KSBI KS Bancorp Inc (PK)

KS Bancorp, Inc. (the �Company�) (OTCBB: KSBI), parent company of KS Bank, Inc., today announced second quarter financial results for the 2007 fiscal year. Consolidated earnings for the second quarter of 2007 were $238,000, or $0.18 per diluted share, compared to earnings of $572,000, or $0.44 per diluted share, for the same period in 2006. For the six-months ended June 30, 2007, consolidated net income was $668,000, or $.51 per diluted share, a decrease of $376,000, compared to $1,044,000 or $0.80 per diluted share for the comparable six-month period of 2006. The decrease in earnings is primarily attributed to pre-tax losses of $525,000 on the sale of investment securities. During the month of April 2007, the Company sold approximately $18.0 million of available-for-sale investment securities with a net realized pre-tax loss. The securities chosen to be sold were those with the least attractive yield, cash flow, and interest rate risk characteristics. Subsequent to these security sales, the Company purchased approximately $18.0 million of new securities with an overall yield 118 basis points higher than that of the securities that were sold. Because of this investment portfolio restructuring, the Company expects pre-tax interest income to be enhanced by approximately $237,000 per year, thereby resulting in an estimated 2.2 year �recovery period� for the security losses recognized during the current quarter. Excluding the losses we recorded to restructure our investment portfolio, consolidated earnings for the second quarter of 2007 would have otherwise totaled $540,000, or $0.41 per diluted share (a non-GAAP measure). For the six months ended June 30, 2007, the Company�s net interest income before loan loss provision was $4.8 million, an increase of $217,000 or 4.7%, over the same period in 2006. In addition, non-interest income increased 10.7% for the period when compared to the six months ended June 30, 2006. This increase is primarily due to increases in fee income on pre-sold mortgage loans. Other than the losses recorded on the sale of investment securities, non-interest expenses increased 14.4% for the first six months in 2007 as compared to 2006. This increase in non-interest expense is primarily attributed to start up costs and compensation expenses associated with opening of the Company�s new branch location in Wendell, NC. The Company�s consolidated total assets increased $20.8 million, or 7.2%, to $307.5 million as of June 30, 2007, as compared to $286.7 million at December 31, 2006. Total assets at March 31, 2007 were $303.1 million. The increase in total assets is primarily attributable to the Company�s strong loan demand. Loans totaled $229.1 million, an increase of $14.7 million, at June 30, 2007 as compared to $214.3 million at December 31, 2006. During the first six months of 2007 the Company made additional investments in its property and equipment totaling approximately $1.9 million. This additional investment was most significantly comprised of the Company�s purchase of its previously leased Garner, North Carolina branch, as well as equipment that was purchased for the Company�s new branch located in Wendell, North Carolina. Funding for the growth in total assets was provided from a 6.4%, or $13.6 million, increase in total deposits. Total deposits were $227.3 million at June 30, 2007 as compared to $213.7 million at December 31, 2006. Demand deposits increased 16.7% to $72.4 million at June 30, 2007 compared to $62.1 million at December 31, 2006. Commenting on the second quarter 2007 results, Harold Keen, President and CEO, stated, �Our results from operations in the second quarter remain solid. The restructuring of our securities portfolio was a good business decision for the Company, even though our second quarter earnings are dramatically affected. In the long run the increased earnings from the securities portfolio will help our net interest margin and overall profits. The Company remains focused on building a solid banking franchise and long-term shareholder value rather than emphasizing quarter to quarter profit goals.� In addition to the earnings report issued today, KS Bancorp, Inc. announced the payment of a quarterly cash dividend of $0.13 per share for stockholders of record on July 23, 2007, with payment to be made on August 2, 2007. KS Bancorp, Inc. is a Smithfield, North Carolina-based single bank holding company. KS Bank, Inc., a state-chartered savings bank, is KS Bancorp�s sole subsidiary. The Bank is a full service community bank offering traditional banking products and services through its operation of seven full service branches located in Kenly, Selma, Clayton, Garner, Goldsboro, Wilson, Smithfield, and Wendell, North Carolina. This release contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management of the Company and on the information available to management at the time that these disclosures were prepared. These statements can be identified by the use of words like �expect,� �anticipate,� �estimate� and �believe,� variations of these words and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to update any forward-looking statements. KS Bancorp, Inc. and SubsidiaryConsolidated Statements of Financial Condition � June 30, 2007 Dec. 31, 2006(a) (Unaudited) � (Dollars in thousands) ASSETS Cash and due from banks: Interest-earning $ 8,149 $ 2,925 Noninterest-earning 1,874 3,180 Time Deposit 100 100 Investment securities: Available for sale 50,909 51,112 Federal Home Loan Bank stock, at cost 2,757 2,494 Presold mortgages in process of settlement 513 1,313 � Loans 231,691 216,822 Less Allowance for loan losses � (2,600 ) � (2,449 ) Net loans 229,091 214,373 � Accrued interest receivable 1,712 1,626 Foreclosed assets, net 669 560 Property and equipment, net 9,108 7,188 Other assets � 2,649 � � 1,859 � TOTAL ASSETS $ 307,531 � $ 286,730 � � LIABILITIES AND STOCKHOLDERS' EQUITY � Liabilities: Deposits $ 227,300 $ 213,672 Short-term borrowings 7,431 16,352 Long-term borrowings 54,048 38,048 Accrued interest payable 503 530 Accounts payable and accrued expenses � 1,023 � � 817 � � TOTAL LIABILITIES � 290,305 � � 269,419 � � Stockholders' Equity: Preferred stock, no par value, 5,000,000 shares authorized; no shares issued and outstanding - - Common stock, no par value, authorized 20,000,000 shares; 1,309,501 and 1,309,501 shares issued and outstanding in 2007 and 2006, respectively � 1,607 1,607 Retained earnings, substantially restricted 16,178 15,850 Accumulated other comprehensive loss � (559 ) � (146 ) � TOTAL STOCKHOLDERS' EQUITY � 17,226 � � 17,311 � � TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 307,531 � $ 286,730 � � (a) Derived from audited financial statements KS Bancorp, Inc. and SubsidiaryConsolidated Statements of Operations (Unaudited) � Three Months Ended June 30, Six Months Ended June 30, 2007 2006 � 2007 2006 (Inthousands, except per share data) INTEREST INCOME Loans $ 4,688 $ 4,050 $ 9,169 $ 7,733 Investment securities: Taxable 264 242 532 484 Tax-exempt 318 240 603 473 Dividends 41 40 79 69 Interest-earning deposits � 42 � 36 � � 74 � 81 � TOTAL INTEREST INCOME � 5,353 � 4,608 � � 10,457 � 8,840 � INTEREST EXPENSE Deposits 2,169 1,720 4,276 3,273 Borrowings � 713 � 510 � � 1,366 � 969 � TOTAL INTEREST EXPENSE � 2,882 � 2,230 � � 5,642 � 4,242 � NET INTEREST INCOME 2,471 2,378 4,815 4,598 � PROVISION FOR LOAN LOSSES � 20 � 150 � � 153 � 300 � NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES � 2,451 � 2,228 � � 4,662 � 4,298 � NON-INTEREST INCOME Service charges on deposit accounts 327 305 616 587 Fees from presold mortgages 119 91 207 161 Other income � 66 � 39 � � 109 � 94 � TOTAL NON-INTEREST INCOME � 512 � 435 � � 932 � 842 � NON-INTEREST EXPENSE Compensation and benefits 1,328 1,164 2,645 2,326 Occupancy and equipment 238 198 471 399 Data processing and outside service fees 191 188 391 369 Advertising 65 52 117 81 (Gain) loss on sale of investments 561 (4 ) 525 3 Net foreclosed real estate - 16 19 23 Other expense � 338 � 267 � � 615 � 520 � TOTAL NON-INTEREST EXPENSE � 2,721 � 1,881 � � 4,783 � 3,721 � INCOME BEFORE INCOME TAXES 242 782 811 1,419 � INCOME TAXES 4 � 210 � � 143 � 375 � NET INCOME $ 238 $ 572 � $ 668 $ 1,044 � NET INCOME PER COMMON SHARE Basic $ .18 $ .44 � $ .51 $ .80 Diluted $ .18 $ .44 � $ .51 $ .80 � DIVIDENDS PER COMMON SHARE $ .13 $ .13 � $ .26 $ .26