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 $165,000, or $.13 per diluted shared, for the three months ended March 31, 2011, compared to a net income of $175,000, or $.13 per diluted share, for the three months ended March 31, 2010.

For the three months ended March 31, 2011 and March 31, 2010, net interest income was $2.6 million. Non-interest income decreased $93,000 to $308,000 for the period ended March 31, 2011, compared to $401,000 for the same period ended March 31, 2010. Non-interest expenses remain constant at $2.6 million for the three months ended March 31, 2011 and March 31, 2010.

In the first quarter of 2011, the Company’s unaudited consolidated total assets decreased $450,000 to $335.1 million at March 31, 2011, compared to $335.6 million at December 31, 2010. Net loan balances decreased $2.2 million from $215.3 million at December 31, 2010, to $213.1 million at March 31, 2011. The Company’s investment securities increased $2.2 million to $89.6 million at March 31, 2011, compared to $87.4 million at December 31, 2010. Total deposits have increased $1.0 million to $252.5 million at March 31, 2011, compared to $251.5 at December 31, 2010. Total borrowings decreased $1.9 million from $60.1 million at December 31, 2010, to $58.2 million at March 31, 2011. Total stockholders’ equity increased $269,000 from $22.1 million at December 31, 2010, to $22.4 million at March 31, 2011.

Nonperforming assets, which includes nonaccrual loans and OREO, have increased $2.5 million from $15.6 million at December 31, 2010 to $18.1 million at March 31, 2011. The nonperforming assets consist of $7.7 million in other real estate owned and $10.4 million in nonaccrual loans. For the three months ended March 31, 2011, the Company recorded an $180,000 expense to the provision for loan losses compared to $274,000 for the three months ended March 31, 2010. Net charge offs for the first quarter of 2011 were $247,000, compared to net charge offs of $265,000 for the three months ended March 31, 2010. The allowance for loan losses at March 31, 2011 totaled $4.0 million, or 1.83% of all outstanding loans.

The Company also announced today that its Board of Directors voted not to declare a dividend for the first quarter of 2011. The continued suspension of the quarterly dividend is to further the Company’s efforts to preserve capital. The Company’s profitability, capital levels and asset quality are factors that are 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 15.00%, tier 1 risk- based capital of 13.74%, and a leverage ratio of 8.72% at March 31, 2011. The minimum levels to be considered well capitalized for each of these ratios are 10%, 6%, and 5%, respectively.

Commenting on the first quarter 2011 results, Harold Keen, President and CEO, stated, “Our first quarter 2011 results were very similar to the first quarter 2010, and our core banking operation continues to remain solid. We have served our community since 1924, and we remain time tested and financially trusted. Our goal is to continue to focus on strengthening our core banking relationships with our current clients and developing new banking relationships with our brand of community banking.”

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       March 31, 2011 December 31, (unaudited) 2010*   (Dollars in thousands) ASSETS   Cash and due from banks: Interest-earning $ 2,531 $ 1,861 Noninterest-earning 1,588 1,428 Time Deposit 100 100 Investment securities available for sale, at fair value 89,614 87,375 Federal Home Loan Bank stock, at cost 2,978 2,978 Presold mortgages in process of settlement 132 129   Loans 217,129 219,363 Less Allowance for loan losses   (3,974 )   (4,041 ) Net loans 213,155 215,322   Accrued interest receivable 1,552 1,663 Foreclosed assets, net 7,715 7,889 Property and equipment, net 9,046 9,151 Other assets   6,738     7,703     Total assets $ 335,149   $ 335,599     LIABILITIES AND STOCKHOLDERS' EQUITY   Liabilities Deposits $ 252,557 $ 251,531 Short-term borrowings 11,980 11,886 Long-term borrowings 46,248 48,248 Accrued interest payable 293 316 Accounts payable and accrued expenses   1,671     1,487     Total liabilities   312,749     313,468     Stockholder's Equity:

Non-cumulative perpetual preferred stock (Series A), no par value 4,000 shares authorized, issued and outstanding

$ 3,832 $ 3,822

Non-cumulative perpetual preferred stock (Series B), no par value 200 shares authorized, issued and outstanding

225 226

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 17,870 17,704 Accumulated other comprehensive income (loss)   (1,134 )   (1,228 )   Total stockholders' equity   22,400     22,131     Total liabilities and stockholders' equity $ 335,149   $ 335,599     * Derived from audited financial statements KS Bancorp, Inc and Subsidiary Consolidated Statements of Income (Unaudited)       Three Months Ended March 31,

2011

2010

(In thousands, except per share data)

Interest and dividend income: Loans $ 3,149 $ 3,507

Investment securities

Taxable 327 420 Tax-exempt 444 492 Dividends 6 2 Interest-bearing deposits   1     1   Total interest and dividend income   3,927     4,422     Interest expense: Deposits 787 1,231 Borrowings   509     556   Total interest expense   1,296     1,787     Net interest income 2,631 2,635   Provision for loan losses   180     274    

Net interest income after provision for loan losses

  2,451     2,361     Noninterest income: Service charges on deposit accounts 297 299 Fees from presold mortgages 20 38 Gain (Loss) on sale of investments (45 ) 5 Other income   36     59   Total noninterest income   308     401     Noninterest expenses: Compensation and benefits 1,470 1,492 Occupancy and equipment 253 268 Data processing & outside service fees 211 216 Advertising 18 12 Net foreclosed real estate 107 64 Other   550     530   Total noninterest expenses   2,609     2,582     Income before income taxes 150 180   Income tax benefit   (79 )   (58 )   Net income   229     238     Dividends on preferred stock (55 ) (55 ) Accretion of discount on preferred stock, net   (9 )   (8 ) Income available to common stockholders $ 165   $ 175     Basic and Diluted earnings per share $ 0.13   $ 0.13