KS Bancorp, Inc. (the �Company�) (OTCBB: KSBI), parent company of
KS Bank, Inc., today announced first quarter financial results for
the fiscal year 2007. The Company ended the first quarter of its
2007 fiscal year with a 11.60% growth in total assets over the same
period in 2006. In addition, total assets increase 5.70% since
December 31, 2006. Consolidated earnings for the first quarter of
2007 were $430,000, or $0.33 per diluted share, compared to
earnings of $472,000, or $0.36 per diluted share, for the same
period in 2006. The decrease in earnings is primarily attributed to
increased interest expense on interest bearing deposits and
borrowings. The Company continues to experience strong loan demand.
Competition for deposits and the use of wholesale funding continues
to compress net interest margins. Net interest income for the first
quarter of 2007 was $2.3 million, up a modest 5.50% over the $2.2
million reported for the same period in 2006. Total revenue,
defined as interest income and non-interest income, for the first
quarter in 2007 was $5.6 million, an increase of 20.3 % above the
$4.6 million reported for the same quarter in 2006. The Company�s
consolidated total assets increased $16.5 million, or 5.70%, to
$303.2 million during the three months ended March 31, 2007, as
compared to $286.7 million at December 31, 2006. This growth
resulted primarily from increases in net loans from $214.3 million
at December 31, 2006, to $222.5 million at March 31, 2007. In
addition, the Company�s volume of pre-sold mortgages increased by
$1.6 million compared to December 31, 2006. Total assets at March
31, 2006, were $271.7 million, and total assets were $303.2
million, at March 31, 2007, representing a 11.60% increase for the
time period. Funding for the growth in total assets was provided
from a 6.5%, or $13.9 million, increase in total deposits. Total
deposits were $227.6 million at March 31, 2007 compared to $213.6
million at December 31, 2006. Demand deposits increased 13.40% to
$70.3 million at March 31, 2007 compared to $62.0 million at
December 31, 2006. Total deposits at March 31, 2006 were $203.7
million. Commenting on the first quarter 2007 results, Harold Keen,
President and CEO, stated, �While pressure on our net interest
margin is increasing, we continue to grow our demand deposit base
at a steady pace. Over time, this will lessen our sensitivity to
market rate pressures. Overall, we believe that 2007 will be a good
year for our Company.� 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 April 20,
2007, with payment to be made on May 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, and Smithfield, 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 � March 31, 2007 (Unaudited) Dec. 31, �2006/a � �(Dollars
in Thousands) ASSETS Cash and due from banks: Interest-earning
$8,414� $2,925� Noninterest-earning 3,848� 3,180� Time Deposit 100�
100� Investment securities: Available for sale 33,895� 51,112�
Trading Securities 17,210� -� Federal Home Loan Bank stock, at cost
2,577� 2,494� Presold mortgages in process of settlement 2,969�
1,313� � Loans 225,123� 216,822� Less Allowance for loan losses
(2,586) (2,449) Net loans 222,537� 214,373� � Accrued interest
receivable 1,666� 1,626� Foreclosed assets, net 737� 560� Property
and equipment, net 7,290� 7,188� Other assets 1,927� 1,859� � TOTAL
ASSETS $303,170� $286,730� � LIABILITIES AND STOCKHOLDERS' EQUITY �
Liabilities: Deposits $227,610� $213,672� Short-term borrowings
6,612� 16,352� Long-term borrowings 50,048� 38,048� Accrued
interest payable 517� 530� Accounts payable and accrued expenses
787� 817� � TOTAL LIABILITIES 285,574� 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
���1,197,029 shares issued and outstanding ���in 2007 and 2006,
respectively � 1,607� 1,607� Retained earnings, substantially
restricted 15,808� 15,850� Accumulated other comprehensive income
(loss) 181� (146) � TOTAL STOCKHOLDERS' EQUITY 17,596� 17,311� �
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $303,170� $286,730� � �
/a:�Derived from audited financial statements � � � � KS Bancorp,
Inc. and Subsidiary Consolidated Statements of Operations
(Unaudited) � Three Months Ended March 31, 2007� 2006� (In
thousands, except per share data) � INTEREST INCOME Loans $ 4,481�
$ 3,683� Investment securities: Taxable 268� 242� Tax-exempt 285�
233� Dividends 38� 29� Interest-bearing deposits 32� 45� � TOTAL
INTEREST INCOME 5,104� 4,232� � INTEREST EXPENSE Deposits 2,107�
1,553� Borrowings 653� 459� � TOTAL INTEREST EXPENSE 2,760� 2,012�
� NET INTEREST INCOME 2,344� 2,220� � PROVISION FOR LOAN LOSSES
133� 150� � NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
2,211� 2,070� � NON-INTEREST INCOME Service charges on deposit
accounts 289� 282� Fees from presold mortgages 88� 70� Gain on
Trading Securities 57� -� Other income 43� 55� � TOTAL NON-INTEREST
INCOME 477� 407� � NON-INTEREST EXPENSE Compensation and benefits
1,317� 1,162� Occupancy and equipment 233� 201� Data processing and
outside service fees 200� 181� Advertising 52� 29� Foreclosed real
estate, net 19� 7� Loss on sale of investments 21� 7� Other 277�
253� � TOTAL NON-INTEREST EXPENSE 2,119� 1,840� � INCOME BEFORE
INCOME TAXES 569� 637� � INCOME TAXES 139� 165� � NET INCOME $ 430�
$ 472� � BASIC AND DILUTED NET INCOME PER COMMON SHARE $ 0.33� $
0.36� � DIVIDENDS PER COMMON SHARE $ 0.13� $ 0.13�
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