SecProbe.io

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                                                          CORRESP.

               [Letterhead of First Keystone Financial, Inc.]

April 12, 2005

Via EDGAR

Joyce Sweeney
Senior Accountant
U.S. Securities and Exchange Commission
Washington, D.C.  20549

     Re:     First Keystone Financial, Inc.
             Form 10-K filed December 29, 2004
             Form 10-Q filed February 14, 2005
             File No. 000-2328

Dear Ms. Sweeney,

     By letter dated March 29, 2005 (the "Comment Letter"), the Staff of the
Securities and Exchange Commission (the "Commission") submitted a comment with
respect to certain disclosure contained in the Annual Report on Form 10-K for
the year ended December 31, 2004 (the "Form 10-K") of First Keystone
Financial, Inc. (the "Company").  For the reasons set forth below, the Company
does not believe the disclosure in the Form 10-K needs to be revised or
amended in response to the Staff's comment. For ease of reference, the Staff's
comment from the Comment Letter is reproduced below in bold-face type and the
response thereto follows.

Form 10-K, September 30, 2004:
Non-Interest Income page 50

1.  We note our disclosure that you recognized $550,000 of non-interest income
    in connection with the repayment of a commercial real estate loan with
    certain contingent fees due upon repayment of the loan in full.  Please
    supplementally tell us the nature of the contingencies, how they were
    resolved, and the basis for your accounting treatment.  In addition,
    supplementally tell us the amount, if any, of any loans outstanding with
    similar contingencies.

    In 1994, a $2.4 million commercial real estate loan which had been granted
    more than 12 years previously by First Keystone Bank, the Company's wholly
    owned subsidiary (the "Bank"), was restructured (the "Restructured Loan")
    due to the significant credit deterioration that had been experienced during
    the life of the loan.   As part of the restructuring, the borrower agreed to
    execute a $600,000 second lien promissory note (the "Second Lien") in favor
    of the Bank in order to provide for the possibility of the Bank recouping
    the time, effort and costs it had incurred not only in restructuring the
    Restructured Loan in 1994 but during the prior years due to the Restructured
    Loan's ongoing difficulties experienced during such prior period.   No cash
    was funded to the borrower at the time of the loan restructuring.  The
    agreement between the borrower and

    the Bank as set forth in the Second Lien was that any excess cash flows
    exceeding the Minimum Reserve Account or the prepayment of the restructured
    loan prior to the full repayment of the Restructured Loan
    (the "Contingencies") would trigger payment of the amounts due under the
    terms of the Second Lien based on a formula set forth therein.
    However, the maximum amount that could be received by the Bank under the
    provisions of the Second Lien was $600,000 less any expenses incurred in
    connection therewith.

    In February 2004, the borrower received an offer to buy the Collateral at
    an amount that was substantially higher than the outstanding principal
    balance of the Restructured Loan, which, if accepted, would trigger payment
    under the Second Lien. The offer was accepted and in connection with the
    closing of the sale of the Collateral and repayment of the Restructured
    Loan, the borrower paid the Bank in full the outstanding balance due
    thereto on the Restructured Loan as well as $550,000, net of costs, in
    satisfaction of the terms of the Second Lien.

    For financial statement purposes, the transaction was considered to be a
    non-recurring item. The Company believed that it was appropriate to
    reflect the transaction in its financial statements in a manner such that
    the transaction was transparent.  Accordingly, the Company determined the
    receipt of the payment under the Second Lien should be classified as
    "other real estate fees" and shown as a separate component of non-interest
    income with appropriate disclosure in "Management's Discussion and
    Analysis" in the Form 10-K.  The Company believes its accounting for the
    transaction is appropriate and in accordance with Statement of Financial
    Accounting Standards No. 5 ("SFAS"), "Accounting for Contingencies," and
    the guidance for "Gain Contingencies" in paragraph 17 of SFAS No. 5.

    The Company wishes to advise the staff supplementally that it does not have
    any other loans with similar structures in its loan portfolio.

                               *     *     *

In connection with this response to the Staff's comment as set forth in the
Comment Letter, the Company acknowledges that:

     *   the Company is responsible for the adequacy and accuracy of the
         disclosure in the Form 10-K;

     *   staff comments or changes to disclosure made in response to staff
         comments do not foreclose the Commission from taking any action
         with respect to the Form 10-K; and

     *   the Company may not assert staff comments as a defense in any
         proceeding initiated by the Commission or any person under the
         federal securities laws of the United States.

    We trust that the foregoing responds sufficiently to the Staff's comment as
set forth in the Comment Letter. Please do not hesitate to contact Rose M.
DiMarco, Chief Financial Officer, or me at (610) 565-6210 if you have
additional questions concerning this matter.

        Sincerely,

        /s/ Donald S. Guthrie
        Donald S. Guthrie

cc:  Ben Phippin, Staff Accountant
     Philip R. Bevan, Esq.
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