KSBI KS Bancorp Inc (PK)

KS Bancorp, Inc. (the “Company”) (OTCBB: KSBI), parent company of KS Bank, Inc. (the “Bank”), reports its unaudited operating results for the quarter and nine months ended September 30, 2013.

For the three months ended September 30, 2013, net income available to common shareholders increased 239.6% to $309,000, or $.24 per diluted share, compared to a net income available to common shareholders of $91,000, or $.07 per diluted share, for the three months ended September 30, 2012. For the nine months ended September 30, 2013, net income available to common shareholders increased 56.5% to $634,000, or $.48 per diluted share, compared to $405,000, or $.31 per diluted share, for the nine months ended September 30, 2012.

Net interest income was $2.4 million for the three months ended September 30, 2013 and September 30, 2012. Non-interest income for the three months ended September 30, 2013 was $525,000, compared to $576,000 for the same period ended September 30, 2012. Non-interest expenses decreased $529,000 from $2.9 million for the three months ended September 30, 2012, compared to $2.4 million for the three months ended September 30, 2013.

For the nine months ended September 30, 2013, net interest income was $7.1 million, compared to $7.3 million for the nine months ended September 30, 2012. Non-interest income decreased slightly from $1.8 million for the nine months ended September 30, 2012 to $1.7 million for the nine months ended September 30, 2013. Non-interest expenses decreased $903,000 from $8.5 million for the nine months ended September 30, 2012, to $7.6 million at September 30, 2013. The decrease in expenses is primarily due to the decrease in costs associated with foreclosed real estate.

In the third quarter of 2013, the Company’s unaudited consolidated total assets decreased $11.0 million to $303.9 million at September 30, 2013, compared to $314.9 million at December 31, 2012. Net loan balances decreased $5.7 million with a balance of $191.2 million at September 30, 2013, compared to $196.9 million at December 31, 2012. The Company’s investment securities increased $2.3 million to $84.6 million at September 30, 2013, compared to $82.3 million at December 31, 2012. Total deposits have decreased $9.5 million to $234.5 million at September 30, 2013, compared to $244.0 at December 31, 2012. Total stockholders’ equity at September 30, 2013 was $24.2 million, compared to $25.3 million at December 31, 2012.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (OREO), decreased $3.0 million to $9.1 million at September 30, 2013 from $12.1 million at December 31, 2012. The nonperforming assets consist of $4.4 million in OREO and $4.7 million in nonaccrual loans. For the nine months ended September 30, 2013, the Company recorded a $221,000 expense to the provision for loan losses compared to $125,000 for the nine months ended September 30, 2012. The allowance for loan losses at September 30, 2013 totaled $3.5 million, or 1.78% of all outstanding loans.

The Company also announced today that its Board of Directors voted not to declare a dividend for the third quarter of 2013. The Company’s profitability, capital levels and asset quality are factors that were considered in determining whether to resume dividend payments.

KS Bank continues to be well-capitalized according to regulatory standards with total risk based capital of 17.36%, tier 1 risk- based capital of 16.10%, and a leverage ratio of 10.09% at September 30, 2013. The minimum levels to be considered well capitalized for each of these ratios are 10%, 6%, and 5%, respectively.

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 serving the citizens of eastern North Carolina since 1924 and offers a variety of financial products and services including a securities brokerage service through an affiliation with a registered broker/dealer. There are nine full service branches located in Kenly, Selma, Clayton, Garner, Goldsboro, Wilson, Wendell, Smithfield, and Four Oaks, North Carolina plus a mortgage loan office in Greenville, NC. For more information, visit www.ksbankinc.com.

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 Subsidiary Consolidated Statements of Financial Condition             Sept 30, 2013 December 31, (unaudited) 2012*   (Dollars in thousands) ASSETS   Cash and due from banks: Interest-earning $ 4,715 $ 9,474 Noninterest-earning 1,432 2,075 Time Deposit 100 100 Investment securities available for sale, at fair value 84,589 82,356 Federal Home Loan Bank stock, at cost 1,953 2,149 Presold mortgages in process of settlement - 518   Loans 194,707 200,280 Less allowance for loan losses   (3,464 )   (3,424 ) Net loans 191,243 196,856   Accrued interest receivable 1,113 1,113 Foreclosed real estate and repossessions, net 4,405 6,637 Property and equipment, net 8,392 8,579 Other assets   5,989     5,082     Total assets $ 303,931   $ 314,939     LIABILITIES AND STOCKHOLDERS' EQUITY   Liabilities Deposits $ 234,545 $ 243,996 Short-term borrowings 1,065 2,156 Long-term borrowings 41,248 41,248 Accrued interest payable 337 233 Accrued expenses and other liabilities   2,517     1,984     Total liabilities   279,712     289,617     Stockholder's Equity: Cumulative perpetual preferred stock (Series A), no par value 4,000 shares authorized, issued and outstanding $ 3,952 $ 3,914 Cumulative perpetual preferred stock (Series B), no par value 200 shares authorized, issued and outstanding 207 213 Common stock, no par value, authorized 20,000,000 shares; 1,309,501 shares issued and outstanding in 2013 and 2012 1,607 1,607 Retained earnings, substantially restricted 19,024 18,390 Accumulated other comprehensive (loss) income   (571 )   1,198     Total stockholders' equity   24,219     25,322     Total liabilities and stockholders' equity $ 303,931   $ 314,939     * Derived from audited financial statements   KS Bancorp, Inc and Subsidiary Consolidated Statements of Income (Unaudited)                 Three Months Ended Nine Months Ended Sept 30, Sept 30,

2013

2012

2013

2012

(In thousands, except per share data)

Interest and dividend income: Loans $ 2,637 $ 2,803 $ 8,013 $ 8,525 Investment securities Taxable 323 357 990 1,088 Tax-exempt 128 159 385 669 Dividends 12 8 26 26 Interest-bearing deposits   2     4     7     7   Total interest and dividend income   3,102     3,331     9,421     10,315     Interest expense: Deposits 359 511 1,136 1,665 Borrowings   359     421     1,136     1,302   Total interest expense   718     932     2,272     2,967     Net interest income 2,384 2,399 7,149 7,348   Provision for loan losses   41     (75 )   221     125     Net interest income after provision for loan losses   2,343     2,474     6,928     7,223     Noninterest income: Service charges on deposit accounts 330 283 937 831 Fees from presold mortgages 88 233 420 465 Gain on sale of investments - 8 139 433 Other income   107     52     217     130   Total noninterest income   525     576     1,713     1,859     Noninterest expenses: Compensation and benefits 1,367 1,531 4,352 4,472 Occupancy and equipment 262 282 775 774 Data processing & outside service fees 202 193 612 601 Advertising 16 13 32 35 Net foreclosed real estate 28 408 324 1,091 Other   507     484     1,536     1,561   Total noninterest expenses   2,382     2,911     7,631     8,534     Income before income taxes 486 139 1,010 548   Income tax (benefit)   111     (17 )   180     (50 )   Net income   375     156     830     598     Dividends on preferred stock (55 ) (55 ) (164 ) (163 ) Accretion of discount on preferred stock, net   (11 )   (10 )   (32 )   (30 ) Income available to common stockholders $ 309   $ 91   $ 634   $ 405     Basic and Diluted earnings per share $ 0.24   $ 0.07   $ 0.48   $ 0.31  

KS Bancorp, Inc.Harold T. Keen, 919-938-3101President and Chief Executive OfficerorRegina J. Smith, 919-938-3101Chief Financial Officer