For Further Information Contact:

                             J. Gerald Bazewicz
                             President and
                             Chief Executive Officer
                             (570) 752-3671



                           Exhibit 99.1


                    FIRST KEYSTONE CORPORATION
                     AUDIT COMMITTEE CHARTER


MISSION STATEMENT

The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities.
The Audit Committee's primary duties and responsibilities are to:

*   Monitor the integrity of the Company's financial reporting
    process and systems of internal controls regarding finance,
    accounting, risk management and regulatory compliance.
*   Monitor the independence and performance of the Company's
    independent auditors and internal auditing department.
*   Provide an avenue of communication among the independent
    auditors, management, the internal auditing department and
    the Board of Directors.

To effectively perform his or her role, each Committee member
will obtain an understanding of the detailed responsibilities of
Audit Committee membership.


COMMITTEE COMPOSITION

The Audit Committee and its members shall meet all applicable
requirements of the National Securities Exchange or National
Securities Association on which the corporation is listed, or
shall have received an exemption therefrom.

The Audit Committee will consist of at least three and no more
than six members of the Board of Directors.  The Board nominating
committee will appoint committee members and the committee chair.

Each committee member will be both independent and financially
literate.  The Audit Committee shall make every effort to have at
least one member who shall be designated as the "financial
expert," as defined by applicable legislation and regulation.  No
committee member shall simultaneously serve on the audit
committees of more than two other public companies.


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MEETINGS

The committee will meet at least four times a year, with
authority to convene additional meetings, as circumstances
require.  All committee members are expected to attend each
meeting, in person or via tele- or video-conference.  The
committee will invite members of management, auditors or others
to attend meetings and provide pertinent information, as
necessary.  It will meet separately, periodically, with
management, with internal auditors and with external auditors.
It will also meet periodically in executive session.  Meeting
agendas will be prepared and provided in advance to members,
along with appropriate briefing materials.  Minutes will be
prepared.


ROLES AND RESPONSIBILITIES

The committee will carry out the following responsibilities:

Financial Statements
____________________

1.   Review significant accounting and reporting issues and
     understand their impact on the financial statements.  These
     issues include:

    *    Complex or unusual transactions and highly judgmental
         areas
    *    Major issues regarding accounting principles and
         financial statement presentations, including any
         significant changes in the Company's selection or
         application of accounting principles
    *    The effect of regulatory and accounting initiatives, as
         well as off-balance sheet structures, on the financial
         statements of the Company

2.   Review analyses prepared by management and/or the
     independent auditor setting forth significant financial
     reporting issues and judgments made in connection with the
     preparation of the financial statements, including analyses
     of the effects of alternative GAAP methods on the financial
     statements.

3.   Review with management and the external auditors the results
     of the audit, including any difficulties encountered.  This
     review will include any restrictions on the scope of the
     independent auditor's activities or on access to requested
     information, and any significant disagreements with
     management.

4.   Discuss the annual audited financial statements and
     quarterly financial statements with management and the
     external auditors, including the Company's disclosures under
     "Management's Discussion and Analysis of Financial Condition
     and Results of Operations."

5.   Review disclosures made by CEO and CFO during the Forms 10-K
     and 10-Q certification process about significant
     deficiencies in the design or operation of internal controls
     or any fraud that involves management or other employees who
     have a significant role in the Company's internal controls.


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6.   Discuss earnings press releases (particularly use of "pro-forma,"
              or "adjusted" non-GAAP, information), as well as
     financial information and earnings guidance provided to
     analysts and rating agencies.  This review may be general
     (i.e., the types of information to be disclosed and the type
     of presentations to be made).  The Audit Committee Chairman
     should discuss with the external auditors each release in
     advance.

Internal Control
________________

1.   Consider the effectiveness of the Company's risk management
     program and internal control system, including information
     technology security and control.

2.   Understand the scope of internal and external auditors'
     review of internal control over financial reporting, and
     obtain reports on significant findings and recommendations,
     together with management's responses.

Internal Audit
______________

1.  Review with management and internal audit the committee
    charter, audit schedule and approach, recommendation
            follow-up matrix, staffing and organizational structure of the
    internal audit function.

2.  Ensure there are no unjustified restrictions or limitations,
    and review and concur in the appointment, replacement or
    dismissal of the chief audit executive.

3.  Review the effectiveness of the internal audit function,
    including the audit risk assessment and compliance with
    internal audit policy and procedures manual.

4.  On a periodic basis, meet separately with internal audit to
    discuss any matters that the committee of internal audit
    believes should be discussed privately.

External Audit
______________

1.   Review the external auditors' audit scope and approach,
     including coordination of audit effort with internal audit.

2.   Review the performance of the external auditors, and
     exercise final approval on the appointment or discharge of
     the auditors.  In performing this review, the committee
     will:

    *    At least annually, obtain and review a report by the
         independent auditor describing the firm's internal
         quality-control procedures; any material issues raised
         by the most recent internal quality-control review, or
         peer review, of the firm, or by any inquiry or
         investigation by governmental or professional
         authorities, within the preceding five years,
         respecting one or more independent audits carried out
         by the firm, and any steps taken to deal with any such
         issues; and (to assess the auditor's independence) all
         relationships between the independent auditor and the
         Company.
    *    Take into account the opinions of management and
         internal audit.
    *    Review and evaluate the lead partner of the independent
         auditor.
    *    Present its conclusions with respect to the external
         auditor to the Board.


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3.   Ensure the rotation of the lead audit partner and other
     audit partners is in accordance with the rules and
     regulations issued by the Securities and Exchange
     Commission.

4.   Present its conclusions with respect to the independent
     auditor to the full Board.

5.   Set clear hiring policies for employees or former employees
     of the independent auditors.

6.   On a regular basis, meet separately with the external
     auditors to discuss any matters that the committee or
     auditors believe should be discussed privately.

7.   Review and discuss with the independent accountants, as may
     be required by law or regulation:

    *    All critical accounting policies and practices to be
         used;
    *    All alternative treatments of financial information
         within GAAP that have been discussed with management,
         ramifications or the use of such alternative
         disclosures and treatments, and the treatment preferred
         by the independent accountant, and;
    *    Other material written communications between the
         independent accountant and management, such as any
         management letter or schedule of unadjusted
         differences.

Compliance
__________

1.   Review the effectiveness of the system for monitoring
     compliance with laws and regulations and the results of
     management's investigation and follow-up (including
     disciplinary action) of any instances of noncompliance.

2.   Establish procedures for:

    *    The receipt, retention, and treatment of complaints
         received by the listed issuer regarding accounting,
         internal accounting controls or auditing matters; and
    *    The confidential, anonymous submission by employees of
         the listed issuer of concerns regarding questionable
         accounting or auditing matters.

3.   Review the findings of any examinations by regulatory
     agencies, and any auditor observations.

4.   Review the process for communicating the code of conduct to
     Company personnel, and for monitoring compliance therewith.

5.   Obtain regular updates from management and Bank legal
     counsel regarding compliance matters.

Reporting Responsibilities
__________________________

1.   Regularly report to the Board of Directors about committee
     activities and issues that arise with respect to the quality
     or integrity of the Company's financial statements, and
     Company's compliance with legal or regulatory requirements,
     the performance and independence of the Company's
     independent auditors, and the performance of the internal
     audit function.


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2.   Provide an open avenue of communication between internal
     audit, the external auditors, and the Board of Directors.

3.   Report annually to the shareholders, describing the
     committee's composition, responsibilities and how they were
     discharged, and any other information required by rule,
     including approval of non-audit services.

4.   Review any other reports the Company issues that relate to
     committee responsibilities.

Other Responsibilities
______________________

1.   Discuss with management the Company's major policies with
     respect to risk assessment and risk management.

2.   Perform other activities related to this charter as
     requested by the Board of Directors.

3.   Institute and oversee special investigations as needed.

4.   Review and assess the adequacy of the committee charter
     annually, requesting Board approval for proposed changes,
     and ensure appropriate disclosure as may be required by law
     or regulation.

5.   Confirm annually that all responsibilities outlined in this
     charter have been carried out.

6.   Evaluate the committee's and individual members' performance
     at least annually.


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