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 twelve months ended December 31, 2013.

For the three months ended December 31, 2013, net income available to common shareholders was $153,000, or $.12 per diluted share, compared to a net income available to common shareholders of $126,000, or $.10 per diluted share, for the three months ended December 31, 2012. For the twelve months ended December 31, 2013, net income available to common shareholders was $788,000, or $.60 per diluted share, compared to $531,000, or $.41 per diluted share, for the twelve months ended December 31, 2012.

Net interest income was $2.5 million for the three months ended December 31, 2013 and December 31, 2012. Noninterest income for the three months ended December 31, 2013 was $603,000, compared to $761,000 for the same period ended December 31, 2012. Noninterest expenses decreased $117,000 from $2.9 million for the three months ended December 31, 2012, compared to $2.8 million for the three months ended December 31, 2013.

For the twelve months ended December 31, 2013, net interest income was $9.6 million, compared to $9.8 million for the twelve months ended December 31, 2012. Noninterest income decreased slightly from $2.6 million for the twelve months ended December 31, 2012 to $2.3 million for the twelve months ended December 31, 2013. The decrease in noninterest income is primarily attributable to decreased volume and fee income from presold mortgages. Additionally, the bank’s gain on sale of investments decreased $298,000 to $139,000 for the twelve months ended December 31, 2013, compared to gain on sale of investments of $437,000 for the twelve months ended December 31, 2012. Noninterest expenses decreased $1.0 million from $11.5 million for the twelve months ended December 31, 2012, to $10.5 million for the twelve months ended December 31, 2013. The decrease in expenses is primarily due to the decrease in costs associated with foreclosed real estate.

The Company’s unaudited consolidated total assets decreased $9.5 million to $305.4 million at December 31, 2013, compared to $314.9 million at December 31, 2012. Net loan balances decreased $3.2 million with a balance of $193.6 million at December 31, 2013, compared to $196.8 million at December 31, 2012. The Company’s investment securities increased $1.9 million to $84.3 million at December 31, 2013, compared to $82.4 million at December 31, 2012. Total deposits have decreased $13.9 million to $230.1 million at December 31, 2013, compared to $244.0 at December 31, 2012. The decrease in deposits is the result of $19.5 million decrease in time deposits, which includes a $9.3 million reduction in brokered deposits. The decline in time deposits was partially offset by a $5.6 million increase in savings and demand deposit accounts. Total stockholders’ equity at December 31, 2013 was $24.3 million, compared to $25.3 million at December 31, 2012. The decrease in stockholders equity is primarily attributable to the change in accumulated other comprehensive income which represents changes in the market value of the available for sale investment portfolio.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (OREO), decreased $4.5 million to $7.6 million at December 31, 2013 from $12.1 million at December 31, 2012. At December 31, 2013, nonperforming assets consist of $2.9 million in OREO and $4.7 million in nonaccrual loans. For the twelve months ended December 31, 2013, the Company recorded a $161,000 expense to the provision for loan losses compared to $207,000 for the twelve months ended December 31, 2012. The allowance for loan losses at December 31, 2013 totaled $3.4 million, or 1.72% of all outstanding loans. This compares to $3.4 million, or 1.71% of all outstanding loans at December 31, 2012.

Commenting on the 2013 results, Mr. Keen stated, “The KS Bank team worked ardently to improve the Bank’s net income available to shareholders. One of our goals for 2013 was to continue to reduce nonperforming assets and the bank continues to be successful in attaining this goal. Improvements in net income for 2013 are the result of the bank remaining focused on our employees, and employees committed to servicing our customers and local communities. During 2014, the Bank will be celebrating its 90th anniversary as a trusted community bank and we look forward to continuing to serve our communities and our customers.”

The Company also announced today that its Board of Directors voted not to declare a dividend for the fourth 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 17.41%, tier 1 risk- based capital of 16.15%, and a leverage ratio of 10.24% at December 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

      Dec 31, 2013 December 31, (unaudited) 2012*   (Dollars in thousands) ASSETS   Cash and due from banks: Interest-earning $ 1,442 $ 9,474 Noninterest-earning 5,737 2,075 Time Deposit 100 100 Investment securities available for sale, at fair value 84,292 82,356 Federal Home Loan Bank stock, at cost 1,953 2,149 Presold mortgages in process of settlement - 518   Loans 197,032 200,280 Less allowance for loan losses   (3,390 )   (3,424 ) Net loans 193,642 196,856   Accrued interest receivable 1,032 1,113 Foreclosed real estate and repossessions, net 2,947 6,637 Property and equipment, net 8,468 8,579 Other assets   5,834     5,082     Total assets $ 305,447   $ 314,939     LIABILITIES AND STOCKHOLDERS' EQUITY   Liabilities Deposits $ 230,083 $ 243,996 Short-term borrowings 7,214 2,156 Long-term borrowings 41,248 41,248 Accrued interest payable 329 233 Accrued expenses and other liabilities   2,234     1,984     Total liabilities   281,108     289,617     Stockholder's Equity: Cumulative perpetual preferred stock (Series A), no par value 4,000 shares authorized, issued and outstanding $ 3,965 $ 3,914 Cumulative perpetual preferred stock (Series B), no par value 200 shares authorized, issued and outstanding 205 213 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 19,178 18,390 Accumulated other comprehensive (loss) income   (616 )   1,198     Total stockholders' equity   24,339     25,322     Total liabilities and stockholders' equity $ 305,447   $ 314,939     * Derived from audited financial statements KS Bancorp, Inc and Subsidiary Consolidated Statements of Income (Unaudited)           Three Months Ended Twelve Months Ended Dec 31, Dec 31,

2013

2012

2013

2012

( In thousands, except per share data) Interest and dividend income: Loans $ 2,672 $ 2,840 $ 10,685 $ 11,365 Investment securities Taxable 337 358 1,327 1,446 Tax-exempt 126 138 511 807 Dividends 26 23 52 49 Interest-bearing deposits   2     1     9     8   Total interest and dividend income   3,163     3,360     12,584     13,675     Interest expense: Deposits 333 454 1,469 2,119 Borrowings   360     424     1,496     1,726   Total interest expense   693     878     2,965     3,845     Net interest income 2,470 2,482 9,619 9,830   Provision for loan losses   (60 )   82     161     207     Net interest income after provision for loan losses   2,530     2,400     9,458     9,623     Noninterest income: Service charges on deposit accounts 312 292 1,249 1,123 Fees from presold mortgages 61 265 481 730 Gain on sale of investments - 4 139 437 Other income   230     200     447     330   Total noninterest income   603     761     2,316     2,620     Noninterest expenses: Compensation and benefits 1,576 1,559 5,928 6,031 Occupancy and equipment 271 268 1,046 1,042 Data processing & outside service fees 216 191 828 792 Advertising 10 13 42 48 Net foreclosed real estate 240 405 564 1,496 Other   515     509     2,051     2,070   Total noninterest expenses   2,828     2,945     10,459     11,479     Income before income taxes 305 216 1,315 764   Income tax (benefit)   86     24     266     (26 )   Net income   219     192     1,049     790     Dividends on preferred stock (55 ) (55 ) (218 ) (218 ) Accretion of discount on preferred stock, net   (11 )   (11 )   (43 )   (41 ) Income available to common stockholders $ 153   $ 126   $ 788   $ 531     Basic and Diluted earnings per share $ 0.12   $ 0.10   $ 0.60   $ 0.41  

KS Bancorp, Inc.Harold T. Keen, President and Chief Executive OfficerorRegina J. Smith, Chief Financial Officer919-938-3101