First Keystone Announces Record Second Quarter Earnings

BERWICK, Pa.--(Business Wire)--
First Keystone Corporation (OTCBB:FKYS), parent company of First
Keystone National Bank, reported net income of $1,886,000 for the
quarter ending June 30, 2008, as compared to $1,384,000 for the second
quarter of 2007. Earnings per share for the quarter ending June 30,
2008 were $.34, an increase of 13.3% over the $.30 per share earned in
the second quarter of 2007. For the six months ending June 30, 2008,
net income was $3,608,000 as compared to $2,818,000 for the first six
months of 2007. Earnings per share were $.66 for the first six months
of 2008, up 6.5% from the $.62 reported in the first six months of
2007. The annualized return on assets and return on tangible equity
were 1.05% and 14.25%, respectively for the six months ending June 30,
2008.

President J. Gerald Bazewicz reported, "We are pleased with our
financial results in the first half of 2008, especially with the
continued improvement of our net interest margin. Also, our income
indicates that our acquisition of Pocono Community Bank in the fourth
quarter of 2007 has been accretive to earnings per share. Finally, we
have experienced continued satisfactory asset quality with our
allowance for loan losses at 1.31% of total loans as of June 30,
2008."

Total assets increased to $694,893,000 as of June 30, 2008, an
increase of 30.0% over the same period in 2007. Total deposits and
loans increased to $522,853,000 and $394,498,000, respectively as of
the end of the second quarter of 2008. In addition, cash dividends
paid for the first half of 2008 were $.44 per share, the same as the
first to quarters in 2007.

First Keystone National Bank, an independently owned community
bank since 1864, presently operates 14 full service offices in
Columbia (5), Luzerne (4), Monroe (4), and Montour (1) Counties
providing banking and trust services. In Monroe County, the Bank
trades as Pocono Community Bank, a division of First Keystone National
Bank.

Inquiries regarding the purchase of the company's stock may be
made through the following brokers: RBC Dain Rauscher, 800-223-4207;
Janney Montgomery Scott, Inc., 800-526-6397; Boenning & Scattergood,
Inc., 800-883-8383; and Stifel Nicolaus & Co., Inc., 800-223-6807.

Note: This press release may contain forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995.
Actual results and trends could differ materially from those set forth
in such statements due to various factors. These factors include
operating, legal and regulatory risks; changing economic and
competitive conditions and other risks and uncertainties.

For more information on First Keystone National Bank or its parent
company, First Keystone Corporation, please contact J. Gerald Bazewicz
at 570-752-3671, extension 172.

First Keystone Corporation
J. Gerald Bazewicz, 570-752-3671, extension 172

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