UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10 - QSB

(MARK ONE)

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

     For the quarterly period ended September 30, 2003

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

     For the transition period from ______ to ______

                         Commission File Number 0-32623

                            Nittany Financial Corp.
                            -----------------------
        (Exact name of small business issuer as specified in its charter)

            Pennsylvania                                23-292576
---------------------------------------------  ---------------------------------
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
 or organization)

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

                                (814) 272 - 2265
                                ----------------
                           (Issuer's telephone number)

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 outstanding at November 11, 2003:

            Class: Common Stock, par value $.10 per share: 1,560,898

            Transitional Small Business Disclosure 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
         September 30, 2003 and December 31, 2002 ......................     3

         Consolidated Statement of Income (Unaudited)
         for the Three and Nine Months ended September 30, 2003
         and 2002.......................................................     4


         Consolidated Statement of Changes in Stockholders' Equity
         (Unaudited) for the Nine months ended September 30, 2003.......     5

         Consolidated Statement of Cash Flows (Unaudited)
         for the Nine Months ended September 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........................................     15

PART II  -  OTHER INFORMATION

Item 1.  Legal Proceedings..............................................     16

Item 2.  Changes in Securities and Use of Proceeds......................     16

Item 3.  Defaults Upon Senior Securities................................     16

Item 4. Submission of Matters to a Vote of Security Holders.............     16

Item 5.  Other Information..............................................     16

Item 6   Exhibits and Reports on Form 8-K...............................     16

SIGNATURES

CERTIFICATIONS

<PAGE>

                             NITTANY FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                    September 30,    December 31,
                                                                        2003             2002
                                                                    -------------    -------------
                                                                     (unaudited)
<S>                                                               <C>              <C>
ASSETS
     Cash and due from banks                                        $     650,824    $     618,937
     Interest-bearing deposits with other banks                         5,898,259        5,233,136
     Investment securities available for sale                           4,434,668        6,024,009
     Investment securities held to maturity (estimated
       market value of $43,972,991 and $38,727,663)                    44,289,418       38,359,925
     Loans receivable (net of allowance for loan losses
       of $1,659,288 and $1,177,141)                                  176,115,140      124,254,560
     Premises and equipment                                             2,574,556        1,941,009
     Federal Home Loan Bank stock                                       1,549,000        1,175,400
     Intangible assets                                                  1,763,231          799,217
     Accrued interest and other assets                                  1,908,986        1,252,839
                                                                    -------------    -------------
             TOTAL ASSETS                                           $ 239,184,082    $ 179,659,032
                                                                    =============    =============
LIABILITIES
     Deposits:
         Noninterest-bearing demand                                 $   9,150,947    $   6,159,204
         Interest-bearing demand                                       19,807,856       18,717,951
         Money market                                                  34,743,942       27,517,955
         Savings                                                      122,556,546       86,498,462
         Time                                                          19,776,318       17,958,397
                                                                    -------------    -------------
            Total deposits                                            206,035,609      156,851,969
     Short-term borrowings                                              7,662,130        1,141,104
     Other borrowings                                                  10,958,792       10,615,650
     Accrued interest payable and other liabilities                       559,575        1,145,853
                                                                    -------------    -------------
             TOTAL LIABILITIES                                        225,216,106      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 1,367,230 issued and outstanding         156,090          136,723
     Additional paid-in capital                                        13,973,134       11,045,912
     Retained deficit                                                    (155,410)      (1,268,694)
     Accumulated other comprehensive loss                                  (5,838)          (9,485)
                                                                    -------------    -------------
             TOTAL STOCKHOLDERS' EQUITY                                13,967,976        9,904,456
                                                                    -------------    -------------
             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 239,184,082    $ 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        Nine-months Ended
                                                    September 30,            September 30,
                                                   2003        2002        2003        2002
                                                ----------  ----------  ----------   ---------
                                                                  (unaudited)
<S>                                           <C>         <C>         <C>          <C>
INTEREST AND DIVIDEND INCOME
    Loans, including fees                       $2,601,103  $1,860,797  $7,011,893  $4,949,651
    Interest-bearing deposits with other banks       8,898      43,673      48,803     108,236
    Investment securities                          328,101     400,910   1,074,435   1,303,893
                                                ----------  ----------  ----------   ---------
           Total interest and dividend income    2,938,102   2,305,380   8,135,131   6,361,780
                                                ----------  ----------  ----------   ---------

INTEREST EXPENSE
    Deposits                                     1,051,561   1,008,544   3,171,166   2,789,419
    Short-term borrowings                           19,023      53,040      44,011     153,333
    Other borrowings                               128,013     110,817     389,654     340,876
                                                ----------  ----------  ----------   ---------
           Total interest expense                1,198,597   1,172,401   3,604,831   3,283,628
                                                ----------  ----------  ----------   ---------

NET INTEREST INCOME                              1,739,505   1,132,979   4,530,300   3,078,152

Provision for loan losses                          230,000     142,000     508,000     410,000
                                                ----------  ----------  ----------   ---------

NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                   1,509,505     990,979   4,022,300   2,668,152
                                                ----------  ----------  ----------   ---------

NONINTEREST INCOME
    Service fees on deposit accounts               124,980     119,717     370,437     333,036
    Investment security gain                             -           -       6,691       7,630
    Asset management fees                          231,764           -     721,434           -
    Other                                           36,125      41,652     123,070      98,730
                                                ----------  ----------  ----------   ---------
           Total noninterest income                392,869     161,369   1,221,632     439,396
                                                ----------  ----------  ----------   ---------

NONINTEREST EXPENSE
    Compensation and employee benefits             544,768     388,630   1,607,880   1,118,858
    Occupancy and equipment                        180,397     124,102     473,618     373,090
    Professional fees                               55,676      41,364     157,425     107,102
    Data processing fees                           112,338      63,618     285,599     186,292
    Supplies, printing, and postage                 35,300      25,932     103,975      91,759
    Advertising                                     42,594      30,381     104,386      91,921
    ATM processing fees                             34,635      32,945      97,257      97,067
    Commission expense                              90,385           -     385,508           -
    Other                                          142,138      78,576     360,610     223,148
                                                ----------  ----------  ----------   ---------
           Total noninterest expense             1,238,231     785,548   3,576,258   2,289,237
                                                ----------  ----------  ----------   ---------

Income before income taxes                         664,143     366,800   1,667,674     818,311
Income taxes                                       205,691     130,749     554,390     232,749
                                                ----------  ----------  ----------   ---------

NET INCOME                                      $  458,452  $  236,051  $1,113,284   $ 585,562
                                                ==========  ==========  ==========   =========

EARNINGS PER SHARE
    Basic                                       $    0.29   $    0.17   $ 0.76       $    0.43
    Diluted                                          0.27        0.16     0.70            0.41

WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                        1,560,898   1,359,973   1,457,970   1,359,959
    Diluted                                      1,687,013   1,461,941   1,581,135   1,440,830
</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
                                                       --------   -----------  ----------- ---------   -------------- --------------
                                                                              (unaudited)

<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                                                                       1,113,284               1,113,284      $1,113,284
Other comprehensive income:
    Unrealized gain on available for sale securities
    net of reclassification adjustment,
    net of taxes of $1,879                                                                     3,647         3,647           3,647
                                                                                                                        ----------
Comprehensive income                                                                                                    $1,116,931
                                                                                                                        ==========
Exercise of stock options                                    16         1,092                                1,108
Issuance of 36,000 shares of common                       3,600       590,400                              594,000
Sale of 157,515 shares of common stock, net
    of offering costs                                    15,751     2,335,730                            2,351,481
                                                       --------   -----------  ----------- ---------   -----------

Balance, September 30, 2003                            $156,090   $13,973,134  $  (155,410)$ $(5,838)  $13,967,976
                                                       ========   ===========  =========== =========   ===========

                                                                                                           2003
                                                                                                       -----------
Components of other comprehensive income:
    Change in net unrealized gain on
      investment securities available for sale                                                         $     8,063
    Realized gains included in net income, net of taxes of $2,275                                           (4,416)
                                                                                                       -----------

Total                                                                                                  $     3,647
                                                                                                       ===========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements

                                       5
<PAGE>

                             NITTANY FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                  Nine-months ended September 30,
                                                                        2003            2002
                                                                   ------------    ------------
                                                                            (unaudited)
<S>                                                              <C>             <C>
OPERATING ACTIVITIES
     Net income                                                    $  1,113,284    $    585,562
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Provision for loan losses                                      508,000         410,000
         Depreciation, amortization, and accretion, net                 772,963         292,445
         Investment security gains                                       (6,691)         (7,630)
         Increase in accrued interest receivable                       (198,645)       (264,417)
         Decrease in accrued interest payable                          (293,164)        (55,478)
         (Increase) decrease in taxes payable                          (526,757)        315,436
         Other, net                                                    (218,384)        (71,232)
                                                                   ------------    ------------
         Net cash provided by operating activities                    1,150,606       1,204,686
                                                                   ------------    ------------
INVESTING ACTIVITIES
     Investment securities available for sale:
         Purchases                                                      (19,826)              -
         Proceeds from sale                                              26,637          37,630
         Proceeds from principal repayments and maturities            1,555,738       6,090,451
     Investment securities held to maturity:
         Purchases                                                  (44,424,200)    (26,458,521)
         Proceeds from principal repayments and maturities           37,940,573      18,270,784
     Net increase in loans receivable                               (52,370,615)    (37,481,590)
     Purchase of FHLB stock                                            (373,600)         (4,400)
     Acquisition of subsidiary                                         (370,014)              -
     Purchase of premises and equipment                                (849,686)       (708,477)
     Sale of premises and equipment                                      31,000               -
                                                                   ------------    ------------
         Net cash used for investing activities                     (58,853,993)    (40,254,123)
                                                                   ------------    ------------

FINANCING ACTIVITIES
     Net increase in deposits                                        49,183,640      49,162,608
     Net increase in short-term borrowings                            6,521,026         901,676
     Proceeds from other borrowings                                     500,000       4,000,000
     Repayment of other borrowings                                     (156,858)     (1,147,437)
     Exercise of stock options                                            1,108           1,370
     Proceeds from sale of common stock                               2,351,481               -
                                                                   ------------    ------------
         Net cash provided by financing activities                   58,400,397      52,918,217
                                                                   ------------    ------------

         Increase in cash and cash equivalents                          697,010      13,868,780

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                      5,852,073       6,113,158
                                                                   ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                         $  6,549,083    $ 19,981,938
                                                                   ============    ============

SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid during the year for:
         Interest on deposits and borrowings                       $  3,897,995    $  4,180,914
         Income taxes                                                 1,095,000         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 nine months ended  September  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 September 30, 2003 and 2002, the diluted
number of shares outstanding from employee stock options was 126,115 and 84,973,
respectively. For the nine-months ended September 30, 2003 and 2002, the diluted
number of shares  outstanding from employee stock options was 123,166 and 67,393
respectively.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available for sale securities. For the nine months ended September
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  September  30,  2003,  comprehensive  income  totaled
$455,167. For the three and nine-months ended September 30, 2002,  comprehensive
income totaled $279,946 and $624,392.

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

                                       7
<PAGE>

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            Nine Month Ended
                                            September 30,                  September 30,
                                           2003          2002            2003          2002
                                       -----------   -----------   -------------   -----------

<S>                                  <C>           <C>      <C>  <C>             <C>
Net income, as reported:               $   458,452   $   236,051   $   1,113,284   $   585,562
Less proforma expense related
  to stock options
                                            43,886        40,683         131,657       122,049
                                       -----------   -----------   -------------   -----------
Proforma net income                   $    414,567   $   195,368   $     981,628   $   463,513
                                       ===========   ===========   =============   ===========


Basic net income per common share:
     As reported                       $      0.29   $      0.17   $        0.76   $      0.43
     Pro forma                                0.27          0.14            0.67          0.34

Diluted net income per common share:
     As reported                       $      0.27   $      0.16   $        0.70   $      0.41
     Pro forma                                0.25          0.13            0.62          0.32
</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,

                                       9
<PAGE>

2003,  and otherwise is effective at the  beginning of the first interim  period
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.  In October,
2003, the FASB decided to defer to the fourth quarter from the third quarter the
implementation  date for  Interpretation  No. 46. This  deferral only applies to
variable  interest entities that existed prior to February 1, 2003. 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.

                                       10

<PAGE>

                      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 de novo  community 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 September  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 as a
               federally-insured  federal  savings  bank 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.  On July 28, 2003,  the 129 Rolling  Ridge Drive
               office moved to a larger  location at 1900 South Atherton  Street
               on the site of the former Shoney's Restaurant.

          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.

          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. Vantage is a registered investment advisor which
               manages  investment  assets  in  excess  of $ 189  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 September 30, 2003, we had consolidated  assets
of $239  million,  loans  receivable  (net of allowance for loan losses) of $176
million,  deposits of $206 million,  and stockholders'  equity of $14.0 million.
Net income for the  quarter  ended  September  30,  2003  increased  $222,000 to
$458,000 or $.27 per diluted share, from $236,000 or

                                       11
<PAGE>

$.16 per diluted  share,  for the same 2002 period.  This included an income tax
expense of $206,000 for 2003 compared to $131,000 for the same 2002 quarter.

Comparison of Financial Condition

         Asset growth for the period  continued to remain  strong.  Total assets
increased $59,525,000 to $239,184,000 at September 30, 2003 from $179,659,000 at
December  31,  2002.  Additionally,  the growth in assets for the quarter  ended
September 30, 2003  represented an increase of  $18,213,000  from June 30, 2003.
The  Bank's  asset  growth  was  driven  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 $697,000 to $6,549,000 at September
30, 2003 as compared to $5,852,000  at December 31, 2002.  For the quarter ended
September 30, 2003, cash and cash equivalents  decreased by $6,707,000 from June
30,  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  $1,589,000  to
$4,435,000 at September 30, 2003 as compared to $6,024,000 at December 31, 2002.
Additionally,  investment  securities held to maturity  increased  $5,929,000 to
$44,289,000 at September 30, 2003 from $38,360,000 at December 31, 2002.  During
the current  period,  we purchased  $14,482,000  of held to maturity  securities
which were partially  funded by $12,455,000 of proceeds  received from principal
repayments and maturities of held to maturity securities.  For the quarter ended
September 30, 2003,  investment securities available for sale decreased $532,000
as  compared  to June 30,  2003.  Additionally,  investment  securities  held to
maturity at  September  30, 2003  increased  $1,837,000  as compared to June 30,
2003.

         For the quarter ended  September  30, 2003,  loans  receivable,  net of
allowance  for loan losses,  increased  $22,786,000  from June 30, 2003. Of such
increase,  1-4 family  residential  loans increased  $18,121,000.  Year to date,
loans  receivable,  net of allowance for loan losses,  increased  $51,860,000 to
$176,115,000  from  $124,255,000  at December 31, 2002.  The net growth was less
than the loans booked because of principal reductions,  unadvanced  construction
loans,  and a  high  level  of  refinancing  activity.  The  increase  in  loans
receivable  resulted  from  the  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  September  30,  2003,  we  had  additional
commitments to fund loan demand of $10,052,000 of which approximately $3,307,000
relates to commercial and commercial real estate.

         The  allowance  for loans is increased by  provisions  for loan losses,
which is charged against  earnings,  and is reduced by charge-offs and increased
by recoveries.  At September 30, 2003,  our allowance for loan losses  increased
$482,000 to  $1,659,000  from  $1,177,000  at December 31, 2002.  The  increased
allowance  resulted  from a loan  loss  provision  for  the  nine  months  ended
September  30,  2003 of  $508,000  offset  by loan  chargeoffs  of  $28,000  and
recoveries  of $3,000.  For the  quarter  ended  September  30,  2003,  we added
$230,000 to the allowance.

                                       12
<PAGE>

         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,
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  provisions  will not be required in future
periods.

         Total deposits  increased  $49,184,000 to $206,036,000 at September 30,
2003 from  $156,852,000 at December 31, 2002. At September 30, 2003, the Nittany
savings deposit account added to our deposit base  $122,557,000,  an increase of
$12,925,000  from June 30,  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  $4,064,000 to $13,968,000 at September
30, 2003 from  $9,904,000  at December  31,  2002,  as a result of net income of
$1,113,000,  a decline in accumulative other comprehensive loss of $3,000, and a
stock  offering of 157,515  shares at $15.50 per share during the year.  The net
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  September  30, 2003  increased
$222,000 to $458,000 from $236,000 for the same 2002 period.  Net income for the
nine months ended  September  30, 2003  increased  $527,000 to  $1,113,000  from
$586,000  for the same 2002  period.  The  increases  in net income for both the
three and nine month periods were primarily attributable to strong growth in net
interest income.  Also contributing to increased  earnings was a higher level of
noninterest income attributable largely to Vantage, which became a subsidiary of
the Company in January  2003.  These  increases  more than offset  increases  in
noninterest  expense  and income  taxes.  Basic and diluted  earnings  per share
increased  to $.76 and $.70 per share for the nine months  ended  September  30,
2003 as compared to $.43 and $.41 for the same period of year 2002.

         Net  interest  income for the three  months  ended  September  30, 2003
increased  $607,000 to $1,740,000  as compared to  $1,133,000  for the same 2002
period.  Interest and dividend income  increased  $633,000 to $2,938,000 for the
three months ended  September  30, 2003 from  $2,305,000  for the same 2002 year
period.  Increased  interest  and dividend  income for the current  three months
ended  September  30, 2003 was  influenced  primarily  by  increases in interest
earned on loans  receivable of $740,000.  Reflecting  declining  market interest
rates,  the average yield on interest  earning assets decreased to 5.18% for the
three-months ended September 30, 2003 from 5.85% for the same period ended 2002.
The average  yield on loans  receivable  decreased  for the three  months  ended
September 30, 2003 by 97 basis points as compared to the same 2002

                                       13
<PAGE>

period.  These declines in yields,  however,  were more than offset by continued
strong growth in earning assets. At September 30, 2003, the three and nine month
average balances of interest earning assets were  $229,920,000 and $202,910,000,
respectively,  compared to $157,708,000 and $150,081,000 for the comparable 2002
periods.

         Net interest  income for nine months ended September 30, 2003 increased
$1,452,000 to $4,530,000 from $3,078,000 for the same 2002 period.  Interest and
dividend  income  increased  $1,773,000 to $8,135,000  for the nine months ended
September  30, 2003 from  $6,362,000  for the same 2002  period.  The  increased
interest  and  dividend  income was  primarily a result of increases in interest
earned on loans receivable of $2,062,000.  The average yield on interest earning
assets declined to 5.35% for the nine months ended September 30, 2003 from 5.91%
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 74 basis points in 2003 as compared to 2002.

         Interest  expense  for  the  three  months  ended  September  30,  2003
increased $27,000 to $1,199,000 from $1,172,000 for the same 2002 period. During
this  period,  there was an  increase  in average  balance of  interest  bearing
deposits of  $79,125,000  which was offset by a decrease in the average  cost of
funds for interest  bearing  liabilities of 91 basis points to 2.33% from 3.24%.
Additionally,  the average cost of funds for deposits  decreased 87 basis points
to 2.18% from 3.05% for the current  three month  period as compared to the same
2002 period.

         Interest expense for the nine months ended September 30, 2003 increased
$321,000 to $3,605,000 from  $3,284,000 for the same 2002 period.  This increase
was caused by an increase in interest  expense on deposits of $382,000 offset by
a decrease in interest on short term  borrowings  of  $109,000.  Average cost of
funds for interest  bearing  liabilities  decreased 67 basis points to 2.58% for
the nine months  ended  September  30, 2003 from 3.25% for the same period ended
2002. Additionally, average cost of funds for deposits decreased 70 basis points
for the current nine month period as compared to the same 2002 period.

         Attention  to the  liquidity  position  of the  Bank  and  management's
diligence in  monitoring  and  adjusting  loan and deposit rates has allowed the
Bank's net  interest  margin to  decrease  by only 2 basis  points to 3.11% from
3.13% at December 31, 2002, a period of dramatic interest rate volatility.

         Total noninterest income increased $232,000 and $783,000,  respectively
for the three and nine month  periods  ending  September  30, 2003.  Noninterest
income is  primarily  comprised of service  charges and fees on deposit  account
activity,  along with fee income  derived  from asset  management  services  and
related commissions. Vantage contributed the majority of the increase during the
year.  Note that Vantage was acquired on January 1, 2003 and therefore,  did not
contribute to earnings in the 2002 period.

         Total noninterest  expenses  increased  $452,000 and $1,287,000 for the
three and nine months ended  September  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 nine months  ended

                                       14
<PAGE>

September 30, 2003, Vantage and Nittany Asset Management operations  contributed
approximately  $394,000  respectively of other operating expense  (excluding the
internal management fee). Note that Vantage was acquired on January 1, 2003.

         For the three and nine months ended  September  30,  2003,  the Company
incurred income tax expense of $206,000 and $554,000, respectively,  compared to
$131,000  and  $233,000,  respectively,  for the  three  and nine  months  ended
September 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 the nine month
period ended September 30, 2003 was 33% compared to 28% for the 2002 period.

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 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 September 30, 2003, the Company
and Nittany  Bank's  total  risk-based,  tier I  risk-based  and tier I leverage
ratios were 10.9%, 9.6%, 5.1% and 12.6%, 11.3%, 6.0%, 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.

                                       15

<PAGE>

                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

               None

Item 2.    Changes in securities and use of proceeds

               None

Item 3.    Defaults by the Company on its senior securities

               None

Item 4.    Submission of matters to a vote of security holders

               None

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      Certifications pursuant to Rule 13a-14 of the Securities
                     Exchange Act of 1934 as amended
           32      Certification Pursuant to Section 1350, of
                     the Sarbanes-Oxley Act 0f 2002.
           99.0    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.

            (i)     The  registrant  filed a Report  on Form 8-K on  August  13,
                    2003,  pursuant to Items 7 and 12, to announce  earnings for
                    the quarter ended June 30, 2003.

                                       16

<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  Nittany Financial Corp.


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



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