KS Bancorp, Inc. (KSBI) Announces First Quarter 2006 Financial Results and Cash Dividend.

KS Bancorp, Inc. (OTCBB: KSBI), parent company of KS
Bank, Inc., reports today financial results for the quarter ended
March 31, 2006. The Company began the year with a 20.7% increase in
net income as compared to the first quarter in 2005. In addition,
diluted earnings per share increased 33.3% during the same period.
   Consolidated earnings for the first quarter of 2006 were $472,000,
or $0.36 per diluted share, compared to earnings of $391,000, or $0.27
per diluted share, for the same period in 2005. Total revenue, defined
as interest income and non-interest income, for the first quarter in
2006 was $4.6 million, an increase of 23.4 % above the $3.8 million
reported for the same quarter in 2005. This increase is primarily due
to loan growth, increased yields on prime based loan products and
growth in investment securities. Income from loans grew 22.2% as
compared to the same quarter in 2005. In addition, interest income
from securities grew 21.5% during the first quarter 2006 as compared
to the first quarter 2005.
   The Company's consolidated total assets increased $10.3 million to
$271.7 million during the three months ended March 31, 2006 as
compared to $261.4 million at December 31, 2005. This growth resulted
primarily from increases in net loans from $194.3 at December 31, 2005
to $201.4 at March 31, 2006. Investments grew 5.0% from $43.9 million
at December 31, 2005 to $46.1 million at March 31, 2006. Funding for
this growth was provided primarily from a 19.6% , or $9.6 million,
increase in core deposits.
   Commenting on the first quarter 2006 results, Harold Keen,
President and CEO, stated, "I am pleased with the increase in earnings
for the first quarter of 2006. Additionally, we began 2006 with
aggressive goals to grow demand deposits, and I am delighted that our
entire team has worked together to begin accomplishing this goal. We
will strive to continue this positive growth throughout 2006."
   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 24, 2006, with payment to be made
on May 8, 2006.
   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 emphasizes being a full service
community bank offering traditional banking products and services
through its operation of seven full service branches located in Kenly,
Selma, Clayton, Garner, Goldsboro, Wilson, 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.
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                    KS Bancorp, Inc. and Subsidiary
            Consolidated Statements of Financial Condition


                                   March 31, 
                                    2006                 December 31,
                                  (Unaudited)               2005(a)
                                 ------------------------------------
                                           (In thousands)
ASSETS
Cash and due from banks:
  Interest-earning         $         9,610       $         8,436
  Noninterest-earning                1,086                 1,333
  Time Deposit                         100                   100
Investment securities:
  Available for sale                46,079                43,904
  Held to maturity
Federal Home Loan Bank stock,
 at cost                             2,516                 2,512
Presold mortgages in
 process of settlement                 879                   885

Loans                              202,695               195,461
Less Allowance for loan losses      (2,218)               (2,085)
                                   --------              --------
  Net loans                        200,477               193,376

Accrued interest receivable          1,313                 1,354
Foreclosed assets, net                 635                   568
Property and equipment, net          7,359                 7,381
Other assets                         1,673                 1,589
                                   --------              --------
       TOTAL ASSETS      $         271,727     $         261,438
                                   ========              ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits               $         203,732     $         194,778
  Short-term borrowings              8,923                 5,010
  Long-term borrowings              41,955                44,955
  Accrued interest payable             469                   466
  Accounts payable and
   accrued expenses                    807                   616
                                  --------              --------
  TOTAL LIABILITIES                255,886               245,825

Stockholders' 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 and 1,197,029 shares
   issued and outstanding in
   2006 and 2005, respectively       1,607                 1,607
  Retained earnings, substantially
   restricted                       14,645                14,342
  Accumulated other
   comprehensive loss                 (411)                 (336)
                                  --------              --------
 TOTAL STOCKHOLDERS' EQUITY         15,841                15,613
                                  --------              --------
 TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY      $      271,727     $         261,438
                                  ========              ========

 (a) Derived from audited financial statements



                    KS Bancorp, Inc. and Subsidiary
           Consolidated Statements of Operations (Unaudited)

                                         Three Months Ended
                                             March 31,
                                    --------------------------
                                     2006                 2005
                                    --------------------------
                               (In thousands, except per share Data)
INTEREST INCOME
   Loans                     $      3,683        $         3,013
   Investment securities:
     Taxable                          242                    197
     Tax-exempt                       233                    194
   Dividends                           29                     20
   Interest-bearing deposits           45                     29
                                  -------                -------
          TOTAL INTEREST INCOME     4,232                  3,453
                                  -------                -------
 INTEREST EXPENSE
   Deposits                         1,553                  1,011
   Borrowings                         459                    374
                                  -------                -------
         TOTAL INTEREST EXPENSE     2,012                  1,385
                                  -------                -------
         NET INTEREST INCOME        2,220                  2,068

 PROVISION FOR LOAN LOSSES            150                    185
                                  -------                -------
  NET INTEREST INCOME AFTER
  PROVISION FOR LOAN LOSSES         2,070                  1,883
                                  -------                -------
 NON-INTEREST INCOME
   Service charges on deposit
    accounts                          282                    226
   Fees from presold mortgages         70                     40
   Other income                        55                     40
                                  -------                -------
  TOTAL NON-INTEREST INCOME           407                    306
                                  -------                -------
 NON-INTEREST EXPENSE
   Compensation and benefits        1,162                  1,035
   Occupancy and equipment            201                    189
   Data processing and outside
    service fees                      181                    159
   Advertising                         29                     22
   Foreclosed real estate, net          7                     42
   Loss on sale of investments          7                      5
   Other                              253                    207
                                  -------                -------
    TOTAL NON-INTEREST EXPENSE      1,840                  1,659
                                  -------                -------
    INCOME BEFORE INCOME TAXES        637                    530

 INCOME TAXES                         165                    139
                                  -------                -------
        NET INCOME         $          472      $             391
                                  =======                =======
BASIC AND DILUTED NET
 INCOME PER COMMON SHARE   $         0.36      $            0.27
                                  =======                =======
DIVIDENDS PER COMMON SHARE $         0.13      $            0.13
                                  =======                =======
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