income                              355,009        150,900        828,763         278,027
                                                             -----------    -----------    -----------     -----------

NONINTEREST EXPENSE
    Compensation and employee benefits                           544,386        399,771      1,063,112         730,228
    Occupancy and equipment                                      148,245        131,942        293,221         248,988
    Professional fees                                             53,725         41,356        101,749          65,738
    Data processing fees                                          95,608         59,932        173,261         122,674
    Supplies, printing, and postage                               31,518         31,924         68,675          65,827
    Advertising                                                   24,442         31,156         61,792          61,540
    ATM processing fees                                           30,322         33,528         62,622          64,122
    Commission expense                                            77,298              -        295,123               -
    Other                                                        109,331         61,309        218,472         120,761
                                                             -----------    -----------    -----------     -----------
           Total noninterest expense                           1,114,875        790,918      2,338,027       1,479,878
                                                             -----------    -----------    -----------     -----------

Income before income taxes                                       544,692        260,298      1,003,531         475,322
Income taxes                                                     189,089         78,503        348,699         110,096
                                                             -----------    -----------    -----------     -----------
NET INCOME                                                   $   355,603    $   181,795    $   654,832     $   365,226
                                                             ===========    ===========    ===========     ===========
EARNINGS PER SHARE
    Basic                                                    $      0.25    $      0.13    $      0.47     $     0.27
    Diluted                                                         0.23           0.13           0.43           0.25

WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                                      1,408,449      1,359,952      1,405,653       1,359,952
    Diluted                                                    1,529,307      1,430,274      1,527,344       1,448,508
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       4
<PAGE>
                             NITTANY FINANCIAL CORP.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                      Accumulated
                                                          Additional                      Other           Total
                                               Common      Paid-in       Retained     Comprehensive   Stockholders'  Comprehensive
                                                Stock      Capital       Deficit          Loss           Equity         Income
                                              --------    ----------     -------     --------------   -------------  -------------
<S>                                           <C>           <C>         <C>            <C>            <C>              <C>
Balance, December 31, 2002                    $136,723   $11,045,912   $(1,268,694)      $(9,485)     $ 9,904,456

Net income                                                                 654,832                        654,832     $654,832
Other comprehensive income:
    Unrealized gain on available for sale
    securities net of reclassification
    adjustment, net of taxes of $3,571                                                     6,932            6,932        6,932
                                                                                                                      --------
Comprehensive income                                                                                                  $661,764
                                                                                                                      ========
Exercise of stock options                           16         1,092                                        1,108
Issuance of 36,000 shares of common stock        3,600       590,400                                      594,000
Sale of 157,515 shares of common stock,
    net of offering costs                       15,751     2,352,097                                    2,367,848
                                              --------   -----------   -----------       -------      -----------
Balance, June 30, 2003                        $156,090   $13,989,501   $  (613,862)      $(2,553)     $13,529,176
                                              ========   ===========   ===========       =======      ===========

                                                                                           2003
                                                                                         --------
Components of other comprehensive income:
    Change in net unrealized gain on
      investment securities available
      for sale                                                                           $11,348
    Realized gains included in net income,
      net of taxes of $2,275                                                              (4,416)
                                                                                         -------
Total                                                                                    $ 6,932
                                                                                         =======
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       5
<PAGE>
                             NITTANY FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                 Six-Months Ended June 30,
                                                                    2003          2002
                                                               ------------    ------------
<S>                                                            <C>             <C>
OPERATING ACTIVITIES
     Net income                                                $    654,832    $    365,226
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Provision for loan losses                                  278,000         268,000
         Depreciation, amortization, and accretion, net             509,503         182,747
         Investment security gains                                   (6,691)         (7,630)
         Increase in accrued interest receivable                   (115,856)       (137,411)
         Decrease in accrued interest payable                      (259,453)        (59,720)
         Decrease in income taxes payable                          (676,000)         (8,904)
         Other, net                                                 186,618         140,563
                                                               ------------    ------------
         Net cash provided by operating activities                  570,953         742,871
                                                               ------------    ------------
INVESTING ACTIVITIES
     Investment securities available for sale:
         Purchases                                                  (19,826)             --
         Proceeds from sale                                          26,637          37,630
         Proceeds from principal repayments and maturities        1,040,647       2,324,347
     Investment securities held to maturity:
         Purchases                                              (29,941,878)    (10,737,445)
         Proceeds from principal repayments and maturities       25,486,230       5,251,778
     Net increase in loans receivable                           (29,517,912)    (22,482,045)
     Purchase of FHLB stock                                         (65,600)         (4,400)
     Acquisition of subsidiary                                     (370,014)             --
     Purchase of premises and equipment                            (206,154)       (681,957)
                                                               ------------    ------------
         Net cash used for investing activities                 (33,567,870)    (26,292,092)
                                                               ------------    ------------
FINANCING ACTIVITIES
     Net increase in deposits                                    33,649,325      28,844,843
     Net increase in short-term borrowings                        4,126,779          29,272
     Proceeds from other borrowings                                 360,000       2,000,000
     Repayment of other borrowings                                 (103,760)     (1,097,526)
     Exercise of stock options                                        1,108              --
     Proceeds from the sale of common stock                       2,352,113              --
     Issuance of common stock                                        15,751              --
                                                               ------------    ------------
         Net cash provided by financing activities               40,401,300      29,776,589
                                                               ------------    ------------

         Increase in cash and cash equivalents                    7,404,383       4,227,368

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                  5,852,073       6,113,158
                                                               ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                     $ 13,256,456    $ 10,340,526
                                                               ============    ============
SUPPLEMENTAL CASH FLOW DISCLOSURE
     Cash paid during the year for:
         Interest on deposits and borrowings                   $  2,665,687    $  3,004,271
         Income taxes                                             1,020,000         119,000
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       6
<PAGE>
                             NITTANY FINANCIAL CORP
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Nittany Financial Corp. (the "Company")
includes its wholly-owned subsidiaries, Nittany Bank (the "Bank"), Nittany Asset
Management,   Inc,  and  Vantage  Investment  Advisors,   LLC.  All  significant
intercompany items have been eliminated.

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with the  instructions  to Form  10-QSB and,  therefore,  do not
necessarily  include all information that would be included in audited financial
statements.  The information furnished reflects all adjustments that are, in the
opinion  of  management,  necessary  for a  fair  statement  of the  results  of
operations.  All such adjustments are of a normal recurring nature.  The results
of  operations  for the  three  and six  months  ended  June  30,  2003  are not
necessarily  indicative  of the results to be expected for the fiscal year ended
December 31, 2003 or any other future interim period.

These statements  should be read in conjunction with the consolidated  financial
statements  and related  notes for the year ended  December 31, 2002,  which are
incorporated by reference in the Company's Annual Report on Form 10-KSB.

NOTE 2 - EARNINGS PER SHARE

The Company provides dual  presentation of Basic and Diluted earnings per share.
Basic  earnings per share  utilizes net income as reported as the  numerator and
the actual average shares  outstanding as the denominator.  Diluted earnings per
share  includes  any  dilutive  effects of options,  warrants,  and  convertible
securities.  For the three  months  ended June 30,  2003 and 2002,  the  diluted
number of shares outstanding from employee stock options was 120,858 and 88,556,
respectively.  For the  six-months  ended June 30,  2003 and 2002,  the  diluted
number of shares outstanding from employee stock options was 121,691 and 70,322,
respectively.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available for sale  securities.  For the six months ended June 30,
2003, this activity is shown under the heading Comprehensive Income as presented
in the Consolidated  Statement of Changes in Stockholders' Equity. For the three
months ended June 30, 2003, comprehensive income totaled $363,243. For the three
and six-months  ended June 30, 2002,  comprehensive  income totaled $210,971 and
$344,446.

                                       7
<PAGE>

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

In August  2001,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("FAS") No. 143,  Accounting  for
Asset Retirement Obligations,  which requires that the fair value of a liability
be  recognized  when incurred for the  retirement of a long-lived  asset and the
value of the asset be increased by that amount. The statement also requires that
the  liability be  maintained  at its present  value in  subsequent  periods and
outlines  certain  disclosures  for  such  obligations.  The  adoption  of  this
statement,  which was effective  January 1, 2003, did not have a material effect
on the Company's financial position or results of operations.

In July 2002, the FASB issued FAS No. 146,  Accounting for Costs Associated with
Exit or  Disposal  Activities,  which  requires  companies  to  recognize  costs
associated  with exit or disposal  activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. This statement replaces
EITF Issue No. 94-3,  Liability  Recognition  for Certain  Employee  Termination
Benefits and Other Costs to Exit an Activity  (Including  Certain Costs Incurred
in a  Restructuring).  The new  statement  is  effective  for  exit or  disposal
activities initiated after December 31, 2002. The adoption of this statement did
not have a material  effect on the  Company's  financial  position or results of
operations.

On December 31, 2002, the FASB issued FAS No. 148,  Accounting  for  Stock-Based
Compensation - Transition and Disclosure,  which amends FAS No. 123,  Accounting
for Stock-Based Compensation.  FAS No. 148 amends the disclosure requirements of
FAS No. 123 to require more prominent and more frequent disclosures in financial
statements about the effects of stock-based  compensation.  Under the provisions
of FAS No. 123,  companies that adopted the preferable,  fair value based method
were required to apply that method  prospectively  for new stock option  awards.
This  contributed to a "ramp-up" effect on stock-based  compensation  expense in
the first few years following  adoption,  which caused concern for companies and
investors  because of the lack of  consistency in reported  results.  To address
that concern,  FAS No. 148 provides two  additional  methods of transition  that
reflect  an  entity's  full  complement  of  stock-based   compensation  expense
immediately upon adoption,  thereby  eliminating the ramp-up effect. FAS No. 148
also  improves the clarity and  prominence  of  disclosures  about the pro forma
effects of using the fair  value  based  method of  accounting  for  stock-based
compensation  for all  companies--regardless  of the accounting  method used--by
requiring  that  the  data  be  presented  more   prominently   and  in  a  more
user-friendly format in the footnotes to the financial statements.  In addition,
the statement  improves the  timeliness of those  disclosures  by requiring that
this information be included in interim as well as annual financial  statements.
The  transition  guidance and annual  disclosure  provisions  of FAS No. 148 are
effective  for fiscal  years  ending  after  December  15,  2002,  with  earlier
application   permitted  in  certain   circumstances.   The  interim  disclosure
provisions are effective for financial reports containing  financial  statements
for interim periods beginning after December 15, 2002

                                       8
<PAGE>
The following  table  represents the effect on net income and earnings per share
had the stock-based employee compensation expense been recognized:
<TABLE>
<CAPTION>
                                             Three Months Ended June 30,              Six Months Ended June 30,
                                               2003                2002                2003               2002
                                             --------           --------            --------           --------

<S>                                          <C>                <C>                 <C>                <C>
Net income, as reported:                     $355,603           $181,795            $654,832           $365,226

Less proforma expense related
  to stock options                             43,886             40,683              87,771             81,366
                                             --------           --------            --------           --------
Proforma net income                          $311,717           $141,112            $567,061           $283,860
                                             ========           ========            ========           ========


Basic net income per common share:
     As reported                             $   0.25           $   0.13            $   0.47           $   0.26
     Pro forma                                   0.22               0.10                0.40               0.21
Diluted net income per common share:
     As reported                             $   0.23           $   0.13            $   0.43           $   0.24
     Pro forma                                   0.20               0.10                0.37               0.20
</TABLE>

In April,  2003,  the FASB issued FAS No. 149,  Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities.  This  statement  amends  and
clarifies  accounting for derivative  instruments,  including certain derivative
instruments  embedded in other contracts,  and for hedging  activities under FAS
No. 133. The amendments set forth in FAS No. 149 improve financial  reporting by
requiring  that  contracts  with  comparable  characteristics  be accounted  for
similarly.  In particular,  this statement  clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a derivative
as  discussed  in FAS No. 133.  In  addition,  it  clarifies  when a  derivative
contains a financing  component that warrants special reporting in the statement
of cash flows.  FAS No.149 amends certain other existing  pronouncements.  Those
changes  will  result  in  more  consistent  reporting  of  contracts  that  are
derivatives in their entirety or that contain embedded  derivatives that warrant
separate  accounting.  This statement is effective for contracts entered into or
modified  after  June  30,  2003,   except  as  stated  below  and  for  hedging
relationships  designated  after June 30, 2003.  The guidance  should be applied
prospectively.  The  provisions  of this  statement  that  relate to FAS No. 133
Implementation  Issues that have been  effective for fiscal  quarters that began
prior to June 15, 2003,  should  continue to be applied in accordance with their
respective effective dates. In addition,  certain provisions relating to forward
purchases or sales of when-issued securities or other securities that do not yet
exist,  should be applied to existing contracts as well as new contracts entered
into after June 30, 2003. The adoption of this statement is not expected to have
a material effect on the Company's financial position or results of operations.

In May 2003,  the FASB issued FAS No.  150,  Accounting  for  Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity. This statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Such  instruments may have
been previously  classified as equity. This statement is effective for financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period

                                       9
<PAGE>

beginning after June 15, 2003. The adoption of this statement is not expected to
have a material effect on the Company's reported equity.

In November, 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure  requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others. This interpretation  elaborates on the disclosures to be
made by a guarantor  in its interim and annual  financial  statements  about its
obligations  under certain  guarantees that it has issued.  This  interpretation
clarifies  that a  guarantor  is  required  to  disclose  (a) the  nature of the
guarantee,  including the approximate  term of the guarantee,  how the guarantee
arose,  and the events or  circumstances  that would  require the  guarantor  to
perform under the guarantee; (b) the maximum potential amount of future payments
under the guarantee;  (c) the carrying amount of the liability,  if any, for the
guarantor's  obligations  under the guarantee;  and (d) the nature and extent of
any recourse provisions or available  collateral that would enable the guarantor
to recover  the  amounts  paid under the  guarantee.  This  interpretation  also
clarifies  that a guarantor  is required to  recognize,  at the  inception  of a
guarantee,  a liability  for the  obligations  it has  undertaken in issuing the
guarantee,  including its ongoing  obligation to stand ready to perform over the
term of the  guarantee  in the event  that the  specified  triggering  events or
conditions occur. The objective of the initial  measurement of that liability is
the fair value of the guarantee at its inception.  The initial  recognition  and
initial  measurement  provisions  of this  interpretation  are  applicable  on a
prospective  basis to  guarantees  issued or modified  after  December 31, 2002,
irrespective of the guarantor's fiscal year-end. The disclosure  requirements in
this interpretation are effective for financial  statements of interim or annual
periods ending after December 15, 2002. The adoption of this  interpretation did
not have a material  effect on the  Company's  financial  position or results of
operations.

In  January,  2003,  the FASB issued  Interpretation  No. 46,  Consolidation  of
Variable Interest Entities,  in an effort to expand upon and strengthen existing
accounting  guidance  that  addresses  when  a  company  should  include  in its
financial  statements the assets,  liabilities and activities of another entity.
The  objective  of this  interpretation  is not to restrict  the use of variable
interest entities but to improve financial  reporting by companies involved with
variable  interest  entities.  Until now,  one company  generally  has  included
another entity in its  consolidated  financial  statements only if it controlled
the  entity  through  voting  interests.  This  interpretation  changes  that by
requiring a variable  interest  entity to be  consolidated  by a company if that
company is subject to a majority of the risk of loss from the variable  interest
entity's  activities or entitled to receive a majority of the entity's  residual
returns or both. The  consolidation  requirements of this  interpretation  apply
immediately to variable  interest  entities  created after January 31, 2003. The
consolidation  requirements  apply to older entities in the first fiscal year or
interim  period  beginning  after  June  15,  2003.  Certain  of the  disclosure
requirements  apply in all financial  statements  issued after January 31, 2003,
regardless of when the variable interest entity was established. The adoption of
this interpretation has not and is not expected to have a material effect on the
Company's financial position or results of operations.

NOTE 5 - RESTATEMENT OF FINANCIAL STATEMENTS

On October 1, 2002, the FASB issued FAS No. 147 which changes the accounting for
goodwill from an amortization approach to an impairment-only  approach as of the
effective  date that FAS No. 142 was  adopted,  which in the  Company's  case is
January 1, 2002.  As a result of  complying  with FAS No.  147,  the  Company is
required to restate  earnings for the first and second fiscal

                                       10
<PAGE>

quarters  of 2002.  The  following  table  details the changes on net income and
earnings per share as a result of this restatement:
<TABLE>
<CAPTION>
                                  Three Months Ended            Three Months Ended            Six Months Ended
                                    March 31, 2002                June 30, 2002                June 30, 2002

                               Previously        As         Previously         As         Previously        As
                                Reported      Restated       Reported       Restated       Reported      Restated
                              -------------  ------------   ------------   ------------  -------------  ------------
<S>                            <C>           <C>            <C>            <C>            <C>           <C>
     Net income                $ 175,530     $ 183,430      $ 173,981      $ 181,795      $ 349,511     $ 365,226

     Earnings Per Share:
       Basic                   $    0.13     $    0.13      $    0.13      $    0.13      $    0.26     $    0.27
       Diluted                      0.13          0.13           0.12           0.13           0.24          0.25
</TABLE>


MANAGEMENT'S DISCUSSION AND ANALYSIS

General

     The  Private  Securities  Litigation  Act  of  1995  contains  safe  harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes,"  "anticipates,"  "contemplates,"  "expects,"  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties  which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in  interest  rates,  the  ability to control  costs and  expenses,  and
general economic conditions.

Overview

     Nittany  Financial  Corp.  ("Nittany") is a unitary thrift holding  company
organized  in 1997 for the  purpose of  establishing  a  hometown  bank in State
College,  Pennsylvania.  Nittany Bank (the  "Bank")  commenced  operations  as a
wholly-owned  FDIC-insured federal savings bank subsidiary of Nittany on October
26, 1998. At June 30, 2003,  the business  operations of Nittany  included three
operating  subsidiaries  (collectively  defined  as the  "Company",  unless  the
context indicates otherwise), as follows:

     o    Nittany Bank  commenced  banking  operations  in October 1998 with two
          offices at 116 East  College  Avenue and 1276  North  Atherton,  State
          College,  Pennsylvania.  On August 7, 2000, a third branch  office was
          opened at 129 Rolling  Ridge Drive in State College and on January 14,
          2002, a fourth State College branch office opened at 2541 East College
          Avenue.  In July,  2003, the 129 Rolling Ridge Drive office moved to a
          larger location in the same general area of State College, PA.

     o    Nittany  Asset  Management,  Inc. was formed in May 1999  primarily to
          offer  various  types  of  investment  products  and  services.   This
          subsidiary  is  headquartered  at  2541  East  College  Avenue,  State
          College, Pennsylvania and began operations in November 1999.

                                       11
<PAGE>

     o    On  January  1,  2003,   Nittany  Financial  Corp.   acquired  Vantage
          Investment Advisors,  LLC ("Vantage") for consideration  consisting of
          cash,  the  assumption  of  Vantage  debt,  and  36,000  shares of the
          Company's stock. The Company recognized goodwill of approximately $1.0
          million  Vantage is a  registered  investment  advisor  which  manages
          investment  assets in excess of $180 million.  This subsidiary is also
          headquartered at 2541 East College Avenue in State College.

     Our retail business is conducted  principally through Nittany Bank. Nittany
Bank provides a wide range of banking  services with an emphasis on  residential
and commercial real estate lending,  consumer  lending,  commercial  lending and
retail deposits.  At June 30, 2003, we had consolidated  assets of $221 million,
loans receivable (net of allowance for loan losses) of $153 million, deposits of
$191 million,  and  stockholders'  equity of $13.5  million.  Net income for the
quarter ended June 30, 2003  increased  $174,000 to $356,000 or $.23 per diluted
share,  from $182,000 or $.13 per diluted share, for the same 2002 period.  This
included an income tax expense of $189,000 for 2003  compared to $78,000 for the
same 2002 quarter.

Comparison of Financial Condition

     Total assets  increased  $41,312,000 to  $220,971,000 at June 30, 2003 from
$179,659,000  at December 31, 2002.  The growth in assets for the quarter  ended
June 30, 2003  represented an increase of  $19,064,000  from March 31, 2003. The
Bank's  asset  growth was driven  primarily  by strong  growth in the 1-4 family
residential  loan  portfolio,  which  has been  funded by  steady  increases  in
deposits.

     Cash and cash equivalents  increased  $7,404,000 to $13,256,000 at June 30,
2003 as compared to $5,852,000 at December 31, 2002.  For the quarter ended June
30, 2003, cash and cash  equivalents  decreased by $908,000 from March 31, 2003.
The changes in cash and cash  equivalents  resulted from temporary  fluctuations
with  interest-bearing  deposits  with other banks due to the timing of customer
activity and investments purchased.  Nittany's primary depository is the Federal
Home Loan Bank of Pittsburgh.

     Investment securities available for sale decreased $1,057,000 to $4,967,000
at June 30, 2003 as compared to $6,024,000  at December 31, 2002.  Additionally,
investment  securities held to maturity  increased  $4,092,000 to $42,452,000 at
June 30, 2003 from $38,360,000 at December 31, 2002.  During the current period,
we purchased  $29,942,000  of held to maturity  securities  which were partially
funded by  $25,486,000  of  proceeds  received  from  principal  repayments  and
maturities of held to maturity securities.  For the quarter ended June 30, 2003,
investment securities available for sale decreased $418,000 as compared to March
31, 2003. Additionally,  investment securities held to maturity at June 30, 2003
decreased $2,606,000 as compared to March 31, 2003.

     Approximately  $30,800,000  of gross loans closed  during the quarter,  and
loans  receivable,  net of allowance for loan losses,  increased  $29,074,000 to
$153,329,000  at June 30, 2003 from  $124,255,000  at December 31, 2002. The net
growth was less than the gross loans booked because of principal  reductions and
a high level of refinancing activity. For the quarter ended June 30, 2003, loans
receivable,  net increased  $22,510,000 from March 31, 2003. Of such increase in
loans  receivable,  net  for  the  quarter  ended  June  30,  2003,  1-4  family
residential  loans increased  approximately  $17,128,000.  The increase in loans
receivable resulted from the

                                       12
<PAGE>

economic health of our market area and the strategic, service-oriented marketing
approach  taken by  management to meet the lending needs of the area. As of June
30, 2003,  we had  additional  commitments  to fund loan demand of $9,473,000 of
which approximately $5,905,000 relates to commercial and commercial real estate.

     The allowance  for loan losses is increased by provisions  for loan losses,
which is charged against  earnings,  and is reduced by charge-offs and increased
by  recoveries.  At June 30,  2003,  our  allowance  for loan  losses  increased
$264,000 to  $1,441,000  from  $1,177,000  at December 31, 2002.  The  increased
allowance  resulted from a loan loss provision for the six months ended June 30,
2003 of $278,000  offset by loan chargeoffs of $17,000 and recoveries of $3,000.
For the quarter ended June 30, 2002, we increased the allowance by $188,000.

     The  additions  to the  allowance  for loan  losses  are based on growth of
residential and commercial loans and upon a further  determination by management
that it believes is appropriate.  Due to our lack of historical experience since
we are newly formed, management bases its determination upon such factors as the
volume and type of loans that we  originate,  the amount and trends  relating to
our delinquent and non-performing loans,  regulatory policies,  general economic
conditions  and other  factors  relating to the  collectibility  of loans in our
portfolio. Although we maintain our allowance for loan losses at a level that we
consider to be adequate  to provide  for the  inherent  risk of loss in our loan
portfolio, there can be no assurance that additional losses will not be required
in future periods.

     Total deposits increased  $33,649,000 to $190,501,000 at June 30, 2003 from
$156,852,000 at December 31, 2002. At June 30, 2003, the Nittany savings deposit
account  added to our deposit base  approximately  $22,693,000.  For the quarter
ended June 30, 2003,  interest bearing demand deposits increased  $1,749,000 and
Nittany savings deposits increased  $10,808,000 from March 31, 2003. The Nittany
savings  deposit  product is a competitive  deposit account with a tiered annual
interest  rate of  2.25%  for  balances  over  $2,500  for the  current  period.
Increases in Nittany's  checking and savings products continue to be the primary
source of core deposit growth.

     Stockholder's  equity increased  $3,625,000 to $13,529,000 at June 30, 2003
from  $9,904,000 at December 31, 2002, as a result of net income of $655,000,  a
decline in accumulative other comprehensive loss of $7,000, and a stock offering
of 157,515  shares @ $15.50 per share  during the  quarter.  The proceeds of the
offering were approximately $2.4 million.  Accumulated other  comprehensive loss
decreased  as a result  of  changes  in the net  unrealized  loss on  investment
securities  available for sale due to fluctuations in interest rates. Because of
interest rate volatility,  accumulated other comprehensive loss could materially
fluctuate  from  period  to period  depending  on  economic  and  interest  rate
conditions.

Results of Operations

     Net income for the three months ended June 30, 2003  increased  $174,000 to
$356,000 from  $182,000 for the same 2002 period.  Net income for the six months
ended June 30, 2003  increased  $290,000 to $655,000  from $365,000 for the same
2002  period.  The  increases  in net  income  for both the  three and six month
periods were  attributable  to a $404,000  increase in net interest income and a
$204,000 increase in noninterest income attributable  largely to Vantage,  which
became a subsidiary of the Company in 2003.  These  positive  developments  were
more than  sufficient to offset a $305,000  increase in noninterest  expense and
$119,000 increase in

                                       13
<PAGE>

income taxes.  Basic and diluted  earnings per share  increased to $.47 and $.43
per share for the six months  ended June 30,  2003 as  compared to $.27 and $.25
for the same period of year 2002.

     Net  interest  income for the three  months  ended June 30, 2003  increased
$475,000  to  $1,493,000  as compared to  $1,018,000  for the same 2002  period.
Interest and dividend  income  increased  $562,000 to  $2,693,000  for the three
months  ended  June 30,  2003 from  $2,131,000  for the same  2002 year  period.
Increased  interest and dividend  income for the current three months ended June
30, 2003 was  influenced  primarily  by  increases  in interest  earned on loans
receivable of $663,000.  Reflecting declining market interest rates, the average
yield on interest earning assets  decreased to 5.37% for the three-months  ended
June 30, 2003 from 6.02% for the same period  ended 2002.  The average  yield on
loans receivable  decreased for the three months ended June 30, 2003 by 76 basis
points as compared to the same 2002 period.  These declines in yields,  however,
were more than  offset  by  continued  strong  growth in the  amount of  earning
assets.  At June 30, 2003, the three and six month average  balances of interest
earning  assets were $200 million and $193  million,  respectively,  compared to
$142 million and $134 million for the comparable 2002 periods.

     Net interest  income for six months ended June 30, 2003 increased  $846,000
to $2,791,000  from  $1,945,000 for the same 2002 period.  Interest and dividend
income increased $1,141,000 to $5,197,000 for the six months ended June 30, 2003
from  $4,056,000 for the same 2002 period.  The increased  interest and dividend
income  was  primarily  a  result  of  increases  in  interest  earned  on loans
receivable of $1,322,000.  The average yield on interest earning assets declined
to 5.39% for the six months  ended June 30,  2003 from 6.05% for the same period
ended 2002.  The  significant  increase in  residential  real estate lending was
partially  offset but the  reduction  in yield on loans  receivable  of 71 basis
points in 2003 as compared to 2002.

     Interest expense for the three months ended June 30, 2003 increased $87,000
to  $1,200,000  from  $1,113,000  for the same 2002  period  and was  influenced
primarily  by an increase in average  balance of  interest  bearing  deposits of
$62,543,000. However, the average cost of funds for interest bearing liabilities
decreased  83 basis  points to 2.59% from 3.42% for the three  months ended June
30, 2003 as compared to the same 2002 period. Additionally,  the average cost of
funds for deposits  decreased 92 basis points for the current three month period
as compared to the same 2002 period.

     Interest expense for the six months ended June 30, 2003 increased  $295,000
to  $2,406,000  from  $2,111,000  for the same 2002  period  and was  influenced
primarily by an increase in interest  expense on deposits of $339,000.  However,
the average cost of funds for interest  bearing  liabilities  decreased 75 basis
points to 2.68% for the six months  ended June 30,  2003 from 3.43% for the same
period  ended  2002.  Additionally,  the  average  cost of  funds  for  deposits
decreased  82 basis  points for the current six month  period as compared to the
same 2002 period.

                                       14
<PAGE>

     Management's  monitoring and adjusting of loan and deposit rates  increased
the Bank's net interest margin by 9 basis points to 2.98% from 2.89% at June 30,
2002, a period of dramatic interest rate volatility.

     Total noninterest income increased $204,000, a 135% increase, and $551,000,
a 198%  increase,  respectively  for the three and six month periods ending June
30, 2003.  Noninterest  income items are primarily  comprised of service charges
and fees on deposit account  activity,  along with fee income derived from asset
management services and related commissions. Additionally, for the three and six
months ended June 30, 2003,  Vantage and Nittany  Asset  Management  contributed
approximately  $339,000 and $544,000,  respectively in commission and management
fees.  Note that Vantage was acquired on January 1, 2003 and did not  contribute
to earnings in the 2002 period.

     Total noninterest  expenses  increased  $324,000 and $858,000 for the three
and six months ended June 30, 2003 as compared to the same  periods  ended 2002.
The  increase  in total  noninterest  expenses  for both  periods was related to
operating a larger  organization which resulted from the acquisition of Vantage,
marketing efforts to increase visibility, and higher data processing fees caused
by the growing  number of loan and deposit  accounts.  Salary and benefits costs
increased in connection with the acquisition of Vantage as three full-time staff
were  hired.  For the three and six months  ended  June 30,  2003,  Vantage  and
Nittany  Asset  Management  operations  contributed  approximately  $326,000 and
$510,000,  respectively  of other  operating  expense.  Note  that  Vantage  was
acquired on January 1, 2003.

     For the three and six months  ended June 30,  2003,  the  Company  incurred
income tax expense of $189,000 and $349,000,  respectively,  compared to $78,000
and  $110,000,  respectively,  for the three and six months ended June 30, 2002.
The higher  income tax  expense  during  2003  periods  reflects  the  Company's
increased  earnings during 2003 plus the use of remaining loss  carryforwards in
2002. The Company's effective tax rates for both the three and six month periods
ended June 30, 2003 were 34.7% compared to 29.5% and 23.2%, respectively for the
2002 periods.

Liquidity and Capital Resources

     Our primary sources of funds are customer deposits, proceeds from principal
and interest payments on loans,  proceeds from maturities,  sales and repayments
of investment  securities  and FHLB  advances.  While  maturities  and scheduled
amortization  of loans are a  predictable  source of  funds,  deposit  flows and
mortgage prepayments are greatly influenced by general interest rates,  economic
conditions  and  competition.  Management  monitors  liquidity  daily,  and on a
monthly  basis  incorporates   liquidity  management  into  its  asset/liability
management program.

     Liquidity  may  be  adversely  affected  by  unexpected  deposit  outflows,
excessive interest rates paid by competitors,  adverse publicity relating to the
savings and loan industry and similar  matters.  Management  monitors  projected
liquidity  needs and

                                       15
<PAGE>

determines the level desirable  based in part on the Bank's  commitments to make
loans and management's assessment of the Bank's ability to generate funds.

     Management monitors both the Company's and Nittany Bank's total risk-based,
tier I  risk-based  and tier I  leverage  capital  ratios  in  order  to  assess
compliance  with  regulatory  guidelines.  At June 30, 2003, the Company's total
risk-based,  tier I risk-based and tier I leverage ratios were 11.5%,  10.2% and
5.4%, respectively,  and Nittany Bank's total risk-based,  tier I risk-based and
tier I leverage ratios were 12.6%, 11.4% and 5.9%, respectively.

Item 3.  Controls and Procedures

     The Company's management evaluated, with the participation of the Company's
Chief Executive  Officer and Chief Financial  Officer,  the effectiveness of the
Company's  disclosure  controls  and  procedures,  as of the  end of the  period
covered by this report.  Based on that evaluation,  the Chief Executive  Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information  required to be disclosed by
the  Company  in the  reports  that it files or  submits  under  the  Securities
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time periods  specified in the  Securities and Exchange  Commission's  rules and
forms.

     There were no changes in the  Company's  internal  control  over  financial
reporting  that  occurred  during the  Company's  last fiscal  quarter that have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal control over financial reporting.

                                       16
<PAGE>



PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

               None

Item 2.    Changes in Securities

               Not Applicable


Item 3.    Defaults Upon Senior Securities

               None

Item 4.    Submission of Matters to a Vote of Security Holders

               The following represents the results of matters submitted to a
               vote of the stockholders at the annual meeting held on May 23,
               2003:

               Election of a Director for term to expire in 2007:
               D. Michael Taylor was elected by the following vote:

               For:                          1,186,857
               Votes Withheld:                   6,369

               J. Gary McShea was elected by the following vote:

               For:                          1,188,684
               Votes Withheld:                   4,542

               S.R.  Snodgrass  A.C. was selected as the  Company's  independent
               auditors for the fiscal year 2003 by the following vote:

               For:                          1,190,877
               Against:                            396
               Votes Withheld:                   1,953

Item 5.    Other Information

               None

Item 6.    Exhibits and Reports on Form 8-K

          (a)     The following exhibits are included in this Report or
                  incorporated herein by reference:
                  3(i)  Amended Articles of Incorporation of Nittany
                         Financial Corp. *
                  3(ii) Bylaws of Nittany Financial Corp. *
                  4     Specimen Stock Certificate of Nittany Financial Corp. *
                  10.1  Employment Agreement between the Bank and David Z.
                         Richards *
                  10.2  Nittany Financial Corp. 1998 Stock Option Plan **
                  31.1  Certification Pursuant to Section 302 of the Securities
                         Exchange Act of 1934 - David Z. Richards

                                       17
<PAGE>

                  31.2  Certification Pursuant to Section 302 of the Securities
                         Exchange Act of 1934 - Gary M. Bradley
                  32.1  Certification  Pursuant to 18 U.S.C.  Section 1350, as
                         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                         Act 0f 2002.
                  99.1  Independent Accountants Report

*    Incorporated  by  reference  to the  identically  numbered  exhibit  to the
     registration statement on Form SB-2 (File No. 333-57277) declared effective
     by the SEC on July 31, 1998.

**   Incorporated  by  reference  to the  identically  numbered  exhibit  to the
     December 31, 1999 Form 10-KSB filed with the SEC on March 28, 2000.

     (b)  Reports on Form 8-K.

     (1) A Report on Form 8-K was filed on June 27, 2003 pursuant to items 7 and
     9 announcing  that the Registrant  has closed the  additional  common stock
     offering previously announced April 25, 2003.

     (2) A Report on Form 8-K was filed on June 3, 2003  pursuant to items 7 and
     9 announcing  that the  Registrant  completed the  additional  common stock
     offering previously announced April 25, 2003.

     (3) A Report on Form 8-K was filed on May 19, 2003  pursuant to items 5 and
     7 announcing that the Registrant has commenced the additional  common stock
     offering previously announced April 25, 2003.

     (4) A Report on Form 8-K was filed on April 30,  2003  pursuant  to Items 7
     and 12 in accordance  with Release No.  34-47583 to report earnings for the
     quarter ended March 31, 2003.

     (5) A Report on Form 8-K was filed on April 25,  2003  pursuant  to items 5
     and 7 announcing  that the Registrant  was filing a Registration  Statement
     with  the  Securities  and  Exchange  Commission  to  sell  up  to  149,500
     additional shares of Common Stock.

     (6) A Report on Form 8-K was filed on February 13, 2003 pursuant to items 5
     and 7 to report earnings for the quarter and year ended December 31, 2002.

     (7) A report on Form 8-K was filed on January 17,  2003,  pursuant to items
     5, 7 and 9  announcing  that  that  the  Registrant's  Board  of  Directors
     declared  a  six-for-five  stock  split  payable in the form of a 20% stock
     dividend on the Company's outstanding common stock.

     (8) A Report on Form 8-K was filed on January 10, 2003 pursuant to items 5,
     7 and 9 announcing  the  Registrant's  new branch  office  location at 1900
     South Atherton St.

                                       18
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned and hereunto duly authorized.


                                      Nittany Financial Corp.


Date:    August 12, 2003              By: /s/David Z. Richards
                                          --------------------------------------
                                          David Z. Richards
                                          President and Chief Executive Officer



Date:    August 12, 2003              By: /s/Gary M. Bradley
                                          --------------------------------------
                                          Gary M. Bradley
                                          Vice President and Chief Accounting
                                          Officer