[NITTANY FINANCIAL CORP. LETTERHEAD]



FOR IMMEDIATE RELEASE                   FOR FURTHER INFORMATION CONTACT:
- ---------------------                   --------------------------------
December 31, 2001                       David Z. Richards, Jr., President
                                        (814) 234-7320
                                        Samuel J. Malizia, Chairman of the Board
                                        (814) 466-6625


              NITTANY FINANCIAL CORP. ANNOUNCES 10% STOCK DIVIDEND

         State  College,  Pennsylvania  -- Nittany  Financial  Corp.  (OTC Stock
Symbol:  NTNY),  parent  holding  company  of  Nittany  Bank and  Nittany  Asset
Management,  Inc.,  State  College,  Pennsylvania,  announced that the Company's
Board of Directors  has declared a 10% stock  dividend.  The Company  intends to
effect the  issuance  of the 10% stock  dividend  on the  Company's  outstanding
common stock,  payable on or about January 15, 2002,to stockholders of record as
of December 31, 2001.

         Samuel J.  Malizia,  Chairman of the Board of the Company,  stated that
"The Board of Directors  is very  pleased to issue a 10% stock  dividend for the
second year in a row. The stock dividend will provide our  stockholders a return
on their investment and is expected to enhance stockholder value." President and
CEO of the Company, David Z. Richards, Jr., stated that "The Company's continued
growth and profitability  warrants the payment of a stock dividend and the Board
of Directors will continue to periodically  consider payment of additional stock
dividends."

         As a result  of the  Board's  action,  the  outstanding  shares  of the
Company's  common stock will increase by  approximately  103,000  shares.  As of
September  30,  2001,  the Company  currently  has total  assets,  deposits  and
stockholders'  equity of  approximately  $106.3 million,  $88.6 million and $8.2
million, respectively, in only its third year of operations.

         Nittany   Bank  is  the   only   FDIC-insured   financial   institution
headquartered  and operated solely in State College and offers a wide variety of
consumer and  commercial  lending and deposit  services,  and  personal  banking
services from its three full service offices located at 116 East College Avenue,
1276 North  Atherton and 129 Rolling Ridge Drive (Hills  Plaza),  State College,
Pennsylvania.  The  Nittany  Financial  Corp.  Financial  Center  and the fourth
Nittany Bank office,  located near the Nittany Mall at 2541 East College Avenue,
is expected to open in January 2002.  Deposits at Nittany Bank are insured up to
the legal maximum amount by the Federal Deposit  Insurance  Corporation  (FDIC).
Nittany  Asset  Management,  Inc.  offers  alternative  investment  products and
investment  management  services to  customers.  The  Company's  common stock is
traded in the OTC Electronic Bulletin Board under the symbol "NTNY".