SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST KEYSTONE CORPORATION
(Exact name of registrant as specified in its Charter)
_______________________________________________________
(Name of Person(s) Filing Proxy Statement if other
than Registrant)
Payment of Filing Fee (check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(1)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
[X] No Fee Required
1) Title of each class of securities to which transaction applies:
_______________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration No.:
3) Filing party:
4) Date filed:
_____________
*Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
<FIRST KEYSTONE CORPORATION LOGO - 1K> First Keystone Corporation
111 West Front Street
Berwick, Pennsylvania 18603
March 28, 2000
DEAR SHAREHOLDER:
It is my pleasure to invite you to attend the 2000 Annual Meeting
of Shareholders of First Keystone Corporation to be held on Tuesday,
April 18, 2000, at 10:00 a.m., Eastern Daylight Time. The Annual
Meeting this year will be held at the main office of The First
National Bank of Berwick, 111 West Front Street, Berwick, Pennsylvania
18603.
The Notice of the Annual Meeting and the Proxy Statement on the
following pages address the formal business of the meeting. The
formal business schedule includes:
(Bullet) The election of 4 Class A Directors; and
(Bullet) The ratification of the selection of the
independent auditors for 2000.
At the meeting, members of the corporation's management will
review the corporation's operations during the past year and be
available to respond to questions.
We strongly encourage you to vote your shares, whether or not you
plan to attend the meeting. It is very important that you sign, date
and return the accompanying proxy form as soon as possible, in the
postage-prepaid envelope. If you do attend the meeting and wish to
vote in person, you must give written notice of your intentions to the
Secretary of the corporation so that any ballot you submit at the
meeting will supersede your prior proxy.
Thank you for your continued support. I look forward to seeing
you at the Annual Meeting if you are able to attend.
Sincerely,
/s/ J. Gerald Bazewicz
J. Gerald Bazewicz
President
<PAGE>
Proxy Statement
Table of Contents
__________________
Page
General Information 2
Introduction, Date, Time and Place of Annual Meeting 2
Voting Procedures 2
Solicitation and Voting of Proxies 2
Revocability of Proxy 2
Voting Securities, Record Date and Quorum 3
Vote Required for Approval 3
Principal Beneficial Owners of the Corporation's Stock 3
Principal Owners 3
Beneficial Ownership by Officers, Directors and Nominees 4
Proposal No. 1: Election of Directors 6
Information as to Nominees and Directors 6
Directors 7
Committees of the Board of Directors 8
Procedures for Nominating Directors 9
Compensation of Directors 9
Section 16(A) Beneficial Ownership Reporting Compliance 9
Board Compensation Committee Report on
Executive Compensation 10
Base Salary 10
Cash Bonuses 10
Long-Term Incentives 11
Executive Compensation 11
Aggregated Stock Option Exercises 12
401(k) Plan 13
Supplemental Employee Retirement Plan 13
Other Executive Benefits 13
Certain Relationships and Related Transactions 15
Principal Officers of the Corporation 16
Principal Officers of the Bank 16
Legal Proceedings 17
Proposal No. 2: Ratification of Independent Auditors 17
Shareholder Proposals 18
Other Matters 18
<PAGE>
FIRST KEYSTONE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2000
TO THE SHAREHOLDERS OF FIRST KEYSTONE CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of
FIRST KEYSTONE CORPORATION will be held at 10:00 a.m., Eastern
Daylight Time, on Tuesday, April 18, 2000, at the main office of The
First National Bank of Berwick, 111 West Front Street, Berwick,
Pennsylvania 18603, for the following purposes:
1. To elect 4 Class A Directors to serve for a three-year term
and until their successors are properly elected and qualified;
2. To ratify the selection of J. H. Williams & Co., LLP as the
independent auditors for the corporation for the year ending December
31, 2000; and
3. To transact such other business as may properly come before
the Annual Meeting and any adjournment or postponement of the meeting.
In accordance with the by-laws of the corporation and action of
the Board of Directors, the corporation is giving notice of the Annual
Meeting only to those shareholders on the corporation's records as of
the close of business on March 14, 2000, and only those shareholders
may vote at the Annual Meeting and any adjournment.
A copy of the corporation's Annual Report for the fiscal year
ended December 31, 1999, is being mailed with this Notice. Copies of
the corporation's Annual Report for the 1998 fiscal year may be
obtained at no cost by contacting J. Gerald Bazewicz, President, 111
West Front Street, Berwick, Pennsylvania 18603, telephone: (570) 752-3671.
Whether or not you expect to attend the Annual Meeting in person,
you are requested to complete, sign, date, and promptly return the
enclosed proxy form in the accompanying postage-prepaid envelope. By
so doing, you will ensure your proper representation at the meeting.
The prompt return of your signed proxy will also save the corporation
the expense of additional proxy solicitation. The execution and
delivery of the enclosed proxy does not affect your right to vote in
person if you attend the meeting and give written notice to the
Secretary of the corporation.
By Order of the Board of Directors,
/s/ J. Gerald Bazewicz
J. Gerald Bazewicz, President
March 28, 2000
<PAGE>
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
OF FIRST KEYSTONE CORPORATION TO BE HELD ON APRIL 18, 2000
GENERAL
INTRODUCTION, DATE, TIME AND PLACE OF ANNUAL MEETING
FIRST KEYSTONE CORPORATION, a Pennsylvania business corporation
and registered bank holding company, is furnishing this Proxy
Statement in connection with the solicitation by its Board of
Directors of proxies to be voted at the Annual Meeting of Shareholders
of the corporation to be held on Tuesday, April 18, 2000, at 10:00
a.m., Eastern Daylight Time, at the main office of The First National
Bank of Berwick, 111 West Front Street, Berwick, Pennsylvania 18603,
and at any adjournment or postponement of the Annual Meeting.
The principal executive office of the corporation is located at
The First National Bank of Berwick, 111 West Front Street, Berwick,
Pennsylvania 18603. The bank is a wholly-owned subsidiary of the
corporation and its sole subsidiary. The telephone number for the
corporation is (570) 752-3671. All inquiries should be directed to J.
Gerald Bazewicz, President of the corporation.
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement and the enclosed proxy form are first being
sent to shareholders of the corporation on or about March 28, 2000.
By properly completing and returning the accompanying proxy, a
shareholder is appointing the proxy holders to vote his or her shares
as the shareholder specifies on the proxy. If a shareholder signs the
proxy but does not make any selection, the proxy holders will vote the
proxy:
(Bullet) FOR the election of the nominees for Class A Director
named below, and
(Bullet) FOR the ratification of the selection of J. H. Williams
& Co. as the independent auditors for the corporation
for the year ending December 31, 2000.
The execution and return of the enclosed proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in person,
after giving written notice to the Secretary of the corporation of
such intent.
The corporation will pay the cost of preparing, assembling,
printing, mailing and soliciting proxies, and any additional material
which the corporation may furnish shareholders in connection with the
Annual Meeting. In addition to the use of the mail, certain
directors, officers and employees of the corporation and the bank may
solicit proxies personally, by telephone, telecopier or other
electronic means. The corporation will not pay any additional
compensation for the solicitation. The corporation will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to forward proxy solicitation material to the beneficial
owners of stock held of record by these persons and will reimburse
them for their reasonable forwarding expenses.
REVOCABILITY OF PROXY
A shareholder who returns a proxy may revoke the proxy at any
time before it is voted only:
(Bullet) By giving written notice of revocation to John L.
Coates, Secretary of First Keystone Corporation, at 111
West Front Street, Berwick, Pennsylvania, 18603;
(Bullet) By executing a later-dated proxy and giving written
notice of this fact to the Secretary of the
corporation; or
Page 2 First Keystone Corporation
<PAGE>
(Bullet) By voting in person after giving written notice to the
Secretary of the corporation, in person or at the above
address.
VOTING SECURITIES, RECORD DATE AND QUORUM
At the close of business on March 14, 2000, the corporation had
outstanding 2,833,727 shares of common stock, par value $2.00 per
share, the only issued and outstanding class of stock. The
corporation also had 100,000 shares held in treasury as issued but not
outstanding shares as of that date. The corporation has 500,000
shares of preferred stock, par value $10.00 per share, authorized. As
of March 14, 2000, no shares of preferred stock were issued.
Only shareholders of record as of the close of business on March
14, 2000, may vote at the Annual Meeting. Cumulative voting rights do
not exist with respect to the election of directors. On all matters
to come before the Annual Meeting, each shareholder is entitled to one
vote for each share of common stock outstanding on the record date.
Pennsylvania law and the by-laws of the corporation require the
presence of a quorum for each matter that shareholders will vote on at
the Annual Meeting. The presence, in person or by proxy, of
shareholders entitled to cast at least a majority of the votes which
all shareholders are entitled to cast shall constitute a quorum for
the transaction of business at the Annual Meeting. The corporation
will count votes withheld and abstentions in determining the presence
of a quorum for a particular matter. The corporation will not count
broker non-votes in determining the presence of a quorum for a
particular matter as to which the broker withheld authority. Those
shareholders present, in person or by proxy, may adjourn the meeting
to another time and place if a quorum is lacking.
VOTE REQUIRED FOR APPROVAL OF PROPOSALS
Assuming the presence of a quorum, the 4 nominees for director
receiving the highest number of votes cast by shareholders will be
elected. Votes withheld from a nominee and broker non-votes will not
be cast for the nominee.
Assuming the presence of a quorum, ratification of the selection
of independent auditors requires the affirmative vote of a majority of
all votes cast by shareholders, in person or by proxy, on the matter.
Abstentions and broker non-votes are not votes cast and therefore do
not count either for or against ratification. Abstentions and broker
non-votes, however, have the practical effect of reducing the number
of affirmative votes required to achieve a majority for each matter by
reducing the total number of shares voted from which the majority is
calculated.
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
PRINCIPAL OWNERS
The following table sets forth, as of March 14, 2000, the name
and address of each person who owns of record or who is known by the
Board of Directors to be the beneficial owner of more than 5% of the
corporation's outstanding common stock, the number of shares
beneficially owned by the person and the percentage of the
corporation's outstanding common stock so owned.
Proxy Statement Page 3
<PAGE>
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Outstanding
Beneficial Common Stock
Name and Address Ownership <F1> Beneficially Owned
________________ _____________ __________________
<S> <C> <C>
Berbank 341,494 <F2> 12.05%
First National Bank of
Berwick Trust Department
111 West Front Street
Berwick, PA 18603
Robert E. Bull 190,397 <F3> 6.72%
323 West Fourth Street
Nescopeck, PA 18635
Robert J. Wise 167,082 <F4> 5.90%
115 West Third Street
Berwick, PA 18603
Frederick E. Crispin, Jr. 148,617 <F5> 5.24%
3 Cedarbrook Terrace
Princeton, NJ 08540
____________________
<FN
<F1>
The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as
securities to which the individual has or shares voting or investment power
or has the right to acquire beneficial ownership within 60 days after March
14, 2000. Beneficial ownership may be disclaimed as to certain of the
securities.
<F2>
Nominee registration for the common stock held by the Trust Department of
the bank on behalf of various trusts, estates and other accounts for which
the bank acts as fiduciary with sole voting and dispositive power over
285,886 shares and as fiduciary with shared voting and dispositive power
over 55,608 shares. Total does not include 31,027 shares held by the Trust
Department of the bank for which the bank does not have sole or shared
voting or dispositive power. The Trust Department intends to cast all
shares under its voting power FOR the election of the nominees for director
named below and FOR the ratification of J. H. Williams & Co., LLP,
independent auditors of the corporation.
<F3>
Includes 133,957 shares held individually by Mr. Bull, 1,995 shares held by
Bull, Bull & Knecht, LLP, a law firm of which Mr. Bull is a partner, 3,850
held by Bull, Bull & Knecht, LLP Profit Sharing Trust, and 50,595 shares
held by the Estate of Sara Bull in which Mr. Bull is executor.
<F4>
Includes 147,321 shares held individually by Mr. Wise and 19,761 shares
held jointly with his spouse.
<F5>
Includes 15,972 shares held individually by Mr. Crispin, 7,986 shares held
individually by his spouse and 124,659 shares held by the Frederick E.
Crispin Sr. Trust in which Mr. Crispin is trustee and has sole voting
authority.
</FN>
</TABLE>
BENEFICIAL OWNERSHIP BY OFFICERS, DIRECTORS AND NOMINEES
The following table sets forth as of March 14, 2000, the amount
and percentage of the common stock beneficially owned by each
director, each nominee and all officers, directors and nominees of the
corporation as a group. All shares are individually owned by the
reporting person unless otherwise indicated.
Page 4 First Keystone Corporation
<PAGE>
<TABLE>
<CAPTION>
Name of Individual Amount and Nature of Percent
or Identity of Group Beneficial Ownership of Class
<F1> <F2> <F3>
____________________ __________________ _______
<S> <C> <C>
Nominees for Class A Directors
(to serve until 2003)
And Current Class A Director
Budd L. Beyer 37,932 1.34%
Frederick E. Crispin, Jr. 148,617 <F4> 5.24%
Jerome F. Fabian 15,814 <F5> --
Robert J. Wise 167,082 <F6> 5.90%
Class B Directors
(to serve until 2001)
John E. Arndt 4,992 <F7> --
J. Gerald Bazewicz 15,085 <F8> --
Robert E. Bull 190,397 <F9> 6.72%
Class C Directors
(to serve until 2002)
John L. Coates 7,729 <F10> --
Dudley P. Cooley 4,293 --
Stanley E. Oberrender 4,791 --
All Officers, Directors and 601,913 21.24%
Nominees as a Group
(11 Persons in Total)
____________________
<FN>
<F1>
The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as
securities to which the individual has or shares voting or investment power
or has the right to acquire beneficial ownership within 60 days after March
14, 2000. Beneficial ownership may be disclaimed as to certain of the
securities.
<F2>
Information furnished by the directors and the corporation.
<F3>
Less than 1% unless otherwise indicated.
<F4>
Includes 15,972 shares held individually by Mr. Crispin, 7,986 shares held
individually by his spouse and 124,659 shares held by the Frederick E.
Crispin Sr. Trust in which Mr. Crispin is trustee and has sole voting
authority.
<F5>
Includes 500 shares held individually by Mr. Fabian, 6,440 shares by the
Jerome F. Fabian Trust Under Agreement for which Mr. Fabian exercises
dispositive power, 7,286 shares held jointly with his spouse, and 1,588
shares held by Tile Distributors of America, Inc. of which Mr. Fabian is
100% owner.
<F6>
Includes 147,321 shares held individually by Mr. Wise and 19,761 shares
held jointly with his spouse.
<F7>
Includes 3,815 shares held individually by Mr. Arndt, 447 shares held
individually by his spouse, and 730 shares held by Arndt Insurance Profit
Sharing.
<F8>
Includes 7,519 shares held individually by Mr. Bazewicz, 2,010 shares held
jointly with his spouse, 566 shares held individually by his spouse, 660
shares held jointly with his children, and 330 shares held as custodian for
the benefit of his children and 4,000 shares which may be purchased upon
the exercise of stock options.
Proxy Statement Page 5
<PAGE>
<F9>
Includes 133,957 shares held individually by Mr. Bull, 1,995 shares held by
Bull, Bull & Knecht, LLP, a law firm of which Mr. Bull is a partner, 3,850
held by Bull, Bull & Knecht, LLP Profit Sharing Trust, and 50,595 shares
held by the Estate of Sara Bull in which Mr. Bull is executor.
<F10>
Includes 5,433 shares held individually by Mr. Coates and 2,296 shares held
jointly with his spouse.
</FN>
</TABLE>
PROPOSAL NO. 1: ELECTION OF CLASS A DIRECTORS
The by-laws of the corporation provide that its Board of
Directors shall manage the corporation's business. Sections 10.2 and
10.3 of the By-laws provide that the number of directors on the Board
shall not be less than 7 nor more than 25 and that the Board of
Directors shall be classified into 3 classes, each class to be elected
for a term of 3 years. Within the foregoing limits, the Board of
Directors may, from time to time, fix the number of directors and
their classifications. No person over 70 may serve as director with
the exception of Messrs. Beyer, Bull, Crispin, and Wise. Section 11.1
of the by-laws requires that a majority of the remaining members of
the Board of Directors, even if less than a quorum, will select and
appoint directors to fill vacancies on the Board and each person so
appointed shall serve as director until the expiration of the term of
office of the class of directors to which he or she was appointed.
Section 10.3 of the by-laws provides for a classified Board of
Directors with staggered three-year terms of office. Accordingly, at
the 2000 Annual Meeting of Shareholders, 4 Class A Directors shall be
elected to serve for a three-year term and until their successors are
properly elected and qualified. The Board of Directors of the
corporation has nominated the current Class A Directors to serve as
Class A Directors for the next three-year term of office. The
nominees for re-election this year are as follows:
(Bullet) Budd L. Beyer, director since 1983
(Bullet) Frederick E. Crispin Jr., director since 1983
(Bullet) Jerome F. Fabian, director since 1998, and
(Bullet) Robert J. Wise, director since 1983
Each nominee has consented to serve a three-year term of office
and until his successor is elected and qualified.
Unless otherwise instructed, the proxy holders will vote the
proxies for the election of these 4 nominees. If any nominee should
become unavailable for any reason, proxies will be voted in favor of a
substitute nominee by the Board of Directors of the corporation. A
majority of the directors of the corporation in office may appoint a
new director to fill any vacancy occurring on the Board for any
reason, and the new director shall serve until the expiration of the
term of the class of directors to which he or she was appointed.
The Articles of Incorporation of the corporation provide that
cumulative voting rights shall not exist with respect to the election
of directors. Accordingly, each share of common stock entitles its
owner to cast one vote for each nominee. For example, if a
shareholder owns 10 shares of common stock, he or she may cast up to
10 votes for each director to be elected.
The Board of Directors recommends that shareholders vote FOR the
election of the above named nominees.
Page 6 First Keystone Corporation
INFORMATION AS TO NOMINEES AND DIRECTORS
The following table contains certain information about the
nominees and directors of the corporation. These individuals also
serve as directors of The First National Bank of Berwick.
<TABLE>
<CAPTION>
Principal Occupation
Age as for Past 5 Years Director
Name and of and Position Held Since
Current March 14, with Corporation Corporation
Committees 2000 and Bank /Bank
__________ _______ ________________ ________
(Numbers refer to
committee listing
below table)
NOMINEES FOR CLASS A DIRECTOR WHOSE TERM EXPIRES IN 2003
AND
CURRENT CLASS A DIRECTORS WHOSE TERM EXPIRES IN 2000
<S> <C> <C> <C>
Budd L. Beyer 72 Investor 1983/1976
Committees 1,2,4,7
Frederick E. Crispin, Jr. 68 Retired, former 1983/1964
Committees 1,2,3,5 financial consultant
Jerome F. Fabian 57 President and sole 1998/1998
Committees 3,5 shareholder, Tile
Distributors of
America, Inc.
Robert J. Wise 70 Retired, former 1983/1967
Committees 1,2,4,7,8 investor; Vice
Chairman of the
corporation and
the bank
<CAPTION>
CLASS B DIRECTORS WHOSE TERM EXPIRES IN 2001
<S> <C> <C> <C>
John E. Arndt 38 Insurance Broker, 1995/1995
Committees 2,3,4,8 Owner of Arndt
Insurance Agency
(general insurance
agency)
J. Gerald Bazewicz 51 President and Chief 1986/1986
Committees 1,2,3,4, Executive Officer
5,7,8 of the corporation
and the bank
Robert E. Bull 77 Attorney and Partner, 1983/1956
Committees 1,4,5,6, Bull, Bull & Knecht,
7,8 LLP; Chairman of the
corporation and the
bank
Proxy Statement Page 7
<PAGE>
<CAPTION>
CLASS C DIRECTORS WHOSE TERM EXPIRES IN 2002
<S> <C> <C> <C>
John L. Coates 63 President and sole 1987/1987
Committees 1,3,5,6,7 shareholder, Tri-
County Hardware Inc.;
Secretary of the
corporation
and the bank
Dudley P. Cooley 61 Personal Financial 1987/1987
Committees 3,5,6,7 Consultant;
Former Controller,
Wise Foods, Borden,
Inc. (Snack food
processor)
Stanley E. Oberrender 58 Owner, Suntex 1987/1987
Committees 3,4,6,7,8 (Dry cleaning)
____________________
<FN>
Committee 1 - Executive Committee This committee exercises the
authority of the Board of Directors in the management of the business of
the bank between the dates of regular meetings of the Board of Directors.
This committee did not meet in 1999.
Committee 2 - Trust Committee This committee ensures that all trust
activities of the Bank are performed in a manner that is consistent with
the legal instrument governing the account, prudent trust administration
practices, and approved trust policy. This committee met 12 times in 1999.
Committee 3 - Asset/Liability Committee This committee reviews
asset/liability committee reports and provides support and discretion in
managing the Bank's net interest income, liquidity, and interest rate
sensitivity positions. This committee met 4 times in 1999.
Committee 4 - Marketing Committee This committee provides guidance to
management in formulating marketing/sales plans and programs to assist in
evaluating the performance of the Bank relative to plans. This committee
met 4 times in 1999.
Committee 5 - Loan Administration Committee This committee monitors
loan review and compliance activities. Also, the committee ensures that
loans are made and administered in accordance with the loan policy. This
committee met 4 times in 1999.
Committee 6 - Audit Committee This committee recommends the
appointment of the independent certified public accountant to examine the
affairs of the Bank. Also, the committee reviews findings of the auditor
and ensures an independent, effective audit function. This committee met 2
times in 1999.
Committee 7 - Human Resources Committee This committee helps ensure
that a sound human resources management system is developed and maintained.
This committee also acts as the Compensation Committee for non-executive
officers and employees. This committee met 1 time in 1999.
Committee 8 - Building Committee This committee makes recommendations
to the Board relating to the Bank's physical assets, including both current
and proposed physical assets. This committee did not meet in 1999.
</FN>
</TABLE>
The above listed committees are committees of the bank and not of
the corporation. The Board of Directors of the corporation has at
present no standing committees.
Page 8 First Keystone Corporation
<PAGE>
The members of the Board of Directors of the corporation also
serve as members of the Board of Directors of The First National Bank
of Berwick. During 1999, the bank's Board of Directors held 25
meetings and the corporation's Board of Directors held 5 meetings.
Each of the Directors attended at least 75% of the combined total
number of meetings of the corporation's and the bank's Board of
Directors and the committees of which he is a member, except Stanley
E. Oberrender who attended 71% of all combined meetings.
PROCEDURES FOR NOMINATING DIRECTORS
The corporation's Board of Directors nominates individuals for
the position of director. Neither the corporation nor the bank has a
nominating committee. In addition, a shareholder who desires to
propose an individual for consideration by the Board of Directors as a
nominee for director should submit a proposal in writing to the
Secretary of the corporation in accordance with Section 10.1 of the
corporation's By-laws. Any shareholder who intends to nominate any
candidate for election to the Board of Directors must notify the
Secretary of the corporation in writing not less than 45 days prior to
the date of any meeting of shareholders called for the election of
directors and must provide the specific information listed in Section
10.1
COMPENSATION OF DIRECTORS
During 1999, the corporation's Board of Directors received
$400.00 for each director's attendance at the Annual Meeting. Other
corporate Board meetings met concurrently with the bank's Board, and
directors received no additional compensation. The bank's directors
received $400.00 for each directors' meeting attended. Non-employee
directors received a $4,000.00 retainer and $200.00 for each committee
meeting attended. All directors received a bonus of $1,000.00. In
addition, Chairman Bull received an annual stipend of $1,000.00 and
Vice Chairman Wise and Secretary Coates each received an annual
stipend of $750.00. In the aggregate, the Board of Directors received
$170,900.00 for all Board of Directors' meetings and committee
meetings attended in 1999, including all fees, bonuses, and stipends
paid to all directors in 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the corporation's officers and directors, and persons who own
more than 10% of the registered class of the corporation's equity
securities, to file reports of ownership of the corporation's common
stock and changes in such ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish the corporation
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received
by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the corporation believes
that during the period January 1, 1999, through December 31, 1999, its
officers and directors were in compliance with all filing requirements
applicable to them.
Proxy Statement Page 9
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The basic mission of the corporation's executive compensation
policy is to provide executives of First Keystone Corporation's
subsidiary, The First National Bank of Berwick, with a competitive
compensation package that attracts and retains qualified executives
while placing a portion of total pay at risk. The Board of Directors
serves as the Compensation Committee for the bank and develops the
bank's and the corporation's executive compensation policy, with
guidance from the Human Resources Committee. The four components of
the total compensation package are:
(Bullet) Base salary
(Bullet) Regular employee bonus
(Bullet) Senior management bonus
(Bullet) Long-term incentives
BASE SALARY
The Board of Directors determines compensation for executive
officers of The First National Bank of Berwick with guidance from the
Human Resources Committee. For the base salary paid to executive
officers other than the Chief Executive Officer, the Board of
Directors considers information provided by the Chief Executive
Officer as to each executive officer's level of individual
performance, contribution to the organization, and salary history.
For the base salary paid to the Chief Executive Officer, the Board of
Directors, with Mr. Bazewicz not being present, considers his
performance level, the results of management decisions made by him,
and the earnings of the organization. No particular weight is
assigned to any of the foregoing individual performance factors. The
executive compensation established by the Board of Directors is based
on its overall subjective assessment of the value of the services
provided by each executive officer with consideration to the
performance factors discussed in this paragraph and peer group
compensation information.
The peer group of banks chosen by the Board of Directors for
purposes of making a comparative analysis of executive compensation
does not include all of the same banks incorporated in the peer group
established to compare shareholder returns as indicated in the
performance graph included in this proxy statement. The Board of
Directors uses data from compensation surveys of the banking industry
to assist in determining executive pay. This group of Pennsylvania
banking organizations bears no direct relationship to those banking
organizations represented in the performance graph.
The Board of Directors established Mr. Bazewicz's base salary,
not including director fees, at $131,000 in 1999 and increased his
salary to $138,500 effective January 1, 2000. This placed Mr.
Bazewicz's base compensation at approximately the median base
compensation of chief executive officers of comparable bank holding
companies, as reflected in the peer group compensation data reviewed
by the Board of Directors.
CASH BONUSES
The cash bonuses serve as short-term incentives which align
executive pay with the annual performance of the corporation. The
regular employee bonus program is for all employees, including
executives. It is based solely on the corporation's return on equity
for the year. The bonus has averaged between 5.0% and 8.7% of each
employee's salary for the past five years. The senior management
bonus provides further short-term incentive for senior executives of
the corporation. This bonus is earned through the achievement of
overall annual earnings objectives. Both bonus programs help to align
management's interests with those of shareholders because, generally,
the higher the net income for the year, the larger the bonuses paid to
management.
Page 10 First Keystone Corporation
<PAGE>
LONG-TERM INCENTIVES: STOCK OPTIONS
The Board of Directors believes that stock option awards under
the First Keystone Corporation's 1998 Stock Incentive Plan provide a
vehicle for long-term incentive compensation through financial rewards
dependent on future increases in the market value of the corporation's
stock. Thus, executive officers are encouraged to manage the
corporation with a view toward maximizing long-term shareholder value.
Under the Stock Incentive Plan, the corporation makes grants of
options to purchase shares of the corporation's common stock to
employees, including executives, and the corporation has absolute
power to determine what, to whom, when and under what facts and
circumstances awards are made. The Board of Directors bases decisions
relating to such awards on its overall subjective assessment of the
value of the services provided by each executive officer with
consideration to performance of the corporation and peer group
compensation information. The options generally vest 6 months after
issue and expire ten years from the date of the grant. On September
28, 1999, the corporation granted 12,000 incentive stock options under
the plan, which are not exercisable until March 28, 2000. The average
per share exercise price is $26.25, which was not less than the full
market value of the shares as of September 28, 1999. The total number
of shares which may be issued under the plan is 100,000.
BOARD OF DIRECTORS
Robert E. Bull, Chairman Budd L. Beyer
Robert J. Wise, Vice Chairman Dudley P. Cooley
J. Gerald Bazewicz, President Frederick E. Crispin, Jr.
John L. Coates, Secretary Jerome F. Fabian
John E. Arndt Stanley E. Oberrender
EXECUTIVE COMPENSATION
The table below shows information concerning the annual and long-term
compensation for services rendered in all capacities to the
corporation and the bank for the fiscal years ended December 31, 1999,
1998, and 1997 of those persons who were:
(Bullet) the Chief Executive Officer during 1999, and
(Bullet) the other 4 most highly compensated executive officers
of the corporation and the bank whose total annual
salary and bonus exceeded $100,000 at December 31,
1999.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
(a) (b) (c) (d) (e)
Other
Annual
Name and Compen-
Principal Salary Bonus sation
Position Year ($) <F1> ($) <F2> ($)
<S> <C> <C> <C> <C>
J. Gerald Bazewicz 1999 141,400 29,290 0
President and CEO 1998 133,500 24,720 0
of the Corporation 1997 126,800 27,972 0
and the Bank
David R. Saracino 1999 86,000 20,086 0
Treasurer and 1998 81,500 16,712 0
Assistant Secretary 1997 77,500 19,286 0
<CAPTION>
Long-Term Compensation
Awards Payouts
(f) (g) (h) (i)
Restricted All Other
Name and Stock Options/ LTIP Compen-
Principal Award(s) SARs <F5> sation
Position ($) <F3> Payouts ($)
(#) <F4> ($) <F6>
<S> <C> <C> <C> <C>
J. Gerald Bazewicz 0 2,000 0 44,648
President and CEO 0 2,000 0 42,474
of the Corporation 0 0 0 38,675
and the Bank
David R. Saracino 0 1,000 0 42,276
Treasurer and 0 1,000 0 40,010
Assistant Secretary 0 0 0 35,924
____________________
Proxy Statement Page 11
<PAGE>
<FN>
<F1>
Amounts shown for Mr. Bazewicz consist of base salary and fees paid for
attendance at Board of Directors meetings of $10,400 in 1999, $10,000 in
1998, and $9,800 in 1997.
<F2>
Bonus information is reported by the year in which earned.
<F3>
Stock Appreciation Rights.
<F4>
Options granted in September 1999 pursuant to First Keystone Corporation's
1998 Stock Incentive Plan.
<F5>
Long-Term Incentive Plan Option Awards.
<F6>
Amounts shown for Mr. Bazewicz include contributions to the Bank's 401(k)
Plan of $15,933 for 1999, $15,828 for 1998, and $15,872 for 1997, and
accrual for the Bank's Supplemental Employee Retirement Plan (SERP) of
$28,715 in 1999, $26,646 in 1998 and $22,803 in 1997. Amounts shown for
Mr. Saracino include contributions to the Bank's 401(k) Plan of $10,573 for
1999, $10,591 for 1998, and $10,749 for 1997, and accrual for the Bank's
Supplemental Employee Retirement Plan (SERP) of $31,703 in 1999, $29,419 in
1998, and $25,175 in 1997.
</FN>
</TABLE>
STOCK OPTION GRANTS IN FISCAL YEAR 1999
Stock options were granted to executive officers and other
employees during fiscal year ended December 31, 1999. All options
were granted under the First Keystone Corporation 1998 Stock Incentive
Plan. The table shows information about such grants to the named
officers:
<TABLE>
INDIVIDUAL GRANTS
<CAPTION>
(a) (b) (c)
Number of % of Total
shares Options
underlying Granted to
Options Employees
Granted in in Fiscal
Name Fiscal Year <F1> Year
____ ______________ ________
<S> <C> <C>
J. Gerald Bazewicz 2,000 16.67%
President and CEO
David R. Saracino 1,000 8.33%
Treasurer and
Assistant Secretary
<CAPTION>
(d) (e) (f)
Potential
Realizable
Value at
Assumed
Annual Rates
Exercise of Stock
or Base Appreciation
Price Expiration for Option
Name ($/Sh) Date Term
5%($) 10%($)
____ _____ ________ _____ _____
<S> <C> <C> <C> <C>
J. Gerald Bazewicz 26.25 9/28/09 33,000 83,660
President and CEO
David R. Saracino 26.25 9/28/09 16,500 41,830
Treasurer and
Assistant Secretary
____________________
<FN>
<F1>
The options were granted under the First Keystone Corporation's 1998 Stock
Incentive Plan on September 28, 1999, and are not exercisable until March
28, 2000.
</FN>
</TABLE>
AGGREGATED STOCK OPTION EXERCISES IN FISCAL YEAR 1999 AND FISCAL YEAR-END
OPTION VALUES
No options were exercised in fiscal year 1999. Mr. Bazewicz had
an option for 2,000 shares and Mr. Saracino had an option for 1,000
shares which were exercisable as of the end of Fiscal Year 1999 at a
price of $33.50 per share.
Page 12 First Keystone Corporation
<PAGE>
401(K) PLAN
The corporation does not have a retirement or pension plan. The
bank maintains a 401(k) Plan which has a combined tax qualified
savings feature and profit sharing feature. The plan provides
benefits to employees who have completed at least one year of service
and are at least 21 years of age. The plan agreement provides that
the bank will match employee deferrals to the plan not to exceed 3% of
their respective eligible compensations. Additionally, the bank may
make a discretionary contribution annually to the plan, which when
combined with the employee's deferral and bank's matching
contributions, cannot exceed 15% of total eligible compensation.
Contributions made by the bank to the plan are allocated to
participants in the same portions that each participant's compensation
bears to the aggregate compensation of all participants. Each
participant in the plan is 100% vested at all times. Benefits are
payable under the plan upon termination of employment, disability,
death, or retirement. Contributions reflected as expense under this
plan in 1999 and 1998 were:
<TABLE>
<CAPTION>
1999 1998
____ ____
<S> <C> <C>
Matching contribution to savings plan $ 75,725 $ 67,377
Contribution to profit sharing plan 193,481 167,497
_______ _______
Total Expense $269,206 $234,874
</TABLE>
Of the $269,206 total expenses during 1999, $42,740 was credited
among the individual accounts of the 4 most highly compensated
executive officers of the bank. Of the $42,740, Mr. Bazewicz was
credited with $15,933 and Mr. Saracino with $10,573 and each has been
a member of the plan for 14 years.
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
The corporation maintains a Supplemental Employee Retirement Plan
("SERP") covering 4 of the bank's executive officers, Mr. Bazewicz,
Mr. Saracino, Mr. Bodle, and Mrs. Rishkofski. The SERP, which is a
salary continuation agreement, provides that if the executive officer
continues to serve as an officer of the bank until a stated retirement
age of either 60 years or 62 years, the bank will pay 240 guaranteed
consecutive monthly payments commencing on the first day of the month
following the officer's 60th or 62nd birthday in the amounts indicated
below.
The salary continuation agreement allows the executive officers
to achieve a retirement income percentage that is more consistent with
their experience and years of service to the bank. The plan objective
is to provide the executive officers with a final wage replacement
ratio of approximately 75% of projected final salary including
projected benefits from the bank 401(k), social security, and salary
continuation provided through the agreement. The retirement benefit
under the salary continuation plan for Messrs. Bazewicz, Saracino,
Bodle, and Mrs. Rishkofski will be $3,750 per month, $2,333 per month,
$1,750 per month, and $417 per month, respectively. If the executive
officer attains their stated retirement age, but dies before receiving
all of the guaranteed monthly payments, then the bank will make the
remaining payments to the officer's beneficiary. In the event the
officer dies while serving as an officer, prior to their stated
retirement age, the bank will remit the guaranteed monthly payment to
the officer's beneficiary commencing the month following the
executive's death. In the event of a change of control and the
termination of the officer's employment, the guaranteed monthly
payments will commence the month following the executive's termination
of service. No benefit shall be paid if the executive officer
voluntarily terminates employment prior to attaining the stated
retirement age.
OTHER EXECUTIVE BENEFITS
The corporation maintains the First Keystone Corporation 1998
Stock Incentive Plan to advance the development, growth and financial
condition of the corporation. Please refer to the description of the
1998 Stock Incentive Plan in the Board Compensation Committee Report
above. The corporation also maintains a bonus program for employees
and for senior management, which is also described above in the Board
Compensation Committee Report.
Proxy Statement Page 13
<PAGE>
The bank has obtained term life insurance, designating the bank
as the beneficiary, on the life of each participating executive
officer in an amount which is intended to cover the bank's obligation
until the expense for the plan is fully accrued, based upon certain
actuarial assumptions. In 1999, the Bank expensed $80,996 for the
accrual of the salary continuation plan for the four executive
officers. In addition, $6,008 was paid to cover the year's premium on
the term insurance policies.
PERFORMANCE GRAPH
The following graph and table compare the cumulative total
shareholder return on the corporation's common stock during the period
December 31, 1994, through and including December 31, 1999, with
(Bullet) the cumulative total return on the SNL Securities
Corporate Performance Index <F1> for banks with less
than $500 million in total assets in the Middle
Atlantic area <F2>, and
(Bullet) the cumulative total return for all United States
stocks traded on the NASDAQ Stock Market.
The comparison assumes $100 was invested on December 31, 1994, in
the corporation's common stock and in each of the indices below and
assumes further the reinvestment of dividends into the applicable
securities. The shareholder return shown on the graph and table below
is not necessarily indicative of future performance.
(Performance Graph omitted)
(The following is a description of the performance graph in tabular
format)
FIRST KEYSTONE CORPORATION
Total Return Performance
Period Ending
12/31/94 12/31/95 12/31/96
First Keystone Corporation 100.00 110.02 144.77
NASDAQ - Total US 100.00 141.33 141.33
SNL <$500M Bank Index 100.00 136.80 176.08
Period Ending
12/31/97 12/31/98 12/31/99
First Keystone Corporation 273.07 473.46 302.45
NASDAQ - Total US 213.07 300.25 542.43
SNL <$500M Bank Index 300.16 274.06 253.69
__________________
Page 14 First Keystone Corporation
<PAGE>
[FN]
<F1>
SNL Securities is a research and publishing firm specializing in the
collection and dissemination of data on the banking, thrift and
financial services industries.
<F2>
The Middle Atlantic area comprises the states of Delaware,
Pennsylvania, Maryland, New Jersey, New York, the District of Columbia
and Puerto Rico.
</FN>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than described below, there have been no material
transactions between the corporation and the bank, nor any material
transactions proposed, with any director or executive officer of the
corporation and the bank, or any associate of these persons. The law
firm Bull, Bull & Knecht, LLP, of which Mr. Bull is a partner,
provided routine legal services to the bank according to the firm's
normal fee schedule and billing rates, and the bank intends to
continue to engage the firm's services in the future. In addition,
the corporation and the bank have engaged in and intend to continue to
engage in banking and financial transactions in the ordinary course of
business with directors and officers of the corporation and the bank
and their associates on comparable terms and with similar interest
rates as those prevailing from time to time for other customers of the
corporation and the bank.
Total loans outstanding from the corporation and the bank at
December 31, 1999, to the corporation's and the bank's officers and
directors as a group and members of their immediate families and
companies in which they had an ownership interest of 10% or more was
$1,708,323 or approximately 5.82% of the total equity capital of the
bank. Loans to such persons were made in the ordinary course of
business, were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more
than the normal risk of collectibility or present other unfavorable
features. All loans are current and being paid as agreed. The
largest aggregate amount of indebtedness outstanding at any time
during fiscal year 1999 to officers and directors of the corporation
and the bank as a group was $2,042,943. The aggregate amount of
indebtedness outstanding as of the latest practicable date, February
1, 2000, to the above described group was $1,683,854.
Proxy Statement Page 15
<PAGE>
PRINCIPAL OFFICERS OF THE CORPORATION
The following table shows selected information about the
principal officers of the corporation, each of whom is elected by the
Board of Directors and each of whom holds office at the discretion of
the Board of Directors:
<TABLE>
<CAPTION>
Age
Number as of
Corporation of Shares March
Held Employee Beneficially 14,
Name and Position Since Since Owned 2000
<S> <C> <C> <C> <C>
Robert E. Bull 1983 <F1> 190,397 <F2> 77
Chairman of the Board
Robert J. Wise 1996 <F1> 167,082 <F2> 70
Vice Chairman of the Board
J. Gerald Bazewicz 1987 1973 15,085 <F2> 51
President and Chief
Executive Officer
John L. Coates 1995 <F1> 7,729 <F2> 63
Secretary
David R. Saracino 1983 1972 5,181 <F3> 55
Treasurer
____________________
<FN>
<F1>
Messrs. Bull, Wise, and Coates are not employees of the corporation.
<F2>
For information on specific nature of ownership, please refer to
"Beneficial Ownership by Officers, Directors and Nominees".
<F3>
Includes 2,383 shares of common stock held individually by Mr. Saracino,
798 shares of common stock held jointly with his spouse, and 2,000 shares
which may be purchased upon the exercise of stock options.
</FN>
</TABLE>
Page 16 First Keystone Corporation
<PAGE>
PRINCIPAL OFFICERS OF THE BANK
The following table presents selected information about the
principal officers of the bank, each of whom is elected by the Board
of Directors and each of whom holds office at the discretion of the
Board of Directors:
<TABLE>
<CAPTION>
Office and Position Held
Name with the Bank Since
<S> <C> <C>
Robert E. Bull Chairman of the Board 1981
Robert J. Wise Vice Chairman 1996
of the Board
J. Gerald Bazewicz President and CEO 1987
John L. Coates Secretary 1995
David R. Saracino Vice President, 1983
Cashier and
Assistant Secretary
Leslie W. Bodle Vice President and 1985
Trust Officer
Sally A. Rishkofski Vice President 1997
<CAPTION>
Number of
Bank Shares Age as of
Employee Beneficially March 14,
Name Since Owned 2000
<S> <C> <C> <C>
Robert E. Bull <F1> 190,397 <F2> 77
Robert J. Wise <F1> 167,082 <F2> 70
J. Gerald Bazewicz 1973 15,085 <F2> 51
John L. Coates <F1> 7,729 <F2> 63
David R. Saracino 1972 5,181 <F3> 55
Leslie W. Bodle 1985 4,915 <F4> 52
Sally A. Rishkofski 1964 2,507 <F4> 60
____________________
<FN>
<F1>
Messrs. Bull, Wise, and Coates are not employees of the bank.
<F2>
For information on specific nature of ownership, please refer to
"Beneficial Ownership by Officers, Directors and Nominees".
<F3>
For information on specific nature of ownership, please refer to "Principal
Officers of the Corporation" above.
<F4>
Includes 2,000 shares which may be purchased upon the exercise of stock
options.
</FN>
</TABLE>
LEGAL PROCEEDINGS
In the opinion of the management of First Keystone Corporation
and its banking subsidiary, there are no proceedings pending to which
the corporation or its banking subsidiary is a party or to which their
property is subject, which, if determined adversely to the corporation
or the bank, would have a material effect on their undivided profits
or financial condition. There are no proceedings pending other than
routine litigation incident to the business of the corporation and its
banking subsidiary. In addition, to the Board's knowledge, no
government authorities have initiated, threatened to initiate, or
contemplated any material proceedings against First Keystone
Corporation or its banking subsidiary.
PROPOSAL NO. 2: RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed J. H. Williams & Co., LLP,
Certified Public Accountants, located at 270 Pierce Street, Kingston,
Pennsylvania 18705, as the corporation's independent auditors for its
2000 fiscal
Proxy Statement Page 17
<PAGE>
year. The Board proposes that shareholders ratify this selection. J.
H. Williams & Co., LLP, has advised the corporation that none of its
members has any financial interest in the corporation. Ratification
of J. H. Williams & Co., LLP, will require the affirmative vote of a
majority of the shares of common stock represented in person or by
proxy at the Annual Meeting. J. H. Williams & Co., LLP served as the
corporation's independent auditors for the 1999 fiscal year, assisted
the corporation and the bank with preparation of their federal and
state tax returns, and provided assistance in connection with
regulatory matters, charging the bank for such services at its
customary hourly billing rates. The corporation's and the bank's
Board of Directors approved these non-audit services after due
consideration of the accountants' objectivity and after finding them
to be wholly independent.
Representatives of J. H. Williams & Co., LLP, will attend the
Annual Meeting of Shareholders, will have the opportunity to make a
statement and are expected to be available to respond to any
questions. In the event that the shareholders do not ratify the
selection of J. H. Williams & Co, LLP, as the corporation's
independent auditors for the 2000 fiscal year, another accounting firm
may be chosen to provide independent audit services for the 2000
fiscal year. The Board of Directors recommends that the shareholders
vote FOR the ratification of the selection of J. H. Williams & Co.,
LLP, as the independent auditors for the corporation for the year
ending December 31, 2000.
ANNUAL REPORT
A copy of the corporation's Annual Report for its fiscal year
ended December 31, 1999, is enclosed with this Proxy Statement.
Additional copies of the Annual Report may be obtained by contacting
J. Gerald Bazewicz, President, 111 West Front Street, Berwick,
Pennsylvania 18603, telephone: (570) 752-3671. We furnish the Annual
Report to shareholders for their information, it is not incorporated
in this Proxy Statement.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the
provisions of the proxy rules of the Securities and Exchange
Commission, wishes to submit a proposal for inclusion in the
corporation's Proxy Statement for its 2001 Annual Meeting of
Shareholders must deliver such proposal in writing to the President of
First Keystone Corporation at its principal executive offices, 111
West Front Street, Berwick, Pennsylvania 18603, not later than
Tuesday, November 28, 2000. Also, if the corporation does not receive
by February 11, 2001, notice of a shareholder proposal that is not to
be included in the corporation's Proxy Statement, the proxy holders at
the 2001 Annual Meeting may vote on the proposal at their discretion.
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented for consideration other than the matters described in the
accompanying Notice of Annual Meeting of Shareholders, but if any
matters are properly presented, the persons named in the accompanying
proxy intend to vote on such matters as they determine to be in the
best interest of the corporation.
ADDITIONAL INFORMATION
Any shareholder may obtain a copy of the corporation's report on
Form 10-K for its fiscal year ended December 31, 1999, including the
financial statements and the schedules thereto, required to be filed
with the Securities and Exchange Commission, without change, by
submitting a written request to David R. Saracino, Treasurer, First
Keystone Corporation, 111 West Front Street, Berwick, Pennsylvania
18603, telephone: (570) 752-3671.
Page 18 First Keystone Corporation
<PAGE>
FIRST KEYSTONE CORPORATION
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints and William
Selden, Jr. and Francis J. Radice, each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the
shares of First Keystone Corporation (the "Corporation") that the
undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Corporation to be held at the main office of The
First National Bank of Berwick, 111 West Front Street, Berwick,
Pennsylvania 18603 on Tuesday, April 18, 2000, at 10:00 a.m.,
prevailing time, and at any adjournment or postponement thereof as
follows:
1. PROPOSAL #1: ELECTION OF CLASS A DIRECTORS TO SERVE FOR A
THREE-YEAR TERM
Budd L. Beyer Frederick E. Crispin, Jr.
Jerome F. Fabian Robert J. Wise
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
above (except as marked to vote for all
to the contrary below) nominees listed above
(INSTRUCTION: IF YOU WISH TO WITHHOLD THE PROXIES' AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE FOR DIRECTOR LISTED ABOVE, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
___________________________________________________________________
2. PROPOSAL #2: PROPOSAL TO RATIFY THE SELECTION OF J. H. WILLIAMS
& CO., LLP AS THE INDEPENDENT AUDITORS FOR THE CORPORATION FOR
THE YEAR ENDING DECEMBER 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR
PROPOSAL 2.
Dated: ____________________ , 2000
__________________________________
__________________________________
__________________________________
Signature(s) (Seal)
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS
HELD JOINTLY, EACH OWNER SHOULD SIGN.
