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

                                  FORM 10 - QSB

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

      For the quarterly period ended June 30, 2005

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


                  For the transition period from ______ to ______

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

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

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

            2541 E. College Avenue, State College, Pennsylvania 16801
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                (814) 238 - 5724
--------------------------------------------------------------------------------
              (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, 2005:  2,133,649

<PAGE>


                             NITTANY FINANCIAL CORP.

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                       Number
                                                                                                       ------

PART I  -  FINANCIAL INFORMATION

<S>                                                                                                   <C>
    Item 1.       Financial Statements

                      Consolidated Balance Sheet (Unaudited) as of                                       3
                          June 30, 2005 and December 31, 2004

                      Consolidated Statement of Income (Unaudited)
                          for the Three and Six Months ended June 30, 2005 and 2004                      4

                      Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
                          for the Six Months ended June 30, 2005                                         5

                      Consolidated Statement of Cash Flows (Unaudited)
                          for the Six Months ended June 30, 2005 and 2004                                6

                      Notes to Unaudited Consolidated Financial Statements                               7

    Item 2.       Management's Discussion and Analysis of
                          Financial Condition and Results of Operations                                  13

    Item 3.       Controls and Procedures                                                                21

PART II  -  OTHER INFORMATION

    Item 1.       Legal Proceedings                                                                      21

    Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds                            21

    Item 3.       Defaults Upon Senior Securities                                                        21

    Item 4.       Submission of Matters to a Vote of Security Holders                                    21

    Item 5.       Other Information                                                                      21

    Item 6.       Exhibits and Reports on Form 8 - K                                                     22

SIGNATURES                                                                                               23

CERTIFICATIONS
</TABLE>


<PAGE>
                             NITTANY FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                      June 30,       December 31,
                                                                        2005             2004
                                                                    -------------    -------------
                                                                             (unaudited)
<S>                                                               <C>              <C>
ASSETS
     Cash and due from banks                                        $   1,128,445    $   1,094,763
     Interest-bearing deposits with other banks                        10,328,376       14,487,813
                                                                    -------------    -------------
     Cash and cash equivalents                                         11,456,821       15,582,576
     Investment securities available for sale                           1,836,667        2,084,223
     Investment securities held to maturity (estimated
       market value of $41,256,706 and $37,502,230)                    41,317,729       37,491,341
     Loans receivable (net of allowance for loan losses
       of $2,377,483 and $2,198,235)                                  260,249,369      235,428,568
     Premises and equipment                                             3,935,558        2,609,528
     Federal Home Loan Bank stock                                       3,652,600        2,066,100
     Intangible assets                                                  1,763,231        1,763,231
     Accrued interest and other assets                                  2,304,863        2,210,133
                                                                    -------------    -------------

             TOTAL ASSETS                                           $ 326,516,838    $ 299,235,700
                                                                    =============    =============

LIABILITIES
     Deposits:
         Noninterest-bearing demand                                 $  12,377,899    $  10,668,777
         Interest-bearing demand                                       28,776,001       25,614,681
         Money market                                                  25,267,055       43,191,121
         Savings                                                      138,851,337      157,200,274
         Time                                                          36,807,492       21,596,027
                                                                    -------------    -------------
            Total deposits                                            242,079,784      258,270,880
     Short-term borrowings                                             54,437,108       14,838,231
     Other borrowings                                                   5,063,168        7,180,612
     Accrued interest payable and other liabilities                     1,331,451        1,279,653
                                                                    -------------    -------------

             TOTAL LIABILITIES                                        302,911,511      281,569,376
                                                                    -------------    -------------

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, 2,113,738 and 1,930,794 issued and outstanding         211,374          193,079
     Additional paid-in capital                                        18,873,040       14,339,979
     Retained earnings                                                  4,537,865        3,139,165
     Accumulated other comprehensive loss                                 (16,952)          (5,899)
                                                                    -------------    -------------

             TOTAL STOCKHOLDERS' EQUITY                                23,605,327       17,666,324
                                                                    -------------    -------------

             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 326,516,838    $ 299,235,700
                                                                    =============    =============
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       3

<PAGE>
                             NITTANY FINANCIAL CORP.
                        CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
                                                  Three-months Ended June 30,    Six-months Ended June 30,
                                                     2005            2004            2005         2004
                                                  ----------      ----------      ----------   ----------
                                                          (unaudited)                    (unaudited)
<S>                                               <C>             <C>             <C>          <C>
INTEREST AND DIVIDEND INCOME
     Loans, including fees                        $3,792,599      $3,009,369      $7,320,504   $5,767,209
     Interest-bearing deposits with other banks       22,945           9,840         103,106       25,206
     Investment securities                           454,892         351,957         837,102      743,016
                                                  ----------      ----------      ----------   ----------
             Total interest and dividend income    4,270,436       3,371,166       8,260,712    6,535,431
                                                  ----------      ----------      ----------   ----------
INTEREST EXPENSE
     Deposits                                      1,254,228       1,146,837       2,511,171    2,306,537
     Short-term borrowings                           331,406          37,939         427,276       63,105
     Other borrowings                                 54,905         100,598         190,723      219,105
                                                  ----------      ----------      ----------   ----------
             Total interest expense                1,640,539       1,285,374       3,129,170    2,588,747
                                                  ----------      ----------      ----------   ----------

NET INTEREST INCOME                                2,629,897       2,085,792       5,131,542    3,946,684

Provision for loan losses                            168,000         194,000         230,000      304,000
                                                  ----------      ----------      ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                     2,461,897       1,891,792       4,901,542    3,642,684
                                                  ----------      ----------      ----------   ----------

NONINTEREST INCOME
     Service fees on deposit accounts                176,679         174,307         341,246      320,368
     Asset management fees and commissions           725,882         592,471       1,423,652    1,159,216
     Secondary market fees                            75,675          39,119         118,918       47,387
     Other                                            36,273           5,417          57,083        7,279
                                                  ----------      ----------      ----------   ----------
             Total noninterest income              1,014,509         811,314       1,940,899    1,534,250
                                                  ----------      ----------      ----------   ----------

NONINTEREST EXPENSE
     Compensation and employee benefits              674,347         745,230       1,455,188    1,437,995
     Occupancy and equipment                         199,562         177,793         376,436      354,129
     Professional fees                                63,743          51,349         126,764       94,798
     Data processing fees                            141,881         111,164         273,443      230,171
     Supplies, printing, and postage                  33,681          31,938          83,982       64,931
     Advertising                                      51,771          37,723         114,353       78,128
     ATM processing fees                              36,906          34,982          73,358       69,853
     Solicitor fees                                  443,584         361,331         873,157      738,837
     Other                                           253,560         174,724         490,596      340,169
                                                  ----------      ----------      ----------   ----------
             Total noninterest expense             1,899,035       1,726,234       3,867,277    3,409,011
                                                  ----------      ----------      ----------   ----------
Income before income taxes                         1,577,371         976,872       2,975,164    1,767,923
Income taxes                                         559,030         339,000       1,048,030      634,000
                                                  ----------      ----------      ----------   ----------

NET INCOME                                        $1,018,341      $  637,872      $1,927,134   $1,133,923
                                                  ==========      ==========      ==========   ==========

DIVIDENDS PER SHARE                               $     0.25             N/A      $     0.25          N/A
EARNINGS PER SHARE
     Basic                                        $     0.48       $    0.33      $     0.94   $    0.59
     Diluted                                            0.45            0.31            0.87        0.55
WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic                                         2,111,729       1,924,621       2,055,054   1,924,621
     Diluted                                       2,267,408       2,080,803       2,211,381   2,077,516
</TABLE>
     See accompanying notes to 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, 2004               $     193,079   $ 14,339,979   $  3,139,165    $     (5,899)  $ 17,666,324

Net income                                                                 1,927,134                      1,927,134   $   1,927,134
Other comprehensive income:
    Unrealized loss on available
    for sale securities
    net of tax benefit of $5,692                                                             (11,053)       (11,053)        (11,053)
                                                                                                                      --------------
Comprehensive income                                                                                                  $   1,916,081
                                                                                                                      ==============
Cash dividend ($0.25 per share)                                             (528,434)                      (528,434)
Stock Offering - 180,000 shares
    at $26 per share
    (net of offering expenses)                  18,000      4,516,163                                     4,534,163
Exercise of stock options                          295         16,898                                        17,193
                                         --------------  -------------  -------------   -------------  -------------

Balance, June 30, 2005                   $     211,374   $ 18,873,040   $  4,537,865    $    (16,952)  $ 23,605,327
                                         ==============  =============  =============   =============  =============

</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       5


<PAGE>
                             NITTANY FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Six-months ended June 30,
                                                                       2005            2004
                                                                   ------------    ------------
                                                                              (unaudited)
<S>                                                              <C>             <C>
OPERATING ACTIVITIES
     Net income                                                    $  1,927,134    $  1,133,923
     Adjustments to reconcile net income to net cash
       provided by (used for) operating activities:
         Provision for loan losses                                      230,000         304,000
         Depreciation, amortization, and accretion, net                 252,562         389,880
         Increase in accrued interest receivable                        (88,736)        (92,398)
         Increase in accrued interest payable                           293,758           3,577
         Other, net                                                    (242,262)        276,734
                                                                   ------------    ------------
         Net cash provided by operating activities                    2,372,456       2,015,716
                                                                   ------------    ------------

INVESTING ACTIVITIES
     Investment securities available for sale:
         Purchases                                                           --         (80,881)
         Proceeds from principal repayments and maturities              227,803       1,674,415
     Investment securities held to maturity:
         Purchases                                                  (10,128,113)    (37,198,347)
         Proceeds from principal repayments and maturities            6,180,205      34,272,474
     Net increase in loans receivable                               (25,041,667)    (31,168,568)
     Purchase of FHLB stock                                          (2,560,600)       (597,400)
     Proceeds from sale of FHLB stock                                   974,100         184,700
     Purchase of premises and equipment                              (1,463,198)        (81,209)
                                                                   ------------    ------------
         Net cash used for investing activities                     (31,811,470)    (32,994,816)
                                                                   ------------    ------------

FINANCING ACTIVITIES
     Net increase (decrease) in deposits                            (16,191,096)     22,222,012
     Net increase in short-term borrowings                           39,598,877       4,681,745
     Proceeds from other borrowings                                          --       1,350,000
     Repayment of other borrowings                                   (2,117,444)       (110,391)
     Proceeds from the sale of common stock                           4,534,163              --
     Proceeds from exercise of stock options                             17,193              --
     Cash dividends paid                                               (528,434)             --
     Cash paid in lieu of fractional shares                                  --          (3,472)
                                                                   ------------    ------------
         Net cash provided by financing activities                   25,313,259      28,139,894
                                                                   ------------    ------------

         Increase in cash and cash equivalents                       (4,125,755)     (2,839,206)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                     15,582,576      14,953,286
                                                                   ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                         $ 11,456,821    $ 12,114,080
                                                                   ============    ============
SUPPLEMENTAL CASH FLOW DISCLOSURE Cash paid during the year for:
         Interest on deposits and borrowings                       $  2,835,412    $  2,585,170
         Income taxes                                                 1,180,000         659,000
</TABLE>
     See accompanying notes to unaudited consolidated financial statements.

                                       6

<PAGE>
                             NITTANY FINANCIAL CORP.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of Nittany Financial Corp. (the "Company")
includes its wholly-owned subsidiaries, Nittany Bank (the "Bank"), 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 six  months  ended  June 30,  2005  are not  necessarily
indicative of the results to be expected for the fiscal year ended  December 31,
2005 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, 2004,  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         Six Months Ended
                                                June 30,                  June 30,
                                            2005         2004         2005         2004
                                         ----------   ----------   ----------   ----------

<S>                                    <C>          <C>          <C>          <C>
Net income, as reported:                 $1,018,341   $  637,872   $1,927,134   $1,133,923

Less proforma expense related
  to stock options                           13,855       29,747       27,710       59,494

                                         ----------   ----------   ----------   ----------
Proforma net income                      $1,004,486   $  608,125   $1,899,424   $1,074,429
                                         ==========   ==========   ==========   ==========


Basic net income per common share:
     As reported                         $     0.48   $     0.33   $     0.94   $     0.59
     Pro forma                                 0.48         0.32         0.92         0.56
Diluted net income per common share:
     As reported                         $     0.45   $     0.31   $     0.87   $     0.55
     Pro forma                                 0.44         0.29         0.86         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 June 30,  2005 and 2004,  the  diluted
number of shares  outstanding  from  employee  stock  options  was  155,679  and
156,182,  respectively.  For the six months  ended June 30,  2005 and 2004,  the
diluted number of shares outstanding from employee stock options was 156,327 and
152,895, respectively.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available for sale  securities.  For the six months ended June 30,
2005, this activity is shown under the heading Comprehensive Income as presented
in the Consolidated  Statement of Changes in Stockholders' Equity. For the three
months ended June 30, 2005 and 2004, comprehensive income totaled $1,012,427 and
$619,879,  respectively.  For the six months ended June 30, 2004,  comprehensive
income totaled $1,132,721.

NOTE 4 - STOCK OFFERING

In November  2004,  the Board of Directors  approved a stock  offering which was
completed  during the first quarter of 2005 to existing  shareholders and to the
public.  As a result,  180,000  additional  shares of the  Company's  stock were
issued,  common  stock was  increased by $18,000,  and surplus was  increased by
$4,516,163,  the net proceeds of the offering. The offering was completed in the
first  quarter but a few of the expenses of the offering were paid in the second
quarter.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards No. 123 (revised 2004),  Share-Based
Payment  (FAS No.  123R).  FAS No.  123R  revised FAS No.  123,  Accounting  for
Stock-Based  Compensation,  and  supersedes  APB Opinion No. 25,  Accounting for
Stock Issued to Employees, and its related implementation guidance. FAS No. 123R
will require  compensation costs related to share-based payment  transactions to
be recognized in the financial statement (with limited  exceptions).  The amount
of compensation  cost will be measured based on the grant-date fair value of the
equity or liability  instruments  issued.  Compensation  cost will be recognized
over the period that an employee provides service in exchange for the award.

In April, the Securities and Exchange  Commission adopted a new rule that amends
the compliance dates for FAS No. 123R. The Statement  requires that compensation
cost relating to  share-based  payment  transactions  be recognized in financial
statements  and that this cost be measured based on the fair value of the equity
or liability instruments issued. FAS No. 123R covers a wide range of share-based
compensation  arrangements  including  share  options,  restricted  share plans,
performance-based awards, share appreciation rights, and employee share purchase
plans.  The Company  will adopt FAS No. 123R on January 1, 2006 and is currently
evaluating  the impact the adoption of the standard  will have on the  Company's
results of operations.

                                       8
<PAGE>

In March 2005,  the  Securities  and Exchange  Commission  ("SEC")  issued Staff
Accounting  Bulletin No. 107 ("SAB No.  107"),  Share-Based  Payment,  providing
guidance on option valuation  methods,  the accounting for income tax effects of
share-based  payment  arrangements  upon  adoption  of FAS  No.  123R,  and  the
disclosures in MD&A subsequent to the adoption. The Company will provide SAB No.
107 required disclosures upon adoption of FAS No. 123R on January 1, 2006 and is
currently  evaluating  the impact the adoption of the standard  will have on the
Company's financial condition, results of operations, and cash flows.

In December 2004, FASB issued FAS No. 153,  Exchanges of Nonmonetary Assets - An
Amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29,  Accounting
for  Nonmonetary  Transactions,  is based on the  principle  that  exchanges  of
nonmonetary  assets  should be  measured  based on the fair  value of the assets
exchanged. The guidance in that Opinion, however, included certain exceptions to
that principle. FAS No. 153 amends Opinion No. 29 to eliminate the exception for
nonmonetary  exchanges  of  similar  productive  assets and  replaces  it with a
general  exception  for  exchanges  of  nonmonetary  assets  that  do  not  have
commercial  substance.  A nonmonetary  exchange has commercial  substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange.  The  provisions  of FAS No. 153 are effective for  nonmonetary
asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early
application  is permitted and companies  must apply the standard  prospectively.
The adoption of this  standard is not expected to have a material  effect on the
Company's results of operations or financial position.

In June  2005,  the FASB  issued  FAS No.  154,  Accounting  Changes  and Errors
Corrections,  a  replacement  of APB Opinion No. 20 and FAS No. 3. The Statement
applies to all  voluntary  changes in  accounting  principle,  and  changes  the
requirements  for  accounting  for  and  reporting  of a  change  in  accounting
principle.  FAS No. 154 requires  retrospective  application  to prior  periods'
financial  statements of a voluntary change in accounting principle unless it is
impractical.  APB Opinion No. 20 previously required that most voluntary changes
in  accounting  principle be recognized by including in net income of the period
of the change the cumulative effect of changing to the new accounting principle.
FAS No.154 improves the financial reporting because its requirements enhance the
consistency of financial reporting between periods.

NOTE 6 - BUSINESS SEGMENTS

The Company operates two reportable  segments:  community banking and investment
advisory and product  services.  The Company's  community banking segment offers
services  traditionally  offered by  full-service  commercial  banks,  including
commercial  mortgage,  residential real estate, and consumer loan financing,  as
well as commercial  demand,  individual demand, and time deposit services to its
customers. The investment advisory and product services segment offers fee based
investment  management  services  and  alternative  investment  products.  Asset
management  fees are primarily  recognized as the services are performed.  Asset
management  fees are  generally  based on a percentage  of the fair value of the
assets under management and performance fees are generally based on a percentage
of the returns on such assets.

                                       9

<PAGE>

Selected segment information is included in the following tables:
<TABLE>
<CAPTION>
                                                                                    Investment
                                                                                   Advisory and
                                                               Community             Product
                                                                Banking              Services          Consolidated
                                                           -------------------  -------------------  ------------------
<S>                                                       <C>                  <C>                  <C>
For the quarter ended June 30, 2005:

Interest income                                            $        4,270,436   $                -   $       4,270,436
Interest expense                                                    1,640,539                    -           1,640,539
                                                           -------------------  -------------------  ------------------

Net interest income                                                 2,629,897                    -           2,629,897
Provision for loan losses                                             168,000                    -             168,000
                                                           -------------------  -------------------  ------------------

Net interest income after provision for loan losses                 2,461,897                    -           2,461,897
Noninterest income                                                    288,252              726,257           1,014,509
Noninterest expense                                                 1,322,993              576,042           1,899,035
                                                           -------------------  -------------------  ------------------

Income before income taxes                                          1,427,156              150,215           1,577,371
Income taxes                                                          559,030                    -             559,030
                                                           -------------------  -------------------  ------------------

Net income                                                 $          868,126   $          150,215   $       1,018,341
                                                           ===================  ===================  ==================

Intersegment revenues (expenses) included above            $          136,795   $         (136,795)  $               -
Goodwill                                                              799,217              964,014           1,763,231
Depreciation and amortization expense                                  69,712                  556              70,268
Total assets                                                      325,324,175            1,192,663         326,516,838

</TABLE>


                                       10

<PAGE>


<TABLE>
<CAPTION>
                                                                                    Investment
                                                                                   Advisory and
                                                               Community             Product
                                                                Banking              Services          Consolidated
                                                           -------------------  -------------------  ------------------
<S>                                                      <C>                  <C>                  <C>
For the quarter ended June 30, 2004:

Interest income                                            $        3,371,166   $                -   $       3,371,166
Interest expense                                                    1,285,374                    -           1,285,374
                                                           -------------------  -------------------  ------------------

Net interest income                                                 2,085,792                    -           2,085,792
Provision for loan losses                                             194,000                    -             194,000
                                                           -------------------  -------------------  ------------------

Net interest income after provision for loan losses                 1,891,792                    -           1,891,792
Noninterest income                                                    218,843              592,471             811,314
Noninterest expense                                                 1,234,476              491,758           1,726,234
                                                           -------------------  -------------------  ------------------

Income before income taxes                                            876,159              100,713             976,872
Income taxes                                                          339,000                    -             339,000
                                                           -------------------  -------------------  ------------------

Net income                                                 $          537,159   $          100,713   $         637,872
                                                           ===================  ===================  ==================

Intersegment revenues (expenses) included above            $          127,587   $         (127,587)  $               -
Goodwill                                                              799,217              964,014           1,763,231
Depreciation and amortization expense                                  65,663                  556              66,219
Total assets                                                      277,068,153            1,030,185         278,098,338
</TABLE>

                                       11


<PAGE>

<TABLE>
<CAPTION>
                                                                                     Investment
                                                                                    Advisory and
                                                           Community                  Product
                                                            Banking                   Services                Consolidated
                                                     ----------------------     ---------------------     ---------------------

<S>                                                <C>                        <C>                       <C>
Year to Date - June 30, 2005

Interest income                                      $           8,260,712      $                  0      $          8,260,712
Interest expense                                                 3,129,170                         0                 3,129,170
                                                     ----------------------     ---------------------     ---------------------

Net interest income                                              5,131,542                         0                 5,131,542
Provision for loan losses                                          230,000                         0                   230,000
                                                     ----------------------     ---------------------     ---------------------

Net interest income after provision for loan losses              4,901,542                         0                 4,901,542
Noninterest income                                                 516,873                 1,424,026                 1,940,899
Noninterest expense                                              2,721,277                 1,146,000                 3,867,277
                                                     ----------------------     ---------------------     ---------------------

Income before income taxes                                       2,697,138                   278,026                 2,975,164
Income taxes                                                     1,048,030                         0                 1,048,030
                                                     ----------------------     ---------------------     ---------------------

Net income                                           $           1,649,108      $            278,026      $          1,927,134
                                                     ======================     =====================     =====================

Intersegment revenues (expenses) included above      $             272,843      $           (272,843)     $                  0
Goodwill                                                           799,217                   964,014                 1,763,231
Depreciation and amortization expense                              136,063                     1,105                   137,168
Total assets                                                   325,324,175                 1,192,663               326,516,838
</TABLE>

                                       12

<PAGE>

<TABLE>
<CAPTION>

                                                                               Investment
                                                                              Advisory and
                                                   Community                    Product
                                                    Banking                     Services                  Consolidated
                                              ---------------------       ---------------------       ---------------------
<S>                                          <C>                         <C>                         <C>
Year to Date - June 30, 2004

Interest income                               $          6,535,431        $                  0        $          6,535,431
Interest expense                                         2,588,747                           0                   2,588,747
                                              ---------------------       ---------------------       ---------------------

Net interest income                                      3,946,684                           0                   3,946,684
Provision for loan losses                                  304,000                           0                     304,000
                                              ---------------------       ---------------------       ---------------------

Net interest income after provision for loan losses      3,642,684                           0                   3,642,684
Noninterest income                                         375,034                   1,159,216                   1,534,250
Noninterest expense                                      2,416,131                     992,880                   3,409,011
                                              ---------------------       ---------------------       ---------------------

Income before income taxes                               1,601,587                     166,336                   1,767,923
Income taxes                                               611,000                           0                     634,000
                                              ---------------------       ---------------------       ---------------------

Net income                                    $            990,587        $            143,336        $          1,133,923
                                              =====================       =====================       =====================

Intersegment revenues (expenses) included
  above                                       $            246,635        $           (246,635)       $                  0
Goodwill                                                   799,217                     964,014                   1,763,231
Depreciation and amortization expense                      129,416                       1,111                     130,527
Total assets                                           277,068,153                   1,030,185                 278,098,338
</TABLE>

                       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.

                                       13
<PAGE>

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 June 30, 2005,  the business  operations of Nittany  included three
operating  subsidiaries  (collectively  defined  as the  "Company",  unless  the
context indicates otherwise), as follows:

     o    Nittany  Bank  commenced  banking  operations  in  October  1998  as a
          federally-insured   federal  savings  bank  with  headquarters   State
          College,  Pennsylvania.  The Bank currently has four offices currently
          operating in State  College plus an office which opened in February of
          this  year in a  historic  property  in  Bellefonte,  Pennsylvania,  a
          neighboring  community.  The Bank formed a Delaware investment company
          called FTF Investments Inc. during 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    In 2003, Nittany Financial Corp. acquired Vantage Investment Advisors,
          LLC  ("Vantage").  Vantage is a registered  investment  advisor  which
          currently  manages  investment  assets of approximately  $310 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 June 30, 2005, we had consolidated  assets of $327 million,  loans
receivable (net of allowance for loan losses) of $260 million,  deposits of $242
million,  and  stockholders'  equity of $24 million.  Net income for the quarter
ended June 30, 2005 increased  $380,400 to $1,018,300 or $0.45 per diluted share
from  $637,900  or $0.31 per  diluted  share for the same  period in 2004.  This
included  an income tax  expense of $559,000  for the 2005  quarter  compared to
$339,000 for the 2004 quarter.

COMPARISON OF FINANCIAL CONDITION

Total  assets  increased  $27,281,100  to  $326,516,800  at June 30,  2005  from
$299,235,700  at December 31, 2004.  Strong growth in residential and commercial
real estate loans resulted in an increase in net loans receivable of $24,820,800
which were funded mainly through Federal Home Loan Bank borrowings.

Cash and cash equivalents  decreased  $4,125,800 at June 30, 2005 as compared to
December  31,  2004.  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  whose
scheduled principal payments and maturities occur within one year. These sources
of funds will enable the Company to meet cash obligations and off-balance  sheet
commitments as they come due.

                                       14

<PAGE>

Investment  securities  available  for sale  decreased to $1,836,700 at June 30,
2005 from  $2,084,200  at December 31, 2004 and  investment  securities  held to
maturity  increased to $41,317,700 at June 30, 2005 from $37,491,300 at December
31, 2004. The increase in the investment  securities held to maturity  portfolio
resulted  primarily  from the  investment  of cash held at  Nittany  Bank's  FTF
Investments Inc. subsidiary.

Net loans receivable increased $24,820,800 to $260,249,400 at June 30, 2005 from
$235,428,600 at December 31, 2004. 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 June 30,  2005,  one to four  family  residential  mortgage
balances grew by $16,675,700 to $173,398,700  from  $156,723,000 at December 31,
2004 and  commercial  real estate loans grew by $9,689,800  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 June 30, 2005, the Company had additional  commitments to fund loan
demand of $12,557,000 of which  approximately  $4,823,000  relates to commercial
customers.

At June 30, 2005, the Company's  allowance for loan losses increased by $179,200
to $2,377,500 from  $2,198,300 at December 31, 2004. The increase  resulted from
an  additional  loan loss  provision of $230,000  needed for the growth in loans
during the quarter which were offset by a partial chargeoff of $52,000 and a few
recoveries of previous charge-offs.

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 June 30, 2005,  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 June 30, 2005:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                         > 90 Days Past Due -   > 90 Days Past Due -
                                                       Total Loan           Number of Loans       Balance of Loans
                               # of Loans               Balance
--------------------------------------------------------------------------------------------------------------------
<S>                               <C>               <C>                        <C>                <C>
Personal Loans                        367               7,823,800                  1                  8,800
--------------------------------------------------------------------------------------------------------------------
Credit
Line Loans                            454               5,080,100                  2                 37,700
--------------------------------------------------------------------------------------------------------------------
Business Loans                        189              12,248,700                  2                 73,500
--------------------------------------------------------------------------------------------------------------------
Real
Estate Loans                        1,401             237,474,300                  1                 29,900
--------------------------------------------------------------------------------------------------------------------
      Total                         2,411             262,626,900                  6                149,900
--------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       15

<PAGE>

Total  deposits  decreased by $16,191,100  to  $242,079,800  at June 30, 2005 as
compared to  $258,270,900  at December 31,  2004.  The Nittany  Savings  deposit
account is a competitively priced deposit account which comprises  approximately
57% of total  deposits at June 30,  2005.  During the  quarter,  a large  escrow
account was  distributed  and also  Management  made the  decision to not retain
selected higher  yielding  deposits during the rise in short term rates that did
not compliment the overall funding strategy of the Bank. Time deposits increased
by $15,211,500 for the year,  mainly in the variable rate products tied to prime
rate,  which partially  offset the decline of $18,348,900 in the Nittany Savings
account and $17,924,100 in money market  accounts.  Non-interest  bearing demand
deposits  increased to $12,377,900 at June 30, 2005 from $10,668,800 at December
31, 2004 which helped the net interest  margin.  Short term  borrowing  from the
Federal Home Loan Bank in Pittsburgh,  with very competitive  market rates, were
used to offset  funding  gaps  caused by the decline in  deposits.  It should be
noted that the number of new deposit  accounts  remained  steady  during the six
month and three month period.

Stockholder's  equity increased to $23,605,300 at June 30, 2005 from $17,666,300
at December 31, 2004 because of net income of $1,927,100,  the stock offering of
180,000 shares at $26 per share during the quarter,  and minor  fluctuations  in
the market value of available for sale securities.

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.

Average Balance Sheet for June 30, 2005 and 2004

The  following  tables set forth certain  information  relating to the Company's
quarterly  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.

                                       16
<PAGE>

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

<TABLE>
<CAPTION>

                                                                              For the three months ended
                                            ----------------------------------------------------------------------------------------
                                                              6/30/05                                         6/30/04
                                            --------------------------------------------------  ------------------------------------

                                                                                   (3)                                      (3)
                                                  Average                  Average          Average                 Average
                                                  Balance    Interest    Yield/Cost         Balance     Interest   Yield/Cost
                                                  -------    --------    ----------         -------     --------   ----------
                                                                              (Dollars in thousands)
<S>                                           <C>           <C>           <C>           <C>            <C>         <C>
Interest-earning assets:
  Loans recievable                               $251,886      $3,793        6.02%         $206,055       $3,009      5.84%
  Investments securities                           47,762         455        3.81%           47,951          352      3.47%
  Interest-bearing dep. with other banks            9,200          23        1.00%           10,542           10      0.38%
                                            --------------   ---------   ----------  ---------------   ----------  ---------
Total interest-earning assets                     308,848       4,271        5.53%          264,548        3,371      5.19%
                                                             ---------                                 ----------
Noninterest-earning assets                          8,403                                     6,383
Allowance for loan losses                          (2,304)                                   (1,876)
                                            --------------                           ---------------
Total assets                                     $314,947                                  $269,056
                                            ==============                           ===============
Interest-bearing liabilities:
  Interest - bearing demand deposits              $25,157          52        0.83%          $20,658           44      0.85%
  Money market deposits                            31,346         167        2.13%           35,573          181      2.04%
  Savings deposits                                141,885         721        2.03%          151,911          761      2.00%
  Certificates of deposit                          34,929         314        3.60%           21,671          160      2.95%
  Borrowings                                       45,267         386        3.41%           13,467          139      4.13%
                                            --------------   ---------   ----------  ---------------   ----------  ---------
Total interest-bearing liabilities                278,585       1,640        2.35%          243,281        1,285      2.11%
                                            --------------   ---------               ---------------   ----------
Noninterest-bearing liabilities
  Demand deposits                                  10,783                                     9,122
  Other liabilities                                 1,743                                       808
Stockholders' equity                               23,837                                    15,845
                                            --------------                           ---------------
Total liabilities and stockholders' equity       $314,947                                  $269,056
                                            ==============                           ===============
Net interest income                                            $2,631                                     $2,086
                                                             =========                                 ==========
Interest rate spread (1)                                                     3.18%                                    3.08%
Net yield on interest-earning assets (2)                                     3.41%                                    3.25%
Ratio of avg. interest-earning assets to
  average interest-bearing liabilities                                     110.86%                                  108.74%

</TABLE>

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

                                       17
<PAGE>

a.  Nittany  Financial  Year to Date  Average  Balance  Sheet  and  Supplemental
    Information:
<TABLE>
<CAPTION>

                                                                     For the period ended
                                            ----------------------------------------------------------------------
                                                        6/30/05                              6/30/04
                                            ------------------------------------  --------------------------------

                                                                        (3)                                  (3)
                                             Average                 Average      Average                 Average
                                             Balance   Interest     Yield/Cost    Balance    Interest   Yield/Cost
                                             -------   --------     ----------    -------    --------   ----------
                                                                                    (Dollars in thousands)
<S>                                      <C>          <C>           <C>      <C>            <C>         <C>
Interest-earning assets:
  Loans recievable                          $259,185     $7,321        5.65%    $197,362       $5,767      5.84%
  Investments securities                      47,713        837        4.03%      48,352          743      3.60%
  Interest-bearing dep. with other banks       9,345        103        2.20%       9,477           25      0.53%
                                            ---------  ---------   ----------   ---------   ----------  ---------
Total interest-earning assets                316,242      8,261        5.30%     255,190        6,535      5.22%
                                                       ---------                            ----------
Noninterest-earning assets                     8,226                               7,587
Allowance for loan losses                     (2,345)                             (1,814)
                                            ---------                           ---------
Total assets                                $322,123                            $260,963
                                            =========                           =========
Interest-bearing liabilities:
  Interest - bearing demand deposits         $25,449        100        0.79%     $19,900           84      0.84%
  Money market deposits                       26,978        378        2.80%      35,018          365      2.08%
  Savings deposits                           139,982      1,490        2.13%     148,129        1,532      2.07%
  Certificates of deposit                     36,118        543        3.01%      21,654          325      3.00%
  Borrowings                                  56,467        618        2.19%      11,650          282      4.84%
                                            ---------  ---------   ----------   ---------   ----------  ---------
Total interest-bearing liabilities           284,994      3,129        2.20%     236,351        2,588      2.19%
                                            ---------  ---------                ---------   ----------
Noninterest-bearing liabilities
  Demand deposits                             11,610                               8,394
  Other liabilities                            1,450                                 725
Stockholders' equity                          24,069                              15,494
                                            ---------                           ---------
Total liabilities and stockholders' equity  $322,123                            $260,963
                                            ---------                           ---------
Net interest income                                      $5,132                                $3,947
                                                       =========                            ==========
Interest rate spread (1)                                               3.11%                               3.03%
Net yield on interest-earning assets (2)                               3.32%                               3.19%
Ratio of average int. earning assets to
  average interest-bearing liabilities                               110.96%                             107.97%

</TABLE>

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


RESULTS OF OPERATIONS

Net income was  $1,018,300 for the three months ended June 30, 2005, an increase
of $380,400 as compared to the same period ended 2004. The increase is primarily
due to increases in net interest income and  noninterest  income of $544,100 and
$203,200  respectively,  which were partially offset by increases in noninterest
expense and taxes.  Basic and diluted  earnings per share increased to $0.48 and
$0.45 per share,  respectively  for the quarter  ended June 30, 2005 compared to
$0.33 and $0.31 per share,  respectively,  for the quarter  ended June 30, 2004.
Net income was $1,927,100 for the six months ended June 30, 2005, an increase of
$793,200 as compared to the same period  ended 2004.  The  increase is primarily
due to increases in net interest income and noninterest income of $1,184,800 and
$406,600,  respectively,  which were offset by increases in noninterest  expense
and taxes. Basic and diluted earnings per share increased to $0.94 and $0.87 per
share,  respectively  for the six months  period ended June 30, 2005 compared to
$0.59 and $0.55 per share, respectively, for the six month period ended June 30,
2004.

                                       18
<PAGE>

Net interest  income for the three months ended June 30, 2005 was  $2,629,900 as
compared to $2,085,800 for the same period ended 2004. Interest income increased
$899,200 for 2005 as compared to the prior year period and was influenced mainly
by increases in interest earned on loans receivable of $783,200. The increase in
interest income was the result of an increase of $44,300,000 in average balances
of interest-earning  assets that primarily resulted from a $45,831,000  increase
in the average balance of loans receivable. The yield on interest earning assets
increased  to 5.53% for the three  months ended June 30, 2005 from 5.19% for the
same period  ended 2004 due to  increasing  interest  rates  during the quarter.
There were significant increases in residential real estate lending although the
yield on the loans  receivable  increased 18 basis points in 2005 as compared to
2004. Net interest  income for the six months ended June 30, 2005 was $5,131,500
as  compared to  $3,946,700  for the same period  ended  2004.  Interest  income
increased  $1,725,300  for 2005 as  compared  to the prior  year  period and was
influenced  mainly  by  increases  in  interest  earned on loans  receivable  of
$1,553,300.

Interest expense  increased by only $355,100 for the three months ended June 30,
2005 as compared to the prior year period as  decreases  in the Nittany  Savings
balances  were  essentially  offset by higher  rates and  balances in  overnight
borrowings.  The average  rate of  interest-bearing  liabilities  (i.e.  cost of
funds) increased by 24 basis points as compared to the same period in year 2004.
The average balance of savings deposit,  the Bank's flagship account,  decreased
by $10,026,000 while rates held steady. The Bank used the preferential overnight
borrowing  rates  offered  by the  Federal  Home  Loan  Bank to  offset  funding
differences.  The average  balance in advances  from the Federal  Home Loan Bank
increased  significantly  from  $13,467,000  in the  second  quarter  of 2004 to
$45,267,000 in the current quarter.  Interest expense  increased by $540,400 for
the six  months  ended June 30,  2005 as  compared  to the prior year  period as
higher rates and additional  borrowings  were  partially  offset by decreases in
average deposit balances.

As a result of an increase in the average yield on interest earning assets,  the
Bank's  quarterly  net  interest  margin for the quarter  increased  by 16 basis
points to 3.41% from 3.25% at June 30, 2004, a period of continued flattening in
the yield curve.

Total  noninterest  income for the three  months  ended June 30, 2005  increased
$203,200 as compared to the same period ended 2004. Noninterest income items are
primarily  comprised of service  charges and fees on deposit  account  activity,
secondary  market fees,  overdraft  privilege  fees, and fee income derived from
asset management services.  For the three month and six month periods ended June
30,  2005,  commissions  and  management  fees from  Vantage and  Nittany  Asset
Management  increased  by  $133,400  and  $264,400  respectively,  over the same
periods of 2004.

Total noninterest  expenses  increased  $172,800 for the three months ended June
30,  2005,  as  compared to the same period  ended 2004.  The  increase in total
noninterest  expenses for the current period was primarily related to the larger
organization  that resulted from opening of the new branch in Bellefonte  during
the last  quarter,  the  marketing  efforts to  increase  visibility  within the
Company's  market  area,  performance  bonuses  given  to  employees,  and  data
processing  expenses.  For the six  months  ended  June  30,  2005,  noninterest
expenses  increased  $458,300 as compared  to the same period  ended 2004.  This
increase also relates primarily to the larger  organization,  marketing efforts,
and data processing expenses. A portion of the increase for the quarter and year
to date also  related to the fact that  Vantage  paid  $443,600  of  independent
investment solicitors' fees for the quarter as compared to $361,300 for the same
period in 2004 and $873,200 for the six month period as compared to $738,800 for
the same six month  period in 2004.  These  increases  are due to the  sustained
growth in assets under management by Vantage.

                                       19
<PAGE>

Income tax expense of $559,000 was recognized in the quarter ended June 30, 2005
compared to $339,000  for the same  period of 2004 as the Bank's  effective  tax
rate remained  steady at  approximately  35%. The Bank holds  approximately  $15
million in high quality  municipal bonds and has a Delaware  investment  company
subsidiary  which holds  approximately  $43 million in investments and deposits.
These strategies have helped to maintain 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 June 30, 2005, cash and cash equivalents  totaled  $11,456,800
million  or 4%  of  total  assets  while  investment  securities  classified  as
available for sale totaled  $1,836,700.  The Bank's borrowings of $45,267,000 of
FHLB  advances are  substantially  higher than historic  levels which  increases
interest rate risk.  Management,  however,  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,  and the portion of the
investment and loan portfolios that mature within one year.

Operating  activities  provided net cash of $2,372,500  for the six month period
ended June 30, 2005, generated  principally from net income of $1,927,100.  Also
contributing  to  operating   activities  was  provision  for  loan  losses  and
depreciation,   amortization,   and   accretion   of  $230,000   and   $252,600,
respectively.

Investing  activities  consist primarily of loan originations and repayments and
investment  purchases and maturities.  These cash usages primarily  consisted of
loan originations of $25,041,700 for the six months ended June 30, 2005, as well
as  investment  purchases of  $10,128,100  for the same time  period.  Partially
offsetting  the usage of  investment  activities  is $6,408,000 of proceeds from
investment security maturities and repayments for the same time period. The Bank
also  purchased a former Dunkin Donuts  building  which was adjacent to the East
College Avenue office for approximately $850,000 for future expansion.

Financing  activities  consist of the  solicitation  and  repayment  of customer
deposits, borrowings and repayments, and proceeds from the sale of common stock.
During the six month period ending June 30, 2005, net cash provided by financing
activities  totaled  $25,313,300,  principally  derived from the stock  offering
during the quarter (180,000 shares at $26 per share) and the proceeds from short
term borrowings from the Federal Home Loan Bank of Pittsburgh of $39,598,900.

                                       20
<PAGE>

Nittany's primary source of capital has been common stock offerings and 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 June 30, 2005, 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
13.0%, 11.8%, 6.7% and 12.9%, 11.6%, 6.6%, respectively, at June 30, 2005.


Item 3.  Controls and Procedures

(a) Evaluation of disclosure controls and procedures.  Based on their evaluation
    ------------------------------------------------
as of June 30, 2005, 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-15(c) and 15d-15(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 upon Senior Securities

          None

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

          The  following represents the results of matters submitted to  a  vote
          of the stockholders at the annual meeting held on May 20, 2005:

          Election of a Director for term to expire in 2009:
          Donald J. Musso elected by the following vote:

          For:                 1,585,739
          Votes Withheld:          9,029

          S.R. Snodgrass A.C. was selected as the Company's independent auditors
          for the fiscal year 2006 by the following vote:

          For:                 1,594,053
          Against:                   715
          Votes Withheld:              0

Item 5.   Other Information

          None

                                       21
<PAGE>

Item 6.    Exhibits

          (a)     The  following   exhibits  are  included  in  this  Report  or
                  incorporated  herein by  reference:
<TABLE>
<CAPTION>
                 <S>     <C>

                   3(i)    Amended Articles of Incorporation of Nittany Financial Corp. *
                   3(ii)   Bylaws of Nittany  Financial  Corp.  *
                   4       Specimen Stock Certificate of Nittany Financial Corp.  *
                  10.1     Employment Agreement between the Bank and David Z. Richards *
                  10.2     Nittany Financial Corp. 1998 Stock Option Plan **
                  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.

                                       22
<PAGE>

                                   SIGNATURES

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


                                 Nittany Financial Corp.


Date:    August 13, 2005         By: /s/ David Z. Richards
                                     -------------------------------------------
                                     David Z. Richards
                                     President and Chief Executive Officer



Date:    August 13, 2005         By: /s/ Gary M. Bradley
                                     -------------------------------------------
                                     Gary M. Bradley
                                     Vice President and Chief Accounting Officer


                                       23