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

                                  FORM 10 - QSB

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

                  For the quarterly period ended June 30, 2002

      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
---
                 For the transition period from ______ to ______


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

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


           Pennsylvania                                  23-2925762
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation 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 as of the latest practicable date:

                  Class: Common Stock, par value $.10 per share
                    Outstanding at August 9, 2002: 1,133,293


<PAGE>


                             NITTANY FINANCIAL CORP.

                                      INDEX



                                                                          Page
                                                                         Number
                                                                        --------


PART I  -  FINANCIAL INFORMATION

      Item 1.  Financial Statements

               Consolidated Balance Sheet (Unaudited) as of                   3
                   June 30, 2002 and December 31, 2001

               Consolidated Statement of Income (Unaudited)
                   for the Six Months ended June 30, 2002 and 2001            4

               Consolidated Statement of Income (Unaudited)
                   for the Three Months ended June 30, 2002 and 2001          4

               Consolidated Statement of Changes in Stockholders'
                    Equity (Unaudited)                                        5

               Consolidated Statement of Cash Flows (Unaudited)
                   for the Six Months ended June 30, 2002 and 2001            6

               Notes to Unaudited Consolidated Financial Statements       7 - 9

      Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations          9 -14

PART II  -  OTHER INFORMATION

      Item 1.   Legal Proceedings                                            15

      Item 2.   Changes in Securities                                        15

      Item 3.   Default Upon Senior Securities                               15

      Item 4.   Submissions of Matters to a Vote of Security Holders         15

      Item 5.   Other Information                                            15

      Item 6.   Exhibits and Reports on Form 8 - K                      15 - 16

SIGNATURES                                                                   17


<PAGE>

                             NITTANY FINANCIAL CORP.
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)


<TABLE>
                                                                            June 30,       December 31,
                                                                              2002             2001
                                                                        -------------     -------------
<S>                                                                   <C>              <C>

ASSETS
     Cash and due from banks                                             $    495,214     $    359,187
     Interest-bearing deposits with other banks                             9,845,312        5,753,971
     Investment securities available for sale                              10,782,982       13,188,065
     Investment securities held to maturity (estimated
       market value of $33,454,203 and $27,789,824)                        33,242,200       27,796,205
     Loans receivable (net of allowance for loan losses
       of $916,649 and $649,565)                                           96,003,609       73,787,410
     Premises and equipment                                                 1,924,051        1,344,262
     Federal Home Loan Bank stock                                             715,100          710,700
     Intangible assets                                                        775,407          799,217
     Accrued interest and other assets                                      1,124,557        1,043,117
                                                                         ------------     ------------

             TOTAL ASSETS                                                $154,908,432     $124,782,134
                                                                         ============     ============
LIABILITIES
     Deposits:
         Noninterest-bearing demand                                      $  5,528,222    $   4,094,714
         Interest-bearing demand                                           17,189,657       14,802,415
         Money market                                                      16,978,899       13,827,084
         Savings                                                           70,003,439       46,864,234
         Time                                                              17,665,862       18,932,789
                                                                         ------------     ------------
            Total deposits                                                127,366,079       98,521,236

     Short-term borrowings                                                  8,743,826        8,714,554
     Other borrowings                                                       8,716,249        7,813,775
     Accrued interest payable and other liabilities                           776,016          770,753
                                                                         ------------     ------------

             TOTAL LIABILITIES                                            145,602,170      115,820,318
                                                                         ------------     ------------

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, 1,133,293 issued and outstanding                           113,329          113,329
     Additional paid-in capital                                            11,069,804       11,069,804
     Retained deficit                                                      (1,805,696)      (2,155,207)
     Accumulated other comprehensive loss                                     (71,175)         (66,110)
                                                                         ------------     ------------

             TOTAL STOCKHOLDERS' EQUITY                                     9,306,262        8,961,816
                                                                         ------------     ------------

             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $154,908,432     $124,782,134
                                                                         ============     ============
</TABLE>

        See accompanying notes to the consolidated financial statements.


                                       3

<PAGE>
                             NITTANY FINANCIAL CORP.
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)


<TABLE>
                                                     Six months ended June 30,  Three months ended June 30,
                                                     -------------------------  --------------------------
                                                          2002        2001          2002          2001
                                                     ------------  -----------  ------------   -----------
<S>                                                <C>          <C>          <C>           <C>

INTEREST AND DIVIDEND INCOME
     Loans, including fees                            $ 3,088,854  $ 1,930,343  $ 1,639,586   $ 1,007,655
     Interest-bearing deposits with other banks            64,563      521,253       43,072       225,221
     Investment securities                                902,983      146,471      448,495        97,505
                                                      -----------  -----------  -----------   -----------
             Total interest and dividend income         4,056,400    2,598,067    2,131,153     1,330,381
                                                      -----------  -----------  -----------   -----------

INTEREST EXPENSE
     Deposits                                           1,780,875    1,362,247      945,944       716,845
     Short-term borrowings                                100,293       35,803       48,222        20,564
     Other borrowings                                     230,059      247,573      118,671       120,910
                                                      -----------  -----------  -----------   -----------
             Total interest expense                     2,111,227    1,645,623    1,112,837       858,319
                                                      -----------  -----------  -----------   -----------

NET INTEREST INCOME                                     1,945,173      952,444    1,018,316       472,062

Provision for loan losses                                 268,000       90,000      118,000        49,500
                                                      -----------  -----------  -----------   -----------

NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                          1,677,173      862,444      900,316       422,562
                                                      -----------  -----------  -----------   -----------

NONINTEREST INCOME
     Service fees on deposit accounts                     213,319      153,915      116,525        84,292
     Investment security gain                               7,630            -            -             -
     Other                                                 57,078       41,485       34,375        22,030
                                                      -----------  -----------  -----------   -----------
             Total noninterest income                     278,027      195,400      150,900       106,322
                                                      -----------  -----------  -----------   -----------

NONINTEREST EXPENSE
     Compensation and employee benefits                   730,228      468,420      399,771       246,515
     Occupancy and equipment                              248,988      166,392      131,942        80,992
     Other                                                524,473      371,885      273,522       187,517
                                                      -----------  -----------  -----------   -----------
             Total noninterest expense                  1,503,689    1,006,697      805,235       515,024
                                                      -----------  -----------  -----------   -----------

Income before income taxes                                451,511       51,147      245,981        13,860
Income taxes                                              102,000            -       72,000             -
                                                      -----------  -----------  -----------   -----------

NET INCOME                                            $   349,511  $    51,147  $   173,981   $    13,860
                                                      ===========  ===========  ===========   ===========

EARNINGS PER SHARE
     Basic                                            $      0.31  $      0.07  $      0.15   $      0.02
     Diluted                                                 0.29         0.06         0.14          0.02

</TABLE>

        See accompanying notes to the consolidated financial statements.


                                       4

<PAGE>


                             NITTANY FINANCIAL CORP.
      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

<TABLE>

                                                                                         Accumulated
                                                              Additional                   Other          Total
                                                     Common     Paid-in     Retained    Comprehensive  Stockholders'  Comprehensive
                                                     Stock      Capital       Deficit       Loss          Equity          Income
                                                   ---------  -----------  -----------  -------------  -------------  -------------

<S>                                              <C>        <C>          <C>            <C>           <C>
Balance, December 31, 2001                         $ 113,329  $11,069,804  $(2,155,207)   $ (66,110)    $ 8,961,816

Net income                                                                     349,511                      349,511     $ 349,511
Other comprehensive income:
    Unrealized loss on available for sale
     securities, net of tax benefit of $2,609                                                (5,065)        (5,065)        (5,065)
                                                                                                                        ---------
Comprehensive income                                                                                                    $ 344,446
                                                                                                                        =========

                                                    --------  -----------  -----------    ---------     -----------
Balance, June 30, 2002                             $ 113,329  $11,069,804  $(1,805,696)   $ (71,175)    $ 9,306,262
                                                    ========  ===========  ===========    =========     ===========

</TABLE>


<TABLE>
                                                                                             2002
                                                                                          ---------
<S>                                                                                   <C>
Components of other comprehensive loss:
    Change in net unrealized loss on investment securities available for sale             $     (29)
    Realized gains included in net income, net of taxes of $2,594                            (5,036)
                                                                                          ---------

Total                                                                                     $  (5,065)
                                                                                          =========
</TABLE>


        See accompanying notes to the consolidated financial statements.


                                      5

<PAGE>


                             NITTANY FINANCIAL CORP.
                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


<TABLE>
                                                                                Six Months Ended June 30,
                                                                               --------------------------
                                                                                   2002          2001
                                                                               ------------- ------------
<S>                                                                         <C>           <C>

OPERATING ACTIVITIES
     Net income                                                                $    349,511  $     51,147
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Provision for loan losses                                                  268,000        90,000
         Depreciation, amortization, and accretion, net                             206,558        98,421
         Investment security gain                                                    (7,630)            -
         Decrease (increase) in accrued interest receivable                        (137,411)       68,885
         Increase (decrease) in accrued interest payable                            (59,720)      (89,158)
         Other, net                                                                 123,563       133,137
                                                                               ------------  ------------
         Net cash provided by operating activities                                  742,871       352,432
                                                                               ------------  ------------

INVESTING ACTIVITIES
     Investment securities available for sale:
         Proceeds from sale                                                          37,630             -
         Proceeds from principal repayments and maturities                        2,324,347     4,351,291
     Investment securities held to maturity:
         Purchases                                                              (10,737,445)   (4,563,109)
         Proceeds from principal repayments and maturities                        5,251,778     1,297,921
     Net increase in loans receivable                                           (22,482,045)   (8,616,466)
     Purchase of FHLB stock                                                          (4,400)            -
     Purchase of premises and equipment                                            (681,957)     (820,852)
                                                                               ------------  ------------
         Net cash used for investing activities                                 (26,292,092)   (8,351,215)
                                                                               ------------  ------------

FINANCING ACTIVITIES
     Net increase in deposits                                                    28,844,843    15,743,587
     Net increase in short-term borrowings                                           29,272       919,672
     Proceeds from other borrowings                                               2,000,000     1,075,000
     Repayment of other borrowings                                               (1,097,526)     (691,671)
     Net proceeds from sale of common stock                                               -       173,999
                                                                               ------------  ------------
         Net cash provided by financing activities                               29,776,589    17,220,587
                                                                               ------------  ------------

         Increase in cash and cash equivalents                                    4,227,368     9,221,804

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  6,113,158     4,233,404
                                                                               ------------  ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $ 10,340,526  $ 13,455,208
                                                                               ============  ============

SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid during the year for:
         Interest on deposits and borrowings                                   $  3,004,271  $  1,734,781
         Income taxes                                                               119,000           650

</TABLE>


        See accompanying notes to the 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") 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  months  ended June 30,  2002 are not  necessarily
indicative of the results to be expected for the fiscal year ended  December 31,
2002 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, 2001,  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 six-months ended June 30, 2002 and 2001, the diluted number
of shares  outstanding  from  employee  stock  options  was  58,602  and  6,874,
respectively.  For the three  months  ended June 30, 2002 and 2001,  the diluted
number of shares  outstanding  from employee stock options was 73,797 and 6,584,
respectively.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available for sale  securities.  For the six months ended June 30,
2002, this activity is shown under the heading Comprehensive Income as presented
in the Consolidated  Statement of Changes in Stockholders' Equity. For the three
months ended June 30, 2002, comprehensive income totaled $210,971. For the three
and six-months  ended June 30, 2001,  comprehensive  income totaled  $23,119 and
$161,495.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

In July, 2001, the Financial  Accounting Standards Board (FASB) issued Statement
of  Financial  Accounting  Standards  (FAS)  No.  141,  Business   Combinations,
effective for all business


                                       7

<PAGE>


combinations initiated after June 30, 2001, as well as all business combinations
accounted for by the purchase method that are completed after June 30, 2001. The
new statement  requires  that the purchase  method of accounting be used for all
business combinations and prohibits the use of the pooling-of-interests  method.
FAS No. 141 also  specifies  criteria  which must be met for  intangible  assets
acquired in a purchase method business combination to be recognized and reported
apart from goodwill.  The adoption of FAS No. 141 did not have a material effect
on the Company's financial position or results of operations.

On January  1,  2002,  the  Company  adopted  FAS No.  142,  Goodwill  and Other
Intangible Assets, effective for fiscal years beginning after December 15, 2001.
This statement  changes the accounting for goodwill from an amortization  method
to an  impairment-only  approach.  Thus,  amortization  of  goodwill,  including
goodwill  recorded in past  business  combinations,  will cease upon adoption of
this statement. However, this new statement did not amend FAS No. 72, Accounting
for  Certain  Acquisitions  of Banking or Thrift  Institutions,  which  requires
recognition and amortization of unidentified  intangible  assets relating to the
acquisition  of  financial  institutions  or  branches  thereof.  The  FASB  has
undertaken a limited scope project to reconsider the provisions of FAS No. 72 in
2002 and has issued an exposure draft of a proposed  statement,  Acquisitions of
Certain  Financial  Institutions,  that would remove  acquisitions  of financial
institutions  from the  scope  of FAS No.  72.  The  adoption  of this  proposed
statement would require all goodwill originating from acquisitions that meet the
definition of a business  combination  as defined in Emerging  Issues Task Force
Issue ("EITF") No. 98-3 to be discontinued.  The adoption of FAS No. 142 did not
have a  material  effect on the  Company's  financial  position  or  results  of
operations.  However,  the Company  continues to amortize  intangible  assets of
$775.4 million that meet the requirements of FAS No. 72.

In August 2001,  the 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 new statement takes effect for
fiscal  years  beginning  after June 15, 2002.  The adoption of this  statement,
which is effective January 1, 2003, is not expected to have a material effect on
the Company `s financial statements.

On January  1,  2002,  the  Company  adopted  FAS No.  144,  Accounting  for the
Impairment  or Disposal of Long-Lived  Assets.  FAS 144  supercedes  FAS 121 and
applies  to  all  long-lived  assets  (including  discontinued  operations)  and
consequently    amends   APB    Opinion   No.   30,    Reporting    Results   of
Operations-Reporting the Effects of Disposal of a Segment of a Business. FAS 144
requires that  long-lived  assets that are to be disposed of by sale be measured
at the lower of book value or fair value less costs to sell. The adoption of FAS
No. 144 did not have a material effect on the Company's financial statements.

In April 2002, the FASB issued FAS No. 145,  "Recission 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  Opinion  30 will  now be used to  classify  those  gains  and  losses.  This
statement   also  amends  FASB  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


                                       8

<PAGE>

transactions.  This  statement  also makes  technical  corrections  to  existing
pronouncements,  which  are  not  substantive  but  in  some  cases  may  change
accounting practice.  FAS No. 145 is effective for transactions  occurring after
May 15, 2002. The adoption of FAS No. 145 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  will be effective for exit or disposal
activities  initiated  after  December  31,  2002,  the adoption of which is not
expected to have a material effect on the Company's financial statements.

                      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

     Our business is conducted  principally  through Nittany Bank.  Nittany Bank
provides a full range of banking  services with an emphasis on  residential  and
commercial real estate lending, consumer lending,  commercial lending and retail
deposits.  At June 30, 2002, we had consolidated  assets of $155 million,  loans
receivable  (net of  reserve) of $96  million,  deposits  of $127  million,  and
stockholders'  equity of $9 million.  Net income for the three months ended June
30, 2002  increased  $160,000 to $174,000 from $14,000 for the same 2001 period.
Net income for the six months ended June 30, 2002 increased $299,000 to $350,000
from $51,000 for the same 2001 period.

     On July 30, 2002 the President  signed into law the  Sarbanes-Oxley  Act of
2002 (the "Act"),  following an investigative order proposed by the SEC on chief
financial officers and chief executive officers of 947 large public companies on
June 27, 2002. Additional regulations are expected to be promulgated by the SEC.
As a result  of the  accounting


                                       9


<PAGE>

restatements by large public  companies,  the passage of the Act and regulations
expected to be implemented by the SEC,  publicly-registered  companies,  such as
the Company, will be subject to additional reporting regulations and disclosure.
These new  regulations,  which are  intended to curtail  corporate  fraud,  will
require certain officers to personally certify certain SEC filings and financial
statements  and may  require  additional  measures  to be taken  by our  outside
auditors,  officers and directors.  The loss of investor confidence in the stock
market and the new laws and regulations will increase our non-interest  expenses
and could adversely affect the prices of publicly-traded stocks, such as us.

Comparison of Financial Condition

     Asset  growth for the  period  continued  to remain  strong.  Total  assets
increased  $30,126,000 to  $154,908,000  at June 30, 2002 from  $124,782,000  at
December 31, 2001. Additionally, the growth in assets for the quarter ended June
30, 2002 represented an increase of $13,819,000 from March 31, 2002.

     Cash and cash equivalents  increased  $4,227,000 to $10,340,000 at June 30,
2002 as compared to $6,113,000 December 31, 2001. For the quarter ended June 30,
2002, cash and cash equivalents decreased by $3,667,000 from March 31, 2002. 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.

     Investment   securities   available  for  sale   decreased   $2,405,000  to
$10,783,000  at June 30, 2002 as compared to  $13,188,000  at December 31, 2001.
Additionally,  investment  securities held to maturity  increased  $5,446,000 to
$33,242,000 at June 30, 2002 from  $27,796,000 at December 31, 2001.  During the
current period,  we purchased  $10,737,000 of held to maturity  securities which
were  partially  funded  by  $7,576,000  of  proceeds  received  from  principal
repayments and maturities of held to maturity and available for sale securities.
For the quarter ended June 30, 2002,  investment  securities  available for sale
decreased  $1,459,000  as compared to March 31, 2002.  Additionally,  investment
securities held to maturity at June 30, 2002 increased $8,839,000 as compared to
March 31, 2002.

     Loans receivable,  net of allowance for loan losses,  increased $22,217,000
to $96,004,000  at June 30, 2002 from  $73,787,000 at December 31, 2001. For the
quarter ended June 30, 2002,  loans  receivable,  net increased  $9,972,000 from
March 31, 2002. Of such increase in loans receivable,  net for the quarter ended
June 30, 2002, residential loans increased approximately $8,034,000. At June 30,
2002,  commercial  real  estate  loans  increased  $4,410,000  and 1 to 4 family
residential  loans  increased  $14,591,000.  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 June 30, 2002, we had

                                       10


<PAGE>


additional commitments to fund loan demand of $18,808,000 of which approximately
$5,417,000 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 June 30, 2002, our allowance for loan losses increased  $267,000
to $917,000 from $650,000 at December 31, 2001.  This increase was primarily due
to the growth of  residential  and commercial  real estate loans.  The increased
allowance  resulted from a loan loss provision for the six months ended June 30,
2002 of $268,000,  offset by loan  chargeoffs  of $1,000.  For the quarter ended
June 30, 2002, we added $118,000 to the allowance.

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

     Total deposits increased  $28,845,000 to $127,366,000 at June 30, 2002 from
$98,521,000 at December 31, 2001. At June 30, 2002, the nittany  savings deposit
account  added to our deposit base  approximately  $23,100,000.  For the quarter
ended June 30, 2002,  interest bearing demand deposits increased  $2,914,000 and
nittany savings deposits increased  $11,268,000 from March 31, 2002. The nittany
savings  deposit  product is a competitive  deposit account with a tiered annual
interest rate of 3.25% for balances over $2,500 for the current  period.  Due to
the  continued  decreases of short term interest  rates over the past year,  the
nittany savings deposit has helped to increase our deposit base.

     Stockholder's equity increased $344,000 to $9,306,000 at June 30, 2002 from
$8,962,000  at December  31,  2001,  as a


                                       11


<PAGE>

result  of  net  income  of  $350,000  and  a  decline  in  accumulative   other
comprehensive loss of $6,000.  Accumulated other comprehensive loss decreased as
a  result  of  changes  in the  net  unrealized  loss on  investment  securities
available for sale due to fluctuations  in interest  rates.  Because of interest
rate volatility, accumulated other comprehensive loss could materially fluctuate
from period to period depending on economic and interest rate conditions.

Results of Operations

     Net income for the three months ended June 30, 2002  increased  $160,000 to
$174,000  from $14,000 for the same 2001  period.  Net income for the six months
ended June 30, 2002  increased  $299,000 to $350,000  from  $51,000 for the same
2001 period.  During both time  periods,  increases in net interest  income were
offset by increases in noninterest expense. Basic and diluted earnings per share
increased  to $.31 and $.29 per share for the six months  ended June 30, 2002 as
compared to $.07 and $.06 for the same period of year 2001.

     Net  interest  income for the three  months  ended June 30, 2002  increased
$546,000  to  $1,018,000  as  compared  to  $472,000  for the same 2001  period.
Interest and dividend  income  increased  $801,000 to  $2,131,000  for the three
months  ended  June 30,  2002 from  $1,330,000  for the same  2001 year  period.
Increased  interest and dividend  income for the current three months ended June
30, 2002 was  influenced  primarily  by  increases  in interest  earned on loans
receivable of $632,000.  The average yield on interest  earning assets decreased
to 6.02% for the three-months ended June 30, 2002 from 7.03% for the same period
ended 2001. The average yield on loans receivable decreased for the three months
ended June 30, 2002 by 99 basis points as compared to the same 2001 period.

     Net interest  income for six months ended June 30, 2002 increased  $993,000
to  $1,945,000  from  $952,000 for the same 2001  period.  Interest and dividend
income increased $1,458,000 to $4,056,000 for the six months ended June 30, 2002
from  $2,598,000 for the same 2001 period.  The increased  interest and dividend
income  was  primarily  a  result  of  increases  in  interest  earned  on loans
receivable of $1,159,000.  The average yield on interest earning assets declined
to 6.05% for the six months  ended June 30,  2002


                                       12


<PAGE>

from  7.20%  for the  same  period  ended  2001.  The  significant  increase  in
residential  real estate lending was partially offset but the reduction in yield
on loans receivable of 100 basis points in 2002 as compared to 2001.

     Interest  expense  for the  three  months  ended  June 30,  2002  increased
$255,000 to $1,113,000 from $858,000 for the same 2001 period and was influenced
primarily by an increase in average balance of interest  bearing deposits of $56
million.  However,  average  cost  of  fund  for  interest  bearing  liabilities
decreased  163 basis  points to 3.42% from 5.05% for the three months ended June
30, 2002 as  compared to the same 2001  period.  Additionally,  average  cost of
funds for deposits decreased 162 basis points for the current three month period
as compared to the same 2001 period.

     Interest expense for the six months ended June 30, 2002 increased  $465,000
to $2,111,000 from $1,646,000 for the same 2001 period and was influenced mainly
by an increase in interest  expense on deposits of  $418,000.  However,  average
cost of fund for  interest  bearing  liabilities  decreased  170 basis points to
3.43% for the six  months  ended June 30,  2002 from  5.13% for the same  period
ended 2001. Additionally, average cost of funds for deposits decreased 168 basis
points for the current six -month period as compared to the same 2001 period.

     Total noninterest  income increased  $45,000 and $83,000,  respectively for
the current three and six months ended June 30, 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.  For the three and six months ended June 30, 2002,  service fees on
deposit  accounts  increased  $32,000  and  $60,000  ,  respectively,  and  have
progressively increased during each quarter as the number of accounts and volume
of related  transactions  have  increased.  Additionally,  for the three and six
months ended June 30, 2002, Nittany Asset Management  contributed  approximately
$29,000 and $50,000, respectively in commission and management fees, an increase
of $10,000 and $17,000, respectively over the same periods in 2001.

     Total noninterest  expenses  increased  $290,000 and $497,000 for the three
and six months ended June 30, 2002 as compared to the same  periods  ended 2001.
The  increase in total  noninterest  expenses  for both  periods  was


                                       13


<PAGE>

primarily  related to operating a larger  organization  that  resulted  from the
opening of an additional office during the first quarter of 2002, as well as the
related  marketing  efforts to increase  visibility within the Company's market.
Salary and benefits costs increased in connection  with the new office,  as five
full-time  staff were hired.  In  addition,  occupancy  and  equipment  expenses
increased as well due to the new branch operations. For the three and six months
ended  June  30,  2002,   Nittany  Asset   Management   operations   contributed
approximately  $10,000 and $21,000 , respectively of other operating expense, an
increase of $5,000 and $11,000, respectively, over the same periods in 2001.

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 June 30, 2002, the Company and Nittany
Bank's  total  risk-based,  tier I  risk-based  and tier I leverage  ratios were
12.4%, 11.2%, 5.6% and 11.8%, 10.6 %, 5.4%, respectively.


                                       14


<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

          The following represents the results of matters submitted to a vote of
          the stockholders at the annual meeting held on May 17, 2002:

          Election of a Director for term to expire in 2006:
          Samuel J. Malizia was elected by the following vote:

          For:                          835,586
          Votes Withheld:                 3,641

          David Z. Richards, Jr. was elected by the following vote:

          For:                          835,586
          Votes Withheld:                 3,641

          S.R. Snodgrass A.C. was selected as the Company's independent auditors
          for the fiscal year 2002 by the following vote:

          For:                          836,565
          Against:                        2,900
          Votes Withheld:                   572

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 **


                                       15


<PAGE>

          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.


*    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.

               None


                                       16


<PAGE>


                                   SIGNATURES


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


                                       Nittany Financial Corp.



Date:    August 14, 2002               By: /s/ David Z. Richards
                                           -------------------------------------
                                           David Z. Richards
                                           President and Chief Executive Officer
                                           (and Chief Accounting Officer)





                                       17