KS Bancorp, Inc. (KSBI) Announces Third Quarter 2012 Financial Results

KS Bancorp, Inc. (KSBI) Announces Third Quarter 2012 Financial Results

SMITHFIELD, N.C.--(BUSINESS WIRE)-- KS Bancorp, Inc. (the "Company") (OTCBB: KSBI), parent company of KS Bank, Inc. (the "Bank"), announced unaudited net income available to common shareholders of $91,000, or $.07 per diluted shared, for the three months ended September 30, 2012, compared to a net loss of ($454,000), or ($.35) per diluted share, for the three months ended September 30, 2011.

The Company reported net income available to common shareholders of $405,000, or $.31 per diluted shared, for the nine months ended September 30, 2012, compared to a net loss attributable to common shareholders of ($34,000), or ($.03) per diluted share, for the nine months ended September 30, 2011.


For the nine months ended September 30, 2012, net interest income was $7.3 million, compared to $7.7 million for the nine months ended September 30, 2011. Noninterest income increased to $1.9 million for the period ended September 30, 2012, compared to $1.0 million for the same period ended September 30, 2011. The increase in noninterest income is primarily attributable to a $433,000 gain on the sale of investments, compared to a loss of ($78,000) for the nine months ended September 30, 2011. Additionally, fees from presold mortgages increased $393,000 during the nine months ended September 30, 2012. Noninterest expenses increased $769,000 to $8.5 million for the nine months ended September 30, 2012, compared to $7.8 million at September 30, 2011. The increase in expenses is primarily due to the costs associated with foreclosed real estate.

The Company's unaudited consolidated total assets decreased $11.3 million to $311.6 million at September 30, 2012, compared to $322.9 million at December 31, 2011. The decrease in the balance sheet is primarily due to a reduction in borrowings and brokered deposits. Total borrowings decreased $6.7 million from $50.1 million at December 31, 2011, to $43.4 million at September 30, 2012. Total deposits have decreased $6.0 million to $240.5 million at September 30, 2012, compared to $246.5 million at December 31, 2011. The decrease in deposits includes an $8.1 million decrease in brokered deposits. Net loan balances decreased $3.4 million with a balance of $192.0 million at September 30, 2012, compared to $195.4 million at December 31, 2011. The Company's investment securities decreased $4.8 million to $86.5 million at September 30, 2012, compared to $91.3 million at December 31, 2011. Total stockholders' equity increased $855,000 from $24.3 million at December 31, 2011, to $25.2 million at September 30, 2012.

Nonperforming assets, which includes nonaccrual loans and other real estate owned (OREO), decreased $5.1 million from $19.9 million at December 31, 2011, to $14.8 million at September 30, 2012. The nonperforming assets consist of $7.4 million in OREO and $7.4 million in nonaccrual loans. Net charge offs for the nine months ended September 30, 2012 were $218,000, compared to net charge offs of $1.0 million for the nine months ended September 30, 2011. The allowance for loan losses at September 30, 2012 totaled $3.4 million, or 1.73% of all outstanding loans.

The Company also announced today that its Board of Directors voted not to declare a dividend for the third 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 16.51%, tier 1 risk- based capital of 15.26%, and a leverage ratio of 9.29% at September 30, 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

September 30, 2012

December 31,

(unaudited)

2011*

(Dollars in thousands)

ASSETS

Cash and due from banks:

Interest-earning

$

5,880

$

1,182

Noninterest-earning

1,325

3,929

Time Deposit

100

100

Investment securities available for sale, at fair value

86,580

91,375

Federal Home Loan Bank stock, at cost

2,059

2,596

Presold mortgages in process of settlement

1,119

809

Loans

195,325

198,847

Less Allowance for loan losses

(3,384

)

(3,477

)

Net loans

191,941

195,370

Accrued interest receivable

1,203

1,316

Foreclosed assets, net

7,398

11,696

Property and equipment, net

8,734

8,825

Other assets

5,311

5,734

Total assets

$

311,650

$

322,932

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Deposits

$

240,468

$

246,464

Short-term borrowings

2,156

6,933

Long-term borrowings

41,248

43,248

Accrued interest payable

237

275

Accounts payable and accrued expenses

2,369

1,696

Total liabilities

286,478

298,616

Stockholder's Equity:

Cumulative perpetual preferred stock (Series A), no par value

4,000 shares authorized, issued and outstanding

$

3,902

$

3,866

Cumulative perpetual preferred stock (Series B), no par value

200 shares authorized, issued and outstanding

214

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

18,264

17,859

Accumulated other comprehensive income

1,185

765

Total stockholders' equity

25,172

24,316

Total liabilities and stockholders' equity

$

311,650

$

322,932

* Derived from audited financial statements

KS Bancorp, Inc and Subsidiary

Consolidated Statements of Income (Loss) (Unaudited)

Three Months Ended

Nine Months Ended

Sept 30,

Sept 30,

2012

2011

2012

2011

( In thousands, except per share data)

Interest and dividend income:

Loans

$

2,803

$

2,988

$

8,525

$

9,187

Investment securities

Taxable

357

396

1,088

1,082

Tax-exempt

159

306

669

1,142

Dividends

8

6

26

18

Interest-bearing deposits

4

2

7

4

Total interest and dividend income

3,331

3,698

10,315

11,433

Interest expense:

Deposits

511

700

1,665

2,218

Borrowings

421

484

1,302

1,493

Total interest expense

932

1,184

2,967

3,711

Net interest income

2,399

2,514

7,348

7,722

Provision for loan losses

(75

)

786

125

1,333

Net interest income after

provision for loan losses

2,474

1,728

7,223

6,389

Noninterest income:

Service charges on deposit accounts

283

299

831

886

Fees from presold mortgages

233

26

465

72

Gain (Loss) on sale of investments

8

(59

)

433

(78

)

Other income

52

34

130

115

Total noninterest income

576

300

1,859

995

Noninterest expenses:

Compensation and benefits

1,531

1,365

4,472

4,249

Occupancy and equipment

282

422

774

750

Data processing & outside service fees

193

20

601

601

Advertising

13

21

35

59

Net foreclosed real estate

408

485

1,091

615

Other

484

461

1,561

1,491

Total noninterest expenses

2,911

2,774

8,534

7,765

Income (loss) before income taxes

139

(746

)

548

(381

)

Income tax expense (benefit)

(17

)

(356