[NITTANY FINANCIAL CORP. LOGO]

April 27, 2005

Dear Stockholder:

On behalf of the Board of Directors and management of Nittany Financial
Corp. (the "Company"), we cordially invite you to the 2005 Annual Meeting of
Stockholders to be held at Nittany Bank's Financial Center, located at 2541 East
College Avenue, State College, Pennsylvania, on Friday, May 20, 2005, at 10:00
a.m., local time. As indicated in the enclosed 2004 Annual Stockholders Report,
2004 was another record year for asset growth, increased earnings and the
trading price of our common stock. The attached Notice of Annual Meeting and
Proxy Statement describe the formal business of the Annual Meeting. During the
Annual Meeting, we will report on the operations of the Company. Directors and
officers of the Company, as well as a representative of S.R. Snodgrass, A.C.,
our independent certified public accountants, will be present to respond to any
questions stockholders may have.

You will be asked to elect one director and to ratify the appointment of
the Company's independent accountants for the fiscal year ending December 31,
2005. The Board of Directors has approved each of these proposals and recommends
that you vote FOR them.

We encourage you to read the enclosed proxy statement and sign and return
your enclosed proxy card as promptly as possible, even if you plan to attend the
Annual Meeting, because a failure to do so could cause a delay in the Annual
Meeting and additional expense to the Company. A postage-paid return envelope is
provided for your convenience. This will not prevent you from voting in person,
but it will assure that your vote will be counted if you are unable to attend
the Annual Meeting. If you do decide to attend the Annual Meeting and want to
change your vote, you will be able to do so. However, if you are a stockholder
whose shares are not registered in your own name (i.e., held in "Street Name"),
you will need additional documentation from your recordholder to vote personally
at the Annual Meeting. If you plan to attend the Annual Meeting, please let us
know by marking the appropriate box on the proxy card.

Sincerely, Sincerely,

/s/ Samuel J. Malizia /s/ David Z. Richards, Jr.

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

- --------------------------------------------------------------------------------
NOTICE OF 2005 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2005
- --------------------------------------------------------------------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Nittany Financial Corp. (the "Company"), the holding company of
Nittany Bank (the "Bank"), will be held at the Bank's Financial Center, located
at 2541 East College Avenue, State College, Pennsylvania, on Friday, May 20,
2005, at 10:00 a.m., local time, for the following purposes:

1. To elect one director of the Company;

2. To ratify the appointment of S.R. Snodgrass, A.C. as independent
accountants of the Company for the fiscal year ending December 31, 2005;

all as set forth in the Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on March 31,
2005 are the stockholders entitled to vote at the Meeting and any adjournments
thereof.

A copy of the Company's Annual Report for the year ended December 31, 2004
is enclosed.

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

BY ORDER OF THE BOARD OF DIRECTORS

/s/ William A. Jaffe

William A. Jaffe
Secretary

State College, Pennsylvania
April 27, 2005

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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
NITTANY FINANCIAL CORP.
116 EAST COLLEGE AVENUE
STATE COLLEGE, PENNSYLVANIA 16801
- --------------------------------------------------------------------------------
2005 ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 2005
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Nittany Financial Corp. (the "Company"),
the holding company of Nittany Bank (the "Bank") to be used at the Annual
Meeting of Stockholders of the Company which will be held at the Bank's
Financial Center, located at 2541 East College Avenue, State College,
Pennsylvania, on Friday, May 20, 2005, 10:00 a.m., local time (the "Meeting").
The accompanying Notice of Annual Meeting of Stockholders and this Proxy
Statement are being first mailed to stockholders on or about April 27, 2005.

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

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

The Board of Directors has fixed the close of business on March 31, 2005,
as the record date for the determination of stockholders who are entitled to
notice of, and to vote at, the Meeting. On the record date, there were 2,110,794
shares, par value $0.10 per share, of the Company's common stock outstanding
(the "Common Stock"). Each stockholder of record on the record date is entitled
to one vote for each share held. The presence in person or by proxy of at least
a majority of the outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting. With respect to any matter, any
shares for which a broker indicates on the proxy that it does not have
discretionary authority as to such shares to vote on such matter (the "Broker
Non-Votes") will not be considered present for purposes of determining whether a
quorum is present. In the event there are not sufficient votes for a quorum or
to ratify any proposals at the time of the Meeting, the Meeting may be adjourned
in order to permit the further solicitation of proxies.

As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominee submitted as
Proposal 1, proposed by the Board, or to withhold authority to vote for the
nominee being proposed. Directors of the Company are elected by a plurality of
votes cast.

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

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

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

PERCENT OF SHARES OF
AMOUNT AND NATURE OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP (2) OUTSTANDING(%)
- --------------------------------------- ------------------------ --------------

David K. Goodman, Jr. 188,333 8.9%
Samuel J. Malizia 246,840 11.7%
J. Garry McShea 183,268 8.9%
Donald J. Musso 112,123 5.3%
<FN>
- --------------------
(1) The address of each beneficial owner is 116 East College Avenue, State
College, Pennsylvania 16801.
(2) The share amounts include shares of Common Stock that the following persons
have a right to purchase pursuant to exercisable stock options within 60
days of the record date, as follows: David K. Goodman, Jr.- 301 shares,
Samuel J. Malizia - 47,695 shares, J. Garry McShea - 18,972 shares and
Donald J. Musso - 29,055 shares.
</FN>

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------

Section 16(a) of the 1934 Act requires the Company's directors, executive
officers, and beneficial owners of more than 10% of the Company's Common Stock,
to file reports of ownership and changes in ownership of their equity securities
of the Company with the Securities and Exchange Commission and to furnish the
Company with copies of such reports. Based solely upon a review of such reports
furnished to the Company or representations that no such reports were required,
all of the filings by the Company's directors and executive officers were made
on a timely basis.

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

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

Donald J. Musso (the "Nominee") has been nominated by the Board of
Directors to serve as director. The Nominee is currently a member of the Board
and has been nominated for a four-year term to expire in 2009.

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

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

SHARES OF COMMON
YEAR FIRST STOCK BENEFICIALLY
ELECTED OR CURRENT TERM OWNED AS OF PERCENT
NAME AND TITLE AGE(1) APPOINTED TO EXPIRE MARCH 31, 2005(2) OWNED (%)
-------------- ------ --------- ------- ----------------- ---------

BOARD NOMINEE FOR TERM TO EXPIRE IN 2009
Donald J. Musso
Director 45 1997 2005 112,123 5.3%

DIRECTORS CONTINUING IN OFFICE
Samuel J. Malizia
Chairman of the Board 50 1997 2006 246,840 11.7%
David Z. Richards, Jr.
President, Chief Executive 44 1997 2006 64,021 3.0%
Officer and Director
J. Garry McShea
Director 50 1999 2007 183,268 8.9%
D. Michael Taylor
Director 63 1998 2007 43,403 2.1%
David K. Goodman, Jr.
Director 51 1999 2008 188,333 8.9%
William A. Jaffe
Director and Secretary 66 1997 2008 38,613 1.8%

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Richard C. Barrickman
Senior Vice President 53 -- -- 41,329 2.0%
John E. Arrington
Vice President 40 -- -- 41,961 2.0%
Gary M. Bradley
Vice President and Chief 53 - -- 1,976 *
Accounting Officer
All directors and executive -- -- -- 961,867 45.56%
officers of the Company as a
group (10 persons)
<FN>
- ----------------------
(1) At December 31, 2004.
(2) The share amounts include shares of Common Stock that the following persons
have a right to purchase pursuant to exercisable stock options within 60
days of the record date, as follows: Samuel J. Malizia - 47,695 shares,
David Z. Richards, Jr.- 16,701 shares, J. Garry McShea - 18,972 shares, D.
Michael Taylor- 19,879 shares, David K. Goodman, Jr.- 301 shares, William
A. Jaffe - 19,911 shares, Donald J. Musso - 29,055 shares, Richard C.
Barrickman - 25,361 shares, John E. Arrington - 27,118 shares and Gary
Bradley - 96 shares.
* Less than 1% of the outstanding of Common Stock.
</FN>

BIOGRAPHICAL INFORMATION

Set forth below is certain information with respect to the directors,
including the Nominee and Executive Officers of the Company.

NOMINEE FOR DIRECTOR:

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

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

CONTINUING DIRECTORS:

SAMUEL J. MALIZIA is the Chairman of the Board and co-founder of the
Company and Nittany Bank. Mr. Malizia is a founding partner of the law firm of
Malizia Spidi & Fisch, PC, a law firm with offices in Washington, DC and State
College, Pennsylvania. For over 23 years, Mr. Malizia has specialized in
transactional, securities and regulatory matters for financial institutions and
related entities. He received a Bachelor of Science Degree with Distinction in
accounting from the Pennsylvania State University and a Juris Doctor Degree from
the George Washington University. He served as Attorney Advisor to Special Trial
Judge Francis Cantrel at the United States Tax Court and attended the Masters of
Law in Taxation program at the Georgetown University where he was associate
editor of the Tax Lawyer. He is a member of the Pennsylvania and District of
Columbia bars, the U.S. Tax Court, U.S. Claims Court, U.S. Court of Appeals for
the District of Columbia and a member of the Federal Bar Association and
American Bar Association. He is an alumnus of several Penn State University's
organizations, including Lions Paw, Skull and Bones Honor Society, Beta Alpha
Psi and Omicron Delta Kappa. He is a member of the board of directors of Mercer
Insurance Group, Inc. and Mercer Mutual Insurance Company. He has also served on
the board of directors of the Lions Paw Alumni Society, the Mount Nittany
Conservancy and the Centre County Theatre for the Performing Arts. Mr. Malizia
is also an active member of Our Lady of Victory Catholic Church in State
College, Pennsylvania, where he coaches the OLV school football team.

DAVID Z. RICHARDS, JR. is one of the founders of the Company and Nittany
Bank and serves as President and Chief Executive Officer of both entities.
Richards began his community banking career in 1977, working part time at the
First National Bank of Danville, PA during high school and college. He continued
with the bank upon graduation from Susquehanna University with a BS in Finance
in 1982 and served the bank in various capacities, including Vice President and
Financial Officer. While at the Danville

bank, Richards helped to pioneer many new innovations such as the bi-weekly
mortgage and began one of the nation's first discount brokerage operations in a
community bank. In 1986, Richards became the youngest graduate of the ABA's
Stonier Graduate School of Banking. In 1990, he joined the 118 year old
Mifflinburg Bank and Trust Company, Mifflinburg, PA ($90 million in assets). As
President and CEO of Mifflinburg Bank, the company enjoyed strong growth to
approximately $200 million in assets when he left to start Nittany Bank in 1997.
Richards has served and chaired various committees for both the Pennsylvania
Bankers Association (PBA) and the American Bankers Association (ABA). Currently
he is chairman of the FURST Board of Directors for the Kirchman Corporation and
is vice chairman of Enterprise Technology Alliance board of directors, a
multi-bank owned data processing consortium. He is active in a number of local
charitable organizations, including serving as treasurer of the State College
Area YMCA and a member of St. Paul's United Methodist Church. Mr. Richards has
two daughters, Lauren (16) and Meghan (15).

J. GARRY MCSHEA has been owner and founder of the J.G. McShea Construction
Company, Boalsburg, Pennsylvania since 1978. McShea Construction specializes in
custom home construction, remodeling projects, commercial/residential rental
properties and land development. Prior to this, Mr. McShea was employed by
Certain Teed Corporation, Valley Forge, Pennsylvania, as a Residential Building
Material Specialist. Mr. McShea is a past President and 26 year member of the
Builders Association of Central Pennsylvania. He is a Director of the Tussey
Mountain Ski Corporation and served on the Harris Township Planning Commission.
Mr. McShea received a Bachelor of Science Degree in Marketing from the
Pennsylvania State University College of Business.

D. MICHAEL TAYLOR is an architect, real estate developer and entrepreneur,
who has resided in the State College area for 34 years. Mr. Taylor has a
Bachelor of Architecture degree from Kansas State University. Upon graduation,
he spent six years in commercial architecture for Phillips Petroleum Company and
several years working directly in the construction business. From 1978 to 1988
Mr. Taylor was part owner of Whitehill Lighting and Supply Company and Village
Hardware located in State College. From 1988 to present Mr. Taylor has
specialized in the design, construction and rental of several office buildings
in the State College area.

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

WILLIAM A. JAFFE is the President of The Jaffe Group, a Human Resource
Consultancy, headquartered in State College, which he established in January
1996. Previously, he was Compensation and Human Resource Practice Leader for the
Mid-Atlantic Region of Alexander & Alexander Consulting Group and a Vice
President of Towers Perrin. Mr. Jaffe received his Bachelor of Arts degree in
journalism from Penn State University and Master of Science degree in Management
from the University of Illinois. He is past President of The Mount Nittany
Conservancy, President of the Penn State College of Communications Alumni
Society, and is the past chair of the Penn State Hillel Foundation. He is a
member of the executive committee and board of directors of the Chamber of
Business and Industry of Centre County; and, as a community volunteer, serves on
the boards of the Centre County Community Foundation, Centre County United Way,
Pennsylvania Centre Stage, Penn State All Sports Museum and Knight Foundation's
State College Community Advisory Board. Additionally, Mr. Jaffe served as an

adjunct associate professor at The George Washington University from 1991 to
1995, and as an adjunct lecturer in management at Penn State. In 1996, Mr. Jaffe
was named a Penn State Alumni Fellow.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:

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

JOHN E. ARRINGTON was appointed Vice President of the Company and Vice
President of Retail Banking upon completion of the formation of the Bank on
October 23, 1998. He is also President of Nittany Asset Management, Inc.
Previously, Mr. Arrington was employed by PNC and its predecessors, serving in a
variety of capacities, most recently as Vice President. Mr. Arrington is active
in youth sports programs and serves on the board of several local non-profit
agencies.

GARY M. BRADLEY joined the Company in February 2002 and serves as the Chief
Accounting Officer. Prior to joining Nittany Financial, he was employed as a
Vice President and Auditor of Promistar Financial Corporation. He is a Certified
Public Accountant licensed in the State of Pennsylvania and a Certified Bank
Auditor. He is chairman of the Cresson Township Municipal Authority, treasurer
of the Allegheny Highlands Regional Theatre, and a trustee board member of the
Cresson Public Library.

COMMUNITY ADVISORY BOARD OF DIRECTORS:

The Bank has created a Community Advisory Board of Directors to help
evaluate the needs of the community and to solicit ideas and comments from the
business community and general populous. The members of the Community Advisory
Board are selected on a yearly basis and meet at least every calendar quarter.
The Community Advisory Board serves by an appointment from the Board of
Directors of the Bank. Set forth below are the names of the members of the
Community Advisory Board along with a brief description of their occupation.
Beginning in November 2003, members of the Community Advisory Board received
$100 per meeting attended and received $300 for attendance at a strategic
planning meeting.

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

D. PATRICK DAUGHERTY is the owner of the Tavern Restaurant located in State
College, Pennsylvania.

DR. RICHARD DOERFLER is in private practice as an orthodontist in State
College, Pennsylvania. He is also an Associate Professor in the Department of
Orthodontics at the University of Pittsburgh's School of Dental Medicine. Dr.
Doerfler is a resident of State College, Pennsylvania.

KELLY GRIMES is the President of five Wendy's restaurants headquartered in
State College, Pennsylvania. Ms. Grimes is a resident of State College,
Pennsylvania.

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

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

LORI PACCHIOLI is a freelance marketing/public relations consultant working
from her home in State College while raising a toddler. She is the former
director of Outreach/Marketing for Penn State Public Broadcasting. For ten years
prior, Ms. Pacchioli was the Director of Public Relations for Brookline Village.

ANNE RILEY is an English Teacher. She is a Penn State Trustee and past
president of the Penn State Alumni Association, State College, Pennsylvania. In
the College of Communications she serves as chair of the Board of Visitors for
the new center for Sports Journalism. She also serves on the boards of the State
College YMCA, the Mt. Nittany Conservancy and the Renaissance Fund.

RICHARD SHORE is Senior Vice President of Development for Tele-Media
Corporation of Delaware, Pleasant Gap, Pennsylvania. Mr. Shore is also a member
of the State College Area School District Community Advisory Board of Finance.
Mr. Shore resides in State College, Pennsylvania.

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

WILLIAM UPDEGRAFF is the owner of Updegraff & Updegraff, an accounting firm
located in State College, Pennsylvania. Mr. Updegraff is a resident of Harris
Township, Pennsylvania.

NEIL HERLOCHER is President of Herlocher Foods, Inc. and owner of Otis
Properties, State College, Pennsylvania. Mr. Herlocher resides in State College,
Pennsylvania.

CHARLES F. WILD is a partner in the firm of R.H. Marcon, Inc., State
College, Pennsylvania. He also holds the position of Secretary/Treasurer of the
Marcon Corp. Mr. Wild is a resident of State College, Pennsylvania.

DENNIS J. RALLIS is the owner of the Lion's Den and Old State Clothing
Company located in State College, Pennsylvania. He is a partner of Nittany
Embroidery & Digitizing, Inc., Pleasant Gap, Pennsylvania. Mr. Rallis resides in
Centre Hall, Pennsylvania.

PHILIP BOSAK is President of Bosak Construction, Inc., Centre Hall,
Pennsylvania. Mr. Bosak is a resident of Centre Hall, Pennsylvania.

JAY LUTZ is President of Preferred Staffing Solutions in State College,
Pennsylvania. Mr. Lutz is a resident of State College, Pennsylvania.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During 2004, the Company's Board of Directors held a total of 12 meetings
and the Bank's Board of Directors also held a total of 12 meetings. No director
attended fewer than 75% of the total meetings of the Company's Board of
Directors and committees during the period of his service. In addition to other
committees, as of December 31, 2004, the Company had a Nominating Committee, a
Compensation Committee, and an Audit Committee.

The Board of Directors of the Company acts as the Nominating Committee,
which is not a standing committee. Nominations to the Board of Directors made by
stockholders must be made in writing to the Secretary and received by the
Company not less than 60 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders of the Company. Notice to the Company
of such nominations must include certain information required pursuant to the
Company's Bylaws. See "-- Director Nomination Process" The Board of Directors
acting as the Nominating Committee met one time during the 2004 fiscal year.

The Compensation Committee is comprised of Directors Jaffe, Goodman,
Malizia and McShea. This standing committee establishes the Bank's salary budget
for approval by the Board of Directors. The Committee met two times during the
2004 fiscal year.

The Audit Committee is comprised of Directors Musso (Chairman), Jaffe,
Goodman, and McShea. All such members are independent as such term is defined
under the rules and regulations of the Nasdaq. The Board of Directors has
determined that Donald J. Musso is an audit committee financial expert within
the meaning of the regulations of the Securities and Exchange Commission based
upon his experience. The Audit Committee is a standing committee and is
responsible for developing and maintaining the Company's audit program. The
Audit Committee has adopted a written charter. The Audit Committee meets with
the Company's independent accountants to discuss the results of the annual audit
and any related matters.

AUDIT FEES

Audit Fees. The aggregate fees billed by S.R. Snodgrass, A.C. for
professional services rendered for the audit of the Company's annual
consolidated financial statements and for the review of the consolidated
financial statements included in the Company's Quarterly Reports on Form 10-QSB
for the fiscal years ended December 31, 2004 and 2003 were $57,458 and $43,184,
respectively.

Audit Related Fees. There were no fees billed by S.R. Snodgrass, A.C. for
assurance and related services related to the audit of the annual financial
statements and to the review of the quarterly financial statements for the years
ended December 31, 2004 and 2003.

Tax Fees. The aggregate fees billed by S.R. Snodgrass, A.C. for
professional services rendered for tax compliance, tax advice or tax planning
for the years ended December 31, 2004 and 2003 were $9,593 and $13,104,
respectively.

All Other Fees. For the year ended December 31, 2004 a fixed asset cost
analysis study for a new office was performed by S.R. Snodgrass, A.C. at a fee
of $5,595. Other than this, there were no fees billed by S.R. Snodgrass, A.C.
for professional services rendered for services or products other than those
listed under the captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" for
the years ended December 31, 2004 and 2003.

It is the Audit Committee's policy to pre-approve all audit and non-audit
services prior to the engagement of the Company's independent auditor to perform
any service. All of the services listed above for 2003 and 2004 were approved by
the Audit Committee prior to the service being rendered.

DIRECTOR NOMINATION PROCESS

The Company does not have a standing nominating committee. The Company's
full Board of Directors acts as a nominating committee for selecting the
management's nominees for election of directors in accordance with the Company's
Bylaws. The Board feels it is appropriate for the full Board to serve this
function because the Company has a relatively small Board, making action by
committee unnecessary for purposes of managing nominations. The Board does not
have a charter governing its nominating function. As defined by Nasdaq, each
director, other than President Richards, is an independent director.

The Company does not pay fees to any third party to identify or evaluate or
assist in identifying or evaluating potential nominees. The Board's process for
identifying and evaluating potential nominees includes soliciting
recommendations from directors and officers of the Company and the Bank.
Additionally, the Board will consider persons recommended by stockholders of the
Company in selecting the Board's nominees for election. There is no difference
in the manner in which the Board evaluates persons recommended by directors,
officers or employees and persons recommended by stockholders in selecting Board
nominees.

STOCKHOLDER COMMUNICATIONS

The Board of Directors has a policy for stockholder communications to the
Board. The Board welcomes all communications to the Board as a whole and to
individual members. Written communications received by the Company or by any
Board members individually from stockholders are shared with the full Board no
later than the next regularly scheduled Board meeting. The Board encourages, but
does not require, directors to attend the annual meeting of stockholders. Five
of the Board's seven members attended the 2004 annual meeting of stockholders.

- --------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
- --------------------------------------------------------------------------------

The Audit Committee has reviewed and discussed the audited financial
statements of the Company with management and has discussed with S.R. Snodgrass,
A.C., the Company's independent auditors, the matters required to be discussed
under Statement of Auditing Standards No. 61 ("SAS 61"). In addition, the Audit
Committee received from S.R. Snodgrass, A.C. the written disclosures and the
letter required to be delivered by S.R. Snodgrass, A.C. under Independence
Standards Board Standard No. 1 ("ISB Standard No. 1") and has discussed with
representatives of S.R. Snodgrass, A.C. their independence.

The Audit Committee has reviewed the non-audit services currently provided
by the Company's independent auditor and has considered whether the provision of
such services is compatible with maintaining the independence of the Company's
independent auditors.

Based on its review of the financial statements, its discussion with S.R.
Snodgrass, A.C. regarding SAS 61, and the written materials provided by S.R.
Snodgrass, A.C. under ISB Standard No. 1 and the related discussion with S.R.
Snodgrass, A.C. of their independence, the Audit Committee has recommended that
the audited financial statements of the Company be included in its Annual Report
on Form 10-KSB for the year ended December 31, 2004, for filing with the
Securities and Exchange Commission.

AUDIT COMMITTEE

Donald J. Musso David K. Goodman, Jr.
William A. Jaffe J. Garry McShea

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

DIRECTOR COMPENSATION

In 2004, each director was paid an annual retainer of $12,000 per year plus
$100 for each committee meeting attended except for the Chairman of the Board
who has requested the Company to donate his fees to local charities. The Bank
paid a total of $78,900 in directors' fees for the year ended December 31, 2004.
The Company does not pay any additional compensation for membership on its Board
of Directors.

OPTION PLAN

Under the 1998 stock option plan, as amended (the "Option Plan"), which was
approved by shareholders on May 24, 1999, each director was granted stock
options. During fiscal 2001, under the Option Plan, each non-employee director
was awarded additional stock options to purchase 10,692 shares of Common Stock,
exercisable at the rate of 25% per year beginning on October 25, 2001. Messrs.
Richards, Barrickman and Arrington were each granted stock options to purchase
19,800 shares of Common Stock, exercisable at the rate of 20% per year beginning
on October 25, 2001. During fiscal 2004 Messrs. Richards, Barrickman and
Arrington were each granted stock options to purchase 400 shares of Common
Stock, exercisable at the rate of 20% per year beginning on February 17, 2004.
Non Employee Directors were awarded additional stock options to purchase 500
shares of Common Stock, exercisable at the rate of 25% per year beginning on
February 17, 2005.

EXECUTIVE OFFICER COMPENSATION

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

SUMMARY COMPENSATION TABLE. The following table sets forth the cash and
non-cash compensation awarded to or earned by the chief executive officer and
each executive officer of the Company who received salary and bonus in excess of
$100,000. No other executive officer of either the Bank or the Company had a
salary and bonus that exceeded $100,000 for services rendered for the years
presented.

LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
NAME AND FISCAL SECURITIES UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) COMPENSATION (2)(3)
- ------------------ ---- --------- -------- --------------------- -------------------

David Z. Richards, Jr. 2004 $150,000 $59,400 400 $30,150
President and Chief 2003 138,000 53,544 -- 25,041
Executive Officer 2002 118,000 56,875 -- 4,056

Richard C. 2004 $100,000 $39,600 400 $20,100
Barrickman 2003 88,000 34,144 -- 15,968
Senior Vice President 2002 83,250 40,216 -- 2,654

John E. Arrington 2004 $ 80,000 $31,680 400 $16,080
Vice President 2003 74,500 28,906 -- 13,518
2002 70,000 33,740 -- 2,406
<FN>
- ---------------------
(1) See "-- Stock Awards."
(2) At December 31, 2004 includes $26,400, $17,600 and $14,080 of accrued
benefits under the SERP.
(3) At December 31, 2004 includes $3,750, $2,500 and $2,000 of matching
contributions under the Bank's 401(k) Plan.
</FN>

EMPLOYMENT AGREEMENT. The Bank and the Company entered into separate
employment agreements with Messrs. Richards, Barrickman and Arrington,
respectively (the "Agreements"). The Agreements each have a term of three, two
and one years, respectively, and may be renewed annually by the Board of
Directors upon a determination of satisfactory performance within the Board's
sole discretion. If Messrs. Richards, Barrickman and Arrington should become
disabled during the term of the Agreements, each shall continue to receive
payment of 80% of the base salary for a period of 3 months and 50% of such base
salary for a period of 12 months, but not exceeding the remaining term of the
Agreements. Such payments shall be reduced by any other benefit payments made
under other disability programs in effect for the Bank's employees. Under the
Agreements, Messrs. Richards, Barrickman and Arrington may be terminated for
"just cause" as defined in the Agreements. If Messrs. Richards, Barrickman or
Arrington are terminated without just cause, each will be entitled to a
continuation of his salary from the date of termination through the remaining
term of his agreement. The Agreements contain a provision stating that in the
event of the termination of employment in connection with a change in control of
the Company or Bank, Messrs. Richards, Barrickman and Arrington will be paid a
lump sum amount equal to 2.99, two, and one times, respectively, their five year
average annual taxable compensation. If such payments had been made under the
Agreements as of December 31, 2004, such payments for Messrs. Richards,
Barrickman and Arrington would have equaled approximately $498,037, $229,047,
$93,114, respectively.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank has adopted a Supplemental
Executive Retirement Plan ("SERP") for the benefit of David Z. Richards, Jr.,
Richard C. Barrickman and John E. Arrington. The Bank makes an annual accrual
equal to not less than ten percent of the annual bonus award under the Nittany
Bank Bonus Plan. In addition, the Bank will contribute an additional accrual
each year equal to the interest rate payable on the 10-year Treasury bond, as
adjusted quarterly. Further, the Bank may within its discretion elect to make an
additional contribution to the participant's account. For 2004, the Bank made an
additional contribution equal to 400% of the participant's deferral. The
additional contribution made by the Bank vests over a five-year period beginning
on the one-year anniversary of such contribution. The accumulated deferred
compensation account for each participant will be payable to such participant at
any time following the retirement at age 65, early retirement at age 60,
disability, death or termination of employment following a change in control of
the Bank or the Company.

STOCK AWARDS. The following tables set forth information concerning option
grants during fiscal 2004 and previously awarded stock options pursuant to the
Option Plan to the named executive officers in the Summary Compensation Table
and the year end value of such outstanding options. No stock appreciation rights
are authorized under the Option Plan.

OPTION GRANTS IN LAST FISCAL YEAR
------------------------------------------------------------------------------
INDIVIDUAL GRANTS
------------------------------------------------------------------------------
PERCENT OF TOTAL
OPTIONS GRANTED
NUMBER OF TO EMPLOYEES EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED(1) IN FISCAL YEAR ($/SHARE) DATE
- ---- ------------------ -------------- --------- ----

David Z. Richards, Jr. 400 14.3% 20.83 2014
Richard C. Barrickman 400 14.3% 20.83 2014
John E. Arrington 400 14.3% 20.83 2014
<FN>
- -------------------
(1) These option grants vest over five years at the rate of 20% per year.
</FN>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES
-------------------------------------------------------------------------

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE FY-END(#) AT FY-END($)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
---- -------------- ----------- ------------------------- -----------------------------

David Z. Richards, Jr. -- -- 16,701 /4,248 $350,870 /$85,571

Richard C. Barrickman 3,500 20,090 25,360 /4,248 534,944 / 85,571

John E. Arrington -- -- 27,118 /4,248 572,319 / 85,571
<FN>
- ----------
(1) Based upon the closing price of $27.00 At December 31, 2004 less the per
share exercise prices of the options.
</FN>

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

S.R. Snodgrass, A.C. was the Company's independent public accountants for
the fiscal year ending December 31, 2004. The Board of Directors has appointed
S.R. Snodgrass, A.C. to be its accountants for the fiscal year ending December
31, 2005, subject to ratification by the Company's stockholders. A
representative of Snodgrass is expected to be present at the Meeting to respond
to stockholders' questions and will have the opportunity to make a statement if
the representative so desires.

RATIFICATION OF THE APPOINTMENT OF THE ACCOUNTANTS REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF THE COMPANY AT THE
MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF S.R. SNODGRASS, A.C. AS THE COMPANY'S
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2005.

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

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

Samuel J. Malizia, the Company's Chairman, is a partner in the law firm of
Malizia Spidi & Fisch, PC which performs legal work for the Company and the Bank
in the normal course of business.

- --------------------------------------------------------------------------------
2006 ANNUAL MEETING STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------

In order to be considered for inclusion in the Company's proxy statement
for the annual meeting of stockholders to be held in 2006, all stockholder
proposals must be submitted to the Secretary at the Company's office, 116 East
College Avenue, State College, Pennsylvania 16801 on or before December 28,
2005. Under the Articles of Incorporation, in order to be considered for
possible action by stockholders at the 2006 annual meeting of stockholders,
stockholder nominations for director and stockholder proposals not included in
the Company's proxy statement must be submitted to the Secretary of the Company,
at the address set forth above, no later than March 21, 2006.

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

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

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

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2004 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF
THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, NITTANY FINANCIAL CORP.,
116 EAST COLLEGE AVENUE, STATE COLLEGE, PENNSYLVANIA 16801.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ William A. Jaffe

William A. Jaffe
Secretary
State College, Pennsylvania
April 27, 2005

- --------------------------------------------------------------------------------
NITTANY FINANCIAL CORP.
116 EAST COLLEGE AVENUE
STATE COLLEGE, PENNSYLVANIA 16801
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 20 2005
- --------------------------------------------------------------------------------

The undersigned hereby appoints the Board of Directors of Nittany Financial
Corp. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at Nittany Bank's operations center,
located at 2541 East College Avenue, State College, Pennsylvania, on May 20,
2005, at 10:00 a.m., local time and at any and all adjournments thereof, in the
following manner:
FOR WITHHELD
--- --------
_ _
1. The election as directors of the nominee |_| |_|
listed below (except as marked to the
contrary below):

Donald J. Musso

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

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

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

2. To ratify the appointment of
S.R. Snodgrass, A.C. as independent
auditors of the Company for the _ _ _
fiscal year ending December 31, 2005 |_| |_| |_|

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

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

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

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

The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated April 27, 2005 and the 2004 Annual Report.
_
Please check the box if you are planning to attend the Meeting in person |_|

Dated: _____________________________, 2005

_____________________________________ __________________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER

_____________________________________ __________________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

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

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