First Keystone Announces Third Quarter 2026 Earnings (Unaudited)

First Keystone Announces Third Quarter 2026 Earnings (Unaudited)

First Keystone Corporation (OTCID: FKYS), parent company of First Keystone Community Bank, reported an increase in total interest income of $3,195,000 or 5.6%, as compared to the nine months ended September 30, 2025. The increase was predominantly due to interest earned on increased balances of interest-bearing deposits held at the Federal Reserve Bank compared to the same period in 2025. Total interest expense increased by $957,000 or 3.3% overall, mainly due to an increase of $675,000 in interest expense related to interest paid on the Bank’s outstanding subordinated debt due to the contracted change from fixed to floating rate which transpired in 2026. The rate paid on the subordinated debt increased from 4.375% fixed to a floating rate which was equivalent to 7.745% as of the September 30, 2026 interest payment. The net effect of derivative agreements decreased net interest income by $809,000 for the nine months ended September 30, 2026 and increased net interest income by $586,000 for the nine months ended September 30, 2025. These derivative agreements are part of the Corporation’s interest rate risk management strategy and are intended to mitigate exposure to changes in market interest rates. The provision for credit losses for the nine month period decreased by $1,894,000 to a recovery of credit losses of $1,125,000 for the nine months ended September 30, 2026 compared to expense of $769,000 for the nine months ended September 30, 2025. The recovery of credit losses for the nine months ended September 30, 2026 was mainly the result of a decrease of $640,000 in the provision for credit losses related to the Bank’s owner-occupied, non-farm, non-residential loans. Of the $640,000, a decrease of $440,000 was due to a reduction in specific allocation on an individually evaluated loan and a decrease of $200,000 was attributable to a decrease in the outstanding principal balance of owner-occupied, non-farm, non-residential loans of $1,954,000, along with a decrease in the related quantitative loss rate. The Bank also experienced decreases in outstanding principal balance and quantitative loss rates related to pooled/collectively evaluated loans in two of the Bank’s larger loan categories: multifamily loans and non-owner occupied, non-farm, non-residential loans. The outstanding principal balance of pooled/collectively evaluated loans related to these two categories decreased by $7,659,000 and $3,710,000 during the nine months ended September 30, 2026. The provision for credit losses related to these categories decreased by $329,000 and $189,000, respectively as of the nine months ended September 30, 2026.