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 September 30, 2004

-----
      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
-----


      For the transition period from ______ to ______

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

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

              Pennsylvania                                23-2925762
---------------------------------------------  ---------------------------------
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
 or organization)

              116 College Avenue, State College, Pennsylvania 16801
              ----------------------------------------------------
                    (Address of principal executive offices)

                                 (814) 234-7320
              ----------------------------------------------------
              (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 12, 2004: 1,924,621


<PAGE>

                             NITTANY FINANCIAL CORP.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------
<S>                                                                                                             <C>
PART I  -  FINANCIAL INFORMATION

      Item 1.       Financial Statements

                    Consolidated Balance Sheet (Unaudited) as of                                                   3
                        September 30, 2004 and December 31, 2003

                    Consolidated Statement of Income (Unaudited)
                        for the Nine Months ended September 30, 2004 and 2003                                      4

                    Consolidated Statement of Income (Unaudited)
                        for the Three Months ended September 30, 2004 and 2003                                     4

                    Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
                        for the Nine Months ended September 30, 2004                                               5

                    Consolidated Statement of Cash Flows (Unaudited)
                        for the Nine Months ended September 30, 2004 and 2003                                      6

                    Notes to Unaudited Consolidated Financial Statements                                           7

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

      Item 3.       Controls and Procedures                                                                       16

PART II  -  OTHER INFORMATION

      Item 1.       Legal Proceedings                                                                             16

      Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds                                   16

      Item 3.       Defaults Upon Senior Securities                                                               16

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

      Item 5.       Other Information                                                                             17

      Item 6.       Exhibits                                                                                      17

SIGNATURES                                                                                                        18

CERTIFICATIONS
</TABLE>

<PAGE>

                             NITTANY FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

                                                                    September 30,     December 31,
                                                                         2004             2003
                                                                    -------------    -------------
                                                                             (unaudited)
<S>                                                               <C>              <C>
ASSETS
     Cash and due from banks                                        $   6,842,808    $     805,812
     Interest-bearing deposits with other banks                         7,586,726       14,147,474
                                                                    -------------    -------------
     Cash and cash equivalents                                         14,429,534       14,953,286
     Investment securities available for sale                             774,294        4,074,095
     Investment securities held to maturity (estimated
       market value of $43,372,047 and $39,168,895)                    44,911,886       39,246,289
     Loans receivable (net of allowance for loan losses
       of $2,107,244 and $1,737,435)                                  226,462,486      182,742,537
     Premises and equipment                                             2,519,408        2,570,953
     Federal Home Loan Bank stock                                       2,223,300        1,311,300
     Intangible assets                                                  1,763,231        1,763,231
     Accrued interest and other assets                                  2,071,117        1,925,622
                                                                    -------------    -------------

             TOTAL ASSETS                                           $ 295,155,256    $ 248,587,313
                                                                    =============    =============
LIABILITIES
     Deposits:
         Noninterest-bearing demand                                 $  10,212,041    $   7,880,177
         Interest-bearing demand                                       24,488,842       21,902,355
         Money market                                                  38,062,725       34,237,951
         Savings                                                      155,711,676      136,273,936
         Time                                                          18,083,354       20,598,238
                                                                    -------------    -------------
            Total deposits                                            246,558,638      220,892,657
     Short-term borrowings                                              6,791,622        2,363,887
     Other borrowings                                                  24,237,985        9,829,866
     Accrued interest payable and other liabilities                       807,428          673,159
                                                                    -------------    -------------

             TOTAL LIABILITIES                                        278,395,673      233,759,569
                                                                    -------------    -------------
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, 1,924,621 and 1,603,960 issued and outstanding         192,462          160,396
     Additional paid-in capital                                        14,287,483       14,323,021
     Retained earnings                                                  2,288,082          356,344
     Accumulated other comprehensive loss                                  (8,444)         (12,017)
                                                                    -------------    -------------

             TOTAL STOCKHOLDERS' EQUITY                                16,759,583       14,827,744
                                                                    -------------    -------------

             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 295,155,256    $ 248,587,313
                                                                    =============    =============
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       3

<PAGE>

                             NITTANY FINANCIAL CORP.
                        CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                              Three-Months Ended September 30,   Nine-months Ended September 30,
                                                   2004           2003                  2004           2003
                                                 -----------   -----------          -----------   -----------
                                                        (unaudited)                        (unaudited)
<S>                                            <C>           <C>                  <C>           <C>
INTEREST AND DIVIDEND INCOME
    Loans, including fees                        $ 3,266,905   $ 2,601,103          $ 9,034,114   $ 7,011,893
    Interest-bearing deposits with other banks        24,473         8,898               49,679        48,803
    Investment securities                            371,767       328,101            1,114,783     1,074,435
                                                 -----------   -----------          -----------   -----------
           Total interest and dividend income      3,663,145     2,938,102           10,198,576     8,135,131
                                                 -----------   -----------          -----------   -----------
INTEREST EXPENSE
    Deposits                                       1,185,689     1,051,561            3,492,226     3,171,166
    Short-term borrowings                             41,023        19,023               65,037        44,011
    Other borrowings                                 137,524       128,013              395,720       389,654
                                                 -----------   -----------          -----------   -----------
           Total interest expense                  1,364,236     1,198,597            3,952,983     3,604,831
                                                 -----------   -----------          -----------   -----------
NET INTEREST INCOME                                2,298,909     1,739,505            6,245,593     4,530,300

Provision for loan losses                            138,000       230,000              442,000       508,000
                                                 -----------   -----------          -----------   -----------
NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                     2,160,909     1,509,505            5,803,593     4,022,300
                                                 -----------   -----------          -----------   -----------
NONINTEREST INCOME
    Service fees on deposit accounts                 177,863       124,980              498,231       370,437
    Investment security gain                          32,707             -               32,707         6,691
    Asset management fees and commissions            614,209       231,764            1,773,425       721,434
    Other                                             26,709        36,125               81,375       123,070
                                                 -----------   -----------          -----------   -----------
           Total noninterest income                  851,488       392,869            2,385,738     1,221,632
                                                 -----------   -----------          -----------   -----------
NONINTEREST EXPENSE
    Compensation and employee benefits               730,611       544,768            2,168,606     1,607,880
    Occupancy and equipment                          186,363       180,397              540,492       473,618
    Professional fees                                 49,290        55,676              144,088       157,425
    Data processing fees                             121,146       112,338              351,317       285,599
    Supplies, printing, and postage                   39,084        35,300              104,015       103,975
    Advertising                                       37,721        42,594              115,849       104,386
    ATM processing fees                               36,191        34,635              106,044        97,257
    Commission expense                               381,639        90,385            1,120,476       385,508
    Other                                            205,537       142,138              545,706       360,610
                                                 -----------   -----------          -----------   -----------
           Total noninterest expense               1,787,582     1,238,231            5,196,593     3,576,258
                                                 -----------   -----------          -----------   -----------

Income before income taxes                         1,224,815       664,143            2,992,738     1,667,674
Income taxes                                         427,000       205,691            1,061,000       554,390
                                                 -----------   -----------          -----------   -----------

NET INCOME                                       $   797,815   $   458,452          $ 1,931,738   $ 1,113,284
                                                 ===========   ===========          ===========   ===========
EARNINGS PER SHARE
    Basic                                        $      0.41   $      0.24          $      1.00   $      0.64
    Diluted                                             0.38          0.23                 0.93          0.59

WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                          1,924,621     1,873,078            1,924,621     1,749,564
    Diluted                                        2,080,438     2,024,416            2,078,490     1,897,362
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                        Accumulated
                                                            Additional                     Other         Total
                                                Common        Paid-in     Retained     Comprehensive  Stockholders'   Comprehensive
                                                Stock         Capital     Earnings         Loss          Equity          Income
                                             -------------  ------------- -----------  -------------  -------------   -------------
                                                                                (unaudited)

<S>                                             <C>         <C>          <C>              <C>         <C>             <C>
Balance, December 31, 2003                        160,396     14,323,021     356,344        (12,017)    14,827,744

Net income                                                                 1,931,738                     1,931,738      $1,931,738
Other comprehensive income:
    Unrealized gain on available for sale securities
    net of reclassification adjustment,
    net of taxes of $1,841                                                                    3,573          3,573           3,573
                                                                                                                        ----------
Comprehensive income                                                                                                    $1,935,311
                                                                                                                        ==========
Twenty percent stock dividend (including cash
  paid for fractional shares)                      32,066    $   (35,538)                                   (3,472)
                                                 --------    -----------  ----------       --------    -----------

Balance, September 30, 2004                      $192,462    $14,287,483  $2,288,082       $ (8,444)   $16,759,583
                                                 ========    ===========  ==========       ========    ===========
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.

                                       5
<PAGE>

                             NITTANY FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  Nine-months ended September 30,
                                                                        2004            2003
                                                                   ------------    ------------
<S>                                                              <C>             <C>
OPERATING ACTIVITIES
     Net income                                                    $  1,931,738    $  1,113,284
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Provision for loan losses                                      442,000         508,000
         Depreciation, amortization, and accretion, net                 540,818         772,963
         Investment security gain                                       (32,707)         (6,691)
         Increase in accrued interest receivable                       (105,747)       (198,645)
         Decrease in accrued interest payable                           (34,839)       (293,164)
         (Increase) decrease in taxes payable                            51,757        (689,419)
         Other, net                                                      75,762         (55,722)
                                                                   ------------    ------------
         Net cash provided by operating activities                    2,868,782       1,150,606
                                                                   ------------    ------------
INVESTING ACTIVITIES
     Investment securities available for sale:
         Purchases                                                      (80,881)        (19,826)
         Proceeds from sale                                              52,707          26,637
         Proceeds from principal repayments and maturities            3,353,469       1,555,738
     Investment securities held to maturity:
         Purchases                                                  (42,268,481)    (44,424,200)
         Proceeds from principal repayments and maturities           36,262,161      37,940,573
     Net increase in loans receivable                               (44,150,543)    (52,370,615)
     Purchase of FHLB stock                                            (912,000)       (373,600)
     Acquisition of subsidiary                                                -        (370,014)
     Purchase of premises and equipment                                (147,330)       (849,686)
     Sale of premises and equipment                                           -          31,000
                                                                   ------------    ------------
         Net cash used for investing activities                     (47,890,897)    (58,853,993)
                                                                   ------------    ------------
FINANCING ACTIVITIES
     Net increase in deposits                                        25,665,981      49,183,640
     Net increase in short-term borrowings                            4,427,735       6,521,026
     Proceeds from other borrowings                                  14,575,000         500,000
     Repayment of other borrowings                                     (166,881)       (156,858)
     Exercise of stock options                                                -           1,108
     Cash paid in lieu of fractional shares                              (3,472)              -
     Proceeds from sale of common stock                                       -       2,335,730
     Issuance of common stock                                                 -          15,751
                                                                   ------------    ------------
         Net cash provided by financing activities                   44,498,363      58,400,397
                                                                   ------------    ------------
         Increase (decrease) in cash and cash equivalents              (523,752)        697,010

CASH & CASH EQUIV. AT BEGINNING OF PERIOD                            14,953,286       5,852,073
                                                                   ------------    ------------

CASH & CASH EQUIV. AT END OF PERIOD                                $ 14,429,534    $  6,549,083
                                                                   ============    ============

SUPPLEMENTAL CASH FLOW DISCLOSURE
     Cash paid during the year for:
         Interest on deposits and borrowings                       $  3,987,822    $  3,897,995
         Income taxes                                                 1,151,500       1,095,000
</TABLE>

See accompanying notes to the consolidated unaudited financial statements.

                                       6
<PAGE>

                             NITTANY FINANCIAL CORP.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Nittany Financial Corp. (the "Company")
includes its wholly-owned subsidiaries, Nittany Bank (the "Bank"), Nittany Asset
Management,  Inc, and Vantage  Investment  Advisors,  LLC. The Bank includes its
wholly-owned subsidiary, FTF Investments Inc. All significant intercompany items
have been eliminated.

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with the  instructions  to Form  10-QSB and,  therefore,  do not
necessarily  include all information that would be included in audited financial
statements.  The information furnished reflects all adjustments that are, in the
opinion  of  management,  necessary  for a  fair  statement  of the  results  of
operations.  All such adjustments are of a normal recurring nature.  The results
of  operations  for the three and nine months ended  September  30, 2004 are not
necessarily  indicative  of the results to be expected for the fiscal year ended
December 31, 2004 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, 2003,  which are
incorporated herein by reference to the Company's Annual Report on Form 10-KSB.

Stock-Based  Compensation  - The Company  maintains a stock  option plan for key
officers, employees, and nonemployee directors. Had compensation expense for the
stock option plan been recognized in accordance  with the fair value  accounting
provisions of Statement of Financial  Accounting  Standards No. 123,  Accounting
for Stock-Based Compensation,  net income applicable to common stock, basic, and
diluted net income per common share would have been as follows:

<TABLE>
<CAPTION>
                                          Three Months Ended            Nine Months Ended
                                             September 30,                September 30,
                                          2004           2003           2004           2003
                                       -----------   -----------   -------------  --------------
<S>                                   <C>           <C>           <C>             <C>
Net income, as reported:               $   797,815   $   458,452   $   1,931,738   $   1,113,284

Less proforma expense related
  to stock options                          29,747        43,886          89,241         131,658
                                       -----------   -----------   -------------   -------------
Proforma net income                    $   768,068   $   414,566   $   1,842,497   $     981,626
                                       ===========   ===========   =============   =============

Basic net income per common share:
     As reported                       $      0.41   $      0.24   $        1.00   $        0.64
     Pro forma                                0.40          0.22            0.96            0.56

Diluted net income per common share:
     As reported                       $      0.38   $      0.23   $        0.93   $        0.59
     Pro forma                                0.37          0.20            0.89            0.52
</TABLE>

                                       7

<PAGE>

NOTE 2 - EARNINGS PER SHARE

The Company provides dual  presentation of Basic and Diluted earnings per share.
Basic  earnings per share  utilizes net income as reported as the  numerator and
the actual average shares  outstanding as the denominator.  Diluted earnings per
share  includes  any  dilutive  effects of options,  warrants,  and  convertible
securities.  For the three months ended September 30, 2004 and 2003, the diluted
number of shares  outstanding  from  employee  stock  options  was  155,817  and
151,338,  respectively.  For the nine-months  ended September 30, 2004 and 2003,
the diluted number of shares outstanding from employee stock options was 153,869
and 147,798, respectively.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available for sale securities. For the nine months ended September
30,  2004,  this  activity is shown under the  heading  Comprehensive  Income as
presented in the Consolidated  Statement of Changes in Stockholders' Equity. For
the  three  months  ended  September  30,  2004,  comprehensive  income  totaled
$802,587. For the three and nine-months ended September 30, 2003,  comprehensive
income totaled $455,167 and $1,116,931.

NOTE 4 - STOCK SPLIT

On February  24,  2004,  the Board of Directors  approved a  six-for-five  stock
split,  effected in the form of a 20 percent stock dividend to  stockholders  of
record  March  10,  2004,  payable  on March  31,  2004.  As a  result,  320,661
additional shares of the Company's stock were issued, common stock was increased
by $32,066, and surplus was decreased by $35,538. Fractional shares were paid in
cash. All average shares outstanding as of September 30, 2004, and all per share
amounts as of September 30, 2004, included in the financial statements are based
on the increased number of shares after giving  retroactive  effect to the stock
split effected in the form of a stock dividend.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

In December 2003, the Financial  Accounting  Standards  Board ("FASB")  issued a
revision to  Interpretation  46,  Consolidation  of Variable  Interest  Entities
("Interpretation"),  which  established  standards  for  identifying  a variable
interest  entity  ("VIE") and for  determining  under what  circumstances  a VIE
should be consolidated with its primary beneficiary. The Interpretation requires
consolidation  of  entities  in which an  enterprise  absorbs a majority  of the
entity's expected losses,  receives a majority of the entity's residual returns,
or both, as a result of ownership,  contractual or other financial  interests in
the entity. Prior to the interpretation, entities were generally consolidated by
an enterprise when it had a controlling  financial interest through ownership of
a majority  voting interest in the entity.  The adoption of this  Interpretation
did not have a material effect on the Company's financial position or results of
operations.

In December 2003,  the FASB revised FAS No. 132,  Employers'  Disclosures  about
Pension and Other Postretirement Benefit. This statement retains the disclosures
required by FAS No. 132,  which  standardized  the disclosure  requirements  for
pensions  and  other  postretirement  benefits  to the  extent  practicable  and
requires  additional  information on changes in the benefit obligations and fair
value of plan assets.  Additional disclosures include information describing the
types  of  plan  assets,   investment  strategy,   measurement   date(s),   plan
obligations,  cash flows, and components of net periodic benefit cost recognized
during interim periods.

                                       8

<PAGE>

This statement retains reduced  disclosure  requirements for nonpublic  entities
from FAS No. 132,  and it  includes  reduced  disclosure  for certain of the new
requirements.  This statement is effective for financial  statements with fiscal
years ending after December 15, 2003. The interim  disclosures  required by this
statement are effective for interim  periods  beginning after December 15, 2003.
The Company has adopted the revised disclosure provisions.

In March  2004,  the  Financial  Accounting  Standards  Board  ("FASB")  reached
consensus  on the  guidance  provided by  Emerging  Issues Task Force Issue 03-1
("EITF  03-1"),   The  Meaning  of   Other-Than-Temporary   Impairment  and  its
Application  to Certain  Investments.  The  guidance is  applicable  to debt and
equity  securities  that are within  the scope of FASB  Statement  of  Financial
Accounting Standard ("SFAS") No. 115, Accounting for Certain Investments In Debt
and Equity Securities and certain other investments. EITF 03-1 specifies that an
impairment would be considered  other-than-temporary unless (a) the investor has
the ability and intent to hold an  investment  for a  reasonable  period of time
sufficient  for the recovery of the fair value up to (or beyond) the cost of the
investment and (b) evidence indicating the cost of the investment is recoverable
within a reasonable period of time outweighs evidence to the contrary. EITF 03-1
cost method  investment and disclosure  provisions  were effective for reporting
periods ending after June 15, 2004. The measurement  and recognition  provisions
relating to debt and equity  securities  have been delayed until the FASB issues
additional  guidance.  The Company adopted cost method investment and disclosure
provisions  of EITF 03-1 on June 30, 2004.  The adoption did not have a material
impact on the  consolidated  financial  statements,  results  of  operations  or
liquidity of the Company.

                       MANAGEMENT DISCUSSION AND ANALYSIS

                                     GENERAL

The Private  Securities  Litigation Act of 1995 contains safe harbor  provisions
regarding forward-looking  statements.  When used in this discussion,  the words
"believes,"  "anticipates,"  "contemplates,"  "expects," and similar expressions
are intended to identify forward-looking statements. Such statements are subject
to certain risks and  uncertainties  which could cause actual  results to differ
materially from those projected.  Those risks and uncertainties include, but are
not limited  to,  changes in interest  rates,  the ability to control  costs and
expenses, and general economic conditions.

Overview

Nittany  Financial  Corp.  ("Nittany")  is  a  unitary  thrift  holding  company
organized in 1997 for the purpose of  establishing  a de novo  community bank in
State College, Pennsylvania. Nittany Bank (the "Bank") commenced operations as a
wholly-owned  FDIC-insured federal savings bank subsidiary of Nittany on October
26, 1998. At September  30, 2004,  the business  operations of Nittany  included
three operating subsidiaries (collectively defined as the "Company",  unless the
context indicates otherwise), as follows:

                                       9

<PAGE>

o    Nittany  Bank   commenced   banking   operations   in  October  1998  as  a
     federally-insured  federal  savings bank with two offices in State College,
     Pennsylvania. Two additional offices were opened in State College in August
     2000 and  January  2002.  A lease was  signed  in June 2004 for a  historic
     property in downtown Bellefonte,  Pennsylvania,  a neighboring community to
     State  College,  which is expected to serve as the fifth  branch early next
     year. The Bank formed a Delaware  investment company called FTF Investments
     Inc. during the first quarter of 2004 to aid in asset utilization.

o    Nittany Asset  Management,  Inc. was formed in May 1999  primarily to offer
     investment  products and services to retail  customers.  The  subsidiary is
     headquartered at 2541 East College Avenue, State College, Pennsylvania.

o    On January 1, 2003,  Nittany  Financial Corp.  acquired Vantage  Investment
     Advisors, LLC ("Vantage"). Vantage is a registered investment advisor which
     currently  manages  investment  assets  in  excess  of $250  million.  This
     subsidiary  is also  headquartered  at 2541  East  College  Avenue in State
     College.

Our retail business is conducted  principally through Nittany Bank. Nittany Bank
provides a wide range of banking  services with an emphasis on  residential  and
commercial real estate lending, consumer lending,  commercial lending and retail
deposits.  At September  30, 2004, we had  consolidated  assets of $295 million,
loans receivable (net of allowance for loan losses) of $226 million, deposits of
$247 million,  and  stockholders'  equity of $16.8  million.  Net income for the
quarter  ended  September  30, 2004  increased  $340,000 to $798,000 or $.38 per
diluted  share from  $458,000 or $.23 per  diluted  share for the same period in
2003.  This included an income tax expense of $427,000 for the quarter  compared
to $206,000 for the 2003 quarter.


COMPARISON OF FINANCIAL CONDITION

Total assets  increased  $46,568,000 to  $295,155,000 at September 30, 2004 from
$248,587,000  at December 31, 2003.  Strong growth in residential and commercial
real estate loans resulted in an increase in net loans receivable of $43,720,000
which were  primarily  funded  through  growth in Nittany  Savings  deposits and
Federal  Home Loan Bank  borrowings.  Total  assets  included  $1.8  million  of
intangible  assets from the  acquisition of Vantage and the Bank's original core
deposits. These intangibles are not currently being amortized.

Cash and cash equivalents  decreased  $523,000 at September 30, 2004 as compared
to December 31, 2003.  This  decrease  resulted from growth in loan demand which
exceeded  deposits  during the quarter.  Management  believes that the liquidity
needs of the  Company  are  satisfied  by the  current  balance of cash and cash
equivalents, readily available access to traditional funding sources, FHLB short
term  advances,  and the portion of the  investment  and loan  portfolios  which
mature  within one year.  These sources of funds will enable the Company to meet
cash obligations and off-balance sheet commitments as they come due.

                                       10

<PAGE>

Investment  securities available for sale decreased to $774,000 at September 30,
2004 from  $4,074,000  at December 31, 2003 and  investment  securities  held to
maturity  increased to  $44,912,000  at September 30, 2004 from  $39,246,000  at
December 31, 2003.  The increase in the investment  securities  held to maturity
portfolio  resulted  primarily from the  investment of savings  deposits not yet
needed to fund loan growth. Most securities  purchased during the year have been
classified as held to maturity.

Net loans receivable increased $43,719,000 to $226,462,000 at September 30, 2004
from  $182,743,000  at December 31, 2003.  The increase in net loans  receivable
resulted from the strong real estate market in the  Company's  market area,  and
low market interest rates. At September 30, 2004, one to four family residential
mortgage  balances grew by  $27,248,000 to  $151,595,000  from  $124,347,000  at
December 31, 2003 and commercial  real estate loans grew by  $10,761,000  during
the same time period. Management attributes the increases in lending balances to
continued customer  referrals,  the economic climate within the market area, and
competitive  rates.  As of  September  30,  2004,  the  Company  had  additional
commitments to fund loan demand of $11,091,000 of which approximately $4,293,000
relates to commercial customers.

At September  30, 2004,  the Company's  allowance  for loan losses  increased by
$370,000 to  $2,107,000  from  $1,737,000  at December  31,  2004.  The increase
resulted  from an  additional  loan loss  provision  of $442,000  needed for the
growth in loans  during the  quarter  which were  offset by  charge-offs  net of
recoveries.

The additions to the allowance for loan losses are based upon a careful analysis
by  management  of loan data.  Because the Company has incurred very little loan
losses in its five-year  history,  management must base its  determination  upon
such factors as the Company's  volume and the type of loans that it  originates,
the amount and trends  relating  to its  delinquent  and  non-performing  loans,
regulatory  policies,  general economic conditions and other factors relating to
the collectibility of loans in its portfolio. Although the Company maintains its
allowance for loan losses at a level that it considers to be adequate to provide
for the inherent risk of loss in its loan portfolio at September 30, 2004, there
can be no  assurance  that  additional  losses  will not be  incurred  in future
periods.


The table below outlines the Company's past due loans as of September 30, 2004:

-------------- ------------ -------------- ----------------- -----------------
                                           > 90 Days Past    > 90 Days Past
                              Total Loan      Due - Number     Due - Balance
                # of Loans      Balance          of Loans         of Loans
-------------- ------------ -------------- ----------------- ------------------
Personal Loans         351     $8,215,000             1            $8,898
-------------- ------------ -------------- ----------------- ------------------
Credit
Line Loans             447     $5,553,000             0                 0
-------------- ------------ -------------- ----------------- ------------------
Business Loans         172    $11,798,000             0                 0
-------------- ------------ -------------- ----------------- ------------------
Real
Estate Loans         1,223   $203,003,000             0                 0
-------------- ------------ -------------- ----------------- ------------------
      Total          2,193   $228,569,000             1            $8,898
-------------- ------------ -------------- ----------------- ------------------

                                       11

<PAGE>

Total deposits increased by $25,666,000 to $246,559,000 at September 30, 2004 as
compared to  $220,893,000  at December 31,  2003.  The Nittany  Savings  deposit
account comprises approximately 63% of total deposits at September 30, 2004. The
Nittany  Savings  deposit is a competitive  deposit account with a tiered annual
interest rate of 2.05% for balances over $2,500 for the current  period.  Due to
the continuation of relatively low short-term interest rates during the quarter,
the Nittany Savings deposit has remained  popular with local  depositors and has
helped to increase  our  deposit  base.  Non-interest  bearing  demand  deposits
increased to $10,212,000  at September 30, 2004 from  $7,880,000 at December 31,
2003 as all our checking and money market accounts grew at a steady pace.

Stockholder's  equity  increased  to  $16,760,000  at  September  30,  2004 from
$14,828,000  at December 31, 2003 because of net income of $1,932,000  and minor
fluctuations in the market value of available for sale securities.

Average Balance Sheets for September 30, 2004

The  following  tables set forth certain  information  relating to the Company's
quarterly and year-to-date  average balance sheet and reflects the average yield
on assets and average  cost of  liabilities  for the periods  indicated  and the
average  yields  earned and rates  paid.  Such  yields and costs are  derived by
dividing  income or expense  by the  average  balance of assets or  liabilities,
respectively,  for the periods  presented.  Average  balances  are derived  from
average daily balances.

The yield on earning assets and the net interest margin are presented on a fully
taxable-equivalent (FTE) and annualized basis. The FTE basis adjusts for the tax
benefit of income on certain  tax-exempt loans and investments using the federal
statutory tax rate of 34% for each period  presented.  The Company believes this
measure to be the  preferred  industry  measurement  of net interest  income and
provides relevant comparison between taxable and non-taxable amounts.

                                       12

<PAGE>

a.   Nittany   Financial   Quarterly  Average  Balance  Sheet  and  Supplemental
     Information:

<TABLE>
<CAPTION>
                                                                              For the three months ended
                                                ---------------------------------------------------------------------------------
                                                              9/30/04                                    9/30/03
                                                -----------------------------------------      ----------------------------------
                                                                             (4)                                           (4)
                                                  Average    Annualized    Average              Average                  Average
                                                  Balance   Interest (1)  Yield/Cost            Balance  Interest (1)  Yield/Cost
                                                  -------   ------------  ----------            -------  ------------  ----------
                                                                             (Dollars in thousands)
<S>                                            <C>            <C>          <C>               <C>           <C>           <C>
Interest-earning assets:
  Loans recievable                               $222,148       $3,267       5.88%             $166,200      $2,601        6.26%
  Investments securities                           46,768          372       4.27%               55,976         328        2.63%
  Interest-bearing dep - other banks               10,355           24       0.93%                7,743           9        0.46%
                                                 --------       ------       ----              --------      ------        ----
Total interest-earning assets                     279,271        3,663       5.43%              229,920       2,938        5.18%
                                                                -------                                      -------
Noninterest-earning assets                          6,413                                         1,679
Allowance for loan losses                          (2,029)                                       (1,522)
                                                  -------                                      --------
Total assets                                      283,655                                      $230,077
                                                  =======                                      ========
Interest-bearing liabilities:
  Interest - bearing demand deposits              $21,652           47       0.87%              $18,753          37        0.80%
  Money market deposits                            37,679          196       2.08%              $35,120         194        2.21%
  Savings deposits                                155,610          790       2.03%              115,886         646        2.23%
  Certificates of deposit                          21,051          153       2.91%               23,516         174        2.97%
  Advances from FHLB                               20,366          179       3.52%               12,659         147        4.65%
                                                 --------       ------       ----              --------      ------        ----
Total interest-bearing liabilities                256,358        1,365       2.13%              205,933       1,199        2.33%
                                                 --------       ------                         --------      ------
Noninterest-bearing liabilities
  Demand deposits                                  10,022                                         6,962
  Other liabilities                                   705                                         3,250
Stockholders' equity                               16,569                                        13,933
                                                 --------                                      --------
Total liabilities and stockholders' equity       $283,655                                      $230,077
                                                 ========                                      ========
Net interest income                                             $2,298                                       $1,740
                                                                ======                                       ======
Interest rate spread (2)                                                     3.30%                                         2.85%
Net yield on interest-earning assets (3)                                     3.47%                                         3.10%
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                     108.94%                                       111.65%
</TABLE>
---------------
(1)  Interest income and expense are for the period that banking ooperations wer
     in effect.
(2)  Interest rate spread  represents  the  difference  between the avg yield on
     interest-earning assets and the avg cost of interest-bearing liabilities.
(3)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.
(4)  Average yields are computed using  annualized  interest  income and expense
     for the periods.

                                       12

<PAGE>

b.   Nittany  Financial  Year-To-Date  Average  Balance  Sheet and  Supplemental
     Information:

<TABLE>
<CAPTION>
                                                                   For the nine month period ended
                                                ---------------------------------------------------------------------------
                                                                9/30/04                             9/30/03
                                                -----------------------------------  --------------------------------------
                                                                             (4)                                    (4)
                                                 Average   Annualized      Average       Average                  Average
                                                 Balance  Interest (1)   Yield/Cost      Balance  Interest (1)   Yield/Cost
                                                 -------  ------------   ----------      -------  ------------   ----------
                                                              (Dollars in thousands)
<S>                                           <C>           <C>            <C>        <C>           <C>           <C>
Interest-earning assets:
  Loans recievable                              $205,669     4 9,034         5.86%      $145,605      $7,012        6.42%
  Investments securities                          47,818       1,115         3.64%        48,345       1,074        3.26%
  Interest-bearing dep - other banks               9,776          50         0.68%         8,960          49        0.73%
                                                --------     -------       ------       --------      ------      --------
Total interest-earning assets                    263,264      10,199         5.26%       202,910       8,135        5.42%
                                                             -------                                  ------
Noninterest-earning assets                         7,193                                   8,867
Allowance for loan losses                         (1,886)                                 (1,347)
                                                --------                                --------
Total assets                                    $268,570                                $210,430
                                                ========                                ========
Interest-bearing liabilities:
  Interest - bearing demand deposits             $20,489         131         0.85%       $17,526         127        0.96%
  Money market deposits                          $35,910         560         2.08%        33,265         614        2.46%
  Savings deposits                               150,639       2,323         2.06%       104,053       1,887        2.42%
  Certificates of deposit                         21,454         478         2.97%        22,002         544        3.29%
  Advances from FHLB                              14,566         461         4.22%         9,276         434        6.23%
                                                --------      ------       ------       --------      ------      --------
Total interest-bearing liabilities               243,059       3,953         2.17%       186,123       3,605        2.58%
                                                --------      ------                    --------      ------
Noninterest-bearing liabilities
  Demand deposits                                  8,939                                   6,738
  Other liabilities                                  719                                   5,519
Stockholders' equity                              15,854                                  12,050
                                                --------                                --------
Total liabilities and stockholders' equity      $268,570                                $210,430
                                                ========                                ========
Net interest income                                          $ 6,246                                  $4,530
                                                             =======                                  ======
Interest rate spread (2)                                                     3.09%                                  2.83%
Net yield on interest-earning assets (3)                                     3.26%                                  3.05%
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                     108.31%                                109.02%
</TABLE>

--------------------
(1)  Interest income and expense are for the period that banking  operations wer
     in effect.
(2)  Interest rate spread  represents  the  difference  between the avg yield on
     interest-earning assets and the avg cost of interest-bearing liabilities.
(3)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.
(4)  Average yields are computed using  annualized  interest  income and expense
     for the periods.


RESULTS OF OPERATIONS

Net income was  $798,000  for the three months  ended  September  30,  2004,  an
increase of $340,000 as compared to the same period ended 2003.  The increase is
primarily  due to  increases in net interest  income and  noninterest  income of
$559,000  and  $458,000,   respectively,  which  were  offset  by  increases  in
noninterest expense and taxes. Basic and diluted earnings per share increased to
$.41 and  $.38  per  share,  respectively  for the  three  months  period  ended
September  30, 2004 compared to $.24 and $.23 per share,  respectively,  for the
three month  period  ended  September  30,  2003.  All "per share" data has been
adjusted for the 20% stock dividend issued in March 2004.

Net income for the nine month period ended  September 30, 2004 was $1,932,000 as
compared to $1,113,300 for the same period in 2003.  Basic and diluted  earnings
per share  increased  to $1.00  and $.93 per  share,  respectively  for the nine
months  period  ended  September  30, 2004  compared to $.64 and $.59 per share,
respectively,  for the nine month period ended  September 30, 2003.

                                       13

<PAGE>

Net interest income for the three months ended September 30, 2004 was $2,299,000
as  compared to  $1,740,000  for the same period  ended  2003.  Interest  income
increased  $725,000  for 2004 as  compared  to the  prior  year  period  and was
influenced  mainly  by  increases  in  interest  earned on loans  receivable  of
$666,000.  The  increase  in  interest  income was the result of an  increase of
$49,351,000  in average  balances  of  interest-earning  assets  that  primarily
resulted from a $55,948,000 increase in the average balance of loans receivable.
The yield on interest  earning  assets  increased  to 5.43% for the three months
ended  September  30,  2004 from  5.18% for the same  period  ended  2003 due to
increasing  interest rates during the quarter.  Although there were  significant
increases in residential real estate lending,  the yield on the loans receivable
decreased  38 basis  points in 2004 as compared to 2003.  Year to date,  the net
interest  income was  $6,246,000 as compared to  $4,530,000  for the same period
ended 2003, as the $60,354,000  increase in average balance of interest  earning
assets was offset by a decrease in yield on these  assets of 16 basis points and
a decrease in the cost of interest bearing liabilities of 41 basis points.

Interest expense  increased by $166,000 for the three months ended September 30,
2004 as  compared to the prior year period and was  influenced  primarily  by an
increase in interest  expense on deposits as increases in deposit  balances were
essentially  offset by lower rates. This increase was primarily  attributable to
an increase in the average balance of interest-bearing  deposits of $42,718,000.
The average  balances of savings  deposit  accounts  increased  $39,724,000 as a
result of customer  service,  referrals,  and marketing  efforts and competitive
rates of the Nittany Savings  product.  The cost of funds decreased to 2.13% for
the three month period ended  September  30, 2004 from 2.33% for the same period
ended 2003 as a result of a reduction in market interest rate levels, a decrease
in the rates paid on  deposits,  and a greater use of our Federal Home Loan Bank
overnight  borrowing  capabilities.  Interest expense for the nine-month  period
ended  September 30, 2004  increased by $348,000 as lower rates were offset by a
$46,586,000 increase in the average balance in the Nittany Savings product.

As a  result  of  decreases  in the  average  cost  of  total  interest  bearing
liabilities,  the Bank's  quarterly  net interest  margin  increased by 37 basis
points to 3.47% from 3.10% at  September  30,  2003,  a period of interest  rate
volatility.  Year to date,  the net  interest  margin has  increased by 21 basis
points.

Total noninterest income for the three months ended September 30, 2004 increased
$458,000 as compared to the same period ended 2003. Noninterest income items are
primarily  comprised of service  charges and fees on deposit  account  activity,
overdraft  privilege fees,  along with fee income derived from asset  management
services and related  commissions.  Service fees on deposit  accounts  increased
$53,000 and have  progressively  increased  during each quarter as the number of
accounts and volume of related  transactions have increased.  Additionally,  for
the three-months ended September 30, 2004,  commissions and management fees from
Vantage and Nittany Asset Management  increased by $382,000 over the same period
of  2003.  Year  to  date,  noninterest  income  increased  to  $2,386,000  from
$1,222,000  for the same period ended 2003 due primarily to the growth in assets
under  management at Vantage as well as increased  fees on deposit  accounts and
the  overdraft  privilege  product.  Also  included in year to date  noninterest
income is a capital gain of approximately  $33,000 on an equity security sold at
the holding company.

                                       14

<PAGE>

Total  noninterest  expenses  increased  $550,000  for the  three  months  ended
September 30, 2004,  as compared to the same period ended 2003.  The increase in
total  noninterest  expenses for the current period was primarily related to the
larger  organization  that resulted from the acquisition of Vantage last year as
well  as the  related  marketing  efforts  to  increase  visibility  within  the
Company's  market area,  annual merit  increases and bonuses given to employees,
and data processing  expenses.  Vantage paid $382,000 of independent  investment
solicitors'  fees for the  quarter as compared to $90,000 for the same period in
2003 due to the growth in assets  under  management.  Year to date,  noninterest
expenses  increased to $5,197,000 from $3,576,000 for the same period ended 2003
primarily  because of the increase of $561,000 in compensation  related expenses
and the $735,000 increase in commission expense, mainly at Vantage.

Income tax  expense of $427,000  was  recognized  in the third  quarter of 2004,
compared  to $206,000  for the same period of 2003.  Year to date the income tax
expense  increased from $554,000 for the nine months ended September 30, 2003 to
$1,061,000  for the same period in 2004.  All of the  Company's  operating  loss
carry-forwards  were  fully  utilized  during  the 2003 tax year.  However,  the
purchase of  approximately  $15 million in high quality  municipal bonds in 2003
and 2004, and the formation of a Delaware  investment company earlier this year,
have helped to reduce our effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity  management for Nittany is measured and monitored on both a short- and
long-term basis,  allowing management to better understand and react to emerging
balance  sheet trends.  After  assessing  actual and projected  cash flow needs,
management seeks to obtain funding at the most economical cost to Nittany.  Both
short- and long-term  liquidity  needs are addressed by maturities,  repayments,
and sales of investments securities, and loan repayments and maturities. The use
of these  resources,  in  conjunction  with  access to credit,  provide the core
ingredients for satisfying depositor, borrower, and creditor needs.

Nittany's  liquid assets  consist of cash and cash  equivalents,  and investment
securities  classified  as  available  for sale.  The  level of these  assets is
dependent on Nittany's operating, investing, and financing activities during any
given period.  At September 30, 2004,  cash and cash  equivalents  totaled $14.4
million  or 4.9% of total  assets  while  investment  securities  classified  as
available  for sale totaled  $774,000.  Management  believes  that the liquidity
needs  of  Nittany  are  satisfied  by the  current  balance  of cash  and  cash
equivalents,  readily  available  access to traditional  funding  sources,  FHLB
advances,  and the portion of the  investment  and loan  portfolios  that mature
within  one year.  These  sources  of funds  will  enable  Nittany  to meet cash
obligations and off-balance sheet commitments as they come due.

Operating activities provided net cash of $2.9 million for the nine month period
ended September 30, 2004, generated principally from net income of $1.9 million.
Also  contributing  to operating  activities  was  provision for loan losses and
depreciation,   amortization,   and   accretion   of  $442,000   and   $541,000,
respectively.

Investing  activities  consist primarily of loan originations and repayments and
investment  purchases and maturities.  These cash usages primarily  consisted of
loan originations of $44.2 million for the nine months ended September 30, 2004,
as well as  investment  purchases  of $42.3  million  for the same time  period.
Partially  offsetting  the usage of  investment  activities  is $39.6 million of
proceeds from  investment  security  maturities and repayments for the same time
period.

                                       15

<PAGE>

Financing  activities  consist of the  solicitation  and  repayment  of customer
deposits, borrowings and repayments, and proceeds from the sale of common stock.
During the nine month period  ending  September  30, 2004,  net cash provided by
financing activities totaled $44.5 million, principally derived from an increase
in  deposit  accounts  in  general,  and  savings  deposits  specifically.  Also
contributing to this influx of cash was proceeds from other  borrowings of $14.6
million.

Nittany's  primary source of capital has been retained  earnings.  Historically,
Nittany  has  generated  net  retained  income  to  support  normal  growth  and
expansion. Management has developed a capital planning policy to not only ensure
compliance  with  regulations,  but also to ensure  capital  adequacy for future
expansion.

Management  monitors both the Company's and the Bank's total risk-based,  Tier I
risk-based  and  tangible  capital  ratios  in order to assess  compliance  with
regulatory  guidelines.  At September  30,  2004,  both the Company and the Bank
exceeded the minimum  risk-based and tangible  capital ratio  requirements.  The
Company's and the Bank's  risk-based,  Tier I risk-based,  and tangible  capital
ratios are 11.3%, 9.9%, 5.1% and 13.5%, 12.1%, 6.2%, respectively,  at September
30, 2004.

Item 3.  Controls and Procedures

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

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


PART II - OTHER INFORMATION

Item 1. Legal Proceedings

        None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

        None

Item 3. Defaults by the Company on its senior securities

        None

                                       16

<PAGE>

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

        None

Item 5. Other information

        None

Item 6. Exhibits

        The  following  exhibits are  included in this  Report  or  incorporated
        herein by reference:
<TABLE>
<CAPTION>
        <S>          <C>
               3(i)    Amended Articles of Incorporation of Nittany Financial Corp. *
               3(ii)   Bylaws of Nittany Financial Corp. *
               4       Specimen Stock Certificate of Nittany Financial Corp. *
               10.1    Employment  Agreement between the Bank and David Z. Richards *
               10.2    Nittany Financial Corp. 1998 Stock Option Plan **
               10.3    Supplemental Executive Retirement Plan ***
               31.1    Certification Pursuant to Section 302 of the Securities Exchange Act of 1934 - David Z. Richards
               31.2    Certification Pursuant to Section 302 of the Securities Exchange Act of 1934 - Gary M. Bradley
               32.1    Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted Pursuant to Section 906 of
                       the Sarbanes-Oxley Act 0f 2002.
               99.1    Independent Accountants Report
</TABLE>

*    Incorporated  by  reference  to the  identically  numbered  exhibit  to the
     registration statement on Form SB-2 (File No. 333-57277) declared effective
     by the SEC on July 31, 1998.

**   Incorporated  by  reference  to the  identically  numbered  exhibit  to the
     December 31, 1999 Form 10-KSB filed with the SEC on March 28, 2000.

***  Incorporated  by  reference  to the  identically  numbered  exhibit  to the
     December 31, 2003 Form 10-KSB filed with the SEC on March 30, 2004.


                                       17

<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:    November 12, 2004      By:  /s/ David Z. Richards
                                     -------------------------------------------
                                     David Z. Richards
                                     President and Chief Executive Officer



Date:    November 12, 2004      By:  /s/ Gary M. Bradley
                                     -------------------------------------------
                                     Gary M. Bradley
                                     Vice President and Chief Accounting Officer

                                       18