Executive Summary

Q2 2025 net income was $2.914M and diluted EPS was $0.47, up from $1.380M and $0.23 in Q2 2024; sequentially, EPS rose from $0.17 in Q1 2025 as margins and loan yields improved .
Net interest margin expanded to 2.78% from 2.38% YoY on higher loan yields; non-interest income rose 10.9% YoY to $1.798M on trust, ATM/debit fees, and equity securities mark-to-market gains .
Balance sheet mix shifted further to term deposits: total deposits reached $1,057.278M (+7.4% YoY) with retail CDs up and brokered CDs +$39.036M YoY; net loans were $952.008M (+$37.276M YoY) .
Provision swung to a net release of $0.237M versus a $0.510M provision in Q2 2024, despite isolated charge-offs (trucking, hemp-based packaging) as delinquency trends and qualitative factors improved .
No earnings call transcript or formal forward revenue/EPS guidance was found; cash dividend remained $0.28 per share, and management expects ~$0.489M to flow through interest expense from hedges over the next 12 months .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded to 2.78% (from 2.38% YoY) on stronger loan pricing and volume, lifting net interest income to $9.505M (+18.8% YoY) .
Non-interest income rose 10.9% YoY to $1.798M, helped by trust fees (+10.2% YoY), ATM/debit fees (+1.9% YoY), and equity securities mark-to-market gains (+$115k YoY) .
Deposit growth and mix management: total deposits grew to $1,057.278M (+7.4% YoY) with retail CDs up $82.610M and brokered CDs up $39.036M, supporting funding stability amid rate volatility .
Management highlighted loan-driven interest income growth: “increase in interest income…predominantly due to growth in commercial real estate loans” (press release, EX-99.1) .

What Went Wrong

Operating expenses rose: Q2 non-interest expense climbed to $8.261M (+7.7% YoY) on higher FDIC insurance (+39.4% YoY), data processing (+63.8% YoY), and tech/ATM replacement costs .
Credit costs not fully benign: specific charge-offs in 1H (trucking $162k; hemp-based packaging $245k) and Q2 net charge-offs of $69k, though provision net release helped results .
Continued reliance on higher-cost CDs/brokered funding increases sensitivity to deposit pricing, even as short-term borrowings were modestly reduced to $129.551M (avg rate 4.56%) .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Net Revenue ($USD Millions)	$9.112 (7.491 net interest income after provision + 1.621 non-interest income)	$9.778 (8.019 net interest income after provision + 1.759 non-interest income; computed from YTD minus Q2)	$11.540 (9.742 net interest income after provision + 1.798 non-interest income)
Net Interest Income ($USD Millions)	$8.001	$8.770 (18.275 YTD − 9.505 Q2)	$9.505
Provision for Credit Losses ($USD Millions)	$0.510	$0.751 (0.514 YTD − (−0.237) Q2)	$(0.237)
Non-Interest Income ($USD Millions)	$1.621	$1.759 (3.557 YTD − 1.798 Q2)	$1.798
Net Income ($USD Millions)	$1.380	$1.053	$2.914
Diluted EPS ($USD)	$0.23	$0.17	$0.47
Net Interest Margin (%)	2.38%	N/A	2.78%

Estimates vs Actuals (S&P Global)	Q2 2025
Revenue Consensus Mean (EPS consensus unavailable)	N/A*
Revenue Actual ($USD Millions)	$11.54*

Values with asterisk (*) retrieved from S&P Global.

Segment and Balance Mix

Loans Held for Investment ($USD Millions)	Dec 31, 2024	Jun 30, 2025
Real Estate	$850.656	$864.608
Agricultural	$0.936	$1.108
Commercial & Industrial	$66.706	$64.908
Consumer	$6.390	$6.295
State & Political Subdivisions	$22.138	$22.016
Total Loans (incl. net deferred)	$947.714	$959.666
Net Loans	$940.779	$952.008

KPIs (Quarter/As-of)

KPI	Q2 2024	Q2 2025
Total Assets ($USD Millions)	$1,428.583	$1,437.389
Total Deposits ($USD Millions)	$1,045.880	$1,057.278
Time CDs < $250k ($USD Millions)	$327.236	$375.600
Time CDs ≥ $250k ($USD Millions)	$39.782	$57.368
Brokered CDs YoY Change ($USD Millions)	—	+$39.036
Short-term Borrowings ($USD Millions; avg rate)	$134.426; 5.37%	$129.551; 4.56%
Non-Performing Assets ($USD Millions)	$4.970	$4.839
Loans ≥90 Days Past Due & Accruing ($USD Millions)	$0.756	$0.621
Allowance for Credit Losses ($USD Millions)	$7.687 (6/30/24)	$7.762 (6/30/25)
Net Charge-offs (Quarter, $USD Thousands)	$19 (Q2 2024)	$69 (Q2 2025)
FDIC Insurance Expense (Quarter, $USD Thousands)	$218	$304

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Cash Dividend	Q3 2025 payable 9/30/2025	$0.28/share (prior cadence)	$0.28/share	Maintained
Hedge Reclassification to Interest Expense	Next 12 months	Not disclosed previously	~$489k expected to be reclassified to interest expense	New disclosure
Revenue, Margin, EPS Guidance	Q3/Q4 2025	Not provided	Not provided	No formal guidance

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was available; themes are drawn from Q4 2024 and Q1/Q2 2025 disclosures.

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Deposit Mix (Term CDs, Brokered CDs)	Shift to CDs and brokered CDs; CDs +$40.1M and brokered +$33.9M in 2024; +$29M brokered YoY at Q1 2025	Deposits +7.4% YoY; retail CDs +$82.61M; brokered CDs +$39.036M YoY	Continued shift to term/brokered
Net Interest Margin & Loan Growth	Interest income up on CRE loans; year-over-year loan growth	NIM 2.78% vs 2.38% YoY; net interest income +18.8% YoY	Improving margin/earnings power
Technology & Ops (ATM, Disaster Recovery, Software)	Vendor credits aided data processing; online banking vendor improvements	Higher expenses from ATM fleet replacement, disaster recovery, and new software systems	Investment-driven opex up
Credit Quality & Provisions	Goodwill impairment burdened 2024; provisioning elevated in 2024	Net release in Q2; isolated charge-offs (trucking, hemp packaging)	Stabilizing, idiosyncratic losses

Management Commentary

“Increase in interest income…predominantly due to growth in commercial real estate loans.” (Q2 press release, EX-99.1) .
“Non-interest income increased…mainly due to gains from life insurance proceeds…increase in ATM and debit card fees.” (Q2 press release) .
Q2 MD&A emphasizes NIM expansion and loan yields: “net interest margin…2.78%…increase…primarily a result of increased interest and fees on loans.” .
Balance sheet growth: “Total Assets increased to $1,437,389,000…Deposits increased by $73,069,000…Retail CDs increased by $82,610,000…Brokered CDs increased by $39,036,000.” .

Q&A Highlights

No Q2 2025 earnings call transcript was available; therefore Q&A highlights and live guidance clarifications were not accessible [Search no results; 0 documents found].

Estimates Context

S&P Global consensus for Q2 2025 EPS and revenue was unavailable; the S&P Global “Revenue Actual” for Q2 2025 was $11.54M, corresponding to net interest income after provision plus non-interest income.*
Given absent consensus, no beat/miss determination can be made; analysts may need to raise near-term net revenue expectations given NIM expansion and loan-driven interest income, while tracking opex normalization post technology investments .

Values retrieved from S&P Global.

Key Takeaways for Investors

Margin tailwind: NIM expansion (2.78%) and higher loan yields drove an outsized EPS step-up QoQ; sustained loan growth in CRE remains the key earnings lever near term .
Funding mix stability at a cost: deposit growth is robust but skewed to CDs/brokered, pressing deposit costs; hedges (cash flow/fair value) mitigate some funding-rate volatility via reclassification and basis adjustments .
Credit risk manageable but watch idiosyncrasies: Q2 provision release and stable NPAs offset isolated industry-specific charge-offs; monitor trucking and specialty manufacturing exposures .
Opex investment phase: tech and ATM fleet replacement plus disaster recovery elevated Q2 opex; expect medium-term efficiency gains once implementations mature .
Capital and liquidity intact: net loans up, deposits up, short-term borrowings moderated; equity improved YoY on AOCI recovery, supporting dividend continuity ($0.28 quarterly) .
Estimate recalibration likely: absent formal guidance, analyst models should reflect higher net revenue run-rate and margin, with conservative opex assumptions and stable credit metrics; no call transcript implies fewer qualitative datapoints for directional guidance .
Near-term trading: Positive momentum from EPS/NIM expansion and deposit growth; sensitivities include rate path (deposit costs), credit outliers, and execution on tech upgrades .

Note: No Q2 2025 earnings call transcript was available, and formal forward guidance was not provided in filings/press releases reviewed.

FIRST KEYSTONE CORP (FKYS)·Q2 2025 Earnings Summary