FIRST KEYSTONE CORP (FKYS)·Q1 2025 Earnings Summary

Executive Summary

• Returned to profitability: Q1 2025 net income was $1.05M ($0.17 EPS) versus a Q1 2024 loss driven by a one-time $19.1M goodwill impairment; operating drivers included higher net interest income and stronger fee income .
• Net interest margin expanded 33 bps year over year to 2.58% on higher loan yields; interest income rose 7.5% while interest expense fell 0.3% despite a higher-cost deposit mix .
• Credit costs were higher: provision for credit losses increased to $0.75M (two charge-offs of $116k and $245k), and non-performing assets rose to $5.93M from $4.97M at year-end .
• Balance sheet trends: loans grew to $964.2M (+$15.7M QoQ), deposits were stable at ~$1.045B with continued shift to CDs (including brokered CDs), and borrowings increased modestly to fund loan growth and securities runoff .
• No formal guidance or earnings call transcript; dividend held at $0.28 per share and a new CEO (Jack W. Jones) took office Feb 1, 2025—near-term investor focus: NIM durability, deposit mix/price, and credit normalization .

What Went Well and What Went Wrong

• What Went Well

  • Net interest income rose to $8.77M (+17.3% YoY), with NIM up to 2.58% from 2.25% on higher loan yields .
  • Non-interest income increased 31% YoY to $1.76M, helped by $235k in life insurance proceeds and higher card fees .
  • Operating expenses normalized without the prior-year goodwill impairment; Q1 2025 non-interest expense was $8.65M vs $27.15M in Q1 2024 .
  • Management narrative: “reported an increase in interest income of $1,264,000 or 7.5%... due to increased interest rates and growth in commercial real estate loans,” and “total interest expense decreased by $31,000 or 0.3% overall” .

• What Went Wrong

  • Credit costs climbed: provision rose to $751k with two charge-offs ($116k transportation; $245k manufacturer of hemp-based products) and non-performing assets increased to $5.93M .
  • Funding mix pressure: higher brokered CDs (+$29.0M YoY) and shift from transactional deposits to term CDs, raising deposit costs despite small YoY decline in total interest expense .
  • Expense line items saw increases: FDIC insurance (+$121k YoY), technology/ATM refresh (+$84k combined furniture/equipment and computer), and a $307k fraud write-off .

Financial Results

Key P&L metrics (YoY)

Balance sheet and credit (period-end)

Loan portfolio mix

Funding mix highlights (YoY context, narrative)

• CDs increased by $55.4M YoY; brokered CDs up $29.0M YoY; other retail deposits down $20.7M YoY .
• Interest expense on deposits rose, partially offset by lower expense on borrowings; derivative hedges reduced net interest income by $165k vs $372k last year .

Estimates vs Actuals (S&P Global)

• Q1 2025 Consensus EPS: N/A (no coverage)*
• Q1 2025 Consensus Revenue: N/A (no coverage)*

Values retrieved from S&P Global.

Guidance Changes

No formal quantitative guidance on revenue, margins, OpEx, or tax rate was issued in Q1 2025 materials .

Earnings Call Themes & Trends

No Q1 2025 earnings call transcript was available; no call themes to report [SearchDocuments – no results].

Management Commentary

• “reported an increase in interest income of $1,264,000 or 7.5%, as compared to the three months ended March 31, 2024... predominantly due to increased interest rates and growth in commercial real estate loans.”
• “Total interest expense decreased by $31,000 or 0.3% overall.”
• “Non-interest income increased by $415,000 or 30.9%... mainly due to $235,000 in gains from life insurance proceeds... and a $26,000 increase in ATM and debit card fees.”
• “Non-interest expense decreased... mainly the result of a full, non-cash, goodwill valuation impairment charge of $19,133,000 [recognized in Q1 2024]... offset by... $307,000... fraud write off... $121,000 increase in FDIC insurance... $84,000 increase in furniture and equipment and computer expense... and a $76,000 increase in salaries and employee benefits.”
• Leadership update: Jack W. Jones appointed President & CEO effective Jan 31, 2025 .

Q&A Highlights

• No earnings call transcript was filed or found for Q1 2025; no Q&A themes or guidance clarifications to report [SearchDocuments – no results].

Estimates Context

• S&P Global shows no Wall Street consensus coverage for Q1 2025 EPS or revenue; as such, no beat/miss determination is possible for this quarter.*
  Values retrieved from S&P Global.

Key Takeaways for Investors

• Core spread recovery continues: NIM expanded to 2.58% on better asset yields; watch sustainability as deposit betas stay elevated .
• Funding mix is the swing factor: continued migration into CDs and brokered balances; pricing discipline and tenor management will drive 2025 NIM trajectory .
• Credit normalization is a watch item: higher provision, two charge-offs, and NPAs up QoQ; reserve coverage remains adequate but bears watching as growth continues .
• Operating investments (ATM refresh, disaster recovery) and regulatory costs (FDIC) are pressuring expenses near term, partly offset by vendor optimization in prior periods .
• Capital and dividend: equity stable near $106.5M; dividend maintained at $0.28—signals confidence but implies ongoing focus on earnings growth to sustain payout .
• New CEO could refine strategy around growth/mix/technology; absence of formal guidance and call means public narrative will hinge on subsequent filings and dividend actions .
• Near-term stock drivers: evidence of continued NIM improvement, stabilization of deposit costs/mix, and benign credit metrics; downside risks include higher-for-longer funding costs and incremental credit migration .

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Supporting documents read in full:

• Q1 2025 8-K and Exhibit 99.1 press release .
• Q1 2025 standalone press release .
• Q1 2025 10-Q financial statements and MD&A .
• Q4 2024 earnings press release .
• Q3 2024 earnings press release .
• Q1 2025 dividend press release .
• Leadership change press release .

Estimates note: S&P Global consensus estimates for Q1 2025 EPS and revenue were unavailable.* Values retrieved from S&P Global.