KS Bancorp, Inc. (KSBI) Announces First Quarter 2008 Financial Results and Cash Dividend

SMITHFIELD, N.C. - (Business Wire) KS Bancorp, Inc. (the “Company”) (OTCBB:KSBI), parent company of KS Bank, Inc., today announced unaudited first quarter net income for the quarter ended March 31, 2008 of $374,000, or $0.29 per diluted share, compared to earnings of $430,000, or $0.33 per diluted share, for the same period in 2007.

Net interest income after allowance for loan provision increased 6.20%, or $137,000, to $2.3 million for the quarter ended March 31, 2008 compared to $2.2 million for the three months ended March 31, 2007. Comparing the first quarter 2008 to the same time period in 2007, non interest expense increased by $237,000 from $2.1 million for the quarter ended March 31, 2007 to $2.3 million for the three months ended March 31, 2008. This increase is primarily due to increases in compensation and benefits related to new hires during 2008, as well as normal wage increases.

The Company’s consolidated total assets increased $4.1 million, or 1.30%, to $322.4 million during the three months ended March 31, 2008, as compared to $318.3 million at December 31, 2007. Growth in the Company’s total assets resulted primarily from an increase of $1.9 million in net loans to $241.7 million at March 31, 2008 compared to $239.8 at December 31, 2007. Funding for the growth in total assets was provided by a $4.6 million increase in total deposits. Total deposits were $238.1 million at March 31, 2008 compared to $233.5 million at December 31, 2007. Demand deposits increased 5.0% to $72.9 million at March 31, 2008 compared to $69.4 million at December 31, 2007.

Commenting on the first quarter 2008 results, Harold Keen, President and CEO, stated, “Early in January when the Federal Reserve reduced rates twice, we knew there would be challenges this year. We feel we have positioned ourselves strategically to lessen our sensitivity to market rate pressures. We are pleased to state at this time we have not experienced major write downs nor charge offs. Additionally, we do not have any exposure to sub prime loans. Overall, we believe that 2008 will be a stable year for our Company.”

In addition to the earnings report issued today, KS Bancorp, Inc. announced the payment of a quarterly cash dividend of $0.13 per share for stockholders of record on April 29, 2008, with payment to be made on May 14, 2008.

KS Bancorp, Inc. is a Smithfield, North Carolina-based single bank holding company. KS Bank, Inc., (the “Bank”) a state-chartered savings bank, is KS Bancorp’s sole subsidiary. The Bank is a full service community bank offering traditional banking products and services through its operation of eight full service branches located in Kenly, Selma, Clayton, Garner, Goldsboro, Wilson, Wendell, and Smithfield, North Carolina.

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,				December 31,
			2008 (unaudited)				2007/a
			(Dollars in thousands)
	ASSETS
	Cash and due from banks:
	Interest-earning		$	6,459			$	6,298
	Noninterest-earning			1,514				1,482
	Time Deposit			100				100
	Investment securities available for sale, at fair value			54,513				53,624
	Federal Home Loan Bank stock, at cost			2,926				2,914
	Presold mortgages in process of settlement			545				476
	Loans			244,442				242,535
	Less Allowance for loan losses			(2,723	)			(2,702	)
	Net loans			241,719				239,833
	Accrued interest receivable			1,790				1,952
	Foreclosed assets, net			939				123
	Property and equipment, net			9,219				8,958
	Other assets			2,637				2,509
	Total assets		$	322,361			$	318,269
	LIABILITIES AND STOCKHOLDERS' EQUITY
	Liabilities
	Deposits		$	238,145			$	233,480
	Short-term borrowings			7,832				10,596
	Long-term borrowings			56,048				54,048
	Accrued interest payable			616				639
	Accounts payable and accrued expenses			860				821
	Total liabilities			303,501				299,584
	Stockholder's Equity:
	Preferred stock, no par value, 5,000,000 shares authorized; no shares issued and outstanding
			$	-			$	-
	Common stock, no par value, authorized 20,000,000 shares; 1,309,501 shares issued and outstanding in 2007 and 2006
				1,607				1,607
	Retained earnings, substantially restricted			17,339				17,135
	Accumulated other comprehensive loss			(86	)			(57	)
	Total stockholders' equity			18,860				18,685
	Total liabilities and stockholders' equity		$	322,361			$	318,269
	/a: Derived from audited financial statements

	KS Bancop, Inc and Subsidiary
	Consolidated Statements of Income (Unaudited)
				Three Months Ended
				March 31,
					2008			2007
			(In thousands, except per share data)
	Interest and dividend income:
		Loans		$	4,542		$	4,481
		Investment securties
		Taxable			309			268
		Tax-exempt			338			285
		Dividends			45			38
		Interest-bearing deposits			26			32
		Total interest and dividend income			5,260			5,104
	Interest expense:
		Deposits			2,194			2,107
		Borrowings			683			653
		Total interest expense			2,877			2,760
		Net interest income			2,383			2,344
	Provision for loan losses				35			133
		Net interest income after
		provision for loan losses			2,348			2,211
	Noninterest income:
		Service charges on deposit accounts			329			289
		Fees from presold mortgages			91			88
		Other income			38			43
		Total noninterest income			458			420
	Noninterest expenses:
		Compensation and benefits			1,495			1,317
		Occupancy and Equipment			242			233
		Data processing & outside service fees			210			200
		Advertising			53			52
		Net Foreclosed real estate			23			19
		(Gain) on sale of investments			-			(36	)
		Other			333			277
		Total noninterest expenses			2,356			2,062
		Income before income taxes			450			569
	Income tax expense				76			139
		Net income		$	374		$	430
		Basic and Diluted earnings per share		$	0.29		$	0.33
		Dividends per common share		$	0.13		$	0.13

KS Bancorp, Inc.
Harold T. Keen, President and Chief Executive Officer or
Earl W. Worley, Jr., Chief Financial Officer,
919-938-3101