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

                               FORM 10-QSB

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

               For the quarterly period ended September 30, 1998

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

For the transition period from            to
                              ------------  ------------

                         Commission File Number 333-57277
                        --------------------------------

                            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)

          PO Box 10283 Calder Square, State College, Pennsylvania 16805
                   ------------------------------------------
                    (Address of principal executive offices)

                                (814) 466 - 6336
                   ------------------------------------------
              (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 October 31, 1998:  577,436 shares






<PAGE>
                          NITTANY FINANCIAL CORP.

                                   INDEX



                                                                      Page
                                                                     Number
                                                                     ------

PART I - FINANCIAL INFORMATION

   Item 1. Financial Statements

            Balance Sheet (Unaudited) as of
              Sept 30, 1998 and Dec 31, 1997                            3

            Statement of Operations (Unaudited) for the
              Three Months, Nine Months ended Sept 30,1998,             4
                  And period from inception through Sept 30, 1998

              Statement of Cash Flows (Unaudited)
              for the Nine Months ended Sept 30,1998,                   5
                  And period from inception through Sept 30, 1998

            Notes to Unaudited Financial Statements                     6

   Item 2. Management's Discussion and Analysis of
             Recent Developments                                       7-8

PART II  -  OTHER INFORMATION

   Item 1. Legal Proceedings                                            9

   Item 2. Changes in Securities                                        9

   Item 3. Defaults Upon Senior Securities                              9

   Item 4. Submission of Matters to a Vote of Security Holders          9

   Item 5. Other Information                                            9

   Item 6. Exhibits and Reports on Form 8-K                             9

SIGNATURES                                                             10






<PAGE>

                             NITTANY FINANCIAL CORP.
                            BALANCE SHEET (UNAUDITED)


                                                         Sept 30,   December 31,
                                                          1998          1997
                                                      ------------- ------------

ASSETS
Cash in banks                                           $  96,656     $  29,449
Certificate of Deposits in banks                           10,548          --  
Furniture and equipment                                     2,649          --
Deferred organization costs                                25,000        70,000
                                                        ---------     ---------

      TOTAL ASSETS                                      $ 134,853     $  99,449
                                                        =========     =========

LIABILITIES
Accounts payable                                        $  94,162     $  75,226
Advances from organizers                                     --          50,000
                                                        ---------     ---------
      TOTAL LIABILITIES                                    94,162       125,226
                                                        ---------     ---------

STOCKHOLDERS' EQUITY
Preferred stock, no par value; 5,000,000 shares
 authorized; none issued                                     --            --
Common Stock, $.10 par value; 10,000,000
 shares authorized; 30,000 shares issued
 and outstanding                                            3,000          --
Additional paid - in capital                              297,000          --
Retained deficit                                         (259,309)      (25,777)
                                                        ---------     ---------

      TOTAL STOCKHOLDERS' EQUITY                           40,691       (25,777)
                                                        ---------     ---------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 134,853     $  99,449
                                                        =========     =========

See accompanying notes to the unaudited financial statements.

                                     3



<PAGE>

                             NITTANY FINANCIAL CORP.
                       STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                     Period from
                                                                      Inception
                                      Three Months    Nine Months   (October 9, 1997
                                          Ended          Ended          Through
                                      September 30,   September 30,  September 30,
                                          1998           1998             1998)
                                      -------------   ------------   ----------------

<S>                                  <C>              <C>              <C>         
INTEREST INCOME                       $     788        $   1,996        $   2,291
                                                                       
EXPENSES                                                               
Salary and benefits                      38,017           79,730           99,479
Occupancy and equipment                    --                439              439
Professional services                   100,453          104,175          110,083
Other                                    31,773           51,184           51,599
                                      ---------        ---------        ---------
Total expenses                          170,243          235,528          261,600
                                      ---------        ---------        ---------
                                                                       
Loss before income taxes               (169,455)        (233,532)        (259,309)
                                                                       
Income taxes                               --               --               --
                                      ---------        ---------        ---------
                                                                       
NET LOSS                              $(169,455)       $(233,532)       $(259,309)
                                      =========         ========         ========
                                                                       
LOSS PER SHARE                        $(   6.22)       $ ( 10.99)       $  (12.20)
                                                                       
WEIGHTED AVERAGE SHARES OUTSTANDING      27,228           21,259           21,259
</TABLE>                                                           
See accompanying notes to the unaudited financial statements.


                                     4


<PAGE>
                             NITTANY FINANCIAL CORP
                       STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                    Period from
                                                                     Inception
                                                    Nine Months   (October 9, 1997
                                                       Ended         Through
                                                   September 30,    September 30,
                                                        1998             1998)
                                                  --------------  ----------------

<S>                                                  <C>             <C>       
OPERATING ACTIVITIES                                                
   Net loss                                           $(233,532)      $(259,309)
   Adjustments to reconcile net loss to net cash                    
     provided by operating activities:                              
   Decrease in deferred and accrued organizational                  
     Expenses, net                                       63,936          69,162
                                                      ---------       ---------
    Net cash provided by operating activities          (169,596)       (190,147)
                                                      ---------       ---------
INVESTING ACTIVITIES                                                
   Purchase of one year bank certificate of deposit     (10,548)        (10,548)
   Purchase of equipment                                 (2,649)         (2,649)
                                                      ---------       ---------
   Net cash used for investing activities               (13,197)        (13,197)
                                                      ---------       ---------
FINANCING ACTIVITIES                                                
   Advances from organizers                                --            50,000
   Proceeds from sale of common stock                   250,000         250,000
                                                      ---------       ---------
   Net cash provided by financing activities            250,000         300,000
                                                      ---------       ---------
   Increase in cash and cash equivalents                 67,207          96,656
                                                                    
CASH AND CASH EQUIVALENTS                                           
   AT BEGINNING OF PERIOD                                29,449            --
                                                      ---------       ---------
CASH AND CASH EQUIVALENTS                                           
   AT END OF PERIOD                                   $  96,656       $  96,656
                                                      =========       =========
</TABLE>


See accompanying notes to the unaudited financial statements.

                                      5


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

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited 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,  which 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.  As of the date of these
financial  statements, Nittany Financial Corp.'s (the "Company") operations have
been limited to in-formation  procedures;  raising capital,  recruiting officers
and staff,  obtaining a banking  facility  and  working  towards  obtainment  of
regulatory  approval.  Since the Company's planned principal operations have not
yet commenced; no significant revenue has been derived therefrom. The results of
operations for the interim periods are not indicative of the results that may be
expected  for a full year and could be  materially  different if the Company was
not an "in-formation" entity and operation.

NOTE 2 - STOCKHOLDERS EQUITY

Initial  capitalization  of the Company  occurred through the issuance of common
stock in a private placement which was exclusively  offered to the organizers of
the Company  during the first  quarter of 1998.  A total of 30,000  shares at an
offering price of $10.00 per share were issued.



                                     6


<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The Company was incorporated  under the laws of the Commonwealth of Pennsylvania
on  December  8, 1997 for the  purpose of  becoming a unitary  savings  and loan
holding company,  which will own all of the outstanding  shares of capital stock
of a proposed federal stock savings bank, Nittany Bank (the "Bank"). The Company
received  regulatory  approval  to open  the  Bank  from the  Office  of  Thrift
Supervision and the Federal Deposit  Insurance  Corporation on September 8, 1998
and September 14, 1998, respectively.  On October 23, 1998 (the "Closing"),  the
Company completed its common stock offering selling 537,436 shares at $10.00 per
share and  raising  $5,374,360  in net  proceeds.  At the  Closing,  the Company
acquired from First Commonwealth  Financial Corp. two branch offices and assumed
such branch leases (the "Branch Agreement").  Pursuant to such Branch Agreement,
the Company assumed deposit  liabilities of approximately $10.2 million and paid
a deposit  premium  in the form of cash and stock.  The  Company  also  acquired
furniture  and  equipment  of   approximately $30,000, personal credit lines and
home equity lines of credit loans of approximately  $695,000,   and  vault  cash
of approximately $154,000. The Bank opened for business on October 26, 1998.

The  proposed  business  of the Bank will  consist  of  offering a full range of
banking  services to  individuals,  professional  and business  customers in its
primary  service  area.  These  services  will  include  providing  personal and
business demand  deposits,  savings and time  certificates  of deposit,  and the
origination of residential and commercial mortgages, home equity loans, consumer
loans,  small business and other loans.  Customer deposits with the Bank will be
at rates  competitive  with those  offered in the Bank's  primary  service area.
Customer  deposits with the Bank will be insured to the maximum extent  provided
by law  through  the  FDIC.  The Bank  does  not  anticipate  offering  brokered
deposits.  The loans  the Bank  anticipates  originating  will  consist  of both
adjustable  and fixed  rate  instruments.  The Bank or  Company  may also  offer
through affiliations with other companies,  alternative non-deposit investments,
such as mutual  funds and  securities.  The Bank  intends  to also  offer  night
depository,  telephone banking,  bank-by-mail, and safe depository services. The
Bank does not anticipate offering trust and fiduciary services,  but may rely on
trust and  fiduciary  services  offered by  correspondent  banks,  if  customers
request  such  services.  Additional  staff was hired by  management  during the
months of September  and October to  adequately  support bank  operations,  bank
staff,  including  management,  totaled 14 full time equivalent  employees as of
October 26, 1998.

Initially,  the Bank anticipates  deriving its income  principally from interest
charged on loans and interest  earned on its investment  portfolio.  Income will
also be derived,  to a lesser  extent;  from fees  received in  connection  with
deposit services offered and loan  originations.  The Bank's principal  expenses
will  be  interest  expense  incurred  on  customer  deposits,  and  noninterest
operating  expenses  such as salaries and  employee  benefits,  data  processing
charges and occupancy costs.





                                            7



<PAGE>




YEAR 2000

A great deal of information has been disseminated about the global computer year
2000. Many computer  programs that can only  distinguish the final two digits of
the year entered (a common  programming  practice in earlier years) are expected
to read entries for the year 2000 as the year 1900 and compute payment, interest
or  delinquency  based on the wrong date or are expected to be unable to compute
payment,  interest  or  delinquency.  Rapid  and  accurate  data  processing  is
essential to our Bank's  operation.  Data  processing is also  essential to most
other financial  institutions  and many other  companies.  A third party service
bureau will be  providing  all of the  material  data  processing  that could be
affected by this problem.  Our prospective service bureau has advised us that it
is  substantially  compliant  and it expects to resolve this  potential  problem
before the year 2000. In this vein, the core application  software vendor, whose
products are used by our  prospective  service  bureau,  has  recently  obtained
ITAA*2000  certification,  which  indicates  that  the  software  has  the  core
capabilities  needed to handle the Year 2000 challenge.  However, if our service
bureau is unable to resolve  all facets of this  potential  problem in time,  we
could  likely  experience  significant  data  processing  delays,   mistakes  or
failures.  These delays,  mistakes or failures could have a significant  adverse
impact on our  financial  condition  and our results of  operation.  In order to
determine the service bureau is year 2000  compliant,  management must develop a
test  plan,  which it  intends  to  implement  during  the  first  half of 1999.
Management is aware of the significant of the Y2K issue and is presently working
to define a comprehensive  plan of action for Year 2000.  Management  expects to
incur  additional  operating  expenses during 1999 relating to the designing and
performing tests of the Bank's computer systems.  Currently,  the Bank estimates
such  costs will be  approximately  $10,000.  Management  is also  addressing  a
contingency  plan in the  event  any  portion  of its  operations  is  adversely
affected by Year 2000 related processing errors.

Successful and timely  completion of the Year 2000 plan is based on management's
best estimates  derived from various  assumptions  of future  events,  which are
inherently  uncertain,  including the progress of testing plans and all vendors,
suppliers and customer readiness.

CAUTIONARY STATEMENT - FORWARD-LOOKING STATEMENTS

Certain statements  contained in this filing  are  "forward-looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
statements   relating  to  financial  results  and  plans  for  future  business
development   activities,   and  are  thus  prospective.   Such  forward-looking
statements are subject to risks,  uncertainties  and other factors,  which could
cause  actual  results to differ  materially  from future  results  expressed or
implied by such  forward-looking  statements.  Potential risks and uncertainties
include,  but are not limited to;  economic  conditions,  competition  and other
uncertainties  detailed  from  time  to  time in the  Company's  Securities  and
Exchange Commission filings.

For additional information regarding the Company and proposed operations, please
refer to the Company's Form SB-2 (333-57277) dated July 31, 1998.


                                            8


<PAGE>
PART II - OTHER INFORMATION

Item 1 - Legal proceedings

         NONE

Item 2 - Changes in securities

         NONE

Item 3 - Defaults upon senior securities

         NOT APPLICABLE

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

         NONE

Item 5 - Other information

         NONE

Item 6 - Exhibits and reports on Form 8-K

(a)      Exhibits.  The following exhibits are filed with this report:

          The  exhibits  filed as  part of  this Registration  Statement are as 
          follows:

          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    Employment Agreement with David Z. Richards*
          10.1  Branch Purchase  and  Deposit  Assumption  Agreement  (including
                Amendment No.  1 to  Agreement)*  (Form  of  Amendment  No. 2 to
                Agreement)*
          27    Financial Data Schedule**

          ---------------------
          *    Incorporated by reference to the  registration  statement on Form
               SB-2 (333-57277)
          **   Electronic filing only

(b)       Reports on Form 8-K

               No reports on Form 8-K have been filed  during the third  quarter
               of the year ending December 31, 1998.


                                        9


<PAGE>


                           
SIGNATURES

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


                                   Nittany Financial Corp.


Date: November 16, 1998         By:\s\ David Z. Richards, Jr.
                                   ---------------------------------------------
                                   David Z. Richards, Jr.
                                   President ,Chief Executive Officer
                                            And Chief Financial Officer



                                   \s\ Matthew J. Ford
                                   ---------------------------------------------
                                   Matthew J. Ford
                                   Asst. Controller








                                     10