SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _______)

Filed by the registrant [X]
Filed by a party other than the registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a 6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant toss.240.14a-11(c) orss.240.14a-12

Steelton Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[STEELTON BANCORP, INC. LETTERHEAD]

March 20, 2002

Dear Fellow Stockholder:

On behalf of the Board of Directors and management of Steelton Bancorp,
Inc. (the "Corporation"), we cordially invite you to attend our Annual Meeting
of Stockholders (the "Meeting") to be held at Mechanics Savings Bank, 51 South
Front Street, Steelton, Pennsylvania, on April 17, 2002, at 10:00 a.m. The
attached Notice of Annual Meeting of Stockholders and Proxy Statement describe
the formal business to be transacted at the Meeting.

The Board of Directors of the Corporation has determined that the
matters to be considered at the Meeting, described in the accompanying Notice of
Annual Meeting and Proxy Statement, are in the best interest of the Corporation
and its stockholders. For the reasons set forth in the Proxy Statement, the
Board of Directors unanimously recommends a vote "FOR" each matter to be
considered.

The Corporation has enclosed its 2001 Annual Stockholders Report. As
reflected in the Annual Report, the Corporation had another successful year of
operations as the only financial institution holding company headquartered and
operated in Steelton, Pennsylvania.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN
ENVELOPE AS QUICKLY AS POSSIBLE. This will not prevent you from voting in person
at the Meeting, but will assure that your vote is counted if you are unable to
attend the Meeting. YOUR VOTE IS VERY IMPORTANT.

Sincerely,

/s/Harold E. Stremmel
-------------------------------------
Harold E. Stremmel
President and Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Steelton Bancorp, Inc. (the "Corporation") will be held at
Mechanics Savings Bank, 51 South Front Street, Steelton, Pennsylvania, on
Wednesday, April 17 , 2002, at 10:00 a.m. The Meeting is for the purpose of
considering and acting upon the following matters:

1. The election of two directors of Steelton Bancorp, Inc.; and

2. The ratification of the appointment of Beard Miller Company
LLP as the Corporation's independent auditor for the fiscal
year ending December 31, 2002.

The transaction of such other business as may properly come before the
Meeting or any adjournments thereof may also be acted upon. The Board of
Directors is not aware of any other business to come before the Meeting.

Action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Corporation's Bylaws, the Board of Directors has fixed the close of business on
February 28, 2002, as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY BY FILING WITH THE SECRETARY OF THE CORPORATION A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. IF YOU ARE PRESENT AT
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT
BEFORE THE MEETING. 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 IN PERSON AT THE MEETING.

BY ORDER OF THE BOARD OF DIRECTORS

/s/Victor J. Segina
-------------------
Victor J. Segina
Secretary
Steelton, Pennsylvania
March 20, 2002

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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
STEELTON BANCORP, INC.
51 SOUTH FRONT STREET
STEELTON, PENNSYLVANIA 17113
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ANNUAL MEETING OF STOCKHOLDERS
April 17, 2002

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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Steelton Bancorp, Inc. (the
"Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation which will be held at Mechanics Savings Bank, 51 South Front Street,
Steelton, Pennsylvania on April 17, 2002, at 10:00 a.m. (the "Meeting"). The
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being first mailed to stockholders on or about March 20, 2002. The
Corporation is the parent company of Mechanics Savings Bank (the "Bank"). The
Corporation was formed as a corporation chartered under the laws of the
Commonwealth of Pennsylvania at the direction of the Bank to acquire all of the
outstanding stock of the Bank issued in connection with the completion of the
Bank's mutual-to-stock conversion on July 8, 1999.

At the Meeting, stockholders will consider and vote upon (i) the
election of two directors of the Corporation, and (ii) the ratification of the
appointment of Beard Miller Company LLP as the Corporation's independent auditor
for the fiscal year ending December 31, 2002.

The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholder the discretionary authority to vote the
shares represented by such proxy in accordance with their best judgment on such
other business, if any, that may properly come before the Meeting or any
adjournment thereof.

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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Corporation at the address above or by the filing
of a later dated proxy prior to a vote being taken on a particular proposal at
the Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted as
specified thereon. If no specification is made, signed proxies will be voted
"FOR" the nominees for director as set forth herein, and "FOR" the ratification
of Beard Miller Company LLP as the Corporation's independent auditor for the
fiscal year ending December 31, 2002. The proxy confers discretionary authority
on the persons named thereon to vote with respect to the election of any person
as a director where the nominee is unable to serve, or for good cause will not
serve, and with respect to matters incident to the conduct of the Meeting.

-1-

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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on February 28, 2002
(the "Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Record Date, the Corporation had 300,290 shares of Common
Stock issued and outstanding.

The articles of incorporation of the Corporation ("Articles of
Incorporation") provide that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Corporation or any
subsidiary, nor any trustee with respect thereto or any affiliate of such
trustee (solely by reason of such capacity of such trustee), shall be deemed,
for purposes of the Articles of Incorporation, to beneficially own any Common
Stock held under any such plan.

The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) 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 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 provided by the Board of
Directors allows a stockholder to vote for the election of the nominees proposed
by the Board of Directors, or to withhold authority to vote for the nominees
being proposed. Under the Corporation's bylaws, directors are elected by a
plurality of votes cast, without regard to either (i) Broker Non-Votes or (ii)
proxies as to which authority to vote for the nominees being proposed is
withheld.

Concerning all other matters that may properly come before the Meeting,
including the ratification of the independent auditors, by checking the
appropriate box, a shareholder may: (i) vote "FOR" the item, (ii) vote "AGAINST"
the item, or (iii) "ABSTAIN" with respect to the item. Unless otherwise required
by law, all such matters shall be determined by a majority of votes cast
affirmatively or negatively without regard to (i) Broker Non-Votes or (ii)
proxies marked "ABSTAIN" as to that matter.

Security Ownership of Certain Beneficial Owners

Persons and groups owning in excess of 5% of the outstanding shares of
Common Stock are required to file 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 and the ownership of all executive officers and Directors of
the Corporation as a group. 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.

-2-

Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- -----------

Mechanics Savings Bank Employee Stock
Ownership Plan ("ESOP") 33,957(1) 11.3%
51 South Front Street
Steelton, Pennsylvania

James S. Nelson
51 South Front Street 23,261(2) 7.7%
Steelton, Pennsylvania 17113

Harold E. Stremmel
51 South Front Street 17,183(3) 5.7%
Steelton, Pennsylvania 17113

All directors and executive officers of
the Corporation as a group (8 persons) 86,581(4) 28.8%

- -----------------------------
(1) These shares are held in a suspense account and are allocated among
participants annually on the basis of compensation as the ESOP debt is
repaid. As of the Record Date, 6,792 shares have been allocated to ESOP
participants.
(2) Includes 3,396 shares that may be acquired pursuant to exercisable options.
(3) Includes 4,244 shares that may be acquired pursuant to exercisable options.
(4) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Includes 9,332 shares that may be acquired
pursuant to exercisable options. Excludes 27,165 unallocated shares held by
the ESOP over which the non-employee directors of the Corporation exercise
sole voting power. The Board of Directors appointed a committee consisting
of Directors Falcone, Farina, Segina, Stone and Wiedeman to serve as the
ESOP Plan Committee (the "ESOP Committee"). The ESOP Committee directs the
vote of unallocated shares and shares for which timely voting directions
are not received. Also excludes 13,588 shares held by the RSP over which
certain directors, as RSP trustees, exercise sole voting power. Such
individuals disclaim beneficial ownership with respect to shares held by
the ESOP and the RSP.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Corporation's officers and directors, and persons who own more than
ten percent of the Common Stock, to file reports of ownership and changes in
ownership of the Common Stock with the Securities and Exchange Commission and to
provide copies of those reports to the Corporation. The Corporation is not aware
of any beneficial owner, as defined under Section 16(a), of more than ten
percent of its Common Stock. To the best of the Corporation's knowledge, all
section 16(a) filing requirements applicable to its officers and directors were
complied with during the 2001 fiscal year.

-3-

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PROPOSAL 1 - ELECTION OF DIRECTORS
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The Articles of Incorporation require that the Board of 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.
Two directors will be elected at the Meeting, each to serve for a four-year term
or until his successor has been elected and qualified.

Harold E. Stremmel and Joseph A. Wiedeman have been nominated by the
Board of Directors to serve as directors. Both nominees are currently members of
the Board of Directors. It is intended that proxies solicited by the Board of
Directors will, unless otherwise specified, be voted for the election of the
named nominees. If either of the nominees is unable to serve, the shares
represented by all valid proxies will be voted for the election of such
substitutes as the Board of Directors may recommend or the size of the Board may
be reduced to eliminate the vacancy. At this time, the Board of Directors knows
of no reason why either of the nominees might be unavailable to serve.

The following table sets forth the names, ages, terms of, length of
board service and the number and percentage of shares of Common Stock
beneficially owned by both nominees and for each other director of the
Corporation who will continue to serve as a director after the Meeting.

Shares of
Age at Year First Current Common Stock Percent
December 31, Elected or Term to Beneficially of
Name 2001 Appointed(1) Expire Owned (2) Class
- ---- ---- ------------ ------ --------- -----

Board Nominees for Term to Expire in 2006

Harold E. Stremmel 67 1991 2002 17,183(4) 5.7%
Joseph A. Wiedeman 62 1979 2002 12,204(3) 4.1%

THE BOARD OF DIRECTORS RECOMMENDS THAT ITS NOMINEES
BE REELECTED AS DIRECTORS

Directors Continuing in Office

James S. Nelson 53 1994 2003 23,261(5) 7.7%
James F. Stone 73 1970 2004 12,204(3) 4.1%
Victor J. Segina 74 1980 2004 12,204(3) 4.1%
Marino Falcone 82 1961 2005 4,396(3) 1.4%
Richard E. Farina 70 1966 2005 1,730(3) --*

- ------------------------
* Less than 1%.
(1) Refers to the year the individual first became a director of the Bank.
(2) Beneficial ownership as of the Record Date. Includes shares of Common
Stock held directly as well as by spouses or minor children, in trust,
and other indirect ownership, over which shares the individuals
effectively exercise sole or shared voting and investment power, unless
otherwise indicated.
(footnotes continue on next page)

-4-

(3) Includes 848 shares subject to exercisable options.
Excludes 27,165 unallocated shares of Common Stock held under the ESOP
over which such individual, an ESOP Trustee, exercises sole voting
power. Also excludes 13,588 shares of Common Stock held by the RSP over
which such individual, as an RSP trustee, exercises sole voting power.
Such individual disclaims beneficial ownership with respect to ESOP and
RSP shares.
(4) Includes 4,244 shares subject to exercisable options.
(5) Includes 3,396 shares subject to exercisable options.

Biographical Information

Directors and Executive Officers of the Corporation. Set forth below is
the business experience for the past five years of each of the directors and
executive officers of the Corporation. All directors of the Bank in February
1999 became directors of the Corporation at that time.

Harold E. Stremmel serves as the President and Chief Executive Officer
and has been a member of the Board of Directors since 1991. Mr. Stremmel has
been Chief Executive Officer of the Bank since 1987. He is the past president
and treasurer of the Harrisburg East Shore Kiwanis Club and was previously the
treasurer of the New Steelton Association.

Joseph A. Wiedeman serves as Treasurer and has been a member of the
Board of Directors since 1979. Since 1974, Mr. Wiedeman has been a majority
stockholder of Wiedeman & Douty, P.C., Certified Public Accountants, an
accounting firm located in Steelton, Pennsylvania.

James S. Nelson serves as the Executive Vice President of the
Corporation and has been a member of the Board of Directors since 1994. Mr.
Nelson is also Executive Vice President and Chief Lending Officer of the Bank
and has been employed by the Bank since 1987.

James F. Stone has been a member of the Board of Directors since 1970.
He has been retired since 1992. Mr. Stone was previously the owner of Stone
Funeral Home in Steelton, Pennsylvania.

Victor J. Segina has been a member of the Board of Directors since 1980
and also serves as Secretary. Mr. Segina retired in 1998. He was previously the
owner of an architectural firm located in Harrisburg, Pennsylvania. Mr. Segina
serves on the Building Commission of the Harrisburg Catholic Diocese.

Marino Falcone has been a member of the Board of Directors since 1961
and has been Chairman of the Board since 1987. He has been retired since 1986.
Mr. Falcone was previously the owner of Steelton Coal and Oil Company in
Steelton, Pennsylvania.

Richard E. Farina has been a member of the Board of Directors since
1966. Since 1994, Mr. Farina has been retired. He was previously a branch
manager for the Pennsylvania Insurance Company in Harrisburg, Pennsylvania.

Shannon Aylesworth serves as Chief Financial Officer of the
Corporation. She has been Chief Financial Officer of the Bank since 1996 and a
Vice President of the Bank since January, 1999. Ms. Aylesworth has been employed
by the Bank since 1990.

-5-

Meetings and Committees of the Board of Directors

The Board of Directors conducts its business through meetings of the
board and through activities of its committees. During the year ended December
31, 2001, the Board of Directors held twelve regular meetings and one special
meeting. No director attended fewer than 75% of the total meetings of the Board
of Directors and the committees on which he served during the year ended
December 31, 2001.

Nominating Committee. The entire Board of Directors serves as a
Nominating Committee to select persons to be nominated to serve as directors of
the Corporation and met one time in such capacity during the year ended December
31, 2001. The Nominating Committee is not required to consider nominees
recommended by stockholders of the Corporation.

Compensation Committee. The Corporation has no full time employees and
relies on the employees of the Bank for the limited services required by the
Corporation. All compensation paid to executive officers of the Corporation is
paid by the Bank. For these reasons, the Corporation does not have a
compensation committee. The entire Board of Directors of the Bank serves the
function of a compensation committee and met one time in such capacity during
the year ended December 31, 2001.

Audit Committee. The Audit Committee consists of Directors Wiedeman,
Stone and Segina and Ms. Barbara Coates, an officer of the Bank. All members of
the Audit Committee other than Ms. Coates are independent under the rules of the
Nasdaq stock market. As the Corporation's stock is traded on the OTC Electronic
Bulletin Board, the Corporation is not required to and has not adopted a written
charter for the Audit Committee. The Audit Committee meets quarterly and meets
with the Corporation's independent auditor to review the results of the annual
audit and other related matters. The Audit Committee met four times during the
year ended December 31, 2001. The Board of Directors as a whole approved the
inclusion of the audited financial statements in the Corporation's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2001.

Report of the Audit Committee. The Audit Committee is scheduled to meet
to do all of the following for the fiscal year ended December 31, 2001: (i)
review and discuss the Corporation's audited financial statements with
management, (ii) discuss with the Corporation's independent auditor, Beard
Miller Company LLP, all matters required to be discussed under Statement on
Auditing Standards No. 61., and (iii) receive from Beard disclosures regarding
Beard's independence as required by Independence Standards Board Standard No. 1
and discuss with Beard its independence. Such matters will be completed prior to
the date of the Meeting.

Audit Committee:

Joseph A. Wiedeman, James F. Stone, Victor J. Segina and
Barbara G. Coates

Principal Accounting Firm Fees

Audit Fees. The aggregate fees billed by Beard Miller Company LLP for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2001 and for the review of the
financial statements included in the Company's Quarterly Reports on Form 10-QSB
for that fiscal year were $39,286.

Financial Information Systems Design and Implementation Fees. There
were no fees billed by Beard Miller Company LLP for professional services
rendered for information technology services relating

-6-

to financial information systems design and implementation for the fiscal year
ended December 31, 2001. All Other Fees. The aggregate fees billed by Beard
Miller Company LLP for services rendered to the Company, other than the services
described above under "Audit Fees," for the fiscal year ended December 31, 2001
were $6,200.

The audit committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.

Certain Relationships and Related Transactions

The Bank, like many financial institutions, has followed a policy of
offering residential mortgage loans for the financing of personal residences,
share loans, and consumer loans to its officers, directors and employees. Share
loans and consumer loans are made in the ordinary course of business and also
made on substantially the same terms and conditions, including interest rate and
collateral, as those of comparable transactions prevailing at the time with
other persons, and do not include more than the normal risk of collectibility or
present other unfavorable features. The Bank offers mortgage loans to full-time
employees for the purchase or refinance of a permanent residence on special
terms and conditions including waiver of appraisal and credit report fees and a
one percent reduction in service charges and interest rate. If the employee is
terminated, or the residence is no longer owner-occupied, the one percent
reduction is eliminated.

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

Compensation of Directors

Board Fees. The Corporation does not presently compensate its directors
for membership on the Board of Directors. Each director of the Corporation is
also a director of the Bank. During 2001, each director was paid a fee of
$6,000. The chairman of the board, the secretary, and the treasurer receive an
additional yearly fee of $2,925, $2,925, and $2,085, respectively. Directors do
not receive compensation for attending committee meetings. The total fees paid
to the directors for the year ended December 31, 2001 were approximately
$49,435.

Stock Awards. In fiscal year ended December 31, 2000, each non-employee
director was awarded 2,122 options to purchase shares of Common Stock at an
exercise price of $8.33 per share under the Option Plan and 841 shares of Common
Stock under the RSP, as adjusted for the stock dividends distributed by the
Corporation. Stockholders of the Corporation approved these awards at a special
meeting of stockholders held February 3, 2000. These awards vest at the rate of
20% on the one year anniversary of the date of stockholder approval, and 20%
annually thereafter.

Executive Compensation

General. The Corporation has no full time employees and relies on the
employees of the Bank for the limited services required by the Corporation. All
compensation paid to officers of the Corporation is paid by the Bank.

-7-

Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Corporation's President and
Chief Executive Officer. No executive officer received a total annual salary and
bonus in excess of $100,000 for the fiscal years ended December 31, 2000 or
2001.

Annual Compensation Long Term Compensation All Other Compensation
-------------------------------------------- ----------------------- ----------------------
Restricted Securities
Name and Fiscal Other Annual Stock Underlying
Principal Position Year Salary Bonus Compensation(1) Award Options
- ------------------ ---- ------ ----- --------------- ---------- -----------

Harold E. Stremmel, 2001 $66,773 $ -- $6,263 $ -- -- $10,304(4)
President and CEO 2000 $62,702 $ -- $6,215 $35,382(2) 10,611(3) $ 8,236(5)
1999 $60,300 $ -- $6,000 $ -- -- $ 2,309(6)

- -----------------------------------
(1) Includes directors fees.
(2) Represents the award of 4,244 shares of Common Stock under the RSP, as
adjusted for the stock dividends distributed by the Corporation, based upon
the last reported sales price for the Common Stock as reported on the OTC
Electronic Bulletin Board on February 3, 2000, the date of the award. This
award vests at the rate of 20% per year, beginning on the first anniversary
of the date of the grant. Dividend rights associated with the restricted
stock are accrued and held in arrears to be paid at the time the shares
vest.
(3) Mr. Stremmel was awarded 10,611 options, as adjusted for the stock
dividends distributed by the Corporation, at the exercise price of $8.33,
equal to the last reported sales price for the Common Stock on February 3,
2000, the date of the award, as adjusted for the 5% stock dividends.
(4) Represents the award of 538 shares under the ESOP as of June 30, 2000 based
upon the last reported sales price of the Common Stock on the date of the
award. Also includes the Bank's contribution to Mr. Stremmel's account
under a 401(k) Plan of $2,381 during 2000.
(5) Represents the award of 549 shares under the ESOP as of June 30, 2001 based
upon the last reported sales price of the Common Stock on the date of the
award. Also includes the Bank's contribution to Mr. Stremmel's account
under a 401(k) Plan of $2,372 during 2001.
(6) Represents Bank's contribution to Mr. Stremmel's account under a 401(k)
Plan of $2,039 during 1999.

Stock Awards. The following table set forth information concerning
options granted to Mr. Stremmel.

Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
------------------------------------------------------------------------

Value of
Number of Options In-the-Money Options
Shares Acquired Value at Fiscal Year-End (#) at Fiscal Year-End ($)
Name on Exercise(#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- -------------- ------------ ------------------------- -----------------------------

Harold E. Stremmel -- $ -- 4,244/6,367 $43,161 /$64,752

- ----------------------------
(1) Based upon the difference between the option exercise price of $8.33
and the last reported sales price of the Common Stock of $18.50 per
share as of December 31, 2001, as reported on the OTC Bulletin Board.

Employment Agreements. The Bank has entered into an employment
agreement with its President and Chief Executive Officer, Harold E. Stremmel.
Mr. Stremmel's current base salary under the employment agreement is $67,677.
The employment agreement has a term of three years. The agreement is terminable
by the Bank for "just cause" as defined in the agreement. If Mr. Stremmel is
terminated without just cause, he will be entitled to a continuation of his
salary from the date of termination through the remaining term of the agreement,
but in no event for a period of less than 1 year. The employment agreement
contains a provision stating that in the event of the termination of employment
in connection with any change in control of the Bank or the Corporation, Mr.
Stremmel will be paid a lump sum amount equal to 2.99 times his five-year
average annual taxable cash compensation. If a payment had been made under the
agreement as of December 31, 2001, the payment would have equaled approximately

-8-

$186,020. The aggregate payment that would have been made to Mr. Stremmel would
be an expense to the Bank and would have resulted in reductions to the Bank's
net income and capital. The agreement may be renewed annually by the Bank's
Board of Directors upon a determination of satisfactory performance within the
board's sole discretion. If Mr. Stremmel shall become disabled during the term
of the agreement, he shall continue to receive payment of 100% of his base
salary for a period of 12 months and 65% of his base salary for the remaining
term of the agreement. The payments shall be reduced by any other benefit
payments made under other disability programs in effect for the Bank's
employees.

In addition, two other executive officers of the Bank have entered into
employment agreements with the Bank which are similar to the employment
agreement with Mr. Stremmel. If change in control termination payments had been
made under the employment agreements with the two other executive officers as of
December 31, 2001, the payment in the aggregate would have equaled approximately
$254,462.

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PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
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Beard Miller Company LLP was the Corporation's independent public
accountant for the 2001 fiscal year. The Board of Directors of the Corporation
has appointed Beard Miller Company LLP as the Corporation's independent auditor
for the fiscal year ending December 31, 2002, subject to ratification by the
Corporation's stockholders. A representative of Beard is expected to be present
at the Meeting, will have the opportunity to make a statement if he or she so
desires, and is expected to be available to respond to appropriate questions.

Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast, in person or by proxy, by the
stockholders of the Corporation at the Meeting. The Board of Directors
recommends that stockholders vote "FOR" the ratification of the appointment of
Beard Miller Company LLP as the Corporation's auditors for the 2002 fiscal year.

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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------

In order to be considered for inclusion in the Corporation's proxy
materials for the annual meeting of stockholders for the fiscal year ending
December 31, 2002, all stockholder proposals must be received at the
Corporation's executive office at 51 South Front Street, Steelton, Pennsylvania
17113 no later than November 15, 2002. In addition, stockholder proposals must
meet other applicable criteria as set forth in the Corporation's bylaws in order
to be considered for inclusion in the Corporation's proxy materials.

Under the Corporation's bylaws, stockholder proposals that are not
included in the Corporation's proxy statement for the fiscal year ending
December 31, 2002, will only be considered at the annual meeting to be held in
2003 if the stockholder submits notice of the proposal to the Corporation at the
above address by February 17, 2003. In addition, stockholder proposals must meet
other applicable criteria as set forth in the Corporation's bylaws in order to
be considered at the 2003 annual meeting.

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

The Board of Directors is not aware of any other matters to come before
the Meeting. However, if any other matters should properly come before the
Meeting or any adjournments, it is intended that proxies in the accompanying
form will be voted in respect thereof in accordance with the judgment of the
persons named in the accompanying proxy.

-9-

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

A copy of the Corporation's annual report on Form 10-KSB for the fiscal
year ended December 31, 2001 will be furnished without charge to stockholders as
of the Record Date upon written request to the Secretary, Steelton Bancorp,
Inc., 51 South Front Street, Steelton, Pennsylvania 17113.

BY ORDER OF THE BOARD OF DIRECTORS

/s/Victor J. Segina
---------------------
Victor J. Segina
Secretary

Steelton, Pennsylvania
March 20, 2002

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STEELTON BANCORP, INC.
51 SOUTH FRONT STREET
STEELTON, PENNSYLVANIA 17113
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
April 17, 2002
- --------------------------------------------------------------------------------

The undersigned hereby appoints the Board of Directors of Steelton
Bancorp, Inc. (the "Corporation"), 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 Corporation, which the undersigned is entitled to
vote at the Annual Meeting of Stockholders (the "Meeting"), to be held at
Mechanics Savings Bank, 51 South Front Street, Steelton, Pennsylvania on
Wednesday, April 17, 2002, at 10:00 a.m. and at any and all adjournments
thereof, in the following manner:

FOR WITHHELD
1. The election as director of the nominees
listed with terms to expire in 2006
(except as marked to the contrary below): [ ] [ ]

Harold E. Stremmel
Joseph A. Wiedeman

INSTRUCTIONS: To withhold your vote for either nominee, write the nominee's name
on the line provided below.

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

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

2. The ratification of the appointment
of Beard Miller Company LLP as the
Corporation's independent auditor for the
fiscal year ending December 31, 2002. [ ] [ ] [ ]

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

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THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR EACH OF 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
Corporation 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 Corporation of his or her decision to terminate this Proxy.

The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and a
Proxy Statement dated March 20, 2002.

[ ] Check Box if You Plan
Dated: to Attend the Annual Meeting.
-----------------------

- ----------------------------- ------------------------------
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.
- --------------------------------------------------------------------------------