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 ended December 31, 2012 and for the twelve months ended December 31, 2012.

For the quarter ended December 31, 2012, the Company reported net income available to common shareholders of $126,000, or $.10 per diluted share, compared to an income of $188,000 or $.14 per diluted share, for the three months ended December 31, 2011. The decrease in earnings is primarily attributable to the income tax expense of $24,000 for the three months ended December 31, 2012, compared to a tax benefit of $34,000 for the three months ended December 31, 2011.

Net income available to common shareholders for the twelve months ended December 31, 2012 increased 244.8% to $531,000, or $.41 per diluted share, from net income available to common shareholders of $154,000, or $.12 per diluted share, for the twelve months ended December 31, 2011. Comparing the twelve months December 31, 2012 to the twelve months ended December 31, 2011, the increase in earnings is primarily attributable to a reduction in the provision for loan loss expense. The Bank experienced improvements in asset quality, as well as a reduction in charge off loans during 2012. For the twelve months ended December 31, 2012, the expense for the provision for loan losses was $207,000, compared to $1.5 million for the twelve months ended December 31, 2011.

For the twelve months ended December 31, 2012, net interest income was $9.8 million, compared to $10.2 million for the twelve months ended December 31, 2011. Noninterest income increased to $2.6 million for the period ended December 31, 2012, compared to $1.6 million for the same period ended December 31, 2011. In 2012, the Bank opened a mortgage origination office in Greenville, NC, which contributed to the increase in the fee income. Fees from presold mortgages increased $611,000 during the twelve months ended December 31, 2012, from $119,000 at December 31, 2011, to $730,000 at December 31, 2012. Noninterest expenses increased $1.0 million to $11.5 million during the twelve months ended December 31, 2012, compared to $10.5 million at December 31, 2011. The increase in expenses is primarily due to the costs associated with foreclosed real estate and an increase in compensation and benefits as a result of the opening of the Greenville mortgage office.

The Company’s unaudited consolidated total assets decreased $8.0 million to $314.9 million at December 31, 2012, compared to $322.9 million at December 31, 2011. The decrease in the balance sheet is primarily due to a reduction in investment and borrowings. The Company’s investment securities decreased $9.0 million to $82.3 million at December 31, 2012, compared to $91.3 million at December 31, 2011. Total borrowings decreased $6.7 million from $50.1 million at December 31, 2011, to $43.4 million at December 31, 2012. Total deposits have decreased $2.5 million to $244.0 million at December 31, 2012, compared to $246.5 million at December 31, 2011. Although there was a decline in deposits, there was an increase of $19.4 million in core checking and savings accounts from $100.1 million at December 31, 2011 to $119.5 million at December 31, 2012. In 2012, the Bank continued to shift its deposit mix from more costly time deposits to less costly funding of demand deposits. Net loan balances increased $1.5 million with a balance of $196.9 million at December 31, 2012, compared to $195.4 million at December 31, 2011. Total stockholders’ equity increased $1.0 million from $24.3 million at December 31, 2011, to $25.3 million at December 31, 2012.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (OREO), decreased $7.8 million from $19.9 million at December 31, 2011, to $12.1 million at December 31, 2012. The nonperforming assets on December 31, 2012 consist of $6.6 million in OREO and $5.5 million in nonaccrual loans. Net charge offs for the twelve months ended December 31, 2012 were $260,000, compared to net charge offs of $1.0 million for the twelve months ended December 31, 2011. The allowance for loan losses at December 31, 2012 totaled $3.4 million, or 1.71% of all outstanding loans.

Commenting on the 2012 results, Mr. Keen stated, “The KS Bank team worked ardently to improve the Bank’s nonperforming assets. In 2013, the Bank will continue to focus on mitigating its nonperforming assets. Reporting an improvement in net income from prior year is the result of the bank remaining focused on our employees, and employees committed to servicing our customers and local communities.”

The Company also announced today that its Board of Directors voted not to declare a dividend for the fourth quarter of 2012. 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 federal regulatory standards with total risk based capital of 16.70%, tier 1 risk- based capital of 15.45%, and a leverage ratio of 9.66% at December 31, 2012. 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 servicing location 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             December 31, 2012 December 31, (unaudited) 2011*   (Dollars in thousands) ASSETS   Cash and due from banks: Interest-earning $ 9,474 $ 1,182 Noninterest-earning 2,075 3,929 Time Deposit 100 100 Investment securities available for sale, at fair value 82,316 91,375 Federal Home Loan Bank stock, at cost 2,149 2,596 Presold mortgages in process of settlement 518 809   Loans 200,280 198,847 Less Allowance for loan losses   (3,424 )   (3,477 ) Net loans 196,856 195,370   Accrued interest receivable 1,113 1,316 Foreclosed assets, net 6,637 11,696 Property and equipment, net 8,579 8,825 Other assets   5,122     5,734     Total assets $ 314,939   $ 322,932     LIABILITIES AND STOCKHOLDERS' EQUITY   Liabilities Deposits $ 243,996 $ 246,464 Short-term borrowings 2,156 6,933 Long-term borrowings 41,248 43,248 Accrued interest payable 233 275 Accounts payable and accrued expenses   1,984     1,696     Total liabilities   289,617     298,616     Stockholder's Equity: Cumulative perpetual preferred stock (Series A), no par value 4,000 shares authorized, issued and outstanding $ 3,914 $ 3,866 Cumulative perpetual preferred stock (Series B), no par value 200 shares authorized, issued and outstanding 213 219 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 18,389 17,859 Accumulated other comprehensive income   1,199     765     Total stockholders' equity   25,322     24,316     Total liabilities and stockholders' equity $ 314,939   $ 322,932     * Derived from audited financial statements KS Bancorp, Inc and Subsidiary Consolidated Statements of Income (Unaudited)               Three Months Ended Twelve Months Ended December 31, December 31,

2012

2011

2012

2011

( In thousands, except per share data) Interest and dividend income: Loans $ 2,840 $ 2,941 $ 11,365 $ 12,128 Investment securities Taxable 358 386 1,446 1,468 Tax-exempt 138 292 807 1,434 Dividends 23 5 49 23 Interest-bearing deposits   1     -     8     4   Total interest and dividend income   3,360     3,624     13,675     15,057     Interest expense: Deposits 454 657 2,119 2,875 Borrowings   424     482     1,726     1,975   Total interest expense   878     1,139     3,845     4,850     Net interest income 2,482 2,485 9,830 10,207   Provision for loan losses   82     150     207     1,483     Net interest income after provision for loan losses   2,400     2,335     9,623     8,724     Noninterest income: Service charges on deposit accounts 292 284 1,123 1,170 Fees from presold mortgages 265 47 730 119 Gain on sale of investments 4 218 437 140 Other income   200     30     330     145   Total noninterest income   761     579     2,620     1,574     Noninterest expenses: Compensation and benefits 1,559 1,443 6,031 5,692 Occupancy and equipment 268 243 1,042 993 Data processing & outside service fees 191 194 792 795 Advertising 13 10 48 69 Net foreclosed real estate 405 356 1,496 971 Other   509     450     2,070     1,941   Total noninterest expenses   2,945     2,696     11,479     10,461     Income (loss) before income taxes 216 218 764 (163 )   Income tax expense (benefit)   24     (34 )   (26 )   (573 )   Net income   192     252     790     410     Dividends on preferred stock (55 ) (54 ) (218 ) (218 ) Accretion of discount on preferred stock, net   (11 )   (10 )   (41 )   (38 ) Income available to common stockholders $ 126   $ 188   $ 531   $ 154     Basic and Diluted earnings per share $ 0.10   $ 0.14   $ 0.41   $ 0.12