KS Bancorp, Inc. (KSBI) Announces Second Quarter 2023 Financial Results and Cash Dividend

SMITHFIELD, N.C., July 25, 2023 (GLOBE NEWSWIRE) -- KS Bancorp, Inc. (the “Company”) (OTCBB: KSBI), parent company of KS Bank, Inc. (the “Bank”), announced unaudited results for the second quarter of 2023.

The Company reported net income of $1.6 million or $1.41 per diluted share, for the three months ended June 30, 2023, compared to net income of $1.8 million or $1.62 per diluted share, for the three months ended June 30, 2022. Comparing the second quarter 2023 to the second quarter of 2022, there was a decrease in net income of $236,000, which is primarily attributable to the $230,000 gain on sale of foreclosed assets recorded in June, 2022.

Net interest income before the provision for credit losses for the three months ended June 30, 2023 was $5.1 million compared to $4.8 million at June 30, 2022. As a result of increased loan balances, the Company recorded a provision for credit losses during the second quarter 2023 in the amount of $110,000. Noninterest income for the three months ended June, 30 2023 was $829,000, compared to $952,000 for the comparable period ended June 30, 2022. Noninterest expense was $3.8 million for the three months ended June 30, 2023, compared to $3.5 million in the comparable period in 2022.

For the six months ended June 30, 2023, net interest income before the provision for credit losses was $10.2 million, compared to $9.0 million for the six months ended June 30, 2022 which was a 12.7% increase. Non-interest income was $1.6 million for the six month period ending June 30, 2023 compared to $1.8 million for the same period ended June 30, 2022. For the six months ended June 30, 2023, non-interest expenses was $7.6 million, compared to $6.8 million for the same period ending June 30, 2022. This is primarily attributable to increase in compensation and benefits.

The Company’s unaudited consolidated total assets increased $40.5 million, to $586.8 million at June 30, 2023, compared to $546.3 million at December 31, 2022. Net loan balances increased by $23.5 million to $437.2 million at June 30, 2023, compared to $413.7 million at December 31, 2022. The Company’s investment securities totaled $97.8 million at June 30, 2023, compared to $98.6 million at December 31, 2022. Total deposits increased $51.2 million to $532.8 million at June 30, 2023, compared to $481.6 million at December 31, 2022. The increase deposits included a $34.5 million increase in core deposits. For the six months ended June 30, 2023, short-term borrowings decreased $17.0 million. Total stockholders’ equity increased $5.6 million to $37.8 million at June 30, 2023, from $32.2 million at December 31, 2022. The increase in stockholders equity is primarily attributable to $3.3 million increase in retained earnings as a result of net income plus $1.0 million added to retained earnings resulting from the CECL adoption. In addition, the accumulated other comprehensive income decreased $1.8 million for six months ended June 30, 2023, as compared to December 31, 2022.

Nonperforming assets consisted of $839,000 nonaccrual loans at June 30, 2023, representing less than 0.15% of the Company’s total assets. There was no foreclosed real estate owned at June 30, 2023. The allowance for credit losses at June 30, 2023 totaled $3.5 million, or 0.80% of total loans.

Commenting on the second quarter results, Earl W. Worley, Jr., President and CEO of the Company, “KS Bank continues to have solid loan demand as our outstanding loan balances have increased 5.6% for the first six months of 2023. In addition, in that same time period net deposits increased 10.6%. We are extremely appreciative of the new personal and business customers that have become our clients over the last six months. The demand for our brand of personal community banking continues to increase due to continued changes in the banking landscape that is affecting customer service in our region.”

Continuing, Worley stated, “As expected, we are experiencing some margin compression with interest rates continuing to rise. Excluding the one time gain of $230,000 on sale of real estate in June 2022 , year-over-year earnings through the second quarter are flat. Given the volatility of rates over the last six months, we are pleased with this result. Our team continues to make adjustments as warranted on both loan and deposit rates as the Federal Reserve continues its quest to tame inflation. The bank’s non-performing loans and past dues remain at historic lows. In spite of the interest rate headwinds, our market area continues to grow and provide opportunities for the bank’s continued growth.”

In addition, the Company announced today that its Board of Directors has declared a quarterly  dividend of $0.25 per share for stockholders of record as of July 31, 2023 with payment to be made on August 10, 2023. 

KS Bank continues to be well capitalized according to regulatory standards with a Community Bank Leverage Ratio of 9.68%, compared to 9.44% at December 31, 2022.

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. The Bank offers a broad range of personal and business banking products and services, mortgage products and trust services. There are nine full service branches located in Kenly, Selma, Clayton, Garner, Goldsboro, Wilson, Wendell, Smithfield, and Four Oaks, North Carolina. There is a loan production office in Dunn, NC which opened in April, 2022.   Additionally, the Bank has received regulatory approval to build a full service branch in Dunn, NC to be completed by the first quarter of 2024. 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
		June 30, 2023				December 31,
		(unaudited)				2022*
		(Dollars in thousands)
	ASSETS
	Cash and due from banks:
	Interest-earning	$	27,469			$	4,558
	Noninterest-earning		3,308				3,162
	Time Deposit		100				5,100
	Investment securities available for sale, at fair value		97,849				98,576
	Federal Home Loan Bank stock, at cost		299				1,021
	Loans		440,782				418,809
	Less allowance for credit losses		(3,530	)			(5,069	)
	Net loans		437,252				413,740
	Accrued interest receivable		2,039				2,093
	Foreclosed assets, net		-				-
	Property and equipment, net		10,147				9,347
	Other assets		8,371				8,753
	Total assets	$	586,834			$	546,350
	LIABILITIES AND STOCKHOLDERS' EQUITY
	Liabilities
	Deposits	$	532,793			$	481,565
	Short-term borrowings	$	-			$	17,028
	Long-term borrowings		11,248				11,248
	Accrued interest payable		297				117
	Accrued expenses and other liabilities		4,663				4,156
	Total liabilities		549,001				514,114
	Stockholder's Equity:
	Preferred stock, no par value, 500,000 shares authorized; none issued and outstanding
	Common stock, no par value, 3,500,000 shares authorized; 1,107,776 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		1,359				1,359
	Retained earnings, substantially restricted		45,282				41,453
	Accumulated other comprehensive (loss)		(8,808	)			(10,576	)
	Total stockholders' equity		37,833				32,236
	Total liabilities and stockholders' equity	$	586,834			$	546,350
	* Derived from audited financial statements

KS Bancorp, Inc and Subsidiary
Consolidated Statements of Income (Unaudited)
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2023			2022				2023			2022
		(In thousands, except per share data)
Interest and dividend income:
	Loans	$	6,174		$	4,327			$	12,038		$	8,457
	Investment securities
	Taxable		479			445				961			767
	Tax-exempt		204			188				409			362
	Dividends		3			(16	)			10			5
	Interest-bearing deposits		326			133				543			177
	Total interest and dividend income		7,186			5,077			$	13,961			9,768
Interest expense:
	Deposits		1,944			211				3,318			430
	Borrowings		175			86				378			324
	Total interest expense		2,119			297				3,696			754
	Net interest income		5,067			4,780				10,265			9,014
Provision for credit losses			110			-				110			-
	Net interest income after
	provision for credit losses		4,957			4,780				10,155			9,014
Noninterest income:
	Service charges on deposit accounts		345			315				655			608
	Fees from presold mortgages		6			8				9			12
	Other income		478			629				903			1,134
	Total noninterest income		829			952				1,567			1,754
Noninterest expenses:
	Compensation and benefits		2,358			2,066				4,722			4,109
	Occupancy and equipment		504			545				1,038			1,029
	Data processing & outside service fees		208			203				413			408
	Advertising		67			32				115			50
	Other		671			613				1,277			1,179
	Total noninterest expenses		3,808			3,459				7,565			6,775
	Income before income taxes		1,978			2,273				4,157			3,993
Income tax			419			478				879			831
	Net income	$	1,559		$	1,795			$	3,278		$	3,162
	Basic and Diluted earnings per share	$	1.41		$	1.62			$	2.96		$	2.85

Contact: Earl W. Worley, Jr.	Regina J Smith
President and Chief Executive Officer	Chief Financial Officer
(919) 938-3101	(919) 938-3101