PRESS RELEASE




                                         Contact:       James S. Nelson
                                                        Executive Vice President
                                                        Steelton Bancorp, Inc.
                                                        (717) 939-1966


Steelton Bancorp, Inc.
Mechanics Savings Bank
51 S. Front Street
Steelton, PA  17113

OTC Electronic Bulletin Board "SELO"


                              FOR IMMEDIATE RELEASE
                              ---------------------


Steelton Bancorp Inc. Announces 5% Stock Repurchase Plan
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Steelton,  Pennsylvania  - September  20, 2001 - Harold  Stremmel,  President of
Steelton Bancorp, Inc. (the "Corporation"),  Steelton, Pennsylvania, the holding
company  of  Mechanics  Savings  Bank (the  "Bank"),  announced  today  that the
Corporation's  Board of Directors  approved a plan to repurchase up to 15,000 of
the  outstanding  shares of the company in open market  purchases.  This buyback
represents  a little more than 5% of the  company's  outstanding  shares.  It is
anticipated that the company will complete this buyback over the next 12 months.

         The Bank is a federally  chartered stock savings bank  headquartered in
Steelton, Pennsylvania. The Bank's deposits are federally insured by the Federal
Deposit Insurance  Corporation  ("FDIC").  At August 31, 2001, Steelton Bancorp,
Inc. had total assets and stockholders equity of $59.7 million and $5.5 million,
respectively.

For further information contact:
James S. Nelson, Investor Relations Officer