KS Bancorp, Inc. (KSBI) Announces Fourth Quarter 2005 Financial Results and Cash Dividend

KS Bancorp, Inc. (OTCBB: KSBI), parent company of KS
Bank, Inc., reports today financial results for the quarter ended
December 31, 2005. The Company ended the year with a 30.9% increase in
net income over 2004. In addition, the Company grew assets 10.4%
during the year.
   For the fourth quarter of 2005 consolidated earnings were
$451,000, or $.34 per diluted share, compared to earnings of $429,000,
or $0.30 per diluted share, for the same period in 2004. Year to date
net income increased 30.8% from $1,290,000 at December 31, 2004 to
$1,688,000 at December 31, 2005 resulting in a 36.2% increase for the
year in net income per common share. Net interest income for the year
ended December 31, 2005 totaled $8.6 million, an increase of $964,000
or 12.7% over the $7.6 million for the year ended December 31, 2004.
This increase is primarily due to loan growth and growth in investment
securities. The investment portfolio grew 11.6% and the loan portfolio
grew 8.6% in 2005.
   The Company has continued its growth in consolidated total assets,
which increased $24.5 million or 10.3% during the twelve months ended
December 31, 2005 from $236.9 million at December 31, 2004 to $261.4
million at December 31, 2005. This growth in the Company's total
assets resulted primarily from an increase of $14.4 million in net
loans from $178.9 to $193.3 at December 31, 2004 and December 31,
2005, respectively. In addition, investments increased $4.5 million.
Funding for this growth was provided primarily from increases in
customer deposits. Total deposits increased to $194.8 million at
December 31, 2005. This represents a $25.5 million or 15.1% increase
from December 31, 2004.
   Total stockholders' equity decreased $3.3 million from $18.9
million at December 31, 2004 to $15.6 million at December 31, 2005. On
March 15, 2005 the Company filed an amendment to its Articles of
Incorporation which provided for a 1-for-200 reverse stock split that
became effective at 6:00 p.m. E.S.T on March 17, 2005, and a
subsequent 250-for-1 forward stock split that became effective at 6:00
a.m. on March 18, 2005. The decrease in equity is the result of the
repurchase of common shares pursuant to the Company's
recapitalization, as well as a separate repurchase of a block of
shares that became available to the Company. A total of 172,555 shares
were repurchased at a total cost of $3.8 million. On June 27, 2005,
the Company issued $5.2 in Junior Subordinated Debentures. These funds
provided additional capital for on going operations and funding for
the block repurchase. As of December 31, 2005, KS Bancorp had
1,309,501 common shares issued and outstanding.
   Commenting on 2005 results, Harold Keen, President and CEO,
stated, "I am delighted with the 2005 results and reaching our goals
for the year. We began 2005 by targeting relationship growth in both
deposits and loans, and we were successful growing both areas. The
entire KS Bank team continues to build solid customer relationships
that will allow us to grow the value of KS Bancorp."
   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 January 23, 2006, with payment to be
made on February 2, 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
----------------------------------------------------------------------
                                          Dec 31, 2005    Dec 31, 2004
                                           (Unaudited)      (Audited)
                                          ------------    ------------
                                                  (In thousands)
ASSETS
Cash and due from banks:
  Interest-earning                         $    8,436      $    5,137
  Noninterest-earning                           1,333           1,038
  Time Deposit                                    100             100
Investment securities:
  Available for sale                           43,904          39,358
Federal Home Loan Bank stock, at
 cost                                           2,512           2,558
Presold mortgages in process of
 settlement                                       884             138

Loans                                         195,461         180,302
Less Allowance for loan losses                 (2,085)         (1,419)
                                           -----------      ----------
  Net loans                                   193,376         178,883
                                          
Accrued interest receivable                     1,354           1,114
Foreclosed assets, net                            567             545
Property and equipment, net                     7,381           6,859
Other assets                                    1,590           1,138
                                           ----------      ----------
                    TOTAL ASSETS           $  261,437      $  236,868
                                           ==========      ==========
LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits                                 $  194,778      $  169,264
  Securities sold under agreements
   to repurchase                                  510             114
  Advances from Federal Home Loan
   Bank                                        44,300          47,900
  Junior subordinated debentures                5,155               -
  Accrued interest payable                        466             314
  Accounts payable and accrued
   expenses                                       615             356
                                            ---------      ----------
                 TOTAL LIABILITIES            245,824         217,948
                                            ---------      ----------
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 2005
   and 2004, respectively                       1,607           5,420
  Retained earnings, substantially
   restricted                                  14,342          13,638
  Accumulated other comprehensive
   loss                                          (336)           (138)
                                           ----------      ----------
             TOTAL STOCKHOLDERS' EQUITY        15,613          18,920
                                           ----------      ---------- 

                    TOTAL LIABILITIES AND
                     STOCKHOLDERS'EQUITY   $  261,437      $  236,868
                                           ==========      ========== 



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

                               Three Months Ended  Twelve Months Ended
                                  December 31,        December 31,
                               -----------------  -------------------
                                   2005     2004      2005     2004
                               ----------  ------   --------  -------
                                (In thousands, except per share data)
INTEREST INCOME
  Loans                          $  3,625  $2,858   $ 13,380 $ 10,596
  Investment securities:
     Taxable                          201     208        781      862
     Tax-exempt                       232     168        882      473
  Dividends                            29      22        108       74
  Interest-earning deposits            59      18        168       54
                                 --------  ------    -------  -------
          TOTAL INTEREST INCOME     4,146   3,274     15,319   12,059
                                 --------  ------    -------  -------

INTEREST EXPENSE
  Deposits                          1,481     861      5,032    3,092
  Borrowings                          525     385      1,726    1,370
                                 --------  ------    -------   ------
         TOTAL INTEREST EXPENSE     2,006   1,246      6,758    4,462
                                 --------  ------    -------   ------
            NET INTEREST INCOME     2,140   2,028      8,561    7,597

PROVISION FOR LOAN LOSSES             200     111        785      365
                                 --------  ------    -------   ------
      NET INTEREST INCOME AFTER
      PROVISION FOR LOAN LOSSES     1,940   1,917      7,776    7,232
                                 --------  ------    -------   ------
NON-INTEREST INCOME
  Service charges on deposit
   accounts                           276     219      1,027      903
  Fees from presold mortgages          96      30        246      115
  Gain on sale of investments           -       7          -       10
  Other income                         45      13        113       72
                                 --------  ------     ------   ------
      TOTAL NON-INTEREST INCOME       417     269      1,386    1,100
                                 --------  ------     ------   ------
NON-INTEREST EXPENSE
  Compensation and benefits         1,032     983      4,235    3,855
  Occupancy and equipment             205     191        778      781
  Data processing and outside
   service fees                       177     174        681      620
  Advertising                          34      41        129      144
  Net foreclosed real estate           45      56         86      169
  Other                               247     236        961      953
                                 --------  ------     ------    -----
     TOTAL NON-INTEREST EXPENSE     1,740   1,681      6,870    6,522
                                 --------  ------     ------    -----
     INCOME BEFORE INCOME TAXES       617     505      2,292    1,810

INCOME TAXES                          166      76        604      520

                     NET INCOME  $    451  $  429   $  1,688 $  1,290
                                 ========  ======   ======== ========
NET INCOME PER COMMON SHARE (1)
  Basic                          $   0.34  $ 0.30   $   1.24 $   0.91
                                 ========  ======   ======== ========
  Diluted                        $   0.34  $ 0.30   $   1.24 $   0.91
                                 ========  ======   ======== ========
DIVIDENDS PER COMMON SHARE (1)   $   0.13  $ 0.13   $   0.52 $   0.54
                                 ========  ======   ======== ========

(1) Per share amounts have been adjusted to reflect the effect of the
1-for-200 reverse stock split effected on March 17, 2005 and the
250-for-1 forward stock split effected on March 18, 2005.
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