[NITTANY FINANCIAL CORP. LOGO]

April 22, 2002

Dear Stockholder:

On behalf of the Board of Directors and management of Nittany Financial
Corp. (the "Company"), we cordially invite you to attend the Annual Meeting of
Stockholders to be held at Nittany Bank's Financial Center, located at 2541 East
College Avenue, State College, Pennsylvania, on Friday, May 17, 2002, at 10:00
a.m., local time. The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the Annual Meeting. During the
Annual Meeting, we will report on the operations of the Company. Directors and
officers of the Company, as well as a representative of S.R. Snodgrass, A.C.,
our independent certified public accountants, will be present to respond to any
questions stockholders may have.

You will be asked to elect two directors and to ratify the appointment
of S.R. Snodgrass, A.C. as the Company's independent accountants for the fiscal
year ending December 31, 2002. The Board of Directors has unanimously approved
each of these proposals and recommends that you vote FOR them.

Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. We encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. However, if you are a
stockholder whose shares are not registered in your own name, you will need
additional documentation from your recordholder to vote personally at the Annual
Meeting. Additionally, if you are planning to attend the Annual Meeting, please
let us know by marking the appropriate box on the proxy card.

Sincerely, Sincerely,

/s/Samuel J. Malizia /s/David Z. Richards, Jr.
-------------------- -------------------------
Samuel J. Malizia David Z. Richards, Jr.
Chairman of the Board President and Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2002
- --------------------------------------------------------------------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Nittany Financial Corp. (the "Company"), the holding company of Nittany Bank
(the "Bank"), will be held at the Bank's Financial Center, located at 2541 East
College Avenue, State College, Pennsylvania, on Friday, May 17, 2002, at 10:00
a.m., local time, for the following purposes:

1. To elect two directors of the Company;

2. To ratify the appointment of S.R. Snodgrass, A.C. as independent
accountants of the Company for the fiscal year ending December 31, 2002.

all as set forth in the Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on April 1,
2002 are the stockholders entitled to vote at the Meeting and any adjournments
thereof.

A copy of the Company's Annual Report for the year ended December 31,
2001 is enclosed.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.

BY ORDER OF THE BOARD OF DIRECTORS

/s/William A. Jaffe
-------------------
William A. Jaffe
Secretary

State College, Pennsylvania
April 22, 2002

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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
NITTANY FINANCIAL CORP.
116 EAST COLLEGE AVENUE
STATE COLLEGE, PENNSYLVANIA 16801
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ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 2002
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GENERAL
- --------------------------------------------------------------------------------

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Nittany Financial Corp. (the "Company"),
the holding company of Nittany Bank (the "Bank") to be used at the Annual
Meeting of Stockholders of the Company which will be held at the Bank's
Financial Center, located at 2541 East College Avenue, State College,
Pennsylvania, on Friday, May 17, 2002, 10:00 a.m., local time (the "Meeting").
The accompanying Notice of Annual Meeting of Stockholders and this Proxy
Statement are being first mailed to stockholders on or about April 22, 2002.

All properly executed written proxies that are delivered pursuant to
this proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of the directors named in Proposal 1; (b) FOR Proposal 2
(ratification of independent public accountants); and (c) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting (including any adjournment). Your proxy may be revoked at any time prior
to being voted by: (i) filing with the Corporate Secretary of the Company
(William A. Jaffe, 116 East College Avenue, State College, Pennsylvania 16801)
written notice of such revocation, (ii) submitting a duly executed proxy bearing
a later date, or (iii) attending the Meeting and giving the Secretary notice of
your intention to vote in person.

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VOTING STOCK AND VOTE REQUIRED
- --------------------------------------------------------------------------------

The Board of Directors has fixed the close of business on April 1,
2002, as the record date for the determination of stockholders who are entitled
to notice of, and to vote at, the Meeting. On the record date, there were
1,133,293 shares of the Company's common stock outstanding (the "Common Stock").
Each stockholder of record on the record date is entitled to one vote for each
share held. The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. With respect to any matter, any shares for which a broker
indicates on the proxy that it does not have discretionary authority as to such
shares to vote on such matter (the "Broker Non-Votes") will not be considered
present for purposes of determining whether a quorum is present. In the event
there are not sufficient votes for a quorum or to ratify any proposals at the
time of the Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.

As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominees as submitted as
Proposal 1, proposed by the Board, or to withhold authority to vote for the
nominees being proposed. Directors are elected by a plurality of votes of the
shares present in person or represented by proxy at a meeting and entitled to
vote in the election of directors.

As to the ratification of independent auditors as set forth in Proposal
2, by checking the appropriate box, a stockholder may: vote "FOR" the item, (ii)
vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, Proposal 2 and any other matters shall be determined
by a majority of votes cast affirmatively or negatively without regard to (a)
Broker-Non Votes or (b) proxies marked "ABSTAIN" as to that matter.

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PRINCIPAL HOLDERS
- --------------------------------------------------------------------------------

Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the record date, persons or groups who own more than 5%
of the Common Stock. Other than as noted below, management knows of no person or
group that owns more than 5% of the outstanding shares of Common Stock at the
record date.

Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner(1) Beneficial Ownership (2) Outstanding(%)
- --------------------------------------- ------------------------ --------------

David K. Goodman, Jr. 96,721 8.5
Samuel J. Malizia 121,465 10.5
J. Garry McShea 85,003 7.5
Donald J. Musso 63,835 5.6

- ----------------
(1) The address of each beneficial owner is 116 East College Avenue, State
College, Pennsylvania 16801.
(2) See "Proposal I - Election of Directors."

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's directors,
executive officers, and beneficial owners of more than 10% of the Company's
Common Stock, to file reports of ownership and changes in ownership of their
equity securities of the Company with the Securities and Exchange Commission and
to furnish the Company with copies of such reports. Due to an administrative
error, Directors Goodman, Malizia, and McShea and Executive Officers John E.
Arrington and Richard C. Barrickman each failed to file a timely Form 4 to
report one transaction. To the best of the Company's knowledge, all of the other
filings by the Company's directors and executive officers were made on a timely
basis. The Company is not aware of any other persons who may have failed to file
on a timely basis any required report.

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PROPOSAL 1 - ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------

The amended articles of incorporation (the "Articles of Incorporation")
requires that directors be divided into four classes, as nearly equal in number
as possible, each class to serve for a four year period, with approximately
one-fourth of the directors elected each year. The Board of Directors currently
consists of seven members, each of whom also serves as a director of the Bank.
Two directors will be elected at the Meeting, each to serve for a four-year term
or until his successor has been elected and qualified.

Samuel J. Malizia and David Z. Richards, Jr. (the "Nominees") have been
nominated by the Board of Directors to serve as directors. The Nominees are
currently members of the Board and have been nominated for four-year terms to
expire in 2006.

The persons named as proxies in the enclosed proxy card intend to vote
for the election of the Nominees, unless the proxy card is marked to indicate
that such authorization is expressly withheld. Should the Nominees withdraw or
be unable to serve (which the Board of Directors does not expect) or should any
other vacancy occur in the Board of Directors, it is the intention of the
persons named in the enclosed proxy card to vote for the election of such
persons as may be recommended to the Board of Directors by the Nominating
Committee of the Board. If there are no substitute nominees, the size of the
Board of Directors may be reduced.

The following table sets forth information with respect to the Nominees
and the other sitting directors, including for each their name, age, the year
they first became a director of the Company, the expiration date of their
current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned. Beneficial ownership of executive officers and
directors of the Company, as a group, is also set forth under this caption.

Shares of
Common Stock
Year First Current Beneficially
Elected or Term to Owned as of Percent
Name and Title Age(1) Appointed Expire April 1, 2002(2) Owned (%)
-------------- ------ --------- ------ ---------------- ---------

BOARD NOMINEES FOR TERMS TO EXPIRE IN 2006
Samuel J. Malizia
Chairman of the Board 47 1997 2002 121,465 10.5

David Z. Richards, Jr.
President, Chief Executive 41 1997 2002 33,875 2.9
Officer and Director

DIRECTORS CONTINUING IN OFFICE
J. Garry McShea
Director 47 1999 2003 85,003 7.5

D. Michael Taylor
Director 60 1998 2003 22,658 2.0

David K. Goodman, Jr.
Director 48 1999 2004 96,721 8.5

William A. Jaffe
Director and Secretary 63 1997 2004 21,121 1.9

Donald J. Musso
Director 42 1997 2005 63,835 5.6

NAMED EXECUTIVE OFFICER WHO IS NOT A DIRECTOR
Richard C. Barrickman
Senior Vice President 50 -- -- 19,139 1.7

All directors and executive
officers of the Company as 483,688 38.5
a group (10 persons)

- ---------------
(1) At December 31, 2001.
(2) The share amounts include shares of Common Stock that the following persons
have a right to purchase pursuant to exercisable stock options within 60
days of the record date, as follows: Samuel J. Malizia - 26,915 shares,
David Z. Richards, Jr.- 27,181 shares, J. Garry McShea - 7,164 shares, D.
Michael Taylor- 7,988 shares, David K. Goodman, Jr.- 7,511 shares, William
A. Jaffe - 8,001 shares, Donald J. Musso - 14,252 shares, and Richard C.
Barrickman - 11,439.

Biographical Information

Set forth below is certain information with respect to the directors,
including the Nominees and executive officers of the Company.

Nominees For Directors:

Samuel J. Malizia is the Chairman of the Board of the Company and
Nittany Bank. Mr. Malizia is the managing partner of the law firm of Malizia
Spidi & Fisch, PC, a law firm headquartered in Washington, DC with a State
College, Pennsylvania office. For over 22 years, Mr. Malizia has specialized in
transactional, securities and regulatory matters for financial institutions and
related entities. He received a Bachelor of Science Degree with Distinction in
accounting from the Pennsylvania State University and a Juris Doctor Degree from
the George Washington University. He served as Attorney Advisor to Special Trial
Judge Francis Cantrel at the United States Tax Court and attended the Masters of
Law in Taxation program at the Georgetown University where he was associate
editor of the Tax Lawyer. He is a member of the Pennsylvania and District of
Columbia bars, the U.S. Tax Court, U.S. Claims Court, U.S. Court of Appeals for
the District of Columbia and a member of the Federal Bar Association and
American Bar Association. He is an alumnus of several Penn State University's
organizations, including Lions Paw, Skull and Bones Honor Society, Beta Alpha
Psi and Omicron Delta Kappa. He serves on the board of directors of the Lions
Paw Alumni Society and the Mount Nittany Conservancy. Mr. Malizia is also an
active member of Our Lady of Victory Catholic Church in State College,
Pennsylvania, where he is the Chairman of the Fund Raising Campaign and the
coach of its school's football team.

David Z. Richards, Jr. is President and CEO of the Company and Nittany
Bank. Mr. Richards was President and Chief Executive Officer of Mifflinburg Bank
and Trust Company of Mifflinburg, Pennsylvania from 1991 until 1997. From 1978
until 1990, he served in various capacities, including Vice President and
Financial Officer of The First National Bank of Danville, Pennsylvania. In 2000
he was appointed to the Governing Council of the Pennsylvania Bankers
Association, for which he has chaired and served on several committees. He
formerly served as President of LUN Data Inc., a multi-owned data processing
consortium. In 2001, Mr. Richards was appointed to the ABA Community Banker's
Council and the Kirchman Corporation Advisory Board. Mr. Richards has a Bachelor
of Science in Finance from Susquehanna University and is a graduate of The
Stonier Graduate School of Banking.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.

Continuing Directors:

J. Garry McShea has been owner and founder of the J.G. McShea
Construction Company, Boalsburg, Pennsylvania since 1978. McShea Construction
specializes in custom home construction, remodeling projects,
commercial/residential rental properties and land development. Prior to this,
Mr. McShea was employed by Certain Teed Corporation, Valley Forge, Pennsylvania,
as a Residential Building Material Specialist. Mr. McShea is a past President
and 25 year member of the Builders Association of Central Pennsylvania. He is a
Director of the Tussey Mountain Ski Corporation and served on the Harris
Township Planning Commission. Mr. McShea received a Bachelor of Science Degree
in Marketing from the Pennsylvania State University College of Business.

D. Michael Taylor is an architect, real estate developer and
entrepreneur, who has resided in the State College area for 33 years. Mr. Taylor
has a Bachelor of Architecture degree from Kansas State University. Upon
graduation, he spent six years in commercial architecture for Phillips Petroleum
Company and several years working directly in the construction business. From
1978 to 1988 Mr. Taylor was part owner of Whitehill Lighting and Supply Company
and Village Hardware located in State College. From 1988 to present Mr. Taylor
has specialized in the design, construction and rental of several office
buildings in the State College area.

David K. Goodman, Jr. is the President and Chief Executive Officer of
D. C. Goodman & Sons, Inc., a Huntingdon based contracting firm. The firm
specializes in construction for industry, institutions, and commercial customers
in the fields of fire protection sprinkler systems, mechanical, and electrical
contracting. Mr. Goodman is a member of the board of directors of Huntingdon
County United Way and is an emeritus member of the board of directors of J. C.
Blair Memorial Hospital. He is also a member of the Trustee's Council of Juniata
College. Mr. Goodman received his education at Juniata College and holds
numerous professional memberships in fire protection and contracting
organizations.

William A. Jaffe is the President and owner of The Jaffe Group, a Human
Resource Consultancy, headquartered in State College, Pennsylvania, which he
established in January 1996. Previously, he was Compensation and Human Resource
Practice Leader for the Mid-Atlantic Region of Alexander & Alexander Consulting
Group and a Vice President of Towers Perrin. Mr. Jaffe received his Bachelor of
Arts degree in journalism from Penn State University and Master of Science
degree in Management from the University of Illinois. He is past President of
The Mount Nittany Conservancy, President-Elect of the Penn State College of
Communications Alumni Society, and is the past chair of the Penn State Hillel
Foundation. He previously served as the chair of the Chamber of Business &
Industry of Centre County's Human Resource Committee and is currently a member
of its executive committee and board of directors. Additionally, Mr. Jaffe
served as an adjunct associate professor at The George Washington University
from 1991 to 1995. In 1996, Mr. Jaffe was named a Penn State Alumni Fellow.

Donald J. Musso is the founder of FinPro, Inc., a consulting and
investment banking firm which specializes in providing advisory services
nationally to the financial institutions industry. Mr. Musso has a Bachelor of
Science in Finance from Villanova University and an MBA in Finance from
Fairleigh Dickinson University. Mr. Musso's corporation has represented hundreds
of financial institutions nationally in connection with business plans,
appraisals, asset liability management, mergers and acquisitions, branch
acquisitions and de novo financial institutions. Prior to establishing FinPro,
he had direct industry experience, having managed the Corporate Planning and
Mergers and Acquisitions departments for Meritor Financial Group, a $20 billion
dollar institution in Philadelphia. Prior to that, he was responsible for the
banking, thrift and real estate consulting practice in New Jersey for DeLoitte,
Haskins and Sells. He is also an instructor of strategic planning and mergers
and acquisitions for the Stonier Graduate School of Banking.

Named Executive Officer Who Is Not A Director

Richard C. Barrickman was appointed Senior Vice President of the
Company and the Bank upon completion of the formation of the Bank on October 23,
1998. Mr. Barrickman was employed by PNC Bank, N.A. ("PNC") and its predecessors
through mergers. Prior to merger with PNC and its predecessors in 1982, Mr.
Barrickman was the President of Mt. Nittany Savings and Loan Association. Mr.
Barrickman is a native of State College, Pennsylvania.

Certain Other Executive Officers Who Are Not Directors

John E. Arrington, 37, was appointed Vice President of the Company and
Vice President of Retail Banking upon completion of the formation of the Bank on
October 23, 1998. He is also President of Nittany Asset Management, Inc.
Previously, Mr. Arrington was employed by PNC and its predecessors, serving in a
variety of capacities, most recently as Vice President. Mr. Arrington is past
President of the Board of the Nittany Valley Symphony.

Scott Lamb, 39, joined the Company and Bank on July 6, 2001 to serve as
Vice President and Vice President of Lending, respectively. Previously, Mr. Lamb
was a Vice President - Market Manager, of M&T Bank, State College, Pennsylvania.

Community Advisory Board of Directors

The Bank has created a Community Advisory Board of Directors to help
evaluate the needs of the community and to solicit ideas and comments from the
business community and general populous. The members of the Community Advisory
Board are selected on a yearly basis and meet at least every calendar quarter.
The Community Advisory Board serves by an appointment from the Board of
Directors of the Bank. Set forth below are the names of the members of the
Community Advisory Board along with a brief description of their occupation.

Craig Avedesian is the President and part-owner of Federal Carbide Co.
located in Tyrone, Pennsylvania. Mr. Avedesian is a resident of State College,
Pennsylvania.

D. Patrick Daugherty is the owner of the Tavern Restaurant located in
State College, Pennsylvania.

Dr. Richard Doerfler is in private practice as an orthodontist in State
College, Pennsylvania. Dr. Doerfler is a resident of State College,
Pennsylvania.

Kelly Grimes is the President and owner of the Wendy's franchise stores
located in State College, Pennsylvania. Ms. Grimes is a resident of State
College, Pennsylvania.

Christopher Kunes is the owner of Christopher Kunes General Contractor,
State College, Pennsylvania.

James Meister recently retired as a Special Assistant to the Athletic
Director of the Pennsylvania State University, State College, Pennsylvania. He
also is a retired vice president of ALCOA. Mr. Meister is a resident of State
College, Pennsylvania.

Lori Pacchioli is the Director of Marketing for Penn State Public
Broadcasting, State College, Pennsylvania. Ms. Pacchioli is a resident of State
College, Pennsylvania.

Anne Riley is a member of the Pennsylvania State Board of Trustees and
is past president of the Pennsylvania State University Alumni Association, State
College, Pennsylvania. Ms. Riley is also a member of the Renaissance board of
directors and the Mt. Nittany Conservatory board of directors, State College,
Pennsylvania. She is a resident of State College, Pennsylvania.

Richard Shore is Senior Vice President of Corporate Development and Tax
Affairs for Tele- Media, Corporation of Delaware, Inc., Pleasant Gap,
Pennsylvania. Mr. Shore is a resident of State College, Pennsylvania.

Donn Wagner is President of Alleghenies Analysis, Boalsburg,
Pennsylvania. Mr. Wagner is a resident of Boalsburg, Pennsylvania.

William Updegraff is the owner of Updegraff & Updegraff, an accounting
firm located in State College, Pennsylvania. Mr. Updegraff is a resident of
State College, Pennsylvania.

Meetings and Committees of the Board of Directors

During 2001, the Company's Board of Directors held a total of 11
meetings and the Bank's Board of Directors also held a total of 11 meetings. No
director attended fewer than 75% of the total meetings of the Company's Board of
Directors and committees during the period of his service. In addition to other
committees, as of December 31, 2001, the Company had a Nominating Committee, a
Compensation Committee, and an Audit Committee.

The Board of Directors of the Company acts as the Nominating Committee,
which is not a standing committee. Nominations to the Board of Directors made by
stockholders must be made in writing to the Secretary and received by the
Company not less than 60 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders of the Company. Notice to the Company
of such nominations must include certain information required pursuant to the
Company's Bylaws. The Board of Directors acting as the Nominating Committee met
one time during the 2001 fiscal year.

The Compensation Committee is comprised of Directors Jaffe, Goodman,
Malizia and McShea. This standing committee establishes the Bank's salary budget
for approval by the Board of Directors. The Committee met two times during the
2001 fiscal year.

The Audit Committee is comprised of Directors Jaffe, Goodman, Malizia
and McShea. The Audit Committee is a standing committee and is responsible for
developing and maintaining the Company's audit program. The Audit Committee
meets with the Company's independent accountants to discuss the results of the
annual audit and any related matters.

The Common Stock is not traded on an exchange or on Nasdaq and
accordingly, the Audit Committee is not required to have a written charter. The
Audit Committee met two times during the fiscal year ended December 31, 2001.

Audit Committee Report

Review of Audited Financial Statements with Management.

The Audit Committee reviewed and discussed the audited financial
statements for the year ended December 31, 2001 with the management of the
Company.

Review of Financial Statements and Other Matters with Independent
Accountant.

The Audit Committee discussed with S. R. Snodgrass, A.C. ("Snodgrass")
the Company's independent accountants, the matters required to be discussed by
the statement on Auditing Standards

No. 61 (Communications with Audit Committees), as may be modified or
supplemented. The Audit Committee has received the written disclosures and the
letter from Snodgrass required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with Snodgrass its independence.

Recommendation that Financial Statements be Included in Annual Report.

Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2001, for filing with the Securities and Exchange
Commission.

Audit Committee:

William A. Jaffe, Chairman
David K. Goodman, Jr.
Samuel J. Malizia
J. Gary McShea

Audit Fees

The aggregate fees billed by Snodgrass for professional services
rendered for the audit of the Company's consolidated annual financial statements
for the 2001 fiscal year and the reviews of the financial statements included in
the Company's quarterly reports on Forms 10-QSB were approximately $45,000.

Financial Information Systems Design and Implementation Fees

For the 2001 fiscal year, Snodgrass did not render to the Company or
its consolidated subsidiary any professional services for financial information
systems design and implementation. Accordingly, there were no fees billed for
fiscal 2001 by Snodgrass to the Company or its consolidated subsidiary.

All Other Fees

The aggregate fees billed by Snodgrass to the Company and its
consolidated subsidiaries for all other services other than those covered under
"Audit Fees" for the 2001 fiscal year were approximately $19,000.

The Audit Committee considered whether the provision of the non-audit
services listed under "All Other Fees" above was compatible with maintaining
Snodgrass' independence.

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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------

Director Compensation

Directors and advisory directors have received no cash compensation for
their services since the incorporation of the Company in 1997.

Option Plan

Under the 1998 stock option plan, as amended (the "Option Plan"), which
was approved by shareholders on May 24, 1999, each director was granted stock
options. During fiscal 2001, under the Option Plan, each non-employee director
was awarded additional stock options to purchase 7,425 shares of Common Stock,
exercisable at the rate of 25% per year beginning on October 25, 2001. Messrs.
Richards and Barrickman were each granted stock options to purchase 13,750
shares of Common Stock, exercisable at the rate of 20% per year beginning on
October 25, 2001.

Executive Officer Compensation

The Company has no full time employees, but relies on the employees of
the Bank for the limited services. All compensation paid to officers and
employees is paid by the Bank.

Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the chief executive officer. No
other executive officer of either the Bank or the Company had a salary and bonus
that exceeded $100,000 for services rendered for the years presented.

Long Term
Annual Compensation Compensation Awards
--------------------------- -------------------
Securities
Name and Fiscal Underlying
Principal Position Year Salary($) Bonus($) Options(#)(1)
------------------ ---- --------- -------- -------------

David Z. Richards, Jr. 2001 112,500 40,725 13,750
President and Chief Executive Officer 2000 105,000 24,675 464
1999 100,000 15,000 24,200

Richard C. Barrickman 2001 80,000 28,000 13,750
Senior Vice President 2000 75,000 17,625 439
1999 70,000 10,420 8,470

- -----------------
(1) See "-- Stock Awards."

Employment Agreement. The Company entered into employment agreements
with Messrs. Richards and Barrickman, respectively (the "Agreements"). The
Agreements each have a term of three and two years, respectively, and may be
renewed annually by the Board of Directors upon a determination of satisfactory
performance within the Board's sole discretion. If Messrs. Richards and
Barrickman should become disabled during the term of the Agreements, each shall
continue to receive payment of 80% of the base salary for a period of 3 months
and 50% of such base salary for a period of 12 months, but not exceeding the
remaining term of the Agreements. Such payments shall be reduced by any other
benefit payments made under other disability programs in effect for the Bank's
employees. Under the Agreements, Messrs. Richards and Barrickman may be
terminated for "just cause" as defined in the Agreements. If Messrs. Richards or
Barrickman are terminated without just cause, each will be entitled to a
continuation of his salary from the date of termination through the remaining
term of his agreement. The Agreements contain a provision stating that in the
event of the termination of employment in connection with a change in control of
the Company or Bank, Messrs. Richards and Barrickman will be paid a lump sum
amount equal to 2.99 times their five year average annual taxable compensation.
If such payments had been made under the Agreements as of December 31, 2001,
such payments for Messrs. Richards and Barrickman would have equaled
approximately $350,000 and $250,000, respectively.

Stock Awards. The following tables set forth additional information
concerning stock options granted during the 2001 fiscal year pursuant to the
Option Plan to the named executive officer in the Summary Compensation Table and
the year end value of such outstanding options. No stock appreciation rights are
authorized under the Option Plan. The awards (including the exercise prices and
estimated prices) in the tables below were adjusted for the 10% stock dividend
issued on January 15, 2002.

OPTION GRANTS TABLES

Option Grants in Last Fiscal Year
---------------------------------

Individual Grants
- ---------------------------------------------------------------------------------------------------------------

# of Securities % of Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date
---- ---------- ----------- ------ ----

David Z. Richards, Jr. 13,750 22 8.41 October 25, 2011
Richard C. Barrickman 13,750 22 8.41 October 25, 2011

Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Values
-------------------------------------------------------------------------

Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-The-Money Options
Shares Acquired Value FY-End(#) at FY-End($)
Name on Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- -------------- ----------- ------------------------- ----------------------------

David Z. Richards, Jr. -- -- 24,200/--(1) 47,674/--
-- -- 231/233(2) 596/601
-- -- 2,750/11,000(3) 5,005/20,020

Richard C. Barrickman -- -- 8,470/--(1) 16,686/--
-- -- 219/220(2) 565/568
-- -- 2,750/11,000(3) 5,005/20,020

- ---------------
(1) Based upon an exercise price of $8.26 per share and estimated price of
$10.23 at December 31, 2001.
(2) Based upon an exercise price of $7.65 per share and estimated price of
$10.23 at December 31, 2001.
(3) Based upon an exercise price of $8.41 per share and estimated price of
$10.23 at December 31, 2001.

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PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
- --------------------------------------------------------------------------------

Snodgrass was the Company's independent public accountants for the
fiscal year ending December 31, 2001. The Board of Directors has appointed
Snodgrass to be its accountants for the fiscal year ending December 31, 2002,
subject to ratification by the Company's stockholders. A representative of
Snodgrass is expected to be present at the Meeting to respond to stockholders'
questions and will have the opportunity to make a statement if the
representative so desires.

Ratification of the appointment of the accountants requires the
affirmative vote of a majority of the votes cast by the stockholders of the
Company at the Meeting. The Board of Directors recommends that stockholders vote
"FOR" the ratification of the appointment of Snodgrass as the Company's
accountants for the fiscal year ending December 31, 2002.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------

The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.

- --------------------------------------------------------------------------------
ANNUAL MEETING STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------

In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2003, all
stockholder proposals must be submitted to the Secretary at the Company's
office, 116 East College Avenue, State College, Pennsylvania 16801 on or before
December 22, 2002. Under the Articles of Incorporation, in order to be
considered for possible action by stockholders at the 2003 annual meeting of
stockholders, stockholder nominations for director and stockholder proposals not
included in the Company's proxy statement must be submitted to the Secretary of
the Company, at the address set forth above, no later than March 16, 2003.

- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------

The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees, and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.

- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2001 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS
OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, NITTANY FINANCIAL
CORP., 116 EAST COLLEGE AVENUE, STATE COLLEGE, PENNSYLVANIA 16801.

BY ORDER OF THE BOARD OF DIRECTORS

/s/William A. Jaffe
----------------------------------
William A. Jaffe
Secretary

State College, Pennsylvania
April 22, 2002

APPENDIX

- --------------------------------------------------------------------------------
NITTANY FINANCIAL CORP.
116 EAST COLLEGE AVENUE
STATE COLLEGE, PENNSYLVANIA 16801
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
May 17, 2002
- --------------------------------------------------------------------------------

The undersigned hereby appoints the Board of Directors of Nittany
Financial Corp. (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at Nittany
Bank's Financial Center, located at 2541 East College Avenue, State College,
Pennsylvania, on Friday, May 17, 2002, at 10:00 a.m., local time and at any and
all adjournments thereof, in the following manner:

FOR WITHHELD
--- --------

1. The election as directors of the nominees |_| |_|
listed below (except as marked to the
contrary below):

Samuel J. Malizia
David Z. Richards, Jr.

(Instructions: To withhold authority to
vote for any individual nominee, write
that nominee's name on the space provided
below):

-----------------------------------------------------------------------

FOR AGAINST ABSTAIN
--- ------- -------

2. To ratify the appointment of
S.R. Snodgrass, A.C. as independent
accountants of the Company for the
fiscal year ending December 31, 2002. |_| |_| |_|

The Board of Directors recommends a vote "FOR" the above listed
propositions. ---

- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the Stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.

The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated April 22, 2002 and the 2001 Annual Report.

Please check the box if you are planning to attend the Meeting in person |_|

Dated: , 2002
-------------------

- ------------------------------------ --------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER

- ------------------------------------ --------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.

- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------