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, 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                (IRS Employer Identification No.)
incorporation or organization)

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

                                (814) 272 - 2265
            ---------------------------------------------------------
              (Registrant's telephone number, including area code)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X No

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:

                  Class: Common Stock, par value $.10 per share
                    Outstanding at August 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
                       June 30, 2004 and December 31, 2003

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

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

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

                   Consolidated Statement of Cash Flows (Unaudited)
                       for the Six Months ended June 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                           11

      Item 3.  Controls and Procedures                                                         16

PART II  -  OTHER INFORMATION

      Item 1.  Legal Proceedings                                                               17

      Item 2.  Changes in Securities and Small Business Issuer
                    Purchases of Equity Securities                                             17

      Item 3.  Defaults Upon Senior Securities                                                 17

      Item 4.  Submission of Matters to a Vote of Security Holders                             17

      Item 5.  Other Information                                                               17

      Item 6.  Exhibits and Reports on Form 8 - K                                              17

SIGNATURES                                                                                     19

CERTIFICATIONS

</TABLE>

<PAGE>
                             NITTANY FINANCIAL CORP.
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                       June 30,       December 31,
                                                                         2004             2003
                                                                    -------------    -------------
                                                                     (unaudited)
<S>                                                               <C>              <C>
ASSETS
     Cash and due from banks                                        $   8,665,074    $     805,812
     Interest-bearing deposits with other banks                         3,449,006       14,147,474
                                                                    -------------    -------------
         Cash and cash equivalents                                     12,114,080       14,953,286
     Investment securities available for sale                           2,468,431        4,074,095
     Investment securities held to maturity (estimated
       market value of $41,309,945 and $39,168,895)                    41,913,421       39,246,289
     Loans receivable (net of allowance for loan losses
       of $1,984,680 and $1,737,475)                                  213,606,805      182,742,537
     Premises and equipment                                             2,521,636        2,570,953
     Federal Home Loan Bank stock                                       1,724,000        1,311,300
     Intangible assets                                                  1,763,231        1,763,231
     Accrued interest and other assets                                  1,986,734        1,925,622
                                                                    -------------    -------------

             TOTAL ASSETS                                           $ 278,098,338    $ 248,587,313
                                                                    =============    =============
LIABILITIES
     Deposits:
         Noninterest-bearing demand                                 $  11,843,397    $   7,880,177
         Interest-bearing demand                                       24,321,562       21,902,355
         Money market                                                  35,341,260       34,237,951
         Savings                                                      152,444,179      136,273,936
         Time                                                          19,164,271       20,598,238
                                                                    -------------    -------------
            Total deposits                                            243,114,669      220,892,657
     Short-term borrowings                                              7,045,632        2,363,887
     Other borrowings                                                  11,069,475        9,829,866
     Accrued interest payable and other liabilities                       911,566          673,159
                                                                    -------------    -------------

             TOTAL LIABILITIES                                        262,141,342      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                                                  1,490,267          356,344
     Accumulated other comprehensive loss                                 (13,216)         (12,017)
                                                                    -------------    -------------

             TOTAL STOCKHOLDERS' EQUITY                                15,956,996       14,827,744
                                                                    -------------    -------------

             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $ 278,098,338    $ 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 June 30, Six-months Ended June 30,
                                                    2004         2003         2004         2003
                                                 ----------   ----------   ----------   ----------
                                                       (unaudited)                (unaudited)
<S>                                            <C>          <C>          <C>          <C>
INTEREST AND DIVIDEND INCOME
    Loans, including fees                        $3,009,369   $2,302,577   $5,767,209   $4,410,790
    Interest-bearing deposits with other banks        9,840       13,037       25,206       39,905
    Investment securities                           351,957      377,023      743,016      746,334
                                                 ----------   ----------   ----------   ----------
           Total interest and dividend income     3,371,166    2,692,637    6,535,431    5,197,029
                                                 ----------   ----------   ----------   ----------

INTEREST EXPENSE
    Deposits                                      1,146,837    1,056,983    2,306,537    2,119,605
    Short-term borrowings                            18,033       12,878       24,014       24,988
    Other borrowings                                120,504      130,218      258,196      261,641
                                                 ----------   ----------   ----------   ----------
           Total interest expense                 1,285,374    1,200,079    2,588,747    2,406,234
                                                 ----------   ----------   ----------   ----------

NET INTEREST INCOME                               2,085,792    1,492,558    3,946,684    2,790,795

Provision for loan losses                           194,000      188,000      304,000      278,000
                                                 ----------   ----------   ----------   ----------

NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES                                    1,891,792    1,304,558    3,642,684    2,512,795
                                                 ----------   ----------   ----------   ----------

NONINTEREST INCOME
    Service fees on deposit accounts                174,307      126,632      320,368      245,457
    Investment security gain                              -            -            -        6,691
    Asset management fees and commissions           592,471      150,526    1,159,216      489,670
    Other                                            44,536       77,851       54,666       86,945
                                                 ----------   ----------   ----------   ----------
           Total noninterest income                 811,314      355,009    1,534,250      828,763
                                                 ----------   ----------   ----------   ----------

NONINTEREST EXPENSE
    Compensation and employee benefits              745,230      544,386    1,437,995    1,063,112
    Occupancy and equipment                         177,793      148,245      354,129      293,221
    Professional fees                                51,349       53,725       94,798      101,749
    Data processing fees                            111,164       95,608      230,171      173,261
    Supplies, printing, and postage                  31,938       31,518       64,931       68,675
    Advertising                                      37,723       24,442       78,128       61,792
    ATM processing fees                              34,982       30,322       69,853       62,622
    Commission expense                              361,331       77,298      738,837      295,123
    Other                                           174,724      109,331      340,169      218,472
                                                 ----------   ----------   ----------   ----------
           Total noninterest expense              1,726,234    1,114,875    3,409,011    2,338,027
                                                 ----------   ----------   ----------   ----------

Income before income taxes                          976,872      544,692    1,767,923    1,003,531
Income taxes                                        339,000      189,089      634,000      348,699
                                                 ----------   ----------   ----------   ----------

NET INCOME                                       $  637,872   $  355,603   $1,133,923   $  654,832
                                                 ==========   ==========   ==========   ==========

EARNINGS PER SHARE
    Basic                                        $     0.33   $     0.21   $     0.59   $     0.39
    Diluted                                            0.31         0.19         0.55         0.36

WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                         1,924,621    1,690,139    1,924,621    1,686,784
    Diluted                                       2,080,803    1,835,168    2,077,516    1,832,813
</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
                                                                                 Other         Total
                                                  Additional                    Compre-        Stock-        Compre-
                                       Common      Paid-in       Retained       hensive        holders       hensive
                                       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                                                       1,133,923                    1,133,923     $1,133,923
Other comprehensive income:
    Unrealized loss on
      available for sale securities
      net of tax benefit of $618                                                (1,199)          (1,199)        (1,199)
                                                                                                            ----------
Comprehensive income                                                                                        $1,132,724
                                                                                                            ==========
Twenty percent stock dividend
  (including cash paid for
  fractional shares)                    32,066       (35,538)                                    (3,472)
                                      --------   -----------    ----------    --------      -----------

Balance, June 30, 2004                $192,462   $14,287,483    $1,490,267    $(13,216)     $15,956,996
                                      ========   ===========    ==========    ========      ===========

</TABLE>

   See accompanying notes to the unaudited consolidated financial statements.

                                        5

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

<TABLE>
<CAPTION>
                                                                Six-months ended June 30,
                                                                   2004            2003
                                                               ------------    ------------
<S>                                                           <C>             <C>
OPERATING ACTIVITIES
     Net income                                                $  1,133,923    $    654,832
     Adjustments to reconcile net income to net cash
       provided by operating activities:
         Provision for loan losses                                  304,000         278,000
         Depreciation, amortization, and accretion, net             389,880         509,525
         Investment security gains                                        -           6,691
         Increase in accrued interest receivable                    (92,398)       (115,856)
         Increase (decrease) in accrued interest payable              3,577        (259,453)
         Other, net                                                 276,734        (489,382)
                                                               ------------    ------------
         Net cash provided by operating activities                2,015,716         584,357
                                                               ------------    ------------

INVESTING ACTIVITIES
     Investment securities available for sale:
         Purchases                                                  (80,881)        (19,826)
         Proceeds from sale                                               -          26,637
         Proceeds from principal repayments and maturities        1,674,415       1,027,265
     Investment securities held to maturity:
         Purchases                                              (37,198,347)    (29,941,878)
         Proceeds from principal repayments and maturities       34,272,474      25,486,208
     Net increase in loans receivable                           (31,168,568)    (29,517,912)
     Purchase of FHLB stock                                        (412,700)        (65,600)
     Acquisition of subsidiary                                            -        (964,014)
     Purchase of premises and equipment                             (81,209)       (206,154)
                                                               ------------    ------------
         Net cash used for investing activities                 (32,994,816)    (34,175,274)
                                                               ------------    ------------

FINANCING ACTIVITIES
     Net increase in deposits                                    22,222,012      33,649,325
     Net increase in short-term borrowings                        4,681,745       4,126,779
     Proceeds from other borrowings                               1,350,000         360,000
     Repayment of other borrowings                                 (110,391)       (103,760)
     Cash paid in lieu of fractional shares                          (3,472)              -
     Exercise of stock options                                            -           1,108
     Issuance of common stock                                             -       2,367,848
     Issuance of common stock for the purchase of subsidiary              -         594,000
                                                               ------------    ------------
         Net cash provided by financing activities               28,139,894      40,995,300
                                                               ------------    ------------

         Increase (decrease) in cash and cash equivalents        (2,839,206)      7,404,383

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                 14,953,286       5,852,073
                                                               ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                     $ 12,114,080    $ 13,256,456
                                                               ============    ============

SUPPLEMENTAL CASH FLOW DISCLOSURE
     Cash paid during the year for:
         Interest on deposits and borrowings                   $  2,585,170    $  2,665,687
         Income taxes                                               659,000       1,020,000
</TABLE>

See accompanying notes to the 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")
include 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 six  months  ended  June  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 June 30,           Six Months Ended June 30,
                                          2004          2003                    2004          2003
                                        --------      --------               ----------     --------
<S>                                   <C>           <C>                    <C>            <C>
Net income, as reported:                $637,872      $355,603               $1,133,923     $654,832

Less proforma expense related
  to stock options                        29,747        43,886                   59,494       87,771
                                        --------      --------               ----------     --------
Proforma net income                     $608,125      $311,717               $1,074,429     $567,061
                                        ========      ========               ==========     ========


Basic net income per common share:
     As reported                        $   0.33      $   0.21               $     0.59     $   0.39
     Pro forma                              0.32          0.18                     0.56         0.34
Diluted net income per common share:
     As reported                        $   0.31      $   0.19               $     0.55     $   0.36
     Pro forma                              0.29          0.17                     0.52         0.31
</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,  2004 and 2003,  the  diluted
number of shares  outstanding  from  employee  stock  options  was  156,182  and
145,030,  respectively.  For the  six-months  ended June 30, 2004 and 2003,  the
diluted number of shares outstanding from employee stock options was 152,895 and
146,029, 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,
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 June 30, 2004, comprehensive income totaled $619,879. For the three
and six-months  ended June 30, 2003,  comprehensive  income totaled $363,243 and
$661,764.

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 June
30,  2004,  and all per  share  amounts  as of June 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.

                                       8

<PAGE>

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.  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.


                       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 June 30, 2004,  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 two  offices  in State
          College, Pennsylvania. Two State College offices were opened 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 will serve as the fifth branch,  if it proves
          to be suitable.  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.

                                       9
<PAGE>

     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 $245 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, 2004, we had consolidated  assets of $278 million,  loans
receivable (net of allowance for loan losses) of $214 million,  deposits of $243
million,  and stockholders'  equity of $16.0 million. Net income for the quarter
ended June 30, 2004  increased  $282,000  to $638,000 or $.31 per diluted  share
from  $356,000  or $.19 per  diluted  share for the same  period  in 2003.  This
included an income tax expense of $339,000 for the quarter  compared to $189,000
for the 2003 quarter.

COMPARISON OF FINANCIAL CONDITION

Total  assets  increased  $29,511,000  to  $278,098,000  at June 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
$30,864,000,  which were  primarily  funded  through  growth in Nittany  Savings
deposits,  available  cash and matured  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.

Cash and cash equivalents  decreased  $2,839,000 at June 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
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.

Investment  securities  available  for sale  decreased to $2,468,000 at June 30,
2004 from  $4,074,000  at December 31, 2003 and  investment  securities  held to
maturity  increased to $41,913,000 at June 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.

Net  loans   receivable   increased  to  $213,607,000  at  June  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 June 30, 2004, 1 to 4 family  residential  mortgage  balances
grew by  $17,871,000 to  $142,218,000  from  $124,347,000  at December 31, 2003.
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, 2004, the Company had additional  commitments to fund loan demand
of  $12,628,000  of  which   approximately   $5,010,000  relates  to  commercial
customers.

                                       10

<PAGE>

At June 30, 2004, the Company's  allowance for loan losses increased by $167,000
to $1,985,000 from  $1,818,000 at March 31, 2004. The increase  resulted from an
additional loan loss provision of $194,000 needed for the growth in loans during
the quarter, which were partially offset by a few minor charge-offs.

The additions to the allowance for loan losses are based upon a careful analysis
by management of loan data.  Because the Company  lacks  substantial  historical
experience,  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, 2004,  there can be no assurance
that additional losses will not be required in future periods.

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                  > 90 Days Past    > 90 Days Past
                                                    Total Loan      Due - Number      Due - Balance
                               # of Loans             Balance         of Loans          of Loans
---------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>                  <C>               <C>
Personal Loans                     361              $8,914,000           1                 $5,287
---------------------------------------------------------------------------------------------------------
Credit
Line Loans                         428              $4,456,000           0                      0
---------------------------------------------------------------------------------------------------------
Business Loans                     168             $11,453,000           0                      0
---------------------------------------------------------------------------------------------------------
Real
Estate Loans                     1,158            $190,768,000           1                $81,433
---------------------------------------------------------------------------------------------------------
      Total                      2,115            $215,591,000           2                $86,720
---------------------------------------------------------------------------------------------------------
</TABLE>


Total  deposits  increased by $22,222,000  to  $243,115,000  at June 30, 2004 as
compared to  $220,893,000  at December 31,  2003.  The Nittany  Savings  deposit
account made up approximately  63%  ($152,444,000) of total deposits at June 30,
2004.  Non-interest bearing demand deposits increased to $11,843,000 at June 30,
2004 from  $7,880,000  at December 31, 2003.  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
historically  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.

Stockholder's  equity increased to $15,957,000 at June 30, 2004 from $14,828,000
at December 31, 2003 primarily as a result of net income of $1,134,000 and minor
fluctuations in the market value of available for sale securities.

                                       11

<PAGE>

Average Balance Sheet for the Three- Month Period Ended June 30, 2004

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

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

<TABLE>
<CAPTION>
                                                              For the three months ended
                                --------------------------------------------------------------------------------------
                                                  6/30/04                                     6/30/03
                                -------------------------------------------  -----------------------------------------
                                                                   (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                 $206,055        $3,009         5.84%        $142,259         $2,303        6.48%
  Investments securities             47,951           352         3.47%          50,855            377        2.97%
  Interest-bearing deposits
    with banks                       10,542            10         0.38%           7,385             13        0.70%
                                   --------        ------       ------         --------         ------      ------
Total interest-earning assets       264,548         3,371         5.19%         200,499          2,693        5.37%
                                                   ------                                       ------
Noninterest-earning assets            6,383                                       6,034
Allowance for loan losses            (1,876)                                     (1,309)
                                   --------                                    --------
Total assets                       $269,056                                    $205,224
                                   ========                                    ========
Interest-bearing liabilities:
  Interest - bearing
    demand deposits                 $20,658            44         0.85%         $18,013             41        0.91%
  Money market deposits              35,573           181         2.04%          33,435            210        2.51%
  Savings deposits                  151,911           761         2.00%         103,739            630        2.43%
  Certificates of deposit            21,671           160         2.95%          21,504            176        3.27%
  Advances from FHLB                 13,467           139         4.13%           8,673            143        6.60%
                                   --------        ------       ------         --------         ------      ------
Total interest-bearing liabilities  243,281         1,285         2.11%         185,364          1,200        2.59%
                                   --------        ------                      --------         ------
Noninterest-bearing liabilities
  Demand deposits                     9,122                                       7,081
  Other liabilities                     808                                         505
Stockholders' equity                 15,845                                      12,274
                                   --------                                    --------
Total liabilities &
  stockholders' equity              269,056                                     205,224
                                   --------                                    --------
Net interest income                                $2,086                                       $1,493
                                                   ======                                       ======
Interest rate spread (1)                                          3.08%                                       2.78%
Net yield on interest-earning
  assets (2)                                                      3.25%                                       2.98%

Ratio of average interest-earning assets to
  average interest-bearing liabilities                          108.74%                                     108.17%

</TABLE>

(1)  Interest  rate  spread  is  the  difference   between  the  avg.  yield  on
     interest-earning assets and the avg. cost of interest-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.

                                       12
<PAGE>
b.  Nittany  Financial  Year-To-Date  Average  Balance  Sheet  and  Supplemental
Information:

<TABLE>
<CAPTION>
                                                                     For the period ended
                                --------------------------------------------------------------------------------------
                                                  6/30/04                                     6/30/03
                                -------------------------------------------  -----------------------------------------
                                                                   (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                  $197,362       $5,767          5.84%        $135,181        $4,411         6.53%
  Investments securities              48,352          743          3.60%          48,565           747         3.07%
  Interest-bearing deposits
    with banks                         9,477           25          0.53%           9,566            39         0.84%
                                    --------       ------        ------         --------        ------       ------
Total interest-earning assets        255,190        6,535          5.22%         193,312         5,197         5.38%
                                                   ------                                       ------
Noninterest-earning assets             7,587                                       8,792
Allowance for loan losses             (1,814)                                     (1,259)
                                    --------                                    --------
Total assets                        $260,963                                    $200,846
                                    ========                                    ========
Interest-bearing liabilities:
  Interest - bearing
    demand deposits                  $19,900           84          0.84%         $16,901            89         1.05%
  Money market deposits              $35,018          365          2.08%          32,324           420         2.60%
  Savings deposits                   148,129        1,532          2.07%          98,063         1,241         2.53%
  Certificates of deposit             21,654          325          3.00%          21,229           369         3.48%
  Advances from FHLB                  11,650          282          4.84%          10,964           287         5.23%
                                    --------       ------        ------         --------        ------       ------
Total interest-bearing liabilities   236,351        2,588          2.19%         179,482         2,406         2.68%
                                    --------       ------                       --------        ------
Noninterest-bearing liabilities
  Demand deposits                      8,394                                       6,170
  Other liabilities                      725                                       3,783
Stockholders' equity                  15,494                                      11,410
                                    --------                                    --------
Total liabilities &
  stockholders' equity               260,963                                    $200,846
                                    --------                                    --------
Net interest income                                $3,947                                       $2,791
                                                   ======                                       ======
Interest rate spread (1)                                           3.03%                                       2.70%
Net yield on interest-earning assets (2)                           3.19%                                       2.89%
Ratio of average interest-earning assets to
  average interest-bearing liabilities                           107.97%                                     107.71%

</TABLE>

(1)  Interest  rate  spread  is  the   difference   between  the  avg  yield  on
     interest-earning assets and the avg cost of interest-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 $638,000 for the three months ended June 30, 2004, an increase of
$282,000  as compared to the same  period  ended  2003.  The  increase is due to
increases  in net  interest  income  and  noninterest  income  of  $593,000  and
$456,000,  respectively,  which were offset by increases in noninterest  expense
and  taxes.  For the six month  period  ended  June 30,  2004,  net  income  was
$1,134,000  as  compared  to  $655,000  for the same  period in 2003.  Basic and
diluted  earnings per share  increased to $.33 and $.31 per share,  respectively
for the three months  period  ended June 30, 2004  compared to $.21 and $.19 per
share,  respectively,  for the three month period ended June 30, 2003. Basic and
diluted  earnings per share increased to $.59 and $.55 per share,  respectively,
for the six months  ended June 30,  2004  compared  to $.39 and $.36 for the six
month period ended June 30, 2003. All "per share" data has been adjusted for the
20% stock dividend issued in March 2004.

                                       13

<PAGE>

Net interest  income for the three months ended June 30, 2004 was  $2,086,000 as
compared to $1,493,000 for the same period ended 2003. Interest income increased
$679,000 for 2004 as compared to the prior year period and was influenced mainly
by increases in interest earned on loans receivable of $707,000. The increase in
interest income was the result of an increase of $64,049,000 in average balances
of interest-earning  assets that primarily resulted from a $63,796,000  increase
in the average balance of loans receivable. The yield on interest earning assets
decreased  to 5.19% for the three  months ended June 30, 2004 from 5.37% for the
same period ended 2003  resulting  from a continuous  drop in interest rates for
the quarter.  Although  there were  significant  increases in  residential  real
estate lending,  the yield on the loans receivable  decreased 64 basis points in
2004 as compared to 2003.  Year to date, the net interest  income was $3,947,000
as  compared to  $2,791,000  for the same  period  ended  2003,  as the yield on
interest earning assets dropped 16 basis points during the time period.

Interest  expense  increased by only $85,000 for the three months ended June 30,
2004 as  compared  to the prior  year  period  and was  influenced  mainly 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 $53,123,000.
The average  balances of savings  deposit  accounts  increased  $48,172,000 as a
result of customer  service,  referrals,  and marketing  efforts and competitive
rates of the Nittany Savings  product.  The cost of funds decreased to 2.11% for
the three month  period ended June 30, 2004 from 2.59% for the same period ended
2003 as a result of a general  reduction  in market  interest  rate levels and a
decrease  in the rates paid on  deposits.  Interest  expense  for the  six-month
period ended June 30, 2004 increased by $183,000 as lower rates were offset by a
$50,066,000 increase in the average balance in the Nittany Savings product.

Management's  constant attention to loan rates, deposit rates, and the liquidity
position  of the Bank has been  successful  as the  Bank's net  interest  margin
increased  by 27 basis  points to 3.25% from 2.98% at June 30, 2003, a period of
interest rate volatility.

Total  noninterest  income for the three  months  ended June 30, 2004  increased
$456,000 as compared to the same period ended 2003. Noninterest income items are
primarily  comprised of service  charges and fees on deposit  account  activity,
along with fee  income  derived  from  asset  management  services  and  related
commissions.  Service  fees on  deposit  accounts  increased  $47,700  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
June 30, 2004,  commissions  and management  fees from Vantage and Nittany Asset
Management  increased  by $442,000  over the same period of 2003.  Year to date,
noninterest  income  increased to  $1,534,000  from $829,000 for the same period
ended 2003 due to the growth in assets under management at Vantage.

Total noninterest  expenses  increased  $611,000 for the three months ended June
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  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 $361,000 of solicitors' fees for the quarter as compared
to  $223,000  for the same  period in 2003 due to the  growth  in  assets  under
management.  Year to date,  noninterest  expenses  increased to $3.409,000  from
$2,338,000 for the same period ended 2003  primarily  because of the increase of
$375,000  in  compensation   related  expenses  and  the  $444,000  increase  in
commission expense mainly at Vantage.

                                       14

<PAGE>

Income tax expense of $339,000  was  recognized  in the second  quarter of 2004,
compared to $189,000 for the same period of 2003. 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 during the quarter,
have helped to reduce our effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Our   primary   sources  of  funds  are   deposits,   repayment   of  loans  and
mortgage-backed securities, maturities of investments, interest-bearing deposits
with other banks and, funds provided from operations. While scheduled repayments
of loans and mortgage-backed  securities and maturities of investment securities
are predictable sources of funds, deposit flows and loan prepayments are greatly
influenced  by the general level of interest  rates,  economic  conditions,  and
competition.  We use our liquid resources  principally to fund loan commitments,
maturing  certificates of deposit and demand deposit  withdrawals,  to invest in
other interest-earning assets, and to meet operating expenses.

Liquidity may be adversely  affected by unexpected  deposit outflows,  excessive
interest rates paid by competitors,  adverse  publicity  relating to the savings
and loan industry and similar matters.  Management  monitors projected liquidity
needs and determines the level desirable based in part on the Bank's commitments
to make loans and  management's  assessment  of the Bank's  ability to  generate
funds.

Management  monitors both the Company's and 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, 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
10.5%, 9.2%, 5.5% and 12.9%, 11.6%, 6.4%, respectively, at June 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.

                                       15

<PAGE>

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

               None

Item 2.    Changes  in  securities and Small Business Issuer Purchases of Equity
           Securities

               None

Item 3.    Defaults by the Company on its senior securities

               None

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

               The following  represents  the results of matters  submitted to a
               vote of the  stockholders  at the annual  meeting held on May 21,
               2004:

               Election of a Director for term to expire in 2008:
               David K. Goodman Jr. was elected by the following vote:

               For:                   1,332,490
               Votes Withheld:           14,734

               William A. Jaffe was elected by the following vote:

               For:                   1,328,927
               Votes Withheld:           18,297

               S.R.  Snodgrass  A.C. was selected as the  Company's  independent
               auditors for the fiscal year 2004 by the following vote:

               For:                   1,244,323
               Against:                     120
               Votes Withheld:            2,781

Item 5.    Other information

               None

Item 6.    Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
          (a)  The   following   exhibits   are   included  in  this  Report  or
               incorporated herein by reference:

             <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 ***

                                       16

<PAGE>

               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.


          (b)  Reports on Form 8-K.


          (1)  A Report on Form 8-K was filed on August  10,  2004  pursuant  to
               Items 7 and 12 in accordance  with Release No. 34-47583 to report
               earnings for the quarter ended June 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:    August 13, 2004         By: /s/David Z. Richards
                                     -------------------------------------------
                                     David Z. Richards
                                     President and Chief Executive Officer



Date:    August 13, 2004         By: /s/Gary M. Bradley
                                     -------------------------------------------
                                     Gary M. Bradley
                                     Vice President and Chief Accounting Officer

                                       18