News Column

KS Bancorp, Inc. (KSBI) Announces Second Quarter 2014 Financial Results

July 22, 2014

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 $158,000, or $.12 per diluted share, for the three months ended June 30, 2014, compared to a net income available to common shareholders of $200,000, or $.15 per diluted share, for the three months ended June 30, 2013.

For the six months ended June 30, 2014, the Company reported net income available to common shareholders of $259,000, or $.20 per diluted share, compared to $325,000 or $.25 per diluted share, for the six months ended June 30, 2013. The decline in earnings is primarily attributable to a decrease in gain on sale of investments recognized. For the six months ended June 30, 2013, the Company recognized a $139,000 gain in sale of investments, compared to a $40,000 gain recognized in the six months ended June 30, 2014.

For the three months ended June 30, 2014, net interest income was $2.5 million compared to $2.4 million for the three months ended June 30, 2013. Non-interest income for the three months ended June 30, 2014 was $468,000, compared to $548,000 for the same period ended June 30, 2013. The decrease is primarily attributable to the $127,000 decrease in fees from presold mortgages.

For the six months ended June 30, 2014 and June 30, 2013, net interest income was $4.8 million. Non-interest income was $940,000 for the six months ended June 30, 2014 compared to $1.2 million for the six months ended June 30, 2013. The decrease in non-interest income is primarily attributable to a decrease in fees from presold mortgages. Non-interest expenses remain constant at $5.2 million for the six months ended June 30, 2014 and June 30, 2013.

In the second quarter of 2014, the Company’s unaudited consolidated total assets increased $3.2 million to $308.6 million at June 30, 2014, compared to $305.4 million at December 31, 2013. Net loan balances increased $11.5 million with a balance of $205.1 million at June 30, 2014, compared to $193.6 million at December 31, 2013. Funding for the growth in the loan portfolio was provided by cash flows from the investment portfolio and an increase of core deposit accounts. The Company’s investment securities decreased $6.6 million to $77.7 million at June 30, 2014, compared to $84.3 million at December 31, 2013. Total deposits have increased $4.4 million to $234.5 million at June 30, 2014, compared to $230.1 at December 31, 2013. For the six months ended June 30, 2014, short-term borrowing decreased $2.2 million to $5.0 million compared to $7.2 million at December 31, 2013. Total stockholders’ equity increased $676,000 from $24.3 million at December 31, 2013, to $25.0 million at June 30, 2014.

Nonperforming assets, which includes nonaccrual loans and OREO, remain at $7.7 million at June 30, 2014. The nonperforming assets consist of $2.9 million in OREO and $4.8 million in nonaccrual loans. For the three months ended June 30, 2014, there was no expense to the provision for loan losses compared to $95,000 for the three months ended June 30, 2013. The allowance for loan losses at June 30, 2014 totaled $3.4 million, or 1.62% of all outstanding loans.

The Company also announced today that its Board of Directors voted not to declare a dividend for the second quarter of 2014. 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 regulatory standards with total risk based capital of 16.95%, tier 1 risk- based capital of 15.70%, and a leverage ratio of 10.48% at June 30, 2014. The minimum levels to be considered well capitalized for each of these ratios are 10%, 6%, and 5%, respectively.

Commenting on the second quarter of 2014 results, Mr. Keen, President and CEO, stated, “There has been an increased demand for loans which is evidence by our 5.85% increase in loans since December 31, 2013. In addition, we are continuing to grow our core demand deposit base. This coupled with our loan growth continues to add value to our balance sheet and our franchise. Also, I am honored to announce that KS Bank is recognizing its 90th anniversary this year. KS Bank and its employees remain committed to our local communities where we live, work, and volunteer.

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
   
 
June 30 2014 December 31,
(unaudited)2013*
 
(Dollars in thousands)
ASSETS
 
Cash and due from banks:
Interest-earning $ 3,289 $ 5,737
Noninterest-earning 1,727 1,441
Time Deposit 100 100
Investment securities available for sale, at fair value 77,725 84,292
Federal Home Loan Bank stock, at cost 1,760 1,953
Presold mortgages in process of settlement 690 -
 
Loans 208,555 197,032
Less allowance for loan losses   (3,387)   (3,390)
Net loans 205,168 193,642
 
Accrued interest receivable 1,023 1,032
Foreclosed real estate and repossessions, net 2,935 2,948
Property and equipment, net 8,307 8,468
Other assets   5,911     5,782  
 
Total assets $308,635   $305,395  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Liabilities
Deposits $ 234,522 $ 230,083
Short-term borrowings 5,024 7,214
Long-term borrowings 41,248 41,248
Accrued interest payable 320 329
Accrued expenses and other liabilities   2,507     2,183  
 
Total liabilities   283,621     281,057  
 
Stockholder's Equity:
Cumulative perpetual preferred stock (Series A), no par value
4,000 shares authorized, issued and outstanding $ 3,991 $ 3,964
Cumulative perpetual preferred stock (Series B), no par value
200 shares authorized, issued and outstanding 201 205
Common stock, no par value, authorized 20,000,000 shares;
1,309,501 shares issued and outstanding in 2014 and 2013 1,607 1,607
Retained earnings, substantially restricted 19,437 19,178
Accumulated other comprehensive income   (222)   (616)
 
Total stockholders' equity   25,014     24,338  
 
Total liabilities and stockholders' equity $308,635   $305,395  
 
* 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,

2014

2013

2014

2013

( In thousands, except per share data)
Interest and dividend income:
Loans $ 2,653 $ 2,658 $ 5,376 $ 5,376
Investment securities

 

Taxable 313 328 667 667
Tax-exempt 114 127 257 257
Dividends 12 12 14 14
Interest-bearing deposits   1     2     5     5  
Total interest and dividend income   3,093     3,127     6,319     6,319  
 
Interest expense:
Deposits 276 371 777 777
Borrowings   351     364     777     777  
Total interest expense   627     735     1,554     1,554  
 
Net interest income 2,466 2,392 4,765 4,765
 
Provision for loan losses   -     95     180     180  
 
Net interest income after
provision for loan losses   2,466     2,297     4,585     4,585  
 
Noninterest income:
Service charges on deposit accounts 312 318 607 607
Fees from presold mortgages 47 174 332 332
Gain on sale of investments 9 - 139 139
Other income   100     56     110     110  
Total noninterest income   468     548     1,188     1,188  
 
Noninterest expenses:
Compensation and benefits 1,517 1,458 2,985 2,985
Occupancy and equipment 80 259 513 513
Data processing & outside service fees 399 207 410 410
Advertising 14 7 16 16
Net foreclosed real estate 51 96 296 296
Other   556     505     1,029     1,029  
Total noninterest expenses   2,617     2,532     5,249     5,249  
 
Income before income taxes 317 313 524 524
 
Income tax (benefit)   93     48     69     69  
 
Net income   224     265     455     455  
 
Dividends on preferred stock (55 ) (54 ) (109 ) (109 )
Accretion of discount on preferred stock, net   (11)   (11)   (21)   (21)
Income available to common stockholders $158   $200   $325   $325  
 
Basic and Diluted earnings per share $0.12   $0.15   $0.25   $0.25  





KS Bancorp, Inc.

Harold T. Keen, President and Chief Executive Officer

919-938-3101

or

Regina J. Smith, Chief Financial Officer

919-938-3101

Source: KS Bancorp, Inc.


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