First Keystone Corporation
Annual Report 2023

Plain-text annual report

FIRST FIRST KEYSTONE KEYSTONE CORPORATION CORPORATION firstkeystonecorp.fkc.bank firstkeystonecorp.fkc.bank FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share data) 2023 2022 2021 2020 2019 SUMMARY OF OPERATIONS Interest income Interest expense Net interest income (Credit) provision for loan losses Net income PER COMMON SHARE DATA Net income Dividends BALANCE SHEET DATA Total assets Total securities Net loans Total deposits Total stockholders’ equity PERFORMANCE RATIOS Return on average assets Return on average equity Dividend payout Average equity to average assets $56,988 $46,413 $42,048 $ 39,567 $ 38,527 27,872 29,116 (217) 5,560 $0.91 1.12 8,913 37,500 (264) 14,024 $2.35 1.12 5,148 36,900 860 14,688 $2.49 1.12 6,360 33,207 1,200 11,837 $ 2.03 1.08 10,243 28,284 450 10,227 $ 1.77 1.08 $1,415,870 $1,329,194 $1,320,350 $1,179,047 $1,007,226 394,450 904,153 375,143 850,195 439,878 368,357 279,861 744,161 712,677 640,727 980,439 993,499 1,077,969 937,488 121,615 120,386 148,555 144,242 0.42% 4.55% 121.90% 9.22% 1.07% 10.75% 47.70% 9.92% 1.15% 9.93% 45.05% 11.57% 1.09% 8.61% 53.29% 12.72% Dollars in thousands 761,628 128,752 1.02% 8.17% 61.08% 12.42% LOANS # OF NEW LOANS 2022 2023 1,270 958 DEPOSITS # OF NEW CORE DEPOSITS 2022 3,909 2023 3,756 TOTAL NEW LOANS $206,719 $135,435 TOTAL NEW CORE DEPOSITS $51,380 $65,005 2023 INITIATIVES AND COMMUNITY SUPPORT Opened our first full-service branch in the Lehigh Valley on March 30, 2023 at 1503 Linden Street, Bethlehem PA Expanded our deposit and loan product offerings providing innovative solutions. Grand opening ribbon cutting for our new Briar Creek branch was held in January 2023 as we relocated from an in-store branch to a larger suite within the same strip mall located at 55 Briar Creek Plaza, Berwick PA Launched a new and enhanced online banking platform providing many new and improved features as well as mobile banking for consumers and businesses. Continued to support more than 200 non-profit agencies throughout our markets with combined employee and Bank donations in excess of $245,000 How We Generated Income in 2023 vs 2022: 68% $42,747 69% $35,372 INCOME STATEMENT IN GRAPHIC FORM 2023 $63,144 2022 $51,744 MAJOR COMPONENTS OF OTHER INCOME 22% $14,202 21% $11,025 Interest and Fees on Loans Interest and Dividends on Securities and Stock 10% $5,347 10% $6,195 Other Income ATM FEES & DEBIT CARD INCOME $2,146 $2,195 2022 2023 TRUST DEPARTMENT $975 $931 SERVICE CHARGES & FEES $2,193 $2,205 Dollars in thousands How We Used Our Income in 2023 vs 2022: 27% $17,108 25% $16,055 28% $14,554 2023 $63,144 2022 $51,744 27% $14,024 17% $10,764 10% $5,259 7% $3,654 0% -1% $(217) $(264) 14% $8,863 16% $8,200 7% $4,327 8% $4,023 9% $5,560 5% $2,294 1% $684 Paid to Depositors Borrowing Costs Provision/ Credit for Loan Losses Employees Computers, Buildings & Equipment Other Overhead Income Tax Expense Profit Dollars in thousands and percentages indicate ratio to total income TO OUR SHAREHOLDERS 2023: A YEAR OF CHALLENGES, COMMITMENT TO COMMUNITY, AND CULTURE 2023 was truly a challenging year for the Banking industry as a whole as well as for your Bank, First Keystone Community Bank (“FKCB”). In early March 2023, the Banking industry as a whole encountered a significant challenge as two large banks failed: Silicon Valley Bank (“SVB”) and Signature Bank, followed by First Republic Bank in May 2023. FKCB reacted immediately in March 2023 and published several articles in local newspapers, on social media and our website explaining the factors that differentiate First Keystone Community Bank from those that failed, including but not limited to our strong capital and liquidity positions, low deposit exposure to non-FDIC insured deposits, our commitment to our relationship-based business model which focuses on building long-term trust with our customers, and our dedication to small businesses and diverse industries within the communities we serve. We provided education and guidance regarding FDIC insurance to not only our depositors but to consumers throughout each of our markets. Another challenge encountered in 2023 was short term rates. After two consecutive years of stagnant interest rates during COVID, the Federal Reserve raised rates seven times in 2022 for an aggregate increase of 4.25%, and while the pace of increased rates tapered in 2023, rates increased an additional four times for an aggregate increase of 1.00%. The total rates up adjustment of 5.25% in 17 months marked an unprecedented faster for longer adjustment to interest rates in more than 40 years. As a result, our total interest expense more than doubled in 2023 compared to 2022 or by $18,959,000 primarily due to more interest paid to depositors resulting from increased interest rates and an effort to retain and grow deposit relationships, and an increase in interest paid on short and long-term borrowings through the Federal Home Loan Bank due to increased amounts borrowed and rate. Although our interest income increased by $10,575,000 to $56,988,000 primarily due to growth in both volume and interest yields in our investment and loan portfolios, the increased interest income was not sufficient to completely overcome the challenges of increased deposit and borrowing expense. As a result, our net interest margin decreased from 3.19% in 2022 to 2.38% in 2023 and net interest income decreased by $8,384,000. Total assets increased to $1,415,870,000 at December 31, 2023 compared to $1,329,194,000 at December 31, 2022, an increase of 6.5%. Total debt securities available-for-sale increased $19,524,000 or 5.2% to 392,968,000 as of December 31, 2023. Net loans increased in 2023 from $850,195,000 to $904,153.000, a 6.3% increase. Overall, for the fiscal year ended December 31, 2023, First Keystone Corporation reported earnings of $5,560,000, compared to $14,024,000 for 2022, a decrease of $8,464,000. Net income per share in 2023 was $0.91 while dividends remained steady at $1.12 per share for both 2022 and 2023. In summary from a regulatory standpoint, the Bank remains well-capitalized and compares favorably to all regulatory ratios. The Corporation continued our tradition of paying shareholders dividends, as we have consistently since commencement of the Corporation in 1984. For additional information on the Bank’s financial performance, please see the Financial Highlights summary on page 1, along with the more detailed information below the Highlights, the Income Statement in Graphic Form on Page 2, and in our 2023 Form 10-K filing located on our website at firstkeystonecorp.fkc.bank. Community Support: We remain committed to connecting with each other and building a culture that benefits our employees, customers, communities, and shareholders. In 2023 our employees not only donated their personal funds totaling $9,896, which in turn supported non-profit organizations throughout our communities. They also volunteered close to 1800 hours, outside of work hours. In addition, the bank supported more than 200 non-profit organizations by contributing over $235,000 throughout our market footprint. Culture: Education and Recognition: Our Executive Management Team, pictured below, has 142 combined years of service in the banking industry, with experience ranging from frontline teller and customer service to commercial lending, accounting and finance, information technology, deposit operations, credit analysis and underwriting, and risk mitigation. Throughout the organization, we are truly fortunate to have very dedicated and talented employees whose range of years in service reach to greater than 45 years. We recognize and celebrate their milestone anniversaries annually. Please see the back cover of this publication which recognizes some of our long-term employees. While we recognize and appreciate the longevity of our employees’ years of service, we are also cognizant of the challenges of the “retirement cliff.” We believe in employee development and support our employees’ education and career paths with a variety of resources including in-house and externally provided webinars on many pertinent subjects such as cyber-security, current compliance and regulatory topics, and professional development. We also support and encourage their attendance at a wide variety of seminars and schools. In addition to supporting our employees’ education, we also support the education of youth by sponsoring the PA Council on Financial Literacy Stock Market Challenge which offers students the opportunity to learn about personal finance and budgeting along with entrepreneurship skills that will help them thrive in the workforce and in life. This year is an exciting year for our Bank as we look forward to celebrating our 160-year anniversary on September 21, 2024. From our humble beginnings in a 400 square foot building located in downtown Berwick, you have helped us prosper and grow, providing banking services to consumers and businesses through 19 full-service branches located in 5 counties and supporting an additional 11 contiguous counties. As always, we thank and recognize our employees, officers, and board members for their continued outstanding efforts. We also sincerely thank you for your unwavering support and confidence. Elaine A. Woodland President and Chief Executive Officer L-R: Jonathan Littlewood, Chief Lending Officer; Mark McDonald, Chief Credit Officer; Elaine A. Woodland, President & CEO; Diane C.A. Rosler, Chief Financial Officer; Chris Zlobik, Chief Banking Officer FIRST KEYSTONE COMMUNITY BANK 160 YEARS IN THE MAKING On September 21, 1864, First Keystone Community Bank (FKCB) opened its doors as First National Bank of Berwick. The bank started with $50,000 in capital and seven employees in its first home on East Front Street in Berwick. The 16 x 25-foot brick building saw the fledgling bank soon outgrow its original location. Almost one hundred sixty years later, First National Bank of Berwick has become First Keystone Community Bank with 19 branches in five counties, 217 employees, and more than $1 billion in assets. As we celebrate this milestone anniversary, we are proud to continue the core values and work ethic that grounded FKCB in that small building in 1864 to modern day as we continue to serve the many families and businesses in our communities. FKCB has seen many changes and advancements over the past 160 years, but one thing remains constant--the dedication and service to the local people and businesses in the communities. We live, work, and grow alongside our customers and we are proud to be a strong community partner to ensure the vitality of the economy and help our local people and businesses thrive. We are proud to support our local communities throughout the year with donations and sponsorships. In 2023, FKCB donated $235,234 to local community and service organizations throughout our service area. Our employees showed their community support through Denim Days, which raised $9,896 for 17 non-profit organizations, as well as volunteering 1,797 hours for local activities and events. Our branches also conducted drives for books, toys, food, etc. because helping these local organizations assists our friends, our families, and our neighbors. This past year, FKCB saw the evolution of the bank’s services with two new branch locations. After 24 years located in the Giant Store, our Briar Creek branch hosted a Grand Opening in January 2023 for its new standalone location at the Briar Creek Shopping Center. This new location provides customers with a more conducive banking atmosphere and allows Briar Creek to serve as a training center for our front-line employees. We expanded our footprint in Northampton County by transitioning our Loan Production Office into a new, full-service branch located on Linden Street in Bethlehem, allowing us to better assist our customers with their day-to-day transactions and offer our full line of products and services. FKCB also saw many advancements on the digital side this year that benefited both our customers and our internal operations. We are excited to have implemented the launch of our new digital banking platform for online and mobile banking. This launch brought with it many new features, such as a budgeting component, credit score monitoring, and the ability for our business customers to access our mobile banking platform. We also expanded our product line with two new checking account options and a new mortgage program. Our Keystone First checking account is geared towards youth ages 13-17, providing them with a transactional account and their first VISA® debit card. The account is designed to teach financial responsibility and account management. Our Keystone Bank On checking account is an innovative product designed to introduce safe, reliable banking to people in our community who currently do not utilize a bank and/or banking services. The Turn Key Loan Program is a flexible loan program that offers a low down payment option, making homeownership a viable possibility for many consumers. Looking forward, our customers will see advancements in our services such as our new online account opening platform that allows customers to open accounts from virtually anywhere with a computer or mobile device, making banking easy and convenient. We are upgrading and replacing our ATMs with newer models to provide greater speed and efficiency. And we will be launching our new contactless debit card giving customers access to their funds with a tap of the card. We continue our dedication to financial education with our financial literacy programs and fraud education. FKCB continues to recognize the importance of learning the basics of banking at an early age with skills like balancing a checkbook and managing a savings account. Speaking of fraud education, we continue to fight back against fraudsters and scammers by increasing the awareness of our customers. We have introduced a quarterly fraud newsletter to keep customers up to date on current scams and fraudulent activity so they can protect themselves. We realize that our employees are our best asset, and we are looking forward in 2024 to providing them enhanced training opportunities. Our goal is to prepare our employees for success by giving them the resources needed to excel in their positions. Providing our employees with the tools to deliver first- rate service to our customers is an investment in ourselves and our communities. We are investing in upgrades to our information technology system and frontline equipment that will provide them with the latest technological systems and help our employees provide more efficient service to our customers. First Keystone Community Bank is defined by its motto, “Yesterday’s Tradition. Tomorrow’s Vision.” For nearly 160 years, we have been your community bank that understands your needs, your visions, and your goals. We have stood beside you as you grew and evolved, bought your first home, started a family, and planned your retirement, and we intend to be here for generations to come. First Keystone Community Bank is your destination for “Local banking for the community we all call home.” YESTERDAY’S TRADITIONS. TOMORROW’S VISION. FIRST KEYSTONE CORPORATION BOARD OF DIRECTORS NANCY J. MARR President Emerita, Marr Development Inc. ELAINE A. WOODLAND President & Chief Executive Officer First Keystone Community Bank WHITNEY B. HOLLOWAY Business Manager Millville Area School District MICHAEL L. JEZEWSKI President & Owner Delta Electrical Systems, Inc. JOHN E. ARNDT, VICE CHAIRMAN Owner Arndt Insurance Agency DAVID R. SARACINO, SECRETARY Retired Vice President & CFO First Keystone Community Bank WILLIAM E. RINEHART President & Owner Gray Chrysler Dodge Jeep Ram and Grey Chevrolet D. MATTHEW BOWER President Don E. Bower, Inc. ROBERT A. BULL, CHAIRMAN Attorney Bull & Bull LLC DIRECTOR EMERITI DR. JOSEPH B. CONAHAN, JR JEROME F. FABIAN JOHN G. GERLACH ROBERT A. BULL Chairman OFFICERS ELAINE A. WOODLAND President & Chief Executive Officer JOHN E. ARNDT Vice Chairman DIANE C.A. ROSLER Chief Financial Officer/Treasurer DAVID R. SARACINO Secretary CHERYL L. WYNINGS Assistant Secretary FIRST KEYSTONE COMMUNITY BANK OFFICERS* DAVID R. SARACINO JOHN E. ARNDT ROBERT A. BULL Secretary Chairman of the Board Vice Chairman EXECUTIVE OFFICERS ELAINE A. WOODLAND President Chief Executive Officer JONATHAN LITTLEWOOD Senior Vice President Chief Lending Officer MARK J. MCDONALD Senior Vice President Chief Credit Officer DIANE C.A. ROSLER Senior Vice President Chief Financial Officer & Cashier CHRISTOPHER ZLOBIK Senior Vice President Chief Banking Officer OFFICERS SENIOR VICE PRESIDENT JUNE GEORGE Branch Administrator VICE PRESIDENT JODI L. ALLEY Loan Operations Manager STACIA L. ARNAUD Commercial Services Officer III SANDRA L. COLE Community Office Manager II JOHN A. DOUGHERTY Community Office Manager II LAUREN E. DUANE Business Services Manager JEFFREY GILBERT Commercial Services Officer III BRENDA L. GRASLEY Consumer Loan Manager LEE A. HESS Loan Review Officer & Security Officer JASON P. HOLLOWAY Commercial Services Officer III ASSISTANT VICE PRESIDENT TIFFANY L. BIENKOWSKI Commercial Services Officer I BRANDON BROWN Commercial Services Officer I LEVI E. DILTZ Compliance Administrator/ISO MELANIE A. FISHER Credit Analyst II YOLANDA FRANCIS Regional Branch Administrator/ Training Specialist ASSISTANT CASHIER/OFFICER DAWN BETTINGER Commercial Loan Documentation Specialist I MEGAN R. BOONE Electronic/Deposit Clerk SHANE A. DAVIS Accountant II & Systems Administrator NICOLE DIETTERICK Community Office Manager I GEOVANY ELIAS Commercial Services Officer LYDIA FATULA Credit Intake/Doc Prep Specialist LAUREL FIDRICK Project & Implementations Coordinator JENNIFER GROBLEWSKI Community Office Manager I REBECCA A. HOOPER Senior Trust Officer KEVIN M. KRIEGER Compliance Officer & CRA Officer AMANDA D. JARSKI Compliance Officer KATHLEEN M. JARSKI Regional Branch Manager DONNA J. KEEFER Deposit Operations Manager BRIAN M. KLINEFELTER Credit Department Manager CINDY LAIDACKER HR Manager SARAH MANEVAL Commercial Services Officer III KRISTI A. MCCLINTOCK Commercial Loan Document Specialist II THOMAS J. MCGRATH III Commercial Services Officer II RYAN NAGLE IT Manager LAURIE J. NUDO Regional Branch Administrator THOMAS POPKO Commercial Services Officer MICHAEL C. SANTIAGO Commercial Services Officer & Sr. Market Manager JOHN SERAFIN Commercial Services Officer III FRANCES I. SEWARD Regional Branch Administrator KIMBERLY S. SHINER Community Office Manager II NATALIE J. STACKHOUSE Controller LEIGHTON B. WALSH Mortgage Services Manager STACY L. GORDNER Accounting Manager HERBERT H. HARMON, JR. Senior Facilities Manager RACHEL JENNINGS Post-Closing Document Specialist STEVEN M. KOTCH Loan Workout Officer MARTIN B. LEANDRI Financial Consultant/Trust Officer KAREN HENRICKSON Electronic/Deposit Processing Clerk LILIANA HENRICKSON Keystone Banker III JOAN HENRY Loan Operations Supervisor JACKSON JAFFIN Credit Analyst II JUSTINE KISHBAUGH Loan Operations Specialist ALEX KLINGER Accountant I/Loan Data Specialist MICHELLE E. KOZAK HR Specialist ANGELA A. MACKERT Community Office Manager I CHRISTOPHER MATTHEWS Commercial Services Officer I BONNIE NEVEL Deposit Processing Supervisor SHERRI A. SITLER Deposit Review Officer CURTIS SNOWDEN Commercial Services Officer I CINDY L. THORNE Trust Officer CHERYL L. WYNINGS Executive Administrative Assistant/ Assistant Secretary KATHRYN MCNEAL Mortgage Loan Underwriter/Processor ASHLEY M. MILLOWAY Mortgage Loan Consultant I KIM R. MURREN Community Office Manager I TINA L. ROTH IRA/HSA Specialist TERESA STERNER Marketing Manager ELIZABETH THOMAS Consumer Loan Underwriter/Processor JESSICA THORNE Accountant II/Purchasing Agent DYLAN WOODARD Systems Engineer/Asst. IT Manager *Officers as of December 31, 2023 CORPORATE INFORMATION THE CORPORATION DIVIDEND REINVESTMENT First Keystone Corporation is a bank holding company incorporated under the Pennsylvania Business Corporation Laws. Its assets consist primarily of the assets of its wholly-owned subsidiary, First Keystone Community Bank. First Keystone Community Bank serves Columbia, Montour, Luzerne, Monroe, Northampton and Lehigh Counties. The Bank engages in general banking business and also provides fiduciary services. CORPORATE HEADQUARTERS First Keystone Corporation 111 West Front Street Berwick, PA 18603 Telephone: 570-752-3671 Fax: 570-752-4022 NOTICE OF ANNUAL MEETING The 2024 Annual Meeting of Shareholders will be held at 10:00 a.m., Eastern Daylight Time, on Thursday, May 30, 2024 at: Berwick Golf Club 473 Martzville Road Berwick, PA 18603 ANNUAL REPORT ON FORM 10-K The Annual Report on Form 10-K as filed with the Securities and Exchange Commission may be obtained, without charge, by contacting: Cheryl Wynings Investor Relations P.O. Box 289 Berwick, PA 18603 Telephone: 1-888-759-2266, extension 1175 Locally: 570-752-3671, extension 1175 TRANSFER AGENT AND REGISTRAR To change or transfer registration of your stock, report a lost certificate, or other related inquiries, please contact our transfer agent at: Equiniti Trust Company, LLC 48 Wall Street, Floor 23 New York, NY 10005 1-800-937-5449 helpast@equiniti.com DIRECT DEPOSIT Shareholders may have their cash dividends deposited directly into the account of their choice at any banking institution, with no charge. Additional information and enrollment materials for direct deposit can be obtained by calling 1-800-937-5449. The Plan, open to residents of Pennsylvania, provides the opportunity to have dividends automatically reinvested into First Keystone Corporation stock. Participants in the Plan may also elect to make cash contributions to purchase additional shares of common stock. For information regarding the Plan, contact the Plan Administrator at: Equiniti Trust Company, LLC Plan Administration Department Wall Street Station P.O.Box 922 New York, NY 10269-0560 1-800-937-5449 helpast@equiniti.com INVESTOR INFORMATION Information regarding First Keystone Corporation is available online at firstkeystonecorp.fkc.bank. The website also includes additional information of interest to shareholders such as: historical stock prices, dividend declarations, press releases and governance documents. Requests for information or assistance regarding the corporation should be directed to Shareholder Relations at 1-888-759-2266, extension 1175 Locally: 570-752-3671, extension 1175 STOCK LISTING First Keystone Corporation common stock is traded on OTC Pink under the symbol “FKYS”. STOCK PURCHASE INQUIRIES The following brokerage firms make a market in First Keystone Corporation common stock: RBC Dain Rauscher, 800-223-4207 Janney Montgomery Scott LLC, 800-526-6397 Stifel Nicholaus & Co. Inc., 800-679-5446 Boenning & Scattergood, Inc., 800-883-1212 INDEPENDENT PUBLIC ACCOUNTANTS Baker Tilly US, LLP 99 Wood Avenue South, Suite 801 Iselin, NJ 08830-2734 Telephone: 848-467-3909 OFFICE LOCATIONS 888-759-2266 | www.fkc.bank MAIN OFFICE 111 West Front Street Berwick, PA 18603 570-752-3671 NESCOPECK OFFICE 437 West Third Street Nescopeck, PA 18635 570-759-2767 SALEM TOWNSHIP OFFICE 400 Fowler Avenue Berwick, PA 18603 570-759-2628 DANVILLE OFFICE 1049 Bloom Road Danville, PA 17821 570-275-8000 BRIAR CREEK OFFICE 55 Briar Creek Plaza Berwick, PA 18603 570-802-0541 KINGSTON OFFICE 299 Wyoming Avenue Kingston, PA 18704 570-718-1110 FREAS AVENUE OFFICE 701 Freas Avenue Berwick, PA 18603 570-752-1244 STROUDSBURG OFFICE 559 Main Street Stroudsburg, PA 18360 570-424-9700 SCOTT TOWNSHIP OFFICE 2301 Columbia Boulevard Bloomsburg, PA 17815 570-784-0354 MOUNTAINHOME OFFICE 1154 Route 390 Cresco, PA 18326 570-595-9700 MIFFLINVILLE OFFICE 133 West Third Street Mifflinville, PA 18631 570-752-5750 BRODHEADSVILLE OFFICE 2022 Route 209 Brodheadsville, PA 18322 570-402-2008 HANOVER TOWNSHIP OFFICE 1540 Sans Souci Highway Hanover Township, PA 18706 570-825-7352 SWIFTWATER OFFICE 2070 Route 611 Swiftwater, PA 18370 570-839-7880 MOUNTAIN TOP OFFICE 18 North Mountain Boulevard Mountain Top, PA 18707 570-715-0720 PLYMOUTH OFFICE 463 West Main Street Plymouth, PA 18651 570-719-1400 DALLAS OFFICE 2325 Memorial Highway Dallas, PA 18612 570-674-1030 SHICKSHINNY OFFICE 107 South Main Street Shickshinny, PA 18655 570-542-6060 BETHLEHEM OFFICE 1503 Linden Street Bethlehem, PA 18017 610-419-1412 FIRST FIRST KEYSTONE KEYSTONE CORPORATION firstkeystonecorp.fkc.bank CORPORATION firstkeystonecorp.fkc.bank 

Continue reading text version or see original annual report in PDF format above