What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-15 · 493 added, 356 removed, 1353 unchanged (39% of the section changed)

9 unchanged sentences

Restricted investment in bank stocks, at cost

Loans held for investment

Loans held for sale

18 unchanged sentences

Preferred stock, par value $ 2.00 per share;

authorized 1,000,000 shares as of March 31, 2025 and December 31, 2024;

issued 0 as of March 31, 2025 and December 31, 2024

authorized 1,000,000 shares as of June 30, 2025 and December 31, 2024;

issued 0 as of June 30, 2025 and December 31, 2024

Common stock, par value $ 2.00 per share;

authorized 20,000,000 shares as of March 31, 2025 and December 31, 2024;

issued 6,450,392 as of March 31, 2025 and 6,450,392 as of December 31, 2024;

outstanding 6,218,781 as of March 31, 2025 and 6,218,781 as of December 31, 2024

authorized 20,000,000 shares as of June 30, 2025 and December 31, 2024;

issued 6,450,392 as of June 30, 2025 and 6,450,392 as of December 31, 2024;

outstanding 6,218,781 as of June 30, 2025 and 6,218,781 as of December 31, 2024

Retained earnings

Accumulated other comprehensive loss

Treasury stock, at cost, 231,611 shares as of March 31, 2025 and December 31, 2024

Treasury stock, at cost, 231,611 shares as of June 30, 2025 and December 31, 2024

TOTAL STOCKHOLDERS’ EQUITY

5 unchanged sentences

Three Months Ended

Six Months Ended

INTEREST INCOME

11 unchanged sentences

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

(Release of) provision for credit losses

Net interest income after (release of) provision for credit losses

NON-INTEREST INCOME

4 unchanged sentences

Net gains on sales of mortgage loans

Net securities losses

Net securities gains (losses)

Gains from life insurance proceeds

23 unchanged sentences

Three Months Ended

Other comprehensive income:

Unrealized net holding gain (loss) on debt securities available-for-sale arising during the period, net of income taxes of $ 107 and $( 875 ), respectively

Fair value adjustment on derivatives, net of income taxes of $ 350 and $ 167 , respectively

Total other comprehensive loss

Total comprehensive income (loss)

(Dollars in thousands)

Six Months Ended

Net income (loss)

Other comprehensive income (loss):

Unrealized net holding gain (loss) on debt securities available-for-sale arising during the period, net of income taxes of $ 427 and $( 177 ), respectively

Unrealized net holding gains (loss) on debt securities available-for-sale arising during the period, net of income taxes of $ 534 and $( 1,053 ), respectively

Fair value adjustment on derivatives, net of income taxes of $ 666 and $ 753 , respectively

Total other comprehensive income

Total other comprehensive income (loss)

Total comprehensive income (loss)

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2025 AND 2024

SIX MONTHS ENDED JUNE 30, 2025 AND 2024

(Dollars in thousands, except

8 unchanged sentences

Balance at March 31, 2025

Other comprehensive loss, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at June 30, 2025

Balance at January 1, 2024

3 unchanged sentences

Balance at March 31, 2024

Other comprehensive loss, net of taxes

Issuance of common stock under dividend reinvestment plan

Dividends - $ 0.28 per share

Balance at June 30, 2024

See accompanying notes to consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2025 AND 2024

SIX MONTHS ENDED JUNE 30, 2025 AND 2024

(Dollars in thousands)

1 unchanged sentence

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Provision for credit losses on loans

(Recapture) provision for credit losses on unfunded commitments

(Release of) provision for credit losses on unfunded commitments

Goodwill impairment

5 unchanged sentences

Originations of mortgage loans originated for sale

Net securities losses

Increase in accrued interest receivable

Net securities (gains) losses

Decrease (Increase) in accrued interest receivable

Increase in cash surrender value of bank owned life insurance

Gains from life insurance proceeds

Gain from bank-owned life insurance proceeds

Net losses on disposals of premises and equipment

Increase in other assets

Decrease in other assets

Amortization of investment in low-income housing partnerships

6 unchanged sentences

Net change in restricted investment in bank stocks

Net (increase) decrease in loans

Net increase in loans

Proceeds from bank-owned life insurance

1 unchanged sentence

Purchase of investment in real estate venture

NET CASH USED IN INVESTING ACTIVITIES

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase in deposits

Net increase in short-term borrowings

Net increase in deposits

Net (decrease) increase in short-term borrowings

Common stock issued

21 unchanged sentences

In the opinion of management, all adjustments considered necessary for fair presentation have been included.

Operating results for the three months ended March 31, 2025, are not necessarily indicative of the results for the year ending December 31, 2025.

Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the results for the year ending December 31, 2025.

For further information, refer to the consolidated financial statements and notes thereto included in First Keystone Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024.

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of March 31, 2025 for items that should potentially be recognized or disclosed in these consolidated financial statements.

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of June 30, 2025 for items that should potentially be recognized or disclosed in these consolidated financial statements.

The evaluation was conducted through the date these consolidated financial statements were issued.

1 unchanged sentence

Adopted ASUs:

There were no ASUs adopted during the three months ended March 31, 2025.

There were no ASUs adopted during the first half of 2025.

Pending ASUs:

20 unchanged sentences

Securities classified as Held-to-Maturity are carried at cost adjusted for amortization of premium and accretion of discount to maturity.

At March 31, 2025 and December 31, 2024, all debt securities held were classified as available-for-sale.

At June 30, 2025 and December 31, 2024, all debt securities held were classified as available-for-sale.

Debt securities not classified as Held-to-Maturity are included in the Available-for-Sale category and are carried at fair value.

13 unchanged sentences

Corporate debt securities consist of senior debt and subordinated debt holdings.

There was no allowance for credit losses for Available-For-Sale debt securities as of March 31, 2025;

There was no allowance for credit losses for Available-For-Sale debt securities as of June 30, 2025;

therefore, it is not present in the table below.

The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as Available-For-Sale were as follows at March 31, 2025 and December 31, 2024:

The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as Available-For-Sale were as follows at June 30, 2025 and December 31, 2024:

Debt Securities Available-for-Sale

(Dollars in thousands)

March 31, 2025:

June 30, 2025:

Treasury securities

17 unchanged sentences

Corporate debt securities

Debt securities Available-for-Sale with an aggregate fair value of $ 211,047,000 at March 31, 2025 and $ 251,961,000 at December 31, 2024, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $ 170,877,000 at March 31, 2025 and $ 192,671,000 at December 31, 2024.

The amortized cost and estimated fair value of debt securities, by contractual maturity, are shown below at March 31, 2025.

Debt securities Available-for-Sale with an aggregate fair value of $ 208,462,000 at June 30, 2025 and $ 251,961,000 at December 31, 2024, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $ 161,683,000 at June 30, 2025 and $ 192,671,000 at December 31, 2024.

The amortized cost and estimated fair value of debt securities, by contractual maturity, are shown below at June 30, 2025.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

March 31, 2025

June 30, 2025

Debt Securities Available-For-Sale

11 unchanged sentences

Mortgage-backed securities are allocated for maturity reporting at their original maturity date.

At March 31, 2025 and December 31, 2024, the Corporation had holdings of securities from the following issuers in excess of ten percent of consolidated stockholders’ equity (excluding holdings of the U.S.

At June 30, 2025 and December 31, 2024, the Corporation had holdings of securities from the following issuers in excess of ten percent of consolidated stockholders’ equity (excluding holdings of the U.S.

Government and U.S.

1 unchanged sentence

(Dollars in thousands)

March 31, 2025:

June 30, 2025:

Sallie Mae Bank

7 unchanged sentences

Navient Student Loan Trust

There were no proceeds from sales of Debt Securities Available-For-Sale for the three months ended March 31, 2025 and 2024.

There were no proceeds from sales of Debt Securities Available-For-Sale for the six months ended June 30, 2025 and 2024.

Therefore, there were no gains or losses realized during these periods.

The summary below shows the gross unrealized losses and fair value of the Company’s debt securities.

Totals are aggregated by investment category where individual securities have been in a continuous loss position for less than 12 months or 12 months or more as of March 31, 2025 and December 31, 2024:

March 31, 2025

Totals are aggregated by investment category where individual securities have been in a continuous loss position for less than 12 months or 12 months or more as of June 30, 2025 and December 31, 2024:

June 30, 2025

(Dollars in thousands)

23 unchanged sentences

Corporate debt securities

There were 166 individual debt securities in an unrealized loss position as of March 31, 2025, with a combined decline in value representing 7.10 % of the debt securities portfolio.

There were 164 individual debt securities in an unrealized loss position as of June 30, 2025, with a combined decline in value representing 7.17 % of the debt securities portfolio.

There were 167 individual debt securities in an unrealized loss position as of December 31, 2024, with their combined decline in value representing 7.36 % of the debt securities portfolio.

3 unchanged sentences

The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses.

Consideration is given to (1) the financial condition and near-term prospects of

the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values.

Consideration is given to (1) the financial condition and near-term prospects of the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) the Company’s intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values.

In analyzing an issuer’s financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the debt securities.

3 unchanged sentences

The Company made a policy election to exclude accrued interest receivable from the amortized cost basis of debt securities available for sale.

Accrued interest receivable on debt securities available for sale is reported as a component of accrued interest receivable on the Company’s consolidated balance sheet and totaled $ 2,117,000 as of March 31, 2025.

Accrued interest receivable on debt securities available for sale is excluded from the estimate of credit losses.

All debt securities available for sale in an unrealized loss position, as of March 31, 2025, continue to perform as scheduled and we do not believe that there is a credit loss or that a provision for credit losses is necessary.

Also, as part of our evaluation of our intent and ability to hold debt securities for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategies, cash flow needs, liquidity position, capital adequacy and interest rate risk position.

We do not currently intend to sell the debt securities within the portfolio and it is not more-likely-than-not that we will be required to sell the debt securities.

Management continues to monitor all of our debt securities with a high degree of scrutiny.

There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its debt securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

All debt securities available for sale in an unrealized loss position, as of June 30, 2025, continue to perform as scheduled and the Company does not believe that there is a credit loss or that a provision for credit losses is necessary.

Also, as part of the Company’s evaluation of its intent and ability to hold debt securities for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategies, cash flow needs, liquidity position, capital adequacy and interest rate risk position.

The Company does not currently intend to sell the debt

securities within the portfolio and it is not more-likely-than-not that the Company will be required to sell the debt securities.

Management continues to monitor all of the Company’s debt securities with a high degree of scrutiny.

There can be no assurance that the Company will not conclude in future periods that conditions existing at that time indicate some or all of its debt securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

Equity Securities

1 unchanged sentence

Equity securities without readily determinable fair values are recorded at cost, adjusted for observable price changes and impairments, if any.

At March 31, 2025 and December 31, 2024, the Company had $ 1,501,000 and $ 1,587,000 , respectively, in equity securities recorded at fair value.

The following is a summary of realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2025 and 2024:

At June 30, 2025 and December 31, 2024, the Company had $ 1,606,000 and $ 1,587,000 , respectively, in equity securities recorded at fair value.

The following is a summary of realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2025 and 2024:

(Dollars in thousands)

1 unchanged sentence

Three months ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Net gains (losses) from market value fluctuations recognized during the period on equity securities

1 unchanged sentence

Net gains (losses) recognized during the reporting period on equity securities still held at the reporting date

(Dollars in thousands)

Six months ended

June 30, 2025

June 30, 2024

Net gains (losses) from market value fluctuations recognized during the period on equity securities

Net gains recognized during the period on equity securities sold during the period

Net gains (losses) recognized during the reporting period on equity securities still held at the reporting date

Management evaluates equity securities for impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

Equity securities without readily determinable fair values are generally evaluated for impairment under FASB ASC 321, Equity Securities.

In determining impairment under the FASB ASC 321 model, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the equity

security or more likely than not will be required to sell the equity security before its anticipated recovery.

The assessment of whether an impairment exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

2 unchanged sentences

The Company monitors the equity securities portfolio monthly with particular attention given to securities in a continuous loss position of at least ten percent for over twelve months.

Based on the factors described above, management did not consider any equity securities to be impaired at March 31, 2025 or December 31, 2024.

Based on the factors described above, management did not consider any equity securities to be impaired at June 30, 2025 or December 31, 2024.

NOTE 4 — LOANS AND ALLOWANCE FOR CREDIT LOSSES

2 unchanged sentences

Loan origination fees and certain direct loan origination costs have been deferred with the net amount amortized using the straight line method or the interest method over the contractual life of the related loans as an interest yield adjustment.

The loans receivable portfolio is segmented into the following segments:

The loans held for investment portfolio is segmented into the following segments:

Real Estate (including both commercial and residential loans), Agricultural, Commercial and Industrial, Consumer, and State and Political Subdivisions.

14 unchanged sentences

most of the residential mortgages held in the Company’s residential real estate portfolio have maximum terms of twenty years .

Generally, the majority of the Company’s

residential mortgage loans originate with a loan-to-value of eighty percent or less, or those with private mortgage insurance at ninety-five percent or less.

Generally, the majority of the Company’s residential mortgage loans originate with a loan-to-value of eighty percent or less, or those with private mortgage insurance at ninety-five percent or less.

Home equity term loans are secured by the borrower’s primary residence and typically have a maximum loan-to-value of eighty percent and a maximum term of fifteen years .

2 unchanged sentences

The ability and willingness to repay is assessed based upon the borrower’s employment history, current financial conditions and credit background.

A majority of the properties securing residential real estate loans made by the Company are appraised by independent appraisers.

A majority of the properties securing residential real estate loans made by the

Company are appraised by independent appraisers.

The Company generally requires mortgage loan borrowers to obtain an attorney’s title opinion or title insurance and fire and property insurance, including flood insurance, if applicable.

3 unchanged sentences

These loans are sold without recourse.

Loans held for sale amounted to $ 559,000 and $ 737,000 at March 31, 2025 and December 31, 2024, respectively.

Loans held for sale amounted to $ 104,000 and $ 737,000 at June 30, 2025 and December 31, 2024, respectively.

Agricultural Lending

The Company originates agricultural loans to individuals in the farming industry for funding the production of crops or to purchase or refinance capital assets such as farmland, livestock, machinery, equipment, and farm real estate improvements.

Agricultural loans are typical secured by collateral related to the farming activities.

Agricultural loans are typically secured by collateral related to the farming activities.

These loans originate from customers within the Company’s primary market area or the surrounding areas.

16 unchanged sentences

As a result, the availability of funds for the repayment of commercial and industrial loans is dependent on the success of the business itself, which in turn, is likely to be dependent upon the general economic environment.

As an addition to the commercial loans receivable portfolio, the Company may purchase the guaranteed portion of loans secured by the U.S.

As an addition to the commercial loans held for investment portfolio, the Company may purchase the guaranteed portion of loans secured by the U.S.

The originating bank retains the unguaranteed portion of the loan.

The loans are sponsored by one of the various government agencies including the SBA, United States Department of Agriculture (“USDA”), and the Farm Service Agency (“FSA”).

The loans are sponsored by one of the various government agencies including the SBA, United States

Department of Agriculture (“USDA”), and the Farm Service Agency (“FSA”).

Government Guaranteed Loans ("GGLs") carry no credit risk due to an unconditional and irrevocable guarantee (which is supported by the full faith and credit of the U.S.

Government) on all principal and the balance of interest accruing through ninety days beyond the date that demand is made to the originating bank for repurchase of the loan.

As of March 31, 2025, the Company's balance of GGLs was $ 4,267,000 , compared to $ 4,306,000 at December 31, 2024.

As of June 30, 2025, the Company's balance of GGLs was $ 3,974,000 , compared to $ 4,306,000 at December 31, 2024.

Consumer Lending

22 unchanged sentences

Delinquent notices are generated automatically when a loan is 10 or 15 days past-due, depending on loan type.

Collection efforts continue on past-due loans that have not been brought current, when it is believed that some chance

exists for improvement in the status of the loan.

Collection efforts continue on past-due loans that have not been brought current, when it is believed that some chance exists for improvement in the status of the loan.

Past-due loans are continually evaluated with the determination for charge-off being made when no reasonable chance remains that the status of the loan can be improved.

27 unchanged sentences

The Company has opted to utilize the Weighted Average Remaining Maturity (“WARM”) method to calculate the ACL which uses an average annual charge-off rate.

This average annual charge-off rate contains loss content over several vintages and is used as a foundation for estimating the credit loss content for loans by segmented pools at the balance sheet date and is used to determine a historical charge-off

When estimating expected credit losses, the Company considers forward-looking information that is reasonable, supportable, and relevant to assessing the collectability of cash flows.

4 unchanged sentences

The Company may revert to historical loss information for each individual forecast input or based on the entire estimate of loss.

Reversion to historical loss information may be immediate, occur on a straight-line basis, or use any systematic/rational method.

Reversion to historical loss

information may be immediate, occur on a straight-line basis, or use any systematic/rational method.

Management may apply different reversion techniques depending on the economic environment or applicable loan portfolio.

56 unchanged sentences

A loan that is fully secured by cash or cash equivalents, such as a certificate of deposit issued by the lending institution, would likely have zero credit loss expectations.

Similarly, the guaranteed portion of an SBA loan purchased

on the secondary market through the SBA’s fiscal and transfer agent would likely have zero credit loss expectations because these financial assets are unconditionally guaranteed by the U.S.

Similarly, the guaranteed portion of an SBA loan purchased on the secondary market through the SBA’s fiscal and transfer agent would likely have zero credit loss expectations because these financial assets are unconditionally guaranteed by the U.S.

A reserve for unfunded lending commitments is provided for possible credit losses on off-balance sheet credit exposures.

1 unchanged sentence

The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded loan commitments and, if necessary, is recorded in other liabilities on the consolidated balance sheets.

As of March 31, 2025 and December 31, 2024, the amount of the reserve for unfunded lending commitments was $ 89,000 and $ 102,000 , respectively.

As of June 30, 2025 and December 31, 2024, the amount of the reserve for unfunded lending commitments was $ 97,000 and $ 102,000 , respectively.

The Company made a policy election to exclude accrued interest receivable from the amortized cost basis of loans.

Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Company’s consolidated balance sheets and totaled $ 2,685,000 as of March 31, 2025 compared to $ 2,575,000 at December 31, 2024.

Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Company’s consolidated balance sheets and totaled $ 2,589,000 as of June 30, 2025 compared to $ 2,575,000 at December 31, 2024.

Accrued interest receivable on loans is excluded from the estimate of credit losses.

38 unchanged sentences

Loans are graded doubtful if they contain weaknesses so serious that collection or liquidation in full is questionable.

The following table presents outstanding loan balances by loan class prior to allocation of net deferred fees and costs, as well as the balance of total gross loans after allocation of net deferred fees and costs and net loans after allocation of the allowance for credit losses as of March 31, 2025 and December 31, 2024.

The following table presents outstanding loan balances by loan class prior to allocation of net deferred fees and costs, as well as the balance of total loans held for investment after allocation of net deferred fees and costs and net loans after allocation of the allowance for credit losses as of June 30, 2025 and December 31, 2024.

(Dollars in thousands)

2 unchanged sentences

Net Deferred Fees and Costs

Total Loans Held for Investment

Loans Held for Sale

Allowance for Credit Losses

The following tables present the classes of the loan portfolio summarized by risk rating and year of origination and year-to-date gross charge-offs by loan portfolio summarized by year of origination as of March 31, 2025 and December 31, 2024.

March 31, 2025:

June 30, 2025:

(Dollars in thousands)

1 unchanged sentence

8 Substandard

Unearned discount