SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]  Annual Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the fiscal year ended December 31, 2001

                                     - OR -

| |  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934 For the transition period from         to
                                                         -------    -------
Commission file number:   0-26499
                          -------

                             Steelton Bancorp, Inc.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

                Pennsylvania                                    25-1830745
    ---------------------------------------------            -------------------
     (State or Other Jurisdiction of                          (I.R.S. Employer
      Incorporation or Organization)                         Identification No.)

    51 South Front Street, Steelton, Pennsylvania                  17113
    ---------------------------------------------                  -----
   (Address of Principal Executive Offices)                      (Zip Code)

Registrant's telephone number, including area code:              (717) 939-1966
                                                                 --------------

Securities registered pursuant to Section 12(b) of the Act:          None
                                                                 --------------
Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

         Indicate  by check mark  whether  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or for such shorter period that  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

         Registrant's  revenues  for the  year  ended  December  31,  2001  were
$4,377,722.

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant,  based upon the last reported sales price of such stock as of
March 19, 2002, was approximately $3.2 million.

         As of March 19, 2002, the registrant had 300,290 shares of Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     December 31, 2001. (Part II)
2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders  for
     the Fiscal Year ended December 31, 2001. (Part III)

<PAGE>

                                     PART I

Forward-Looking Statements

         Steelton  Bancorp,  Inc. (the  "Corporation" or "Registrant")  may from
time to  time  make  written  or oral  "forward-looking  statements,"  including
statements  contained  in the  Corporation's  filings  with the  Securities  and
Exchange  Commission  (including  this  Annual  Report  on Form  10- KSB and the
exhibits thereto), in its reports to stockholders and in other communications by
the Corporation, which are made in good faith by the Corporation pursuant to the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Corporation's plans,  objectives,  expectations,  estimates
and intentions,  that are subject to change based on various  important  factors
(some of which are beyond the  Corporation's  control).  The following  factors,
among others,  could cause the  Corporation's  financial  performance  to differ
materially from the plans,  objectives,  expectations,  estimates and intentions
expressed in such forward-looking  statements: the strength of the United States
economy  in  general  and  the  strength  of the  local  economy  in  which  the
Corporation  conducts  operations;  the effects of, and changes in, monetary and
fiscal  policies  and laws,  including  interest  rate  policies of the Board of
Governors of the Federal Reserve system,  inflation,  interest rate,  market and
monetary  fluctuations;  the impact of changes in financial  services'  laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological  changes;  changes in  consumer  spending  and saving
habits; and the success of the Corporation at managing the risks involved in the
foregoing.

         The Corporation  cautions that the foregoing list of important  factors
is  not   exclusive.   The   Corporation   does  not  undertake  to  update  any
forward-looking  statement,  whether written or oral, that may be made from time
to time by or on behalf of the Corporation.

Item 1. Description of Business
-------------------------------

General

         The Corporation is a Pennsylvania company organized in February 1999 at
the direction of Mechanics  Savings and Loan, FSA (the "Bank") to acquire all of
the  capital  stock that the Bank  issued in its  conversion  from the mutual to
stock form of ownership (the "Conversion").  On July 8, 1999, the Bank completed
the  Conversion  and became a wholly owned  subsidiary of the  Corporation.  The
Corporation is a unitary savings and loan holding company which,  under existing
laws,  generally is not restricted in the types of business  activities in which
it may engage provided that the Bank retains a specified amount of its assets in
housing-related investments. The Corporation conducts no significant business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank and investing the Corporation's portion of the net proceeds obtained in the
Conversion.

                                        1
<PAGE>

         The Bank is a federally  chartered stock savings bank  headquartered in
Steelton,  Pennsylvania,  originally chartered in 1900 as Mechanics Building and
Loan   Association  of  Steelton.   The  Bank  is  subject  to  examination  and
comprehensive  regulation  by the Office of Thrift  Supervision  ("OTS") and its
deposits are federally insured by the Savings Association  Insurance Fund of the
Federal Deposit Insurance Corporation ("SAIF"). The Bank is a member of and owns
capital stock in the Federal Home Loan Bank ("FHLB") of Pittsburgh, which is one
of the 12 regional banks in the FHLB System.

         The Bank  operates a  traditional  savings  bank  business,  attracting
deposit accounts from the general public and using those deposits, together with
other  funds,  primarily  to  originate  and invest in loans  secured by one- to
four-family residential real estate.

         References to the Corporation or the Bank, include the Corporation, the
Bank and any subsidiaries on a consolidated  basis,  unless the context requires
otherwise.

Competition

         The competition for deposit products comes from other insured financial
institutions such as commercial banks, thrift  institutions,  credit unions, and
multi-state  regional banks in the Bank's market area. Deposit  competition also
includes a number of  insurance  products  sold by local  agents and  investment
products  such as mutual funds and other  securities  sold by local and regional
brokers. Loan competition varies depending upon market conditions and comes from
other  insured  financial   institutions   such  as  commercial  banks,   thrift
institutions, credit unions, multi-state regional banks, and mortgage bankers.

Lending Activities

         The following table sets forth  information  concerning the composition
of the Bank's loan portfolio by loan category at the dates indicated.

<TABLE>
<CAPTION>
                                                                           At December 31,
                                                      -------------------------------------------------------
                                                                2001                           2000
                                                      --------------------------     ------------------------
                                                         $                  %           $                 %
                                                      -------            -------     -------           ------
                                                                        (Dollars in thousands)
<S>                                                 <C>                <C>        <C>                 <C>
Type of Loans:
Real estate:
  1-4 family..................................        $35,827             95.6%     $38,597              95.9%
  Non-residential.............................            631              1.7        1,024               2.5
Consumer loans................................            935              2.5          566               1.4
Commercial (business) loans...................             69              0.2           73               0.2
                                                      -------            -----      -------             -----
Total loans...................................         37,462            100.0%      40,260             100.0%
                                                      -------            =====      -------             =====
Less:
  Loans in process............................            205                            50
  Deferred loan origination fees, net.........            243                           291
  Allowance for loan losses...................            148                           150
                                                      -------                       -------
Total loans, net..............................        $36,866                       $39,769
                                                      =======                       =======
</TABLE>

                                       2
<PAGE>

         Residential  Lending.  The Bank's primary lending activity  consists of
the  origination  of one- to four-family  residential  mortgage loans secured by
property  located in the  Bank's  market  area.  The Bank  generally  originates
single-family  residential  mortgage loans in amounts up to 80% of the lesser of
the appraised value or selling price of the mortgaged property without requiring
private mortgage insurance. The Bank will originate a mortgage loan in an amount
up to 97% of the lesser of the  appraised  value or selling price of a mortgaged
property,  however,  private mortgage  insurance for the borrower is required on
the amount financed in excess of 80%.

         The Bank originates both fixed rate and adjustable rate mortgage loans.
The majority of the mortgage  loans are fixed rate loans with terms of 30 years,
however the Bank also originates a significant  amount of loans with terms of 15
years.  Adjustable  rate  mortgage  loans are tied to the 1-year  U.S.  Treasury
Security Index or the 3-year Treasury Security Index.

         The Bank  generally  underwrites  its fixed rate mortgage loans to meet
the secondary  market  standards of the Federal Home Loan  Mortgage  Corporation
("FHLMC")  but also makes  limited  non-conforming  loans.  While the Bank is an
approved FHLMC seller/servicer, it generally does not sell its mortgage loans in
the secondary market.  The Bank may in the future sell fixed rate mortgage loans
in the secondary market, as markets and the Bank's own portfolio needs dictate.

         Property  appraisals on real estate  securing the Bank's  single-family
residential  loans  are  made  by  state  certified  and  licensed   independent
appraisers  approved by the Board of  Directors.  Appraisals  are  performed  in
accordance  with  applicable  regulations  and policies.  The Bank obtains title
insurance  policies on all first  mortgage  real estate  loans  originated.  All
property  secured  loans  require  fire and  casualty  insurance.  Loans made on
property  located in  designated  flood zones require  minimum  flood  insurance
coverage based on the amount of the loan.

         Construction  Lending. The Bank engages in limited lending to qualified
borrowers for construction of single-family residential properties in the Bank's
market area.  Construction loans are made to builders on a speculative basis and
to   owners   for    construction    of   their    primary    residence   on   a
construction/permanent basis.

         Construction lending is generally considered to involve a higher degree
of credit risk than long term  financing of residential  properties.  The Bank's
risk of loss on a  construction  loan is dependent  largely upon the accuracy of
the initial  estimate of the property's  value at completion of construction and
the estimated cost of construction.

         Consumer  Loans.  As of December 31, 2001,  consumer  loans amounted to
2.5% of the Bank's  total loan  portfolio  and  consisted  primarily of personal
loans (secured and unsecured),  savings secured loans (share loans), auto loans,
and credit card loans.  Consumer  loans are originated in the Bank's market area
and have maturities of up to 15 years. On share loans,  the Bank will lend up to
90% of the account balance.

         Consumer loans  generally have shorter terms and higher  interest rates
than residential loans. The consumer loan market can be helpful in improving the
spread between average loan

                                        3

<PAGE>

yield and cost of funds and at the same time  improve  the  matching of the rate
sensitive assets and liabilities.

         Consumer   loans  entail   greater  risks  than  one-  to   four-family
residential  mortgage  loans,  particularly  consumer  loans  secured by rapidly
depreciable assets such as automobiles or loans that are unsecured.

         Commercial  Real Estate and Other Loans.  The Bank originates a limited
number of commercial real estate mortgage loans, including loans on multi-family
dwellings,  retail/service space, and space occupied by local fraternal,  church
or service  organizations.  The Bank  requires no less than 25%  downpayment  or
equity for  commercial  real estate  mortgage  loans.  The average  loan size is
approximately $150,000.  Typically these loans are made with adjustable rates of
interest with terms of up to 20 years.  Essentially  all  originated  commercial
real  estate  loans  are  within  the  Bank's  market  area  and all are  within
Pennsylvania.  The Bank's largest  commercial  real estate loan had a balance of
$381,139 on December 31, 2001 and was secured by commercial  real estate located
in the Bank's market area.

         Commercial real estate loans,  including  multi-family loans, generally
are considered to entail significantly  greater risk than that which is involved
with single family real estate  lending.  The repayment of these loans typically
is dependent on the  successful  operations  and income stream of the commercial
real  estate and the  borrower.  These  risks can be  significantly  affected by
economic  conditions.  In addition,  commercial  real estate  lending  generally
requires  substantially  greater  oversight efforts compared to residential real
estate lending.

         Loans to One Borrower.  Under federal law, savings  institutions  have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the  institution's  unimpaired  capital and
surplus. As of December 31, 2001, the Bank's largest aggregation of loans to one
borrower was $381,139  consisting of an apartment building in the Bank's lending
area,  which was within the Bank's legal  lending  limit to one borrower at that
date. At December 31, 2001, this loan was current.

         Non-performing  and  Problem  Assets.   Non-performing  assets  include
nonaccrual loans,  loans greater than 90 days past due,  foreclosed real estate,
and troubled debt restructurings.  As of the end of the last three fiscal years,
the Bank's nonperforming assets were limited to nonaccrual loans as presented in
the following table.

                                        4

<PAGE>

<TABLE>
<CAPTION>
                                                               At December 31,
                                                   --------------------------------------
                                                   2001              2000            1999
                                                   ----              ----            ----
                                                     (Dollars in thousands)
<S>                                              <C>               <C>             <C>
Loans accounted for on a non-accrual basis:
Mortgage loans:
  1-4 family residential real estate............   $108              $ 98            $380
  Non-residential...............................     58                60              61
Non-mortgage loans:
  Home equity and second mortgages..............    427                37              71
  Other consumer................................     42                41              15
                                                   ----              ----            ----
Total...........................................   $635              $236            $527
                                                   ====              ====            ====
Total non-performing loans to net loans.........   1.72%             0.59%           1.65%
                                                   ====              ====            ====
Total non-performing assets to total assets.....   1.11%             0.39%           0.98%
                                                   ====              ====            ====
</TABLE>

         Loans are reviewed on a regular  basis and are placed on a  non-accrual
status  when  they are more  than 90 days  delinquent.  Loans may be placed on a
non-accrual status at any time if, in the opinion of management,  the collection
of additional  interest is doubtful.  Interest  accrued and unpaid at the time a
loan is placed  on  non-accrual  status  is  charged  against  interest  income.
Subsequent  payments are either applied to the outstanding  principal balance or
recorded  as  interest  income,  depending  on the  assessment  of the  ultimate
collectibility of the loan.

         During the year  ended  December  31,  2001,  approximately  $28,956 of
interest would have been recorded on loans accounted for on a non-accrual  basis
if those loans had been current  according to the original loan  agreements  for
the entire  period.  The amount of interest  income on loans  accounted for on a
non-accrual basis that was included in income during 2001 was insignificant.

         Classified Assets.  Management, in compliance with OTS guidelines,  has
instituted an internal  loan review  program,  whereby  loans are  classified as
special  mention,  substandard,  doubtful or loss.  When a loan is classified as
substandard or doubtful, management is required to establish a valuation reserve
for loan losses in an amount considered  prudent by management.  When management
classifies a loan as a loss asset,  a reserve  equal to 100% of the loan balance
is required to be established or the loan is to be  charged-off.  This allowance
for loan losses is composed of an allowance for both  inherent  risk  associated
with lending activities and particular problem assets.

         An asset is considered "substandard" if it is inadequately protected by
the paying capacity and net worth of the obligor or the collateral  pledged,  if
any.  Substandard assets include those characterized by the distinct possibility
that the insured  institution will sustain some loss if the deficiencies are not
corrected.  Assets classified as doubtful have all of the weaknesses inherent in
those classified substandard,  with the added characteristic that the weaknesses
present  make  collection  or  liquidation  in  full,  highly  questionable  and
improbable,  on the basis of currently existing facts,  conditions,  and values.
Assets  classified as loss are those considered  uncollectible  and of so little
value that their  continuance  as assets  without  the  establishment  of a loss
reserve is

                                        5

<PAGE>

not warranted. Assets which do not currently expose the insured institution to a
sufficient degree of risk to warrant classification in one of the aforementioned
categories but possess credit deficiencies or potential  weaknesses are required
to be designated special mention by management.

         Management's  evaluation  of  the  classification  of  assets  and  the
adequacy of the  allowance for loan losses is reviewed by the Board on a regular
basis and by the regulatory  agencies as part of their examination  process.  At
December 31, 2001,  internally  classified  assets were  $595,887,  all rated as
substandard.

         Allowance for Loan Losses. The allowance for loan losses is established
through  provisions for loan losses charged against  income.  Loans deemed to be
uncollectible are charged against the allowance for loan losses,  and subsequent
recoveries, if any, are credited to the allowance.

         The  allowance  for loan  losses is  maintained  at a level  considered
adequate to provide for losses that can be reasonably anticipated.  Management's
periodic evaluation of the adequacy of the allowance is based on the Bank's past
loan  loss  experience,  known  and  inherent  risks in the  portfolio,  adverse
situations that may affect the borrower's  ability to repay, the estimated value
of any  underlying  collateral,  composition  of  the  loan  portfolio,  current
economic  conditions and other relevant  factors.  This evaluation is inherently
subjective  as it  requires  material  estimates  that  may  be  susceptible  to
significant  change,  including  the  amounts  and  timing of future  cash flows
expected to be received on impaired loans.

         A loan is considered  impaired when,  based on current  information and
events,  it is probable  that the Bank will be unable to collect  the  scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement.  Factors considered by management in determining  impairment
include  payment  status,  collateral  value and the  probability  of collecting
scheduled  principal  and  interest  payments  when due.  Loans that  experience
insignificant payment delays and payment shortfalls generally are not classified
as  impaired.  Management  determines  the  significance  of payment  delays and
payment  shortfalls on a case-by- case basis,  taking into  consideration all of
the circumstances surrounding the loan and the borrower, including the length of
the delay,  the reasons for the delay,  the borrower's  prior payment record and
the amount of the  shortfall in relation to the  principal  and  interest  owed.
Impairment is measured on a loan by loan basis for commercial  and  construction
loans by either the present  value of expected  future cash flows  discounted at
the loan's effective  interest rate or the loan's obtainable market price or the
fair value of the collateral if the loan is collateral dependent.

         Large  groups of smaller  balance  homogeneous  loans are  collectively
evaluated for  impairment.  Accordingly,  the Bank does not separately  identify
individual consumer and residential loans for impairment disclosures.

         The following table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates indicated:

                                        6

<PAGE>


                                             At or for the year ended
                                                   December 31,
                                             ------------------------
                                                2001         2000
                                                ----         ----
                                             (Dollars in thousands)

Total loans outstanding (net) ............   $ 36,866     $ 39,769
                                             ========     ========
Average loans outstanding ................     37,056       37,034
                                             ========     ========
Allowance balance (at beginning of period)   $    150     $    168
Provision for loan losses ................         24            7
Charge-offs (consumer), net ..............        (26)         (25)
                                             --------     --------
Allowance balance (at end of period) .....   $    148     $    150
                                             ========     ========
Allowance for loan losses as a percent
  of total loans outstanding .............       0.40%        0.38%
Loans charged off as a percent
  of average loans outstanding ...........       0.07%         .07%

         Allocation of Allowance for Loan Losses. The following table sets forth
the allocation of the Bank's  allowance for loan losses by loan category and the
percent of loans in each category to total loans  receivable,  net, at the dates
indicated.  The  portion  of the loan  loss  allowance  allocated  to each  loan
category  does not  represent  the total  available  for losses  which may occur
within the loan  category  since the total loan loss  allowance  is a  valuation
reserve applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
                                                                            At December 31,
                                          --------------------------------------------------------------------------------------
                                                             2001                                         2000
                                          ----------------------------------------     -----------------------------------------
                                                Allowance              Percent of          Allowance                 Percent of
                                          -----------------------       Loans to       -----------------------        Loans to
                                          Amount       % of Total      Total Loans     Amount       % of Total       Total Loans
                                          ------       ----------      -----------     ------       ----------       -----------
                                                                       (Dollars in thousands)
<S>                                      <C>             <C>              <C>         <C>             <C>              <C>
At end of period allocated to:
1-4 family.........................        $ 66              45%              95%       $ 96             64%              96%
Non-residential real estate........           1               1                2           1              1                2
Consumer...........................          73              49                2          45             30                1
Commercial (business)..............           8               5                1           8              5                1
                                           ----            ----             ----        ----            ---              ---
Total allowance....................        $148             100%             100%       $150            100%             100%
                                           ====            ====             ====        ====            ===              ===
</TABLE>

Investment Activities

         Investment  Policy.  The  investment  policy  of  the  Bank,  which  is
established  by the Board of  Directors,  is  designed  to foster  earnings  and
liquidity within prudent interest rate risk guidelines,  while complementing the
Bank's lending  activities.  The policy provides for available for sale, held to
maturity and trading classifications. However, the Bank does not currently use a
trading  classification  and does not  anticipate  doing so in the  future.  The
policy permits  investments in high credit quality  instruments with diversified
cash  flows  while  permitting  the Bank to  maximize  total  return  within the
guidelines set forth in the Bank's  interest rate risk and liquidity  management
policy. Permitted investments under the policy and in accordance with

                                        7

<PAGE>

federal regulations include but are not limited to U. S. government obligations,
government agency or government-sponsored agency obligations,  state, county and
municipal  obligations,  mortgage backed securities and collateralized  mortgage
obligations   guaranteed  by  government   or   government-sponsored   agencies,
investment grade corporate debt securities,  and commercial paper. The Bank also
invests in FHLB overnight  deposits and federal funds, but these instruments are
not considered part of the investment portfolio.

         The policy also includes several  specific  guidelines and restrictions
to insure  adherence  with  safe and  sound  activities.  The  policy  prohibits
investments  in high risk mortgage  derivative  products,  as defined within its
policy,  without prior  approval from the Board of Directors.  In addition,  the
policy  limits the maximum  amount of the  investment  in a specific  investment
category.  The Bank does not  participate  in hedging  programs,  interest  rate
swaps,  or  other   activities   involving  the  use  of  derivative   financial
instruments. Further, the Bank does not invest in securities which are not rated
investment grade.

         All transactions are reported to the Board of Directors  monthly,  with
the entire portfolio reported quarterly,  including market values and unrealized
gains (losses).

         Composition of Investment Portfolio. The following table sets forth the
carrying value of the Bank's investment portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                              At December 31,
                                                                        -------------------------
                                                                          2001              2000
                                                                          ----              ----
                                                                         (In thousands)
<S>                                                                 <C>             <C>
Securities Held to Maturity (at amortized cost):
 Certificates of Deposit......................................         $   100           $   100
 U.S. Government and Federal Agencies.........................               -               620
 Mortgage-backed Securities...................................             965             3,364
 Obligations of State and Local Governments...................           1,297             1,297
                                                                       -------           -------
   Total Securities Held to Maturity..........................           2,362             5,381
                                                                       -------           -------

Securities Available for Sale (at fair value):
 U.S. Government and Federal Agencies.........................             414             4,842
 Mortgage-backed Securities...................................           9,168             4,362
 Corporate obligations........................................             350                 -
 Obligations of State and Local Governments...................             427               804
                                                                       -------           -------
   Total Securities Available for Sale........................          10,359            10,008
                                                                       -------           -------
 Total Investment Securities..................................         $12,721           $15,389
                                                                       =======           =======
</TABLE>

         Mortgage-backed Securities. These securities, which comprise 50% of the
year-end investment portfolio,  are participation  certificates that are secured
by  interests  in pools of  mortgages.  At  December  31,  2001,  the Bank  held
mortgage-backed   securities   totaling  $10.1  million  that  were  issued  and
guaranteed by federal agencies. All of the Bank's investments in mortgage-backed
securities are secured by single-family mortgages.

                                        8

<PAGE>

         The  following  table  sets forth  certain  information  regarding  the
carrying values, weighted average yields and maturities of the Bank's investment
portfolio at December 31, 2001.

<TABLE>
<CAPTION>
                                                                                                                    Total Investment
                                                                                                                    ----------------
                           Less than One Year   One to Five Years      Five to Ten Years      More than Ten Years      Securities
                           ------------------   -----------------      -----------------      -------------------   ----------------

                           Carrying  Average   Carrying     Average    Carrying   Average     Carrying   Average   Carrying  Average
                            Value     Yield     Value        Yield      Value      Yield        Value     Yield     Value     Yield
                            -----     -----     -----        -----      -----      -----        -----     -----     -----     -----
                                                                       (Dollars in thousands)
<S>                         <C>       <C>      <C>           <C>      <C>         <C>       <C>           <C>   <C>          <C>
Certificates of Deposit...    $  -        -%     $100          5.2%      $  -         -%      $     -         -%  $   100      5.2%
U.S. Government and
  Federal Agencies........       -        -         -            -          -         -           414       7.0       414      7.0
Mortgage-backed
  securities..............       -        -         -            -          -         -        10,133       5.9    10,133      5.9
Corporate obligations.....       -        -         -            -          -         -           350       8.7       350      8.7
Obligations of State and
  local governments.......     135      4.0       252          4.8        740       5.9           597       7.9     1,724      6.4
                              ----      ---      ----          ---      -----       ---       -------       ---   -------      ---
  Total...................    $135      4.0%     $487          5.5%     $ 740       5.9%      $11,494       7.3%  $12,721      6.1%
                              ====      ===      ====          ===      =====       ===       =======       ===   =======      ===
</TABLE>



                                                         9

<PAGE>

Source of Funds

         Deposits.  The Bank's current deposit products include  certificates of
deposit  accounts  ranging  in  terms  from  90  days  to ten  years  as well as
individual  retirement accounts,  checking,  savings, NOW, money market and club
accounts.

         Interest rates on deposits are set weekly by senior  management,  based
upon a number of factors, including: (1) the Bank's need for funds based on loan
demand,  current maturities of deposits and other cash flow needs; (2) a current
survey of a selected group of competitors'  rates for similar products;  (3) the
Bank's current cost of funds and its yield on assets; and (4) the alternate cost
of funds on a wholesale  basis, in particular the cost of advances from the FHLB
of Pittsburgh.  Information regarding the average amount of and the average rate
paid on various  types of deposits for the two years ended  December 31, 2001 is
presented in the  Corporation's  2001 Annual  Report to  Stockholders,  filed as
Exhibit 13 to this Annual Report on Form 10-KSB.

         Because  of the large  percentage  of  certificates  of  deposit in the
deposit  portfolio  (66% at December 31, 2001),  the Bank's  liquidity  could be
reduced if a significant  amount of certificates  of deposit,  maturing within a
short  period  of  time,  were  not  renewed.  A  significant   portion  of  the
certificates  of deposit  remain  with the Bank  after they  mature and the Bank
believes  that this  will  continue.  However,  the need to  retain  these  time
deposits could result in an increase in the Bank's cost of funds.

                  The   following   table   shows  the   amount  of  the  Bank's
certificates  of deposit of $100,000 or more by time remaining until maturity as
of December 31, 2001.


                                                     Certificates
Maturity Period                                      of Deposits
---------------                                      -----------
                                                    (In thousands)
Three months or less........................        $   622,901
Over three through six months...............            471,803
Over six through twelve months..............            350,000
Over twelve months..........................          2,130,900
                                                     ----------
                                                     $3,575,604
                                                     ==========

         Borrowings.  The Bank, as the need arises or in order to take advantage
of funding opportunities, borrows funds in the form of advances from the FHLB to
supplement  its  supply  of  lendable  funds  and  to  meet  deposit  withdrawal
requirements.  Advances from the FHLB are typically  secured by the Bank's stock
in the FHLB and a portion of the Bank's  residential  mortgage  loans and may be
secured  by  other  assets,  mainly  securities  which  are  obligations  of  or
guaranteed by the U.S. Government. Advances maturing within one year at December
31, 2001  totaled  approximately  $2.0  million.  See Note 6 of the Notes to the
Consolidated Financial Statements.

                                        10

<PAGE>

Personnel

         As of December  31,  2001,  the Bank had fifteen  full-time  equivalent
employees.  The employees are not represented by a collective  bargaining  unit.
The Bank believes its relationship with its employees to be satisfactory.

Regulation

         Set forth below is a brief  description of certain laws which relate to
the regulation of the Corporation and the Bank. The description does not purport
to be complete and is qualified in its entirety by reference to applicable  laws
and regulations.

Recent Legislation

         The  Gramm-Leach-Bliley Act (the "Act") permits qualifying bank holding
companies to become  financial  holding  companies  and thereby  affiliate  with
securities firms and insurance companies and engage in other activities that are
financial in nature. The Act defines "financial in nature" to include securities
underwriting,  dealing and market making; sponsoring mutual funds and investment
companies;  insurance underwriting and agency; merchant banking activities;  and
activities  that the Federal  Reserve Board has determined to be closely related
to banking. A qualifying  national bank also may engage,  subject to limitations
on investment,  in activities that are financial in nature, other than insurance
underwriting,  insurance company portfolio investment,  real estate development,
and real estate investment, through a financial subsidiary of the bank.

         The Act also  prohibits  new  unitary  thrift  holding  companies  from
engaging in  nonfinancial  activities or from  affiliating  with a  nonfinancial
entity. As a grandfathered  unitary thrift holding company, the Corporation will
retain its authority to engage in nonfinancial activities.

Corporation Regulation

         General.  The Corporation is a unitary savings and loan holding company
subject to regulatory oversight by the OTS. As such, the Corporation is required
to  register  and file  reports  with the OTS and is subject to  regulation  and
examination by the OTS. In addition,  the OTS has enforcement authority over the
Corporation  and  its   non-savings   association   subsidiaries,   should  such
subsidiaries  be formed,  which also  permits  the OTS to  restrict  or prohibit
activities  that are determined to be a serious risk to the  subsidiary  savings
association.  This  regulation  and  oversight  is  intended  primarily  for the
protection of the depositors of the Bank and not for the benefit of stockholders
of the Corporation.

         Qualified  Thrift  Lender Test.  As a unitary  savings and loan holding
company,  the  Corporation  generally  is not subject to activity  restrictions,
provided the Bank  satisfies  the Qualified  Thrift Lender  ("QTL") test. If the
Corporation  acquires  control  of  another  savings  association  as a separate
subsidiary, it would become a multiple savings and loan holding company, and the
activities of the Corporation and any of its  subsidiaries  (other than the Bank
or

                                       11

<PAGE>

any other SAIF-insured savings association) would become subject to restrictions
applicable to bank holding  companies unless such other  associations  each also
qualify as a QTL and were acquired in a supervisory acquisition. See "Regulation
of the Bank - Qualified Thrift Lender Test."

Regulation of the Bank

         General.  Set forth below is a brief  description  of certain laws that
relate to the  regulation of the Bank.  The  description  does not purport to be
complete and is qualified  in its entirety by reference to  applicable  laws and
regulations.  As a federally chartered,  SAIF-insured  savings association,  the
Bank is  subject  to  extensive  regulation  by the OTS  and the  FDIC.  Lending
activities and other  investments must comply with various federal statutory and
regulatory   requirements.   The  Bank  is  also  subject  to  certain   reserve
requirements promulgated by the Federal Reserve Board.

         The OTS, in conjunction with the FDIC,  regularly examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that are found in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
and state law,  especially in such matters as the ownership of savings  accounts
and the form and content of the Bank's mortgage documents.

         The Bank must file  reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.

         Insurance of Deposit  Accounts.  The deposit  accounts held by the Bank
are insured by the SAIF to a maximum of  $100,000  for each  insured  member (as
defined by law and  regulation).  Insurance of deposits may be terminated by the
FDIC  upon a finding  that the  institution  has  engaged  in unsafe or  unsound
practices,  is in an unsafe or unsound  condition to continue  operations or has
violated any applicable law, regulation, rule, order or condition imposed by the
FDIC or the institution's  primary regulator.  As a member of the SAIF, the Bank
pays an annual insurance premium to the FDIC based on its total deposits.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted  assets,  (2) a leverage ratio (core capital) equal to
at least 4% of total adjusted assets, and (3) a risk-based  capital  requirement
equal to 8.0% of total risk-weighted assets.

                                       12

<PAGE>

         The following table presents the Bank's  compliance with its regulatory
capital requirements:


                                                        At December 31, 2001
                                                   -----------------------------
                                                                 Percentage of
                                                   Amount      Applicable Assets
                                                   ------      -----------------
                                                       (Dollars in Thousands)

Tangible capital...........................        $4,993             8.84%
Tangible capital requirement..............            847             1.50%
                                                   ------            -----
Excess....................................         $4,146             7.34%
                                                   ======            =====

Core capital...............................        $4,993             8.84
Core capital requirements................           2,260             4.00%
                                                   ------            -----
Excess...................................          $2,733             4.84%
                                                   ======            =====

Total risk-based capital ..................        $5,140            18.98%
Total risk-based capital requirement ....           2,166             8.00%
                                                   ------            -----
Excess...................................          $2,974            10.98%
                                                   ======            =====


         Management  believes  that  under  current  regulations,  the Bank will
continue to meet its minimum capital  requirements  in the  foreseeable  future.
Events  beyond the control of the Bank,  such as increased  interest  rates or a
downturn  in the  economy in areas in which the Bank  operates  could  adversely
affect  future  earnings  and, as a result,  the ability of the Bank to meet its
future minimum capital requirements.

         Dividend and Other Capital  Distribution  Limitations.  The OTS imposes
various  restrictions or requirements on the ability of savings  institutions to
make capital distributions, including cash dividends. A savings association that
is a  subsidiary  of a savings and loan holding  company,  such as the Bank must
file an  application  or a notice with the OTS at least 30 days before  making a
capital  distribution.   Savings  associations  are  not  required  to  file  an
application for permission to make a capital  distribution  and need only file a
notice if the following  conditions are met: (1) they are eligible for expedited
treatment under OTS regulations,  (2) they would remain  adequately  capitalized
after the distribution,  (3) the annual amount of capital  distribution does not
exceed net income for that year to date added to retained net income for the two
preceding  years,  and  (4) the  capital  distribution  would  not  violate  any
agreements  between the OTS and the savings  association or any OTS regulations.
Any other situation would require an application to the OTS.

                                       13

<PAGE>

         The OTS may disapprove an application or notice if the proposed capital
distribution   would:  (i)  make  the  savings   association   undercapitalized,
significantly  undercapitalized,  or  critically  undercapitalized;  (ii)  raise
safety or  soundness  concerns;  or (iii)  violate  a  statute,  regulation,  or
agreement  with the OTS (or with the FDIC),  or a  condition  imposed in an OTS-
approved application or notice. Further, a federal savings association, like the
Bank,  cannot distribute  regulatory  capital that is needed for its liquidation
account.

         Qualified  Thrift  Lender Test.  Savings  institutions  must meet a QTL
test. If the Bank maintains an appropriate level of Qualified Thrift Investments
(primarily  residential  mortgages and related  investments,  including  certain
mortgage-related  securities) ("QTIs") and otherwise qualifies as a QTL, it will
continue to enjoy full borrowing  privileges  from the FHLB of  Pittsburgh.  The
required  percentage of QTIs is 65% of portfolio  assets  (defined as all assets
minus  intangible  assets,  property used by the  institution  in conducting its
business and liquid  assets equal to 10% of total  assets).  Certain  assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings associations may include shares of stock of the FHLBs, FNMA and FHLMC as
qualifying  QTIs. An  association  must be in compliance  with the QTL test on a
monthly basis in nine out of every 12 months.  As of December 31, 2001, the Bank
was in compliance  with its QTL  requirement  with 82% of its assets invested in
QTIs.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Pittsburgh,  which  is  one of 12  regional  FHLBs  that  administers  the  home
financing credit function of savings associations. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB  System.  It makes loans to members  (i.e.,  advances) in  accordance  with
policies and procedures established by the Board of Directors of the FHLB.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Pittsburgh  in an amount equal to at least 1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the beginning of each year.

         Federal  Reserve  System.   The  Federal  Reserve  Board  requires  all
depository  institutions to maintain  non-interest bearing reserves at specified
levels against their transaction  accounts (primarily  checking,  NOW, and Super
NOW checking accounts) and non-personal time deposits.  The balances  maintained
to meet the reserve  requirements  imposed by the Federal  Reserve  Board may be
used to satisfy  the  liquidity  requirements  that are  imposed by the OTS.  At
December 31, 2001, the Bank was in compliance  with these Federal  Reserve Board
requirements.

Item 2. Description of Property
-------------------------------

(a) The  Corporation  owns its main office and branch office  located in Dauphin
County, Pennsylvania.  The main office is located in Steelton,  Pennsylvania and
the branch office is located in Lower Swatara Township.  The Corporation's total
investment  in office  property and  equipment  was $2.3 million with a net book
value of $1.5 million at December 31, 2001.

                                       14

<PAGE>

(b)      Investment Policies.

         See  "Item  1.  Business"  above  for  a  general  description  of  the
Corporation's  investment  policies and any  regulatory  or Board of  Directors'
percentage   of  assets   limitations   regarding   certain   investments.   The
Corporation's  investments are primarily  acquired to produce  income,  and to a
lesser extent, possible capital gain.

         (1)  Investments in Real Estate or Interests in Real Estate.  See "Item
1.  Business - Lending  Activities  and - Regulation  of the Bank," and "Item 2.
Description of Property."

         (2)  Investments  in Real  Estate  Mortgages.  See "Item 1.  Business -
Lending Activities and - Regulation of the Bank."

         (3)  Investments  in  Securities  of or Interests in Persons  Primarily
Engaged in Real Estate  Activities.  See "Item 1. Business - Lending  Activities
and - Regulation of the Bank."

(c)      Description of Real Estate and Operating Data.

         Not Applicable.

Item 3. Legal Proceedings
-------------------------

         There  are  various   claims  and  lawsuits  in  which   Registrant  is
periodically involved, such as claims to enforce liens, condemnation proceedings
on properties in which Registrant holds security interests, claims involving the
making and  servicing  of real  property  loans,  and other  issues  incident to
Registrant's  business.  In the  opinion  of  management,  no  material  loss is
expected from any of such pending claims or lawsuits.

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

         No matter was submitted to a vote of security  holders during the forth
quarter of the fiscal year.

                                     PART II

Item  5.  Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------

         The  information  contained  under the section  captioned  "Stock Price
Information" of the  Corporation's  Annual Report to stockholders for the fiscal
year ended  December 31, 2001 (the "Annual  Report") is  incorporated  herein by
reference.

                                       15

<PAGE>

Item  6.  Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

Item  7.  Financial Statements
------------------------------

         The  Registrant's   financial  statements  listed  under  Item  13  are
incorporated herein by reference.

Item 8.  Changes  in  and  Disagreements  with  Accountants  On  Accounting  and
--------------------------------------------------------------------------------
Financial Disclosure.
--------------------

         None.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
--------------------------------------------------------------------------------
        with Section 16(a) of the Exchange Act.
        ---------------------------------------

         The information  contained under the sections  captioned "Section 16(a)
Beneficial Ownership Reporting  Compliance" and "I - Information with Respect to
Nominees for Director,  Directors Continuing in Office, and Executive Officers -
Election of Directors" and " - Biographical  Information"  in the  Corporation's
definitive   proxy  statement  for  the  2002  Annual  Meeting  of  Stockholders
(the"Proxy Statement") is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

         The  information  contained  in the  section  captioned  "Director  and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (a)  Security Ownership of Certain Beneficial Owners

         Information  required by this item is incorporated  herein by reference
         to the first  chart in the  section  captioned  "I -  Information  with
         Respect to Nominees for Director,  Directors  Continuing in Office, and
         Executive Officers" in the Proxy Statement.

         (b)  Security Ownership of Management

         Information  required by this item is incorporated  herein by reference
         to the first  chart in the  section  captioned  "I -  Information  with
         Respect to Nominees for Director,  Directors  Continuing in Office, and
         Executive Officers" in the Proxy Statement.

                                       16

<PAGE>

         (c) Management of the Registrant  knows of no  arrangements,  including
         any pledge by any person of securities of the Registrant, the operation
         of which may at a subsequent  date result in a change in control of the
         Registrant.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" in the Proxy Statement.

Item 13. Exhibits and Reports on Form 8-K
-----------------------------------------

(a)      Listed below are all financial  statements  and exhibits  filed as part
         of this report.

         1. The following  financial  statements and the  independent  auditor's
report  included  in  the   Registrant's   Annual  Report  to  Stockholders  are
incorporated herein by reference.

         Independent Auditor's Report

         Consolidated Balance Sheets as of December 31, 2001 and 2000

         Consolidated Statements of Income for the Years Ended December 31, 2001
         and 2000

         Consolidated  Statements  of  Stockholders'  Equity for the Years Ended
         December 31, 2001 and 2000

         Consolidated  Statements of Cash Flows for the Years Ended December 31,
         2001 and 2000

         Notes to Consolidated Financial Statements

         2. The following  exhibits are included in this Report or  incorporated
herein by reference:

             3(i)    Articles of Incorporation of Steelton Bancorp, Inc.*
             3(ii)   Bylaws of Steelton Bancorp, Inc.*
             4       Specimen Stock Certificate*
            10.1     Employment Agreement with Harold E. Stremmel*
            10.2     Steelton Bancorp, Inc. 1999 Stock Option Plan**
            10.3     Mechanics Savings Bank Restricted Stock Plan**
            13       2001 Annual Report to Stockholders
            21       Subsidiaries of Registrant (see "Item 1 - Business")
            23.1     Consent of Beard Miller Company LLP

----------------------------
*    Incorporated  by  reference  to an  identically  numbered  exhibit  to  the
     registration statement on Form SB-2 (File No. 333-74279) filed with the SEC
     on March 11, 1999.
**   Incorporated by reference to the Proxy Statement for the Special Meeting on
     February 3, 2000 filed with SEC on January 3, 2000.

                                       17

<PAGE>

(b)      Current Reports on Form 8-K.

         None.


                                       18

<PAGE>



                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized as of March 26, 2002.

                                     STEELTON BANCORP, INC.



                                     By:   /s/Harold E. Stremmel
                                           -------------------------------------
                                           Harold E. Stremmel
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)

         Pursuant to the requirement of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of March 26, 2002.

<TABLE>
<CAPTION>
<S>                                                         <C>

/s/Harold E. Stremmel                                         /s/James S. Nelson
-------------------------------------                         --------------------------------------------
Harold E. Stremmel                                            James S. Nelson
President and Chief Executive Officer                         Executive Vice President and Director
(Principal Executive Officer)




/s/Marino Falcone                                             /s/Joseph A. Wiedeman
-------------------------------------                         --------------------------------------------
Marino Falcone                                                Joseph A. Wiedeman
Chairman of the Board                                         Treasurer and Director



/s/James F. Stone                                             /s/Victor J. Segina
-------------------------------------                         --------------------------------------------
James F. Stone                                                Victor J. Segina
Director                                                      Secretary and Director




/s/Richard E. Farina                                          /s/Shannon Aylesworth
-------------------------------------                         --------------------------------------------
Richard E. Farina                                             Shannon Aylesworth
Director                                                      Chief Financial Officer
                                                              (Principal Financial and Accounting Officer)

</TABLE>