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

                                  FORM 10 - QSB

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

      For the quarterly period ended March 31, 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 incorporation  (IRS Employer Identification No.)
 or organization)

            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 outstanding at May 12, 2003:

            Class: Common Stock, par value $.10 per share: 1,403,225

Transitional Small Business Disclosure Format (check one):

                            Yes           No  X
                                ---          ---
<PAGE>


                             NITTANY FINANCIAL CORP.

                                      INDEX



PART I  -  FINANCIAL INFORMATION

      Item 1.  Financial Statements

               Consolidated Balance Sheet (Unaudited) as of
                 March 31, 2003 and December 31, 2002                          2

               Consolidated Statement of Income (Unaudited)
                 for the Three Months ended March 31, 2003 and 2002            3

               Consolidated Statement of Changes in Stockholders' Equity
                 (Unaudited) for the Three Months ended March 31, 2003         4

               Consolidated Statement of Cash Flows (Unaudited)
                 for the Three Months ended March 31, 2003 and 2002            5

               Notes to Unaudited Consolidated Financial Statements            6

      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

CERTIFICATIONS                                                             20-21
<PAGE>
                             NITTANY FINANCIAL CORP.
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)

<TABLE>
<CAPTION>

                                                                       March 31,     December 31,
                                                                         2003            2002
                                                                    -------------    -------------
<S>                                                               <C>              <C>
ASSETS
     Cash and due from banks                                        $     732,371    $     618,937
     Interest-bearing deposits with other banks                        13,431,570        5,233,136
     Investment securities available for sale                           5,385,428        6,024,009
     Investment securities held to maturity (estimated
       market value of $45,417,119 and $38,727,663)                    45,058,375       38,359,925
     Loans receivable (net of allowance for loan losses
       of $1,257,285 and $1,177,141)                                  130,819,188      124,254,560
     Premises and equipment                                             1,926,136        1,941,009
     Federal Home Loan Bank stock                                       1,175,400        1,175,400
     Intangible assets                                                  1,763,231          799,217
     Accrued interest and other assets                                  1,615,581        1,252,839
                                                                    -------------    -------------

             TOTAL ASSETS                                           $ 201,907,280    $ 179,659,032
                                                                    =============    =============
LIABILITIES
     Deposits:
         Noninterest-bearing demand                                 $   7,295,990    $   6,159,204
         Interest-bearing demand                                       19,365,720       18,717,951
         Money market                                                  32,438,949       27,517,955
         Savings                                                       98,513,640       86,498,462
         Time                                                          18,030,593       17,958,397
                                                                    -------------    -------------
            Total deposits                                            175,644,892      156,851,969
     Short-term borrowings                                              3,742,655        1,141,104
     Other borrowings                                                  10,924,172       10,615,650
     Accrued interest payable and other liabilities                       798,584        1,145,853
                                                                    -------------    -------------

             TOTAL LIABILITIES                                        191,110,303      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, 1,403,225 and 1,367,230 issued and outstanding         140,323          136,723
     Additional paid-in capital                                        11,636,312       11,045,912
     Retained deficit                                                    (969,465)      (1,268,694)
     Accumulated other comprehensive loss                                 (10,193)          (9,485)
                                                                    -------------    -------------
             TOTAL STOCKHOLDERS' EQUITY                                10,796,977        9,904,456
                                                                    -------------    -------------

             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 201,907,280    $ 179,659,032
                                                                    =============    =============
</TABLE>
      See accompanying notes to unaudited consolidated financial statements

                                       2
<PAGE>

                             NITTANY FINANCIAL CORP.
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

                                                   Period Ended March 31,
                                                     2003         2002
                                                  ----------   ----------
INTEREST AND DIVIDEND INCOME
     Loans, including fees                        $2,108,213   $1,449,268
     Interest-bearing deposits with other banks       26,868       21,491
     Investment securities                           369,311      454,488
                                                  ----------   ----------
             Total interest and dividend income    2,504,392    1,925,247
                                                  ----------   ----------
INTEREST EXPENSE
     Deposits                                      1,062,622      834,931
     Short-term borrowings                            12,110       52,071
     Other borrowings                                131,423      111,388
                                                  ----------   ----------
             Total interest expense                1,206,155      998,390
                                                  ----------   ----------

NET INTEREST INCOME                                1,298,237      926,857

Provision for loan losses                             90,000      150,000
                                                  ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                     1,208,237      776,857
                                                  ----------   ----------

NONINTEREST INCOME
     Service fees on deposit accounts                118,825       96,794
     Investment security gain                          6,691        7,630
     Asset management fees                           339,144       21,003
     Other                                             9,094        1,700
                                                  ----------   ----------
             Total noninterest income                473,754      127,127
                                                  ----------   ----------

NONINTEREST EXPENSE
     Compensation and employee benefits              518,726      330,457
     Occupancy and equipment                         144,976      117,046
     Professional fees                                48,024       24,382
     Data processing fees                             77,653       62,742
     Supplies, printing, and postage                  37,157       33,903
     Advertising                                      37,350       30,384
     ATM processing fees                              32,300       30,594
     Commission expense                              217,825            -
     Other                                           109,141       56,946
                                                  ----------   ----------
             Total noninterest expense             1,223,152      686,454
                                                  ----------   ----------

Income before income taxes                           458,839      217,530
Income taxes                                         159,610       34,100
                                                  ----------   ----------

NET INCOME                                        $  299,229   $  183,430
                                                  ==========   ==========

EARNINGS PER SHARE
     Basic                                        $     0.21   $     0.13
     Diluted                                            0.20         0.13

WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic                                         1,402,825    1,359,952
     Diluted                                       1,525,349    1,410,352


      See accompanying notes to unaudited consolidated financial statements

                                       3
<PAGE>
                             NITTANY FINANCIAL CORP.
      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                 Additional                  Other            Total        Compre-
                                                      Common      Paid-in      Retained   Comprehensive   Stockholders'    hensive
                                                      Stock       Capital      Deficit       Loss             Equity       Income
                                                     --------   -----------    --------   -------------   -------------  -----------
<S>                                                <C>        <C>            <C>           <C>          <C>
Balance, December 31, 2002                           $136,723   $11,045,912    $(1,268,694)  $ (9,485)    $ 9,904,456

Net income                                                                         299,229                    299,229      $299,229
Other comprehensive income:
    Unrealized loss on available for sale securities
    net of reclassification adjustment,
    net of tax benefit of $364                                                                   (708)           (708)         (708)
                                                                                                                           --------
Comprehensive income                                                                                                       $298,521
                                                                                                                           ========
Issuance of common shares (36,000 shares)               3,600       590,400                                   594,000
                                                     --------   -----------    -----------   --------     -----------

Balance, March 31, 2003                              $140,323   $11,636,312    $  (969,465)  $(10,193)    $10,796,977
                                                     ========   ===========    ===========   ========     ===========


                                                                                               2002
                                                                                             --------
Components of other comprehensive income:
    Change in net unrealized loss on
      investment securities available for sale                                               $  3,708
    Realized gains included in net income, net of taxes of $2,275                              (4,416)
                                                                                             --------
Total                                                                                        $   (708)
                                                                                             ========
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                       4
<PAGE>
                             NITTANY FINANCIAL CORP.
                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three-months ended March 31,
                                                                        2003            2002
                                                                   ------------    ------------
<S>                                                              <C>             <C>
OPERATING ACTIVITIES
     Net income                                                    $    299,229    $    183,430
     Adjustments to reconcile net income to net cash
       provided by (used for) operating activities:
         Provision for loan losses                                       90,000         150,000
         Depreciation, amortization, and accretion, net                 258,305         122,930
         Investment security gains (losses)                               6,691          (7,630)
         Increase in accrued interest receivable                       (141,401)        (14,913)
         Increase (decrease) in accrued interest payable               (170,320)         81,909
         Other, net                                                    (397,925)        (28,033)
                                                                   ------------    ------------
         Net cash provided by operating (used for) activities           (55,421)        487,693
                                                                   ------------    ------------

INVESTING ACTIVITIES
     Investment securities available for sale:
         Purchases                                                      (28,069)              -
         Proceeds from sale                                              26,901          37,630
         Proceeds from principal repayments and maturities              617,631         848,267
     Investment securities held to maturity:
         Purchases                                                  (14,910,684)              -
         Proceeds from principal repayments and maturities            8,049,792       3,353,182
     Net increase in loans receivable                                (6,676,627)    (12,399,865)
     Redemption of FHLB stock                                                 -             800
     Purchase of subsidiary                                            (964,014)              -
     Purchase of premises and equipment                                 (44,637)       (561,626)
                                                                   ------------    ------------
         Net cash used for investing activities                     (13,929,707)     (8,721,612)
                                                                   ------------    ------------

FINANCING ACTIVITIES
     Net increase in deposits                                        18,792,923      16,010,924
     Net increase in short-term borrowings                            2,601,551         165,707
     Proceeds from other borrowings                                     360,000               -
     Repayment of other borrowings                                      (51,478)        (48,384)
     Proceeds from issuance of common stock                             594,000               -
                                                                   ------------    ------------
         Net cash provided by financing activities                   22,296,996      16,128,247
                                                                   ------------    ------------

         Increase in cash and cash equivalents                        8,311,868       7,894,328

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

CASH AND CASH EQUIVALENTS AT END OF PERIOD                         $ 14,163,941    $ 14,007,486
                                                                   ============    ============

SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid during the year for:
         Interest on deposits and borrowings                       $  1,376,475    $    916,481
         Income taxes                                                   550,000          75,000
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       5
<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") and Nittany
Asset Management, Inc. 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  March  31,  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 March 31,  2003 and 2002,  the diluted
number of shares outstanding from employee stock options was 123,134 and 50,400,
respectively.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available  for sale  securities.  For the three months ended March
31,  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 March 31, 2002, comprehensive income totaled $141,375.

                                       6
<PAGE>


NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board ("FASB") issued 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 April 2002, the FASB issued FAS No. 145,  Rescission of FASB Statement No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical  Corrections.  FAS
No.  145  rescinds  FAS  No.  4,  which  required  all  gains  and  losses  from
extinguishment  of debt to be  aggregated  and, if  material,  classified  as an
extraordinary  item, net of related income tax effect. As a result, the criteria
in APB Opinion No. 30 will now be used to classify those gains and losses.  This
statement  also amends FAS No. 13 to require  that certain  lease  modifications
that have economic effects similar to  sale-leaseback  transactions be accounted
for in the same manner as sale-leaseback transactions. This statement also makes
technical corrections to existing pronouncements,  which are not substantive but
in some cases may change accounting  practice.  The provisions of this statement
related  to the  rescission  of FAS No.  4 shall  be  applied  in  fiscal  years
beginning after May 15, 2002. Any gain or loss on  extinguishments  of debt that
was classified as an extraordinary item in prior periods presented that does not
meet the criteria in APB Opinion No. 30 for  classification  as an extraordinary
item shall be  reclassified.  Early adoption of the provisions of this statement
related to FAS No. 13 shall be effective for  transactions  occurring  after May
15,  2002.  All  other  provisions  of this  statement  shall be  effective  for
financial  statements  issued on or after May 15,  2002.  The  adoption  of this
statement 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"

                                       7
<PAGE>

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

The following  table  represents the effect on net income and earnings per share
had the stock-based employee compensation expense been recognized:



                                                    Three Months Ended March 31,
                                                         2003          2002
                                                     -----------   -----------

Net income, as reported:                             $   299,229   $   183,430
Less proforma expense related
  to stock options                                        25,369        40,683
                                                     -----------   -----------
Proforma net income                                      273,860       142,747
                                                     ===========   ===========


Basic net income per common share:
     As reported                                     $      0.21   $      0.13
     Pro forma                                              0.20          0.10
Diluted net income per common share:
     As reported                                     $      0.20   $      0.13
     Pro forma                                              0.18          0.10


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

                                       8
<PAGE>

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.

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

                                       9
<PAGE>

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.


                                       10

<PAGE>
                       MANAGEMENT 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, but are
not limited  to,  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 March 31, 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.

     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 $140 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 retail banking services with an emphasis on residential
and commercial real estate lending,  consumer  lending,  commercial  lending and
retail deposits.  At March 31, 2003, we had consolidated assets of $202 million,
loans receivable (net of allowance for loan losses) of $131 million, deposits of
$176 million,  and  stockholders'  equity of $10.8  million.  Net income for the
quarter ended March 31, 2003 increased  $123,000 to $299,000 or $.20 per diluted
share,  from

                                       11
<PAGE>

$176,000 or $.12 per diluted share,  for the same 2002 period.  This included an
income tax expense of $160,000  for 2003,  compared to $34,000 for the same 2002
quarter.

COMPARISON OF FINANCIAL CONDITION

Total  assets  increased  $22,248,000  to  $201,907,000  at March 31,  2003 from
$179,659,000  at December 31, 2002.  Strong growth in residential and commercial
real estate loans resulted in an increase in net loans  receivable of $6,564,000
which were primarily  funded through  increased  balances in the savings deposit
products of $12,016,000  for the quarter.  Total assets included $1.8 million of
intangible  assets from the  acquisition of Vantage and the Bank's original core
deposits.  Amortization  of goodwill  was  discontinued  as of December 31, 2001
based on the adoption of Financial Accounting Standards Nos. 142 and 147.

Cash and cash equivalents  increased $8,312,000 at March 31, 2003 as compared to
December 31, 2002. This increase resulted from growth in deposits which exceeded
loan demand during the quarter.  Management believes that the liquidity needs of
the Company are satisfied by the current  balance of cash and cash  equivalents,
readily available access to traditional funding sources, FHLB advances,  and the
portion of the  investment  and loan  portfolios  which mature  within one year.
These  sources of funds will  enable the  Company to meet cash  obligations  and
off-balance sheet commitments as they come due.

Investment  securities  available for sale  decreased to $5,385,000 at March 31,
2003 from  $6,024,000  at December 31, 2002 and  investment  securities  held to
maturity increased to $45,058,000 at March 31, 2003 from $38,360,000 at December
31, 2002. The increase in the investment  securities' held to maturity portfolio
resulted  primarily  from the  investment of savings  deposits not yet needed to
fund loan growth .

Net  loans  receivable   increased  to  $130,819,000  at  March  31,  2003  from
$124,255,000 at December 31, 2002. The increase in net loans receivable resulted
from the strong real estate  market of the  Company's  market  area,  low market
interest rates, and the strategic,  service-oriented marketing approach taken by
management to meet the lending needs of the area. At March 31, 2003,  commercial
real estate loans grew to $25,654,000  from $22,002,000 at December 31, 2002 and
1 to 4 family  residential  mortgage  balances grew by $4,233,000 to $84,501,000
from  $80,268,000 at December 31, 2002.  Management  attributes the increases in
lending balances to continued  customer  referrals,  the economic climate within
the market area, and  competitive  rates.  As of March 31, 2003, the Company had
additional   commitments  to  fund  loan  demand  of  $9.2  million,   of  which
approximately $3.5 million relates to commercial customers.

At March 31, 2003, the Company's  allowance for loan losses increased by $80,000
to $1,257,000 from  $1,177,000 at December 31, 2002. The increase  resulted from
additional  loan loss  provisions  of  $90,000  for the  growth  in  residential
mortgages which were partially offset by charge-offs for the quarter.

                                       12
<PAGE>

The additions to the allowance for loan losses are based upon a careful analysis
by  management  of  loan  data.  As the  Company  lacks  substantial  historical
experience,  management  must base its  determination  upon such  factors as the
Company's volume and the type of loans that it originates, the amount and trends
relating  to its  delinquent  and  non-performing  loans,  regulatory  policies,
general economic  conditions and other factors relating to the collectibility of
loans in its  portfolio.  Although the Company  maintains its allowance for loan
losses at a level that it  considers  to be adequate to provide for the inherent
risk of loss in its loan portfolio at March 31, 2003,  there can be no assurance
that additional losses will not be required in future periods.

Total deposits  increased by $18,793,000  to  $175,645,000  at March 31, 2003 as
compared to  $156,852,000  at December 31, 2002. Of such  increase,  the Nittany
Savings deposit account accounted for  approximately  $12,016,000 to the amount.
The Nittany  Savings  deposit is a  competitive  deposit  account  with a tiered
annual  interest rate of 2.50 % for balances over $2,500 for the current period.
Due to the continued  decreases of short term interest  rates over the past year
by the Federal  Reserve,  the Nittany Savings deposit has helped to increase our
deposit base.

Stockholder's  equity  increased to $10,797,000 at March 31, 2003 as a result of
net income of $299,000 offset by an increase of $1,000 in net unrealized loss on
investment  securities  available for sale.  Because of interest rate volatility
and an illiquid market for some of the investment securities,  accumulated other
comprehensive  loss  could  materially  fluctuate  for each  interim  period and
year-end period depending on economic and interest rate conditions. In addition,
36,000 of new shares  were  issued at $16.50 per share on January 1, 2003 in the
acquisition of Vantage.

RESULTS OF OPERATIONS

Net income of $299,000 for the period ended March 31, 2003 increased by $116,000
as compared to the same period ended 2002 as  increases  in net interest  income
and noninterest  income of $371,000 and $347,000,  respectively,  were partially
offset by increases in noninterest expense and taxes. Basic and diluted earnings
per share increased to $.21 and $.20 per share, respectively for the three month
period  ended March 31, 2003  compared to $.13 and $.13 per share,  respectively
for the three month period ended March 31, 2002.

Net interest  income for the three months ended March 31, 2003 was $1,298,000 as
compared to $927,000 for the same period ended 2002.  Interest income  increased
$579,000 for 2003 as compared to the prior year period and was influenced mainly
by increases in interest earned on loans receivable of $659,000. The increase in
interest  income  was the  result of an  increase  of $34.4  million  in average
balances of interest-earning assets that primarily resulted from a $30.0 million
increase  in the  average  balance of loans  receivable.  The yield on  interest
earning assets decreased to 5.43% for the three months ended March 31, 2003 from
6.09% for the same period ended 2002 as interest rates continued to drop for the
quarter.  Although there were  significant  increases in residential real estate
lending,  the yield on the loans receivable decreased 76 basis points in 2003 as
compared to 2002.

                                       13
<PAGE>

Interest  expense  increased  $208,000  for 2003 as  compared  to the prior year
period and was influenced  mainly by an increase in interest expense on deposits
of $228,000.  This  increase was  primarily  attributable  to an increase in the
average  balance  of  interest-bearing  deposits  of  $36,775,000.  The  average
balances  of  savings  deposit  accounts  increased  $23,728,000  as a result of
customer  service,  referrals,  marketing  efforts and competitive  rates of the
Nittany  Savings  product.  The cost of funds  decreased  to 2.82% for the three
month period ended March 31, 2003 from 3.52% for the same period ended 2002 as a
result of a general  reduction in market  interest rate levels and a decrease in
the rates paid on deposits.

Total  noninterest  income for the three months  ended March 31, 2003  increased
$347,000 as compared to the same period ended 2002. 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.  Service  fees on  deposit  accounts  increased  $22,000  and  have
progressively increased during each quarter as the number of accounts and volume
of related transactions have increased. Additionally, for the three-months ended
March 31, 2003,  commissions  and management fees from Vantage and Nittany Asset
Management increased by $318,000 over the same period of 2002. Note that Vantage
was acquired in January of this year.

Total noninterest  expenses  increased $537,000 for the three months ended March
31,  2003,  as  compared to the same period  ended 2002.  The  increase in total
noninterest  expenses for the current period was primarily related to the larger
organization  that  resulted  from the  acquisition  of  Vantage  as well as the
related  marketing  efforts to increase  visibility  within the Company's market
area, annual merit increases and bonuses given to employees, and data processing
expenses. Vantage paid $218,000 of solicitors' fees for the quarter.

Income tax  expense of $160,000  was  recognized  in the first  quarter of 2003,
compared  to  $34,000  for the  same  period  of  2002,  as all  operating  loss
carryforwards had been utilized during the previous year.

LIQUIDITY AND CAPITAL RESOURCES

Our   primary   sources  of  funds  are   deposits,   repayment   of  loans  and
mortgage-backed securities, maturities of investments, interest-bearing deposits
with other banks and, funds provided from operations. While scheduled repayments
of loans and mortgage-backed  securities and maturities of investment securities
are predictable sources of funds, deposit flows and loan prepayments are greatly
influenced  by the general level of interest  rates,  economic  conditions,  and
competition.  We use our liquid resources  principally to fund loan commitments,
maturing  certificates of deposit and demand deposit  withdrawals,  to invest in
other interest-earning assets, and to meet operating expenses.

                                       14
<PAGE>

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 the Bank's total risk-based,  Tier I
risk-based  and  tangible  capital  ratios  in order to assess  compliance  with
regulatory guidelines. At March 31, 2003, both the Company and the Bank exceeded
the minimum  risk-based and tangible capital ratio  requirements.  The Company's
and the Bank's  risk-based,  Tier I risk-based,  and tangible capital ratios are
10.9%, 9.7%, 5.0% and 12.6%, 11.4%, 5.6%, respectively, at March 31, 2003.

                                       15
<PAGE>

Item 3.  Controls and Procedures

         (a) Evaluation of disclosure  controls and  procedures.  Based on their
             --------------------------------------------------
evaluation  as of a date  within 90 days of the  filing  date of this  Quarterly
Report  on  Form  10-QSB,  the  Registrant's  principal  executive  officer  and
principal  financial  officer have  concluded that the  Registrant's  disclosure
controls and procedures (as defined in Rules  13a-14(c) and 15d-14(c)  under the
Securities  Exchange Act of 1934 (the  "Exchange  Act")) are effective to ensure
that  information  required to be  disclosed  by the Company in reports  that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

         (b) Changes in internal controls.  There were no significant changes in
             ----------------------------
the Registrant's  internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,  including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.

                                       16
<PAGE>

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

           None

Item 2.    Changes in securities and use of proceeds

           None

Item 3.    Defaults upon 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:
<TABLE>
<CAPTION>
          <S>       <C>
               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 **
               99.0   Independent Accountants Report
               99.1   Certification Pursuant to 18 U.S.C. Section 1350,
                        as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act 0f 2002.

</TABLE>

*    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.


                                       17
<PAGE>


          (1)  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.

          (2)  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.

          (3)  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.

          (4)  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.

          (5)  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:    May 14, 2003            By: /s/David Z. Richards
                                     -------------------------------------------
                                     David Z. Richards
                                     President and Chief Executive Officer



Date:    May 14, 2003           By:  /s/Gary M. Bradley
                                     -------------------------------------------
                                     Gary M. Bradley
                                     Vice President and Chief Accounting Officer


                                       19
<PAGE>


                                  CERTIFICATION

         Pursuant to Section 302 of the Securities Exchange Act of 1934

I, David Z. Richards, certify that:

1. I have reviewed  this  quarterly  report on Form 10-QSB of Nittany  Financial
Corp. ("the Registrant").

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  Registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

(a) designed  such  disclosure  controls and  procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

(b) evaluated the  effectiveness  of the  Registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report ("the Evaluation Date"); and

(c) presented in this quarterly report our conclusions  about the  effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons fulfilling the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect the  Registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  Registrant's
auditors any material weaknesses in internal controls; and

(b) any fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the issuer's internal controls; and

6. The  Registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  5/14/03                         /s/ David Z. Richards
                                      ------------------------------------------
                                      David Z. Richards
                                      President

                                       20
<PAGE>

                                  CERTIFICATION
         Pursuant to Section 302 of the Securities Exchange Act of 1934

I, Gary M. Bradley, certify that:

1. I have reviewed  this  quarterly  report on Form 10-QSB of Nittany  Financial
Corp. ("the Registrant").

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;

4.  The  Registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

(a) designed  such  disclosure  controls and  procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

(b) evaluated the  effectiveness  of the  Registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report ("the Evaluation Date"); and

(c) presented in this quarterly report our conclusions  about the  effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons fulfilling the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect the  Registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  Registrant's
auditors any material weaknesses in internal controls; and

(b) any fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the issuer's internal controls; and

6. The  Registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  5/14/03                       /s/ Gary M. Bradley
                                     -------------------------------------------
                                     Gary M. Bradley
                                     Vice President and Chief Accounting Officer

                                       21