First Keystone Corporation Reports Strong Performance for the Nine Months Ended September 30, 2025, Highlighted by Higher Net Income and Loan Growth
First Keystone Corporation the parent company of First Keystone Community Bank, has announced its financial results for the nine-month period ended September 30, 2025. The results reflect meaningful improvements in earnings, loan activity, and overall financial stability compared to the same period in the prior year. The Corporation continued to strengthen its core banking operations, driven by strategic lending growth, stable deposit management, and improved non-interest income performance.
Growth in Interest Income and Loan Portfolio Performance
A key driver of the company’s improved financial performance was the increase in total interest income. For the nine-month period, interest income rose by $4,073,000, representing a year-over-year increase of 7.7%. This improvement was largely attributable to continued growth in the commercial real estate loan portfolio—a core component of the bank’s lending strategy. The expansion in loan balances reflects ongoing economic activity within the markets the Bank serves, as well as strengthened client relationships across the commercial sector.
At the same time, total interest expense decreased modestly by $76,000, or 0.3%, during the same period. The decline in interest expense was influenced significantly by a reduction in short-term borrowings, which contributed to $1,759,000 in savings compared to the prior year. However, this benefit was partially offset by higher interest costs related to deposit funding. Interest expense on deposits increased by $1,683,000 as the Bank experienced a shift in its deposit mix, particularly with greater utilization of brokered certificates of deposit (CDs).
Brokered CDs accounted for a significant portion of the rise in deposit-related interest expense. The costs associated with brokered CDs increased by $1,239,000 as the Bank increased the balance of these deposits by $64,106,000 between September 30, 2024, and September 30, 2025. This strategic shift in funding sources reflects the evolving competitive and rate environment in the broader banking industry, where institutions continue to balance liquidity needs with cost efficiency.
Additionally, derivative agreements designed to manage interest rate exposure contributed positively to net interest income. For the nine months ended September 30, 2025, these derivative agreements resulted in an increase of $586,000 to net interest income, compared to a $1,283,000 benefit recorded in the same period of 2024. Although the year-over-year derivative impact decreased, the use of these instruments continued to support earnings stability.
The provision for credit losses decreased by $723,000 compared to the prior-year period. This decline was primarily the result of reduced loan growth relative to the previous year and a downward adjustment to qualitative credit risk factors. The reduction in provision expense suggests a stable credit environment and sound underwriting across the portfolio.
Strength in Non-Interest Income
Non-interest income also contributed positively to the Corporation’s financial performance. For the nine months ended September 30, 2025, non-interest income increased by $638,000, or 13.2%, compared to the same period in 2024. The increase was driven by several contributing factors across revenue categories.
Net securities gains improved materially, with the Bank recording a net gain of $128,000 compared to a net loss of $48,000 in the prior-year period. This shift reflected favorable market valuation changes in equity securities held by the Bank.
Other sources of non-interest income also expanded. Life insurance proceeds of $255,000 were recognized during the first half of 2025, contributing to overall non-interest income growth. Additionally, ATM and debit card fee income increased by $40,000, reflecting steady customer transaction engagement. Gains on the sale of mortgage loans rose by $29,000, signaling continued demand in residential lending and operational efficiency in loan sales.
Reduction in Non-Interest Expense and One-Time Comparison Effects
Non-interest expense totaled $24,912,000 for the nine months ended September 30, 2025. This represented a decrease from the same period in 2024, although the comparison is influenced by a significant one-time event in the prior year.
In the first quarter of 2024, the Corporation recorded a full goodwill valuation impairment charge of $19,133,000. The impairment was driven by a required accounting reassessment following a decline in stock price, which acted as a triggering event. Because this impairment was a non-cash accounting adjustment, it had no impact on the Bank’s liquidity or regulatory capital position, but it had a major effect on reported results for 2024.
Excluding this non-recurring item, non-interest expense increased, reflecting ongoing operational investments. For instance, the Bank incurred $307,000 in fraud-related expense during the first quarter of 2025 associated with a single customer account event. The Bank also recorded a combined $352,000 increase in equipment and technology-related expenses, primarily involving the replacement and modernization of its ATM network. Additionally, FDIC insurance premiums increased by $239,000, consistent with broader industry trends, as many banks have faced rising insurance assessments.
Higher Net Income and Improved Tax Expense
Income tax expense increased by $964,000 for the nine months ended September 30, 2025, corresponding to the higher pre-tax income earned during the period.
As a result of these operating improvements, net income for the nine months ended September 30, 2025, totaled $6,775,000. Earnings per share were $1.09, and dividends paid during the period were $0.84 per share. Net income increased by $22,265,000 compared to the same period in 2024, largely due to the absence of the prior year’s goodwill impairment charge.
Growth in Balance Sheet and Deposits
Total assets increased to $1,582,377,000 as of September 30, 2025, representing a $143,684,000 or 10.0% increase from the prior year. Loan balances grew by $23,134,000 during the period, while securities and restricted stock holdings grew by $1,149,000.
Deposits increased significantly, rising by $172,585,000 or 16.9% year-over-year. The Bank noted a shift from traditional transactional deposit accounts toward fixed-term retail CDs, which increased by $118,769,000. Brokered CD balances also expanded, reflecting strategic funding diversification.
Stockholders’ equity increased by $4,908,000, or 4.6%, supported by improvements in accumulated other comprehensive income and growth in retained earnings.
Commitment to Community Banking
First Keystone Community Bank continues to emphasize its mission of providing full-service banking built on integrity, customer relationships, and forward-looking solutions. With branches across Columbia, Luzerne, Montour, Monroe, and Northampton counties, the Bank remains closely connected to the communities it serves.
Rooted in tradition and guided by strategic vision, the institution continues to position itself for long-term growth while supporting the financial needs of individuals, families, and businesses across its region.
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