Market Overview

First Keystone Announces Fourth Quarter 2018 Earnings (Unaudited)


First Keystone Corporation (OTC:FKYS), parent company of First
Keystone Community Bank, reported net income of $9,211,000 for the year
ended December 31, 2018. Earnings per share was $1.60 while dividends
totaled $1.08 per share for the year ended December 31, 2018. Net income
increased by $563,000 as compared to the same period in 2017. The
increase was primarily driven by an increase in interest income due to
positive loan growth and a decrease in income tax expense.

Total interest income increased year over year by $3,305,000 or 10.2%
chiefly due to positive loan growth and loans repricing, increasing
interest on loans by $3,271,000 or 14.5%. The increase in interest on
loans was offset by an increase in interest paid on deposits of $961,000
or 22.7% and borrowings of $1,111,000 or 49%, principally stemming from
the rising deposit interest rate environment effected by the recent
short-term federal funds rate hikes.

Non-interest income, excluding net investment gains, was $394,000 higher
in 2018 as compared to 2017. Service charges and fees on deposits and
ATM and debit card income increased by $427,000 as compared to the same
period in 2017. Gains on sales of mortgage loans decreased by $128,000,
as fewer mortgages are being originated.

Non-interest expense increased in 2018 to $22,645,000. The $1,124,000
increase over 2017 was the result of increases in salaries and employee
benefits expense mainly due to the hiring of additional sales staff and
normal merit increases and an increase in professional service fees
related to newly adopted accounting pronouncements, additional SEC
filings and various initiatives.

Income tax expense was $996,000 lower in 2018 as compared to 2017 due to
major tax reform legislation, which reduced the Corporation's tax rate
from 34% to 21%, effective January 1, 2018. The Corporation recognized
$405,000 of tax credits from low-income housing partnerships in 2018.

Total assets increased to $1,012,000,000 at December 31, 2018, an
increase of $21,879,000 or 2.2% as compared to December 31, 2017, due to
improved loan portfolio growth.

Net loans increased $47,737,000 or 8.7%, while deposits decreased
$106,593,000 or 13.7%. Stockholders' equity increased primarily as a
result of an increase in retained earnings.

Management considers subsequent events occurring after the balance sheet
date for matters which may require adjustment to, or disclosure in, the
consolidated financial statements. The review period for subsequent
events extends up to and including the filing date of a public company's
consolidated financial statements when filed with the Securities and
Exchange Commission ("SEC"). Accordingly, the financial information in
this announcement is subject to change.

First Keystone Community Bank provides innovative business and personal
banking products that focus on "Yesterday's Traditions. Tomorrow's
Vision." The Bank currently operates offices in Columbia (5), Luzerne
(8), Montour (1), Monroe (4), and Northampton (1) counties.

Inquiries regarding the purchase of the Corporation's stock may be made
through the following brokers: RBC Dain Rauscher, 800-223-4207; Janney
Montgomery Scott, Inc., 800-526-6397; Boenning & Scattergood, Inc.,
800-883-1212; and Stifel Nicolaus & Co. Inc., 800-679-5446.

Note: This press release may contain forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Actual
results and trends could differ materially from those set forth in such
statements due to various factors. These factors include operating,
legal and regulatory risks, changing economic and competitive conditions
and other risks and uncertainties.

For more information on First Keystone Community Bank or its parent
company, First Keystone Corporation, please contact Elaine A. Woodland
at 570-752-3671.

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