Financial Analysis

NOTE 11 COMMITMENTS AND CONTINGENCIES In the normal course of business, there are various pending legal actions and proceedings that are not reflected in the consolidated financial statements. Management does not believe the outcome of these actions and proceedings will have a material effect on the consolidated financial position of the Corporation. The Corporation currently leases two branch banking facilities and one parcel of land under operating leases. At December 31, 2025, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,326,000 and $1,862,000, respectively, in the consolidated balance sheets. At December 31, 2024, right-of-use assets and liabilities stood at $1,400,000 and $1,920,000, respectively, in the consolidated balance sheets. The Corporation recognized total operating lease costs for the years ended December 31, 2025 and 2024 of $204,000 and $213,000, respectively. Cash payments totaled $188,000 and $198,000 for the years ended December 31, 2025 and 2024, respectively. Operating lease costs are reflected in occupancy expenses in the consolidated statements of income. The Corporation has one finance lease for equipment. At December 31, 2025, right-of-use assets and lease liabilities were recorded related to this finance lease totaling $29,000 and $33,000, respectively. At December 31, 2024, right-of-use assets and lease liabilities stood at $0. Amounts recognized as right-of-use assets related to finance leas …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 17 FAIR VALUE MEASUREMENTS Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. This guidance provides additional information on determining when the volume and level of activity for the asset or liability has significantly decreased. The guidance also includes information on identifying circumstances when a transaction may not be considered orderly. Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance. This guidance clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

NOTE 9 INCOME TAXES The following table presents information regarding income taxes paid for the year ended December 31, 2025 and 2024. (Dollars in thousands) 2025 2024 Federal $ 875 $ 50 States (a) 8 $ 883 $ 50 (a) The amount of state income taxes paid during the year does not meet the 5% disaggregation threshold. Pretax income is entirely related to domestic activities, the Corporation did not have any foreign operations. The components of income tax expense (benefit) from continuing operations consisted of the following: (Dollars in thousands) 2025 2024 Current tax expense: Federal $ 597 $ 18 State 10 Total 607 18 Deferred tax benefit: Federal (327) $ (63) State (67) Total (394) (63) Net provision for income tax expense (benefit) from continuing operations $ 213 $ (45) The Corporation did not have any income tax expense (benefit) in foreign jurisdictions. The following is a reconciliation between the income tax expense (benefit) and the amount of income taxes which would have been provided at the statutory rate of 21% in accordance with ASU 2023-09: 2025 (Dollars in thousands) Amount Rate Tax computed at the statutory federal rate $ 1,337 21.0 % State income taxes, net of federal benefit (a) (45) (0.7) Tax credits: Low income housing tax credits (840) (13.2) Nontaxable or nondeductible items: Tax-exempt income (44) (0.7) Bank owned life insurance income (193) (3.0) Other 12 0.2 Other adjustments (14) (0.2) Provision for income taxes $ 213 3.4 % (a) State taxes in Pennsylva …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 7 LONG-TERM BORROWINGS Long-term borrowings are comprised of advances from the FHLB. Under terms of a blanket agreement, collateral for the FHLB loans is certain qualifying assets of the Bank. The qualifying assets are real estate mortgages and certain investment securities. A schedule of long-term borrowings by maturity as of December 31, 2025 and 2024 follows: (Dollars in thousands) 2025 2024 Due 2026, 4.40% to 4.92% 64,000 64,000 Due 2028, 4.46% to 5.14% 42,000 42,000 Total long-term borrowings $ 106,000 $ 106,000 The Corporations long-term borrowings consist of notes at fixed interest rates. Upon any default, under the terms of a master agreement, the FHLB may declare all indebtedness of the Corporation immediately due. In addition, the FHLB shall not be required to fund advances under any outstanding commitments. Irrevocable standby letters of credit may be issued to a customer/beneficiary by the FHLB on the Corporations behalf in order to secure public/municipal unit deposits, provide credit enhancement to certain transaction types, or to support payment obligations to third parties. These irrevocable standby letters of credit are supported by an irrevocable and independent guarantee by the FHLB for the Corporations pledging obligation to secure public/municipal unit deposits which eliminates the need for the Corporation to pledge collateral in the amount necessary to secure these funds. There were no irrevocable standby letters of credit which could be drawn on th …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Recent Accounting Standards Updates (ASU): Adopted ASUs In January of 2024, the Corporation adopted ASU 2023-07 , Segment Reporting-Improvements to Reportable Segment Disclosures (Topic 280) . This ASU required disclosure of incremental segment information on an annual basis for all public entities, including entities with one reportable segment. Such incremental disclosures included information about significant segment expenses, how chief operating decision makers (CODM) measured a segments profit or loss, and qualitative information about how a CODM assessed segment performance. The Corporation adopted the provisions of the ASU effective January 1, 2024. As the Corporation has only one reportable segment (community banking segment), this ASU did not have a material effect on the Corporations consolidated financial statements. In 2025, the Corporation adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU 2023-09 required enhanced income tax disclosures related to the rate reconciliation and information related to income taxes paid. This ASU was issued to enhance transparency and decision usefulness of income tax disclosures. The standard required: (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid, net of refunds received, disaggregated by jurisdiction based on an established threshold. The Corporation adopted the provisions of the ASU prospectively, being applied on …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

NOTE 10 EMPLOYEE BENEFIT PLANS AND DEFERRED COMPENSATION AGREEMENTS The Corporation maintains a 401k Plan which has a combined tax qualified savings feature and profit sharing feature for the benefit of its employees. Effective January 1, 2014, the Plan became a Safe Harbor Plan. Under the savings feature, the Corporation makes safe harbor matching contributions of 100% of the first 3% of compensation an employee contributes to the Plan and 50% of the next 2% of compensation an employee contributes to the Plan. The safe harbor matching contributions amounted to $427,000 and $425,000 in 2025 and 2024, respectively. Under the profit sharing feature, contributions, at the discretion of the Board of Directors, are funded currently and amounted to $333,000 and $334,000 in 2025 and 2024, respectively. The Corporation also has non-qualified deferred compensation agreements with six retired officers. These agreements are essentially unsecured promises by the Corporation to make monthly payments to the officers over fifteen or twenty year periods. Payments begin based upon specific criteria generally, when the officer retires. To account for the cost of payments yet to be made in the future, the Corporation recognizes an accrued liability in years prior to when payments begin based on the present value of those future payments. The Corporations accrued liability for these deferred compensation agreements, reported in other liabilities on the consolidated balance sheets, as of December …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 13 RELATED PARTY TRANSACTIONS Certain directors, executive officers and immediate family members of First Keystone Corporation and its subsidiary, and companies in which they are principal owners (i.e., at least 10% ownership), were indebted to the Corporation at December 31, 2025 and 2024. The loans do not involve more than the normal risk of collectability nor present other unfavorable features. A summary of the activity on the related party loans consists of the following: (Dollars in thousands) 2025 2024 Balance at January 1 $ 9,082 $ 9,188 Additions 1,632 2,363 Deductions (1,619) (2,469) Balance at December 31 $ 9,095 $ 9,082 The summary of activity on the related party loans represent funds drawn and outstanding at the date of the consolidated financial statements. Commitments by the Bank to related parties on lines of credit and letters of credit for 2025 and 2024, presented an additional off-balance sheet risk to the extent of undisbursed funds in the amounts of $5,134,000 and $4,568,000 respectively, on the above loans. Deposits from certain officers, directors and immediate family members and/or their related companies held by the Bank amounted to $24,025,000 and $24,998,000 at December 31, 2025 and 2024, respectively. Funds from certain officers, directors and immediate family members and/or their related companies held in the Trust Department amounted to $14,647,000 and $12,302,000 at December 31, 2025 and 2024, respectively. …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 18 REVENUE RECOGNITION The Corporation has elected to apply the guidance outlined in ASC 606 regarding the measurement or recognition of revenue. The main types of revenue contracts included in non-interest income within the consolidated statements of income which are subject to ASC 606 are as follows: Deposit related fees and service charges Service charges and fees on deposits, which are included as liabilities in the consolidated balance sheets, consist of fees related to monthly fees for various retail and business checking accounts, ATM fees (charged for withdrawals by the Corporations deposit customers from other bank ATMs) and insufficient funds fees (NSF) (which are charged when customers overdraw their accounts beyond available funds). All deposit liabilities are considered to have one-day terms and therefore related fees are recognized in income at the time when the services are provided to the customers. The Corporation elected to adopt a practical expedient related to incremental costs of obtaining deposit contracts. As such, any costs associated with acquiring the deposits, except for certificate of deposits (CDs) with maturities in excess of one year, are recognized as an expense within the non-interest expense in the consolidated statements of income when incurred as the amortization period of the deposit liabilities that otherwise would have been recognized is one year or less. Wealth/Asset/Trust Management Fees Wealth management services are delivered to …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

NOTE 16 STOCKHOLDERS EQUITY The Corporation also offers to its shareholders a Dividend Reinvestment and Stock Purchase Plan. Participation in this plan by shareholders began in 2001. The plan provides First Keystone shareholders a convenient and economical way to purchase additional shares of common stock by reinvesting dividends. A plan participant can elect full dividend reinvestment or partial dividend reinvestment provided at least 25 shares are enrolled in the plan. In addition, plan participants may make additional voluntary cash purchases of common stock under the plan of not less than $100 per calendar quarter or more than $2,500 in any calendar quarter. Shares transferred under this Dividend Reinvestment and Stock Purchase Plan were 53,354 in 2025 and 97,727 in 2024. Remaining shares authorized in the plan were 69,624 as of December 31, 2025. Shares of First Keystone common stock are purchased for the plan either in the open market by an independent broker on behalf of the plan, directly from First Keystone as original issue shares, or through negotiated transactions. A combination of the previous methods could also occur. …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 8 COMMITMENTS AND CONTINGENCIES In the normal course of business, there are various pending legal actions and proceedings that are not reflected in the consolidated financial statements. Management does not believe the outcome of these actions and proceedings will have a material effect on the consolidated financial position or results of operations of the Company. The Company currently leases two branch banking facilities and one parcel of land under operating leases. At September 30, 2025, right-of-use assets and lease liabilities were recorded related to these operating leases totaling $1,353,000 and $1,885,000, respectively. At December 31, 2024, right-of-use assets and lease liabilities stood at $1,400,000 and $1,920,000, respectively, in the consolidated balance sheets. The Company recognized total operating lease costs for the nine months ended September 30, 2025 and 2024 of $151,000 and $142,000, respectively. Operating lease costs are included in occupancy, net in the accompanying statements of income. Cash payments totaled $139,000 and $132,000, respectively, for the nine months ended September 30, 2025 and 2024. The Company currently has one finance lease for equipment. At September 30, 2025, right-of-use assets and lease liabilities were recorded related to the finance lease totaling $44,000 and $35,000, respectively. At December 31, 2024, right-of-use assets and lease liabilities stood at $0. Amounts recognized as right-of-use assets and lease liabilities re …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 6 BORROWINGS Short-Term Borrowings Short-term borrowings include federal funds purchased, securities sold under agreements to repurchase, the Federal Discount Window, and Federal Home Loan Bank of Pittsburgh (FHLB) advances, which generally represent overnight or less than 30-day borrowings. Short-term borrowings and weightedaverage interest rates at September 30, 2025 and December 31, 2024 are as follows: (Dollars in thousands) September 30, 2025 December 31, 2024 Average Average Amount Rate Amount Rate Federal funds purchased $ 5.48 % $ 6.56 % Securities sold under agreements to repurchase 32,856 3.89 % 32,932 4.34 % Federal Discount Window 4.50 % 5.46 % Federal Home Loan Bank of Pittsburgh 100,000 4.75 % 101,494 5.60 % Total $ 132,856 4.55 % $ 134,426 5.37 % Securities Sold Under Agreements to Repurchase (Repurchase Agreements) The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability on the Companys consolidated balance sheets, while …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 11 FAIR VALUE MEASUREMENTS Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. This guidance provides additional information on determining when the volume and level of activity for the asset or liability has significantly decreased. The guidance also includes information on identifying circumstances when a transaction may not be considered orderly. Fair value measurement and disclosure guidance provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with the fair value measurement and disclosure guidance. This guidance clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

NOTE 12 REVENUE RECOGNITION In accordance with ASC 606, the main types of revenue contracts included in non-interest income within the consolidated statements of income are as follows: Deposits related fees and service charges Service charges and fees on deposits, which are included as liabilities in the consolidated balance sheets, consist of fees related to monthly fees for various retail and business checking accounts, ATM fees (charged for withdrawals by our deposit customers from other bank ATMs) and insufficient funds fees (NSF) (which are charged when customers overdraw their accounts beyond available funds). All deposit liabilities are considered to have one-day terms and therefore related fees are recognized in income at the time when the services are provided to the customers. The Company elected to adopt the practical expedient related to incremental costs of obtaining deposit contracts. As such, any costs associated with acquiring the deposits, except for certificate of deposits (CDs) with maturities in excess of one year, are recognized as an expense within non-interest expense in the consolidated statements of income when incurred as the amortization period of the deposit liabilities that otherwise would have been recognized is one year or less. Wealth/Asset/Trust Management Fees Wealth management services are delivered to individuals, corporations and retirement funds located primarily within our geographic markets. The Trust Department of the Company conducts …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing