KSBI KS Bancorp Inc (PK)

KS Bancorp, Inc. (the “Company”) (OTCBB: KSBI), parent company of KS Bank, Inc. (the “Bank”), announced unaudited net income available to common shareholders of $224,000, or $.17 per diluted shared, for the three months ended September 30, 2010, compared to a net loss of ($142,000), or ($.11) per diluted share, for the three months ended September 30, 2009.

The Company reported net income of $871,000, or $.67 per diluted share, before adjusting for the effect of preferred stock dividends and accretion of discount on preferred stock for the nine months ended September 30, 2010, compared to a net income of $168,000, or $.13 per diluted share, for the same period in 2009. After adjusting for $190,000 and $28,000 in dividends and accretion of discount on preferred stock for the two respective periods, net income available to common stockholders was $681,000, or $0.52 per diluted share at September 30, 2010, compared to $140,000 or $.11 per diluted share at September 30, 2009.

For the nine months ended September 30, 2010, net interest income increased 19.0% to $7.9 million, compared to $6.7 million for the period ended September 30, 2009. The increase is primarily the result of the increase in net interest margin from 2.93% for the nine months ended September 30, 2009, compared to 3.31% for the same period of 2010. Non-interest income increased $600,000 from $1.6 million for the nine month period ending September 30, 2009, to $2.2 million for the same period ended September 30, 2010. The increase is primarily the result of a $830,000 gain on sale of investments during the nine months ending September 30, 2010 compared a $104,000 gain in the same period 2010. For the nine months ended September 30, 2010, non-interest expenses increased $814,000 to $8.3 million, compared to $7.5 million for the same period ending September 30, 2009. The increase in noninterest expenses is primarily attributable to the ongoing expenses of other real estate owned.

The Company’s unaudited consolidated total assets decreased $7.9 million to $340.9 million as of September 30, 2010, as compared to $348.8 million at December 31, 2009. Net loan balances decreased $5.8 million from $227.1 million at December 31, 2009, compared to $221.3 million at September 30, 2010. The Company’s investment securities decreased $1.4 million from $87.2 million at December 31, 2009 to $85.8 million at September 30, 2010. Total deposits decreased $1.0 million to $258.2 million at September 30, 2010, compared to $259.2 at December 31, 2009. Even though total deposits decreased, there is an increase of $14.5 million, or 19.3%, in checking, savings and money market accounts for the nine months ended September 30, 2010. Time deposits decreased $15.5 million, or 8.40%, from $184.3 million at December 31, 2009 to $168.8 million at September 30, 2010. Total borrowings decreased $8.9 million, or 13.6%, from $65.7 million at December 31, 2009 to $56.8 million at September 30, 2010. Total stockholders’ equity increased 7.0% from $22.4 million at December 31, 2009 to $23.9 million at September 30, 2010. The increase in stockholders’ equity is the result of $681,000 in net income and an $857,000 increase in accumulated other comprehensive income.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (OREO), have decreased $1.5 million from $15.3 million at December 31, 2009 to $13.8 million at September 30, 2010. The nonperforming assets consist of $9.1 million in other real estate owned and $4.7 million in nonaccrual loans. For the nine months ended September 30, 2010, the Company recorded a $1.3 million expense to the provision for loan losses compared to $1.1 million for the nine months ended September 30, 2009. Net charge offs for the 2010 fiscal year are $1.2 million. The allowance for loan losses at September 30, 2010 totaled $4.1 million, or 1.80% of all outstanding loans. In this current economy, we continue to monitor collateral values in OREO. The result of the OREO evaluation in the third quarter 2010 was a $524,000 expense to the other real estate owned expense.

The Company also announced today that its Board of Directors voted not to declare a dividend for the third quarter of 2010. The continued suspension of the quarterly dividend is to further the Company’s efforts to preserve capital during this continuing economic downturn. The Board of Directors will continue to monitor business conditions, the Company’s profitability and capital levels, as well as asset quality in considering whether to resume cash dividend payments. KS Bank continues to be well-capitalized according to regulatory standards with total risk based capital of 15.31%, tier 1 risk- based capital of 14.05% and a leverage ratio of 9.01%. The minimum levels for each of these ratios are 10%, 6%, and 5%, respectively.

Commenting on the third quarter 2010 results, Harold Keen, President and CEO, stated, “The current economic pressures on the real estate markets continues to impact property values and credit quality; as a result, we continue to adjust our provision for loan losses accordingly. The entire KS Bank team continues to work with customers who are experiencing challenges due to the current economic conditions. In addition, we are staying the course and actively seeking new customer relationships that are mutually profitable to the Bank and our customers. The Board of Directors and management remain focused on implementing strategies to improve our overall credit quality, preserving capital and building our core deposits both now and for future years.”

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. 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           September 30, 2010 December 31, (unaudited) 2009*   (Dollars in thousands) ASSETS   Cash and due from banks: Interest-earning $ 2,382 $ 3,017 Noninterest-earning 1,517 1,325 Time Deposit 100 100 Investment securities available for sale, at fair value 85,802 87,272 Federal Home Loan Bank stock, at cost 3,095 3,019 Presold mortgages in process of settlement 851 -   Loans 225,394 231,089 Less Allowance for loan losses   (4,050 )   (3,942 ) Net loans 221,344 227,147   Accrued interest receivable 1,727 1,825 Foreclosed assets, net 9,135 9,427 Property and equipment, net 9,221 9,237 Other assets   5,734     6,459     Total assets $ 340,908   $ 348,828     LIABILITIES AND STOCKHOLDERS' EQUITY   Liabilities Deposits $ 258,150 $ 259,169 Short-term borrowings 5,551 11,658 Long-term borrowings 51,248 54,048 Accrued interest payable 348 448 Accounts payable and accrued expenses   1,695     1,154     Total liabilities   316,992     326,477     Stockholder's Equity: Non-cumulative perpetual preferred stock (Series A), no par value 4,000 shares authorized, issued and outstanding $ 3,811 $ 3,780 Non-cumulative perpetual preferred stock (Series B), no par value 200 shares authorized, issued and outstanding 228 232 Common stock, no par value, authorized 20,000,000 shares; 1,309,501 shares issued and outstanding in 2010 and 2009 1,607 1,607 Retained earnings, substantially restricted 17,446 16,765 Accumulated other comprehensive income (loss)   824     (33 )   Total stockholders' equity   23,916     22,351     Total liabilities and stockholders' equity $ 340,908   $ 348,828     * Derived from audited financial statements KS Bancorp, Inc and Subsidiary Consolidated Statements of Income (Unaudited)             Three Months Ended Nine Months Ended September 30, September 30,   2010     2009     2010     2009  

(In thousands, except per share data)

Interest and dividend income: Loans $ 3,398 $ 3,486 $ 10,473 $ 10,831

Investment securities

Taxable 333 315 1,159 893 Tax-exempt 456 405 1,417 1,126 Dividends 4 5 9 5 Interest-bearing deposits   3     3     5     5   Total interest and dividend income   4,194     4,214     13,063     12,860     Interest expense: Deposits 1,106 1,339 3,475 4,419 Borrowings   543     584     1,641     1,760   Total interest expense   1,649     1,923     5,116     6,179     Net interest income 2,545 2,291 7,947 6,681   Provision for loan losses   616     539     1,294     1,083     Net interest income after provision for loan losses   1,929     1,752     6,653     5,598     Noninterest income: Service charges on deposit accounts 344 338 989 980 Fees from presold mortgages 87 86 188 373 Gain (Loss) on sale of investments 830 - 830 104 Other income   55     45     183     146   Total noninterest income   1,316     469     2,190     1,603     Noninterest expenses: Compensation and benefits 1,367 1,381 4,300 4,214 Occupancy and equipment 263 261 787 779 Data processing & outside service fees 203 209 637 626 Advertising 14 23 37 54 Net foreclosed real estate 660 14 895 20 Other   548     695     1,620     1,769   Total noninterest expenses   3,055     2,583     8,276     7,462     Income before income taxes 190 (362 ) 567 (261 )   Income tax benefit   (98 )   (248 )   (304 )   (429 )   Net income   288     (114 )   871     168     Dividends on preferred stock (55 ) (24 ) (164 ) (24 ) Accretion of discount on preferred stock, net   (9 )   (4 )   (26 )   (4 ) Income available to common stockholders $ 224   $ (142 ) $ 681   $ 140     Basic and Diluted earnings (loss) per share $ 0.17   $ (0.11 ) $ 0.52   $ 0.11