EXHIBIT 99



       DEFINITIVE PROXY STATEMENT, NOTICE OF ANNUAL MEETING AND
                 FORM OF PROXY FOR THE ANNUAL MEETING
               OF SHAREHOLDERS TO BE HELD APRIL 15, 1997



                                  29

<PAGE>


<FIRST KEYSTONE CORPORATION LOGO - 1K>     First Keystone Corporation
                                                                    

                                                 111 West Front Street
                                          Berwick, Pennsylvania  18603




                            March 21, 1997







DEAR SHAREHOLDER:

     It is my pleasure to invite you to attend the 1997 Annual Meeting
of Shareholders of First Keystone Corporation to be held on Tuesday,
April 15, 1997 at 9:00 a.m., prevailing 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:  the election of three (3) Class A
Directors and the ratification of the selection of the independent
auditors for 1997.  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 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 thereof to the Secretary of the
Corporation so that your Proxy will be superseded by any ballot that
you submit at the meeting.


                                 Sincerely,


                                 /s/ J. Gerald Bazewicz
                                 J. Gerald Bazewicz
                                 President

<PAGE>


<BLANK PAGE>

<PAGE>


                      FIRST KEYSTONE CORPORATION
                   ________________________________

               NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                     TO BE HELD ON APRIL 15, 1997
                   ________________________________


TO THE SHAREHOLDERS OF FIRST KEYSTONE CORPORATION:

     Notice is hereby given that the Annual Meeting of Shareholders of
FIRST KEYSTONE CORPORATION (the "Corporation") will be held at 9:00
a.m., prevailing time, on Tuesday, April 15, 1997 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 three (3) Class A Directors to serve for a
three-year term and until their successors are elected and qualified;

   2.   To ratify the selection of J. H. Williams & Co. as the
independent auditors for the Corporation for the year ending December
31, 1997; and

   3.   To transact such other business as may properly come before
the Annual Meeting and any adjournment or postponement thereof.

     In accordance with the By-laws of the Corporation and action of
the Board of Directors, only those shareholders of record at the close
of business on March 4, 1997 will be entitled to notice of and to vote
at the Annual Meeting and any adjournment or postponement thereof.

     A copy of the Corporation's Annual Report for the fiscal year
ended December 31, 1996 is being mailed with this Notice.  Copies of
the Corporation's Annual Report for the 1995 fiscal year may be
obtained at no cost by contacting J. Gerald Bazewicz, President, 111
West Front Street, Berwick, Pennsylvania, 18603, telephone:  (717)
752-3671.

     You are urged to mark, sign, date and promptly return your Proxy
in the enclosed envelope so that your shares may be voted in
accordance with your wishes and in order that the presence of a quorum
may be assured.  The prompt return of your signed Proxy, regardless of
the number of shares you hold, will aid the Corporation in reducing
the expense of additional proxy solicitation.  The giving of such
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 21, 1997

<PAGE>


<BLANK PAGE>

<PAGE>


        PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
      OF FIRST KEYSTONE CORPORATION TO BE HELD ON APRIL 15, 1997


                                GENERAL

Introduction, Date, Time and Place of Annual Meeting
                                                    

     This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of FIRST KEYSTONE CORPORATION
(the "Corporation"), a Pennsylvania business corporation, of proxies
to be voted at the Annual Meeting of Shareholders of the Corporation
to be held on Tuesday, April 15, 1997, at 9:00 a.m., prevailing 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 (the "Bank"), 111 West Front
Street, Berwick, Pennsylvania, 18603.  The telephone number for the
Corporation is (717) 752-3671.  All inquiries should be directed to J.
Gerald Bazewicz, President of the Corporation.  The Bank is a
wholly-owned subsidiary of the Corporation.

Solicitation and Voting of Proxies
                                  

     This Proxy Statement and the enclosed form of proxy (the "Proxy")
are first being sent to shareholders of the Corporation on or about
March 21, 1997.

     Shares represented by proxies on the accompanying Proxy, if
properly signed and returned, will be voted in accordance with the
specifications made thereon by the shareholders.  Any Proxy not
specifying to the contrary will be voted FOR the election of the
nominees for Class A Director named below and FOR the ratification of
the selection of J. H. Williams & Co. as the independent auditors for
the Corporation for the year ending December 31, 1997.  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.  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, will be borne by the Corporation. 
In addition to the use of the mails, certain directors, officers and
employees of the Corporation and the Bank may solicit proxies
personally, by telephone, telegraph and telecopier.  Arrangements will
be made 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, upon request
therefor, the Corporation 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:  (1) by giving written notice of
revocation to John L. Coates, Secretary of First Keystone Corporation,
at 111 West Front Street, Berwick, Pennsylvania, 18603;  (2) by
executing a later-dated proxy and giving written notice thereof to the
Secretary of the Corporation; or  (3) by voting in person after giving
written notice to the Secretary of the Corporation.

Voting Securities, Record Date and Quorum
                                         

     At the close of business on March 4, 1997, the Corporation had
outstanding 889,147 shares of common stock, par value $2.00 per share,
the only issued and outstanding class of stock (the "Common Stock"). 
The Corporation has 500,000 shares of preferred stock, par value
$10.00 per share, authorized.  As of March 4, 1997, none of the shares
of preferred stock were issued.


Proxy Statement                                                Page 1

<PAGE>


     Only holders of Common Stock of record at the close of business
on March 4, 1997, will be entitled to notice of and to 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.

     Under Pennsylvania law and the By-laws of the Corporation, the
presence of a quorum is required for each matter to be acted upon at
the Annual Meeting.  Pursuant to Article 3, Section 3.1, of the
By-laws of the Corporation, 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.  Votes withheld and
abstentions will be counted in determining the presence of a quorum
for the particular matter.  Broker non-votes will not be counted in
determining the presence of a quorum for the particular matter as to
which the broker withheld authority.

     Assuming the presence of a quorum, the three nominees for
director receiving the highest number of votes cast by shareholders
entitled to vote for the election of directors shall be elected. 
Votes withheld from a nominee and broker non-votes will not be cast
for such nominee.

     Assuming the presence of a quorum, the affirmative vote of a
majority of all votes cast by shareholders on such matter is required
for the ratification of the selection of independent auditors. 
Abstentions and broker non-votes are not votes cast and therefore do
not count either for or against such 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 4, 1997, 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 five percent (5%)
of the Corporation's outstanding Common Stock, the number of shares
beneficially owned by such person and the percentage of the
Corporation's outstanding Common Stock so owned.  The footnotes to
this table follow the "Beneficial Ownership by Officers, Directors and
Nominees" table, found immediately hereafter.

<TABLE>
<CAPTION>

                                         Shares         Percent of Outstanding
                                      Beneficially          Common Stock
    Name and Address                  Owned <F1>         Beneficially Owned
                                                                            
<S>                                   <C>                        <C>
Robert J. Wise                         63,314 <F4>                 7.12%
115 West Third Street
Berwick, PA  18603

Berbank                                86,019 <F5>                10.38%
First National Bank of
Berwick Trust Department

Robert E. Bull                         63,652 <F6>                 7.16%
323 West Fourth Street
Nescopeck, PA  18635

</TABLE>

Page 2                                                Proxy Statement

<PAGE>

<TABLE>

Beneficial Ownership by Officers, Directors and Nominees
                                                        

     The following table sets forth as of March 4, 1997, 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.

<CAPTION>

Name of Individual                     Amount and Nature of       Percent
or Identity of Group                   Beneficial Ownership        of Class
                                          <F1> <F2> <F3>           <F7>


<S>                                         <C>                   <C>
Nominee for Class A Director
(to serve until 2000)
And a Current Class A Director

Budd L. Beyer                                  11,495                1.29%
Frederick E. Crispin, Jr.                       7,260  <F8>           --  
Robert J. Wise                                 63,314  <F4>          7.12%


Class B Director 
(to serve until 1998)

John Arndt                                      1,245  <F9>           --  
J. Gerald Bazewicz                              3,220 <F10>           --  
Robert E. Bull                                 63,652  <F6>          7.16%
F. Stuart Straub                               14,023 <F11>          1.58%

Class C Director 
(to serve until 1999)

John L. Coates                                  2,130 <F12>           --  
Dudley P. Cooley                                1,210                 --  
Stanley E. Oberrender                           1,452                 --  


All Officers, Directors and                   169,918               19.11%
Nominees as a Group
(10 Directors, 4 Officers -
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
4, 1997.  Beneficial ownership may be disclaimed as to certain of the
securities.

<F2>
Does not include Common Stock held in fiduciary accounts under the control
of the Bank's Trust Department.

<F3>
Information furnished by the directors and the Corporation.

<F4>
Includes 57,325 shares of Common Stock held individually by Mr. Wise and
5,989 shares of Common Stock held jointly with his spouse.

<F5>
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
79,853 shares of Common Stock and as fiduciary with shared voting and
dispositive power over 12,435 shares of Common Stock.  Total does not
include 19,581 shares of Common Stock held by the Trust Department of the
Bank for which the Bank does not have sole voting or dispositive power. 
The Trust


Proxy Statement                                                  Page 3

<PAGE>


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. as the independent auditors of the Corporation.

<F6>
Includes 5,858 shares of Common Stock held individually by Mr. Bull, 39,437
shares held jointly with his spouse, 3,025 shares of Common Stock held by
Bull, Bull & Knecht, a law firm of which Mr. Bull is a partner, and 15,332
shares of Common Stock held individually by his spouse.

<F7>
Less than one percent (1%) unless otherwise indicated.

<F8>
Includes 4,840 shares of Common Stock held individually by Mr. Crispin and
2,420 shares of Common Stock held individually by his spouse.

<F9>
Includes 737 shares of Common Stock held individually by Mr. Arndt, 108
shares of Common Stock held individually by his spouse, and 400 shares of
Common Stock held by Arndt Insurance Profit Sharing.

<F10>
Includes 2,130 shares of Common Stock held individually by Mr. Bazewicz,
600 shares of Common Stock held jointly with his spouse, 140 shares of
Common Stock held individually by his spouse, 250 shares of Common Stock
held jointly with his children and 100 shares of Common Stock held as
Custodian for the benefit of his children.

<F11>
Includes 2,420 shares of Common Stock held individually by Mr. Straub,
11,240 shares of Common Stock held jointly with his spouse, and 363 shares
of Common Stock held jointly by his spouse and son.

<F12>
Includes 1,646 shares of Common Stock held individually by Mr. Coates and
484 shares of Common Stock held jointly with his spouse.

</FN>
</TABLE>


                         ELECTION OF DIRECTORS

     The By-laws of the Corporation provide that the Corporation's
business shall be managed by its Board of Directors.  Section 10.2 of
the By-laws provides that the number of directors that shall
constitute the whole Board of Directors shall not be less than seven
nor more than twenty-five and that the Board of Directors shall be
classified into three classes, each class to be elected for a term of
three years.  Within the foregoing limits, the Board of Directors may,
from time to time, fix the number of directors and their respective
classifications.  No person shall serve as a director after he or she
has attained the age of seventy (70) years, with the exception of
Messrs. Beyer, Bull, Crispin, Straub, and Wise.  Pursuant to Section
11.1 of the By-laws, vacancies on the Board of Directors, including
vacancies resulting from an increase in the number of directors, shall
be filled by the appointment of a replacement by a majority of the
remaining members of the Board of Directors, though less than a
quorum, and each person so appointed shall be a director until the
expiration of the term of office of the class of directors to which he
or she was appointed.  

     In accordance with Section 10.3 of the By-laws, at the 1997
Annual Meeting of Shareholders, three (3) Class A Directors shall be
elected to serve for a three-year term and until their successors are
elected and qualified.  Therefore, the By-laws provide for a
classified Board of Directors with staggered three-year terms of
office.

     Unless otherwise instructed, the Proxyholders will vote the
Proxies received by them for the election of the three nominees named
below.  If any nominee should become unavailable for any reason,
Proxies will be voted in favor of a substitute nominee as the Board of
Directors of the Corporation shall determine.  The Board of Directors
has no reason to believe that the nominees named will be unable to
serve, if elected.  Any vacancy occurring  on  the Board of  Directors
of the Corporation for any reason may be filled by the


Page 4                                                Proxy Statement

<PAGE>


appointment of a replacement by a majority of the directors then in
office until the expiration of the term of the vacancy.

     There is no cumulative voting for the election of directors. 
Each shareholder is entitled to one vote for each share of Common
Stock outstanding on the record date.  For example, if a shareholder
owns ten shares of Common Stock, he or she may cast up to ten votes
for each of the three directors in the class to be elected.


     INFORMATION AS TO NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS

     The following table contains certain information with respect to
the executive officers, nominees for Class A Director whose term
expires in 2000 and the current Class A Directors whose term expires
in 1997, and the Class B Directors and Class C Directors whose terms
expire in 1998 and 1999, respectively:

<TABLE>
<CAPTION>

                                          Principal Occupation
                                         for Past Five Years       Director
Name and                   Age as of       and Position Held         Since
Current                     March 5,       with Corporation      Corporation
Committees                  1996               and Bank             /Bank
                                                                        


         NOMINEES FOR CLASS A DIRECTOR WHOSE TERM EXPIRES IN 2000
                                    AND
           CURRENT CLASS A DIRECTORS WHOSE TERM EXPIRES IN 1997
                                                               

<S>                         <C>      <C>                         <C>
Budd L. Beyer               69       Investor; Former            1983/1976
Committees 1,4,5,7                   President Sunshine 
                                     Textiles Service, Inc.
                                     (Dry Cleaning, Laundry 
                                     and Linen Rental)

Frederick E. Crispin, Jr.   65       Financial Consultant,       1983/1964
Committees 1,3,4,5,6                 F.E. Crispin & 
                                     Associates

Robert J. Wise              67       Retired, former             1983/1967
Committees 1,2,4,5,7,8               investor Vice Chairman
                                     of the Corporation 
                                     and the Bank
<CAPTION>

               CLASS B DIRECTORS WHOSE TERM EXPIRES IN 1998


<S>                         <C>      <C>                         <C>
John  Arndt                 35       Owner of Arndt              1995/1995
Committees 2,3,4,7,8                 Insurance Agency
                                     (General insurance) 

J. Gerald Bazewicz          48       President of the            1986/1986
Committees 1,2,3,4,                  Corporation and the
5,7,8                                Bank

Robert E. Bull              74       Attorney, Bull, Bull        1983/1956
Committees 1,3,4,5,                  & Knecht; Chairman of 
6,7,8                                the Corporation
                                     and the Bank

F. Stuart Straub            75       Retired, former             1983/1968
Committees 2,3,5,8                   President of
                                     Corporation and the 
                                     Bank


Proxy Statement                                                    Page 5

<PAGE>

<CAPTION>
               CLASS C DIRECTORS WHOSE TERM EXPIRES IN 1999

<S>                         <C>      <C>                         <C>
John L. Coates              60       Owner, Tri-County           1987/1987
Committees 1,3,5,6                   True Value Hardware
                                     and Tri-County
                                     True Value Lumber
                                     Secretary of the 
                                     Corporation and the 
                                     Bank

Dudley P. Cooley            58       Personal Financial          1987/1987
Committees 3,6,7                     Consultant; Former
                                     Controller, Wise Foods,
                                     Borden, Inc. (Snack 
                                     food processor)

Stanley E. Oberrender       55       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 1996.

     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 twelve (12) times
in 1996.

     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 gap positions. 
This committee met six (6) times in 1996.

     Committee 4 - Marketing Committee  This committee is to provide
guidance to management in formulating marketing and sales plans and
programs and to assist in evaluating the performance of the Bank relative
to plans.  This committee met five (5) times in 1996.

     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 four (4) times in 1996.

     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
two (2) times in 1996.

     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 the Bank and
related Corporation officers.  This committee met three (3) times in 1996.

     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 met five (5) times in 1996.

</FN>

</TABLE>


     The aforementioned committees are committees of the Bank and not
the Corporation.


Page 6                                                Proxy Statement

<PAGE>


     During 1996, the Bank's Board of Directors held twenty-seven (27)
meetings and the Corporation's Board of Directors held five (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.

     The Board of Directors of the Corporation has at present no
standing committees.  The Corporation does not have a nominating
committee.  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 forty-five (45) days prior to the
date of any meeting of shareholders called for the election of
directors.


                 COMPLIANCE WITH SECTION 16(a) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

     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 ten percent (10%) of the registered class of the
Corporation's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission
(SEC).  Officers, directors and greater than ten percent (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, 1996 through December 31, 1996, its
officers and directors were in compliance with all filing requirements
applicable to them.  


                        EXECUTIVE COMPENSATION

     Shown below is information concerning the annual compensation for
services in all capacities to the Corporation and the Bank for the
fiscal years ended December 31, 1996, 1995 and 1994 of those persons
who were (i) the Chief Executive Officer during 1996, and (ii) the
other four most highly compensated executive officers of the
Corporation and the Bank to the extent such persons' total annual
salary and bonus exceeded $100,000 at December 31, 1996.


Proxy Statement                                                Page 7

<PAGE>


<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             1996       116,800        35,397         0
President and Chief            1995       108,100        22,553         0
Executive Officer              1994       101,600        15,672         0
of the Corporation
and the Bank


<CAPTION>

                                 Long-Term Compensation
                                                       
                                    Awards                         Payouts
                                                              
                               (f)           (g)        (h)         (i)

                             Restricted                           All Other
    Name and                   Stock      Options/    LTIP         Compen-
   Principal                 Award(s)       SARs      Payouts       sation
    Position                    ($)         (#)        ($)           ($)
                                                                  <F3><F4>
                                                                        
<S>                               <C>           <C>       <C>       <C>
J. Gerald Bazewicz                0             0         0         17,938
President and Chief               0             0         0         16,240
Executive Officer                 0             0         0         14,715
of the Corporation
and the Bank

<FN>
<F1>
Amounts shown consist of base salary and fees for attendance at Board of
Directors meetings of $9,800 in 1996, $8,100 in 1995, and $8,100 in 1994.

<F2>
Bonus information is reported by the year in which earned.

<F3>
Contributions to the Bank's 401(K) Plan on behalf of Mr. Bazewicz of
$13,701 for 1996, $17,274 for 1995, and $15,563 for 1994.

<F4>
Includes premium of $1,328 on term life insurance in 1996 relative to
salary continuation agreement.  See Other Executive Benefits on next page.

</FN>
</TABLE>


Retirement 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").  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 one hundred percent (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 1996 and 1995 were:

<TABLE>
<CAPTION>

                                                    1996          1995
                                                                      
<S>                                                  <C>           <C>
Matching contribution to savings plan                $ 52,892      $ 46,306

Contribution to profit sharing plan                   138,818       195,291
                                                                           
   Total Expense                                     $191,710      $241,597
                                                                           

</TABLE>

Page 8                                                Proxy Statement

<PAGE>


     Of the $191,710 total expenses during 1996, $31,566 was credited
among the individual accounts of the most highly compensated executive
officers of the Bank.  Of the $31,566, Mr. Bazewicz was credited with
$13,701 and has been a member of the Plan for eleven years.


Other Executive Benefits

     In 1996, a Supplemental Employee Retirement Plan (SERP) was
introduced covering the Bank's executive officers, Mr. Bazewicz, Mr.
Saracino, and Mr. Bodle.  The SERP, which is a salary continuation
agreement, became effective January 7, 1997.

     The salary continuation agreement provides that if the executive
officer continues to serve as an officer of the Bank until he attains
sixty (60) years of age, the Bank has agreed to pay him 240 guaranteed
consecutive monthly payments commencing on the first day of the month
following the officer's 60th birthday.  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 75% of projected final
salary including projected benefits from the Bank 401K, social
security, and salary continuation provided through the agreement.  The
retirement benefit under the salary continuation plan for Messrs.
Bazewicz, Saracino, and Bodle will be $3,750 per month, $2,333 per
month, and $1,750 per month, respectively.  If the executive officer
attains sixty (60) years of 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 age sixty (60), then 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.

     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 1996, the Bank expensed $9,300 for
professional services rendered in connection with the design and
implementation of the salary continuation plan.  In addition, $5,474
was paid to cover the first year's premium on the term insurance
policies.  No expense was accrued for the salary continuation plan in
1996.


Compensation of Directors

     During 1996, the Corporation's Board of Directors received Three
Hundred Fifty Dollars ($350.00) for each Director's attendance at the
Annual Meeting.  Other Corporate Board meetings met concurrently with
the Bank's Board and there was no additional compensation paid to
Directors.  The Bank's Directors received Three Hundred Fifty Dollars
($350.00) for each Directors' meeting attended, non-employee Directors
received One Hundred Seventy-Five Dollars ($175.00) for each committee
meeting attended, and all Directors received a bonus of One Thousand
Dollars ($1,000.00).  In addition, Chairman Bull received an annual
stipend of One Thousand Dollars ($1,000.00) and Secretary Coates
received an annual stipend of Seven Hundred Fifty Dollars ($750.00). 
In the aggregate, the Board of Directors received $139,025.00 for all
Board of Directors' meetings and committee meetings attended in 1996,
including all fees, bonuses, and stipends paid to all Directors in
1996.

Proxy Statement                                                Page 9

<PAGE>


                         CERTAIN 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 the foregoing persons. 
The Corporation and the Bank have had and intend to continue to have
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, 1996, 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
$2,553,945 or approximately 9.30% 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 1996 to officers and directors of the Corporation
and the Bank as a group was $3,088,843.  The aggregate amount of
indebtedness outstanding as of the latest practicable date, January
31, 1997, to the above described group was $2,536,678.



                 PRINCIPAL OFFICERS OF THE CORPORATION

     The following table sets forth 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
                                           Bank         of Shares      March
                               Held       Employee     Beneficially      4,
 Name and Position             Since       Since           Owned       1997
                                                                           
<S>                         <C>         <C>            <C>            <C>
Robert E. Bull              1983        <F1>           63,652         74
Chairman of the Board

Robert J. Wise              1996        <F1>           63,314         67
Vice Chairman 
of the Board

J. Gerald Bazewicz          1987        1973            3,220         48
President

John L. Coates              1995        <F1>            2,130         60
Secretary

David R. Saracino           1983        1972              917 <F2>    52
Treasurer 

<FN>
<F1>
Messrs. Bull, Wise, and Coates are not employees of the Bank. 

<F2>
Includes 675 shares of Common Stock held individually by Mr. Saracino and
242 shares of Common Stock held jointly with his spouse.

</FN>
</TABLE>


Page 10                                               Proxy Statement

<PAGE>

                    PRINCIPAL OFFICERS OF THE BANK

     The following table sets forth 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                 1983

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        Assistant Vice President              1982



<CAPTION>
                                   Bank           Number of        Age as of
                                  Employee       Shares Bene-        March 4,
     Name                         Since          ficially Owned       1997
                                                                          
<S>                             <C>              <C>                <C>
Robert E. Bull                  <F1>             63,652             74

Robert J. Wise                  <F1>             63,314             67

J. Gerald Bazewicz              1973             3,220              48

John L. Coates                  <F1>             2,130              60

David R. Saracino               1972             917                52

Leslie W. Bodle                 1985             1,000 <F2>         49

Sally A. Rishkofski             1964             74                 57

<FN>
<F1>
Messrs. Bull, Wise, and Coates are not employees of the Bank.

<F2>
Includes 831 shares of Common Stock held individually by Mr. Bodle and 169
shares of Common Stock held jointly with his daughter.

</FN>
</TABLE>



                 RATIFICATION OF INDEPENDENT AUDITORS

     Unless instructed to the contrary, it is intended that votes will
be cast pursuant to the proxies for the ratification of the selection
of J. H. Williams & Co. as the Corporation's independent auditors for
its 1997 fiscal year.  The Corporation has been advised by J. H.
Williams & Co. that none of its members has any financial interest in
the Corporation.  Ratification of J. H. Williams & Co. 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. served as the Corporation's independent auditors for
the 1996 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.  These non-audit 
services were approved by the Corporation's and the Bank's Board
of Directors after due consideration of the effect of the performance
thereof on the independence of the auditors and after the conclusion
by the Corporation's and the Bank's Board of Directors that there was
no effect on the independence of the auditors.  


Proxy Statement                                               Page 11

<PAGE>


     In the event that the shareholders do not ratify the selection of
J. H. Williams & Co. as the Corporation's independent auditors for the
1997 fiscal year, another accounting firm may be chosen to provide
independent audit services for the 1997 fiscal year.  The Board of
Directors recommends that the shareholders vote FOR the ratification
of the selection of J. H. Williams & Co. as the independent auditors
for the Corporation for the year ending December 31, 1997.


                             ANNUAL REPORT

     A copy of the Corporation's Annual Report for its fiscal year
ended December 31, 1996 is enclosed with this Proxy Statement.  A
representative of J. H. Williams & Co., the accounting firm which
examined the financial statements in the Annual Report, will attend
the meeting.  The representative will have the opportunity to make a
statement, if he desires to do so, and will be available to respond to
any appropriate questions concerning the Annual Report presented by
shareholders at the Annual Meeting.


                         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 1998 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
Monday, November 24, 1997.


                             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, it is the intention of the persons
named in the accompanying Proxy to vote on such matters in accordance
with their best judgment.


                        ADDITIONAL INFORMATION

     UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE
CORPORATION'S REPORT ON FORM 10-KSB FOR ITS FISCAL YEAR ENDED DECEMBER
31, 1996, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 13a-1 UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, MAY BE OBTAINED, WITHOUT CHARGE, FROM DAVID R.
SARACINO, TREASURER, FIRST KEYSTONE CORPORATION, 111 WEST FRONT
STREET, BERWICK, PENNSYLVANIA 18603.



Page 12                                               Proxy Statement


<PAGE>


                      FIRST KEYSTONE CORPORATION

                                 PROXY

     ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 15, 1997 
      THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

   The undersigned hereby constitutes and appoints Paul Klinger and
William Selden, Jr. and 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 15, 1997 at 9:00 a.m., prevailing
time, and at any adjournment or postponement thereof as follows:

1.  ELECTION OF CLASS A DIRECTORS TO SERVE FOR A THREE-YEAR TERM

 Budd L. Beyer        Frederick E. Crispin, Jr.        Robert J. Wise

   [ ]  FOR all nominees listed      [ ]  WITHHOLD AUTHORITY to vote
          above (except as marked           for all nominees listed
       to the contrary below)             above

    (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
    NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)

 ____________________________________________________________________


2.  PROPOSAL TO RATIFY THE SELECTION OF J. H. WILLIAMS & CO. AS THE
    INDEPENDENT AUDITORS FOR THE CORPORATION FOR THE YEAR ENDING
    DECEMBER 31, 1997.

   [ ] 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:                  , 1997

                                                                 

                                                                 
Number of Shares Held of
Record on March 4, 1997:                                         
                                    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.