September 3, 2008

FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION

Bethlehem, Pa. Contact Joseph T. Svetik, President

610-691-2233

FIRST STAR BANCORP ANNOUNCES DIVIDEND DECLARATION

Bethlehem, PA, September 3, 2008. First Star Bancorp, Inc. (the “Company”) announced today that on August 26, 2008, the Company’s board of directors has declared a cash dividend of $.03 per share on the Company’s outstanding common stock. The cash dividend will be payable on October 7, 2008 to stockholders of record on September 19, 2008.

The Company reported a net loss for the three months ended June 30, 2008 of $1,486,000, or $0.93 per diluted share, compared to net income of $614,000, or $0.27 per diluted share, for the three months ended June 30, 2007. The decrease is primarily attributable to the recognition of a loss of $2,730,000 for a redemption in kind transaction that was initiated to liquidate a position in the AMF Ultra-Short Mortgage Fund. The fund’s net asset value has declined significantly. Lack of liquidity of certain CMO securities in the fund contributed to the decline. The underlying securities of $35.0 million were delivered to the bank and are now part of the bank’s investment portfolio.

Net income for the twelve months ended June 30, 2008 was $682,000, or $0.42 per diluted share, compared to $3,244,000, or $1.90 per diluted share, for the twelve months ended June 30, 2007. The decrease in the twelve month period ended June 30, 2008 compared to June 30, 2007 was primarily due to the redemption in kind transaction. First Star Bancorp, Inc. had assets of $670.3 million at June 30, 2008. The 21% increase of assets was primarily due to an increase in investment securities which were funded by increased FHLB borrowings.

The company also reported that it contributed approximately $600,000 to its employee stock ownership plan trust during the fiscal year ending June 30, 2008. The employee stock ownership plan trust purchased a corresponding amount of the stock of the company in open market transactions during the fiscal year and utilized such company contributions and/or borrowed funds to effect such stock purchases.

First Star Bancorp, Inc. is the holding company for First Star Savings Bank which serves the Lehigh Valley through its main office in Bethlehem and branch offices in Alburtis, Allentown, Bath, Nazareth, Palmer Township, New Tripoli and Wind Gap. Deposits at First Star Savings Bank are insured up to the legal maximum (generally, $250,000 per depositor) by the Federal Deposit Insurance Corporation (FDIC).

This news release may contain forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows and changes in the quality or composition of the Company’s loan or investment portfolios. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.

FIRST STAR BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share data)

Selected Financial Data:

	At June 30, 2008	At June 30, 2007
Total assets..................................................	$670,2982	$555,348
Cash and cash equivalents.............................	13,661	3,576
Investment securities.....................................	113,578	145,444
Mortgage-backed securities ..........................	304,925	162,257
Loans receivable, net....................................	209,235	227,248
Deposits.......................................................	339,034	354,515
Borrowings...................................................	288,267	155,600
Stockholder’s equity......................................	35,244	38,625
Non-performing loans....................................	1,826	3,626
Non-performing assets..................................	$ 2,359	$ -

Selected Operations Data:

	Three Months Ended June 30,			Year Ended June 30,
	2008	2007		2008	2007
Interest and dividend income.....	$8,468		$7,996	$32,708		$32,746
Interest expense ..........................	6,074		5,738	23,374		23,419
Net interest income.................	2,394		2,258	9,334		9,327
Provision for loan losses............	90		150	255		371
Net interest income after provision for loan losses.........	2,304		2,108	9,079		8,956
Other income.................................	(2,339)		244	(1,458)		1,773
Other expense...............................	1,738		1,482	6,435		6,070
Income before taxes.....................	(1,773)		870	1,186		4,659
Provision for income taxes..........	(287)		256	504		1,415
Net Income...............................	(1,486)		614	682		3,244
Earnings per share basic	$(1.69)		$0.51	$0.57		$2.72
Earnings per share diluted	$(0.93)		$0.31	$0.42		$1.61

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