KS Bancorp, Inc. (KSBI) Announces Second 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 June
30, 2006. Consolidated earnings for the second quarter of 2006 were
$572,000, or $0.44 per diluted share, compared to earnings of
$422,000, or $0.30 per diluted share, for the same period in 2005.
This represents an increase in net income of 35.6% for 2006 second
quarter as compared to the 2005 second quarter.
   For the six months ended June 30, 2006, net income totaled
$1,044,000, an increase of $231,000, or 28.4% over the $813,000 for
the same period ended June 30, 2005. Net income per common share
increased 40.4% from $0.57 at June 30, 2005 to $0.80 at June 30, 2006.
Comparing the six months ended June 30, 2006 to June 30, 2005, net
income after provision for loan losses increased 10.26% from $3.9
million to $4.3 million, which is primarily due to net interest
margin.
   The Company's consolidated total assets increased $21.9 million
during the six months ended June 30, 2006 from $261.4 million at
December 31, 2005 to $283.3 million at June 30, 2006. This growth in
the Company's total assets resulted primarily from an increase of
$17.0 million in net loans from $193.4 million at December 31, 2005 to
$210.4 June 30, 2006. Funding for this growth was provided primarily
from increases in demand deposits which grew 34.2% from December 31,
2005 to June 30, 2006. Total deposits increased to $213.7 million at
June 30, 2006 representing an $18.9 million or 9.70% increase from
December 31, 2005.
   Commenting on the second quarter 2006 results, Harold Keen,
President and CEO, stated, "The first half of this year has been
excellent. We are continuing to grow profitable loans and primarily
fund the growth with demand deposits. I am delighted with the increase
in overall profits. The entire KS Bank team continues to recognize
what is important to customers, stockholders, and employees."
   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 July 21, 2006, with payment to be made
on August 4, 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

                                       June 30, 2006     December 31,
                                        (Unaudited)          2005 (a)
                                       -------------     ------------
                                           (Dollars in thousands)
ASSETS
Cash and due from banks:
  Interest-earning                     $    11,375       $     8,436
  Noninterest-earning                        1,085             1,333
  Time Deposit                                 100               100
Investment securities:
  Available for sale                        44,790            43,904
Federal Home Loan Bank stock, 
 at cost                                     2,651             2,512
Presold mortgages in process of 
 settlement                                  1,554               885

Loans                                       212,776          195,461
Less Allowance for loan losses               (2,353)          (2,085)
                                       ------------     ------------  
  Net loans                                 210,423          193,376

Accrued interest receivable                   1,404            1,354
Foreclosed assets, net                          590              568
Property and equipment, net                   7,246            7,381
Other assets                                  2,120            1,589
                                       ------------     ------------ 
              TOTAL ASSETS             $    283,338     $    261,438
                                       ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits                             $    213,661     $    194,778
  Short-term borrowings                      12,451            5,010
  Long-term borrowings                       39,955           44,955
  Accrued interest payable                      490              466
  Accounts payable and accrued expenses         934              616
                                       ------------     ------------ 
              TOTAL LIABILITIES             267,491          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 shares issued and 
   outstanding in 2006 and 2005               1,607            1,607
  Retained earnings, substantially 
   restricted                                15,046           14,342
  Accumulated other comprehensive loss         (806)            (336)
                                        ------------     ------------ 

              TOTAL STOCKHOLDERS' EQUITY     15,847           15,613
                                        ------------     ------------ 

              TOTAL LIABILITIES AND
               STOCKHOLDERS' EQUITY     $   283,338       $  261,438
                                        ============     ============

(a) Derived from audited financial statements 


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

                              Three Months Ended    Six Months Ended  
                                   June 30,             June 30,      
                              ------------------    ----------------  
                                2006        2005      2006      2005  
                               ------      ------   -------    ------ 
                                (In thousands, except per share data)
INTEREST INCOME
  Loans                       $ 4,050     $ 3,262   $ 7,733   $ 6,275
  Investment securities:
     Taxable                      242         190       484       387 
     Tax-exempt                   240         226       473       420
  Dividends                        40          35        69        55
  Interest-earning deposits        36          35        81        64
                              -------     -------   -------   --------

      TOTAL INTEREST INCOME     4,608       3,748     8,840     7,201
                              -------     -------   -------   --------

INTEREST EXPENSE
  Deposits                      1,720       1,169     3,273     2,180
  Borrowings                      510         419       969       790
                              -------     -------   -------   --------
      TOTAL INTEREST EXPENSE    2,230       1,585     4,242     2,970
                              -------     -------   -------   --------

         NET INTEREST INCOME    2,378       2,163     4,598     4,231

PROVISION FOR LOAN LOSSES         150         180       300       365
                              -------     -------   -------   --------

     NET INTEREST INCOME AFTER
     PROVISION FOR LOAN LOSSES  2,228       1,983     4,298     3,866
                              -------     -------   -------   --------

NON-INTEREST INCOME
  Service charges on deposit 
   accounts                       305         244       587       470
  Fees from presold mortgages      91          48       161        88
  Gain (loss) on sale of 
   investments                      4           5        (3)        -
  Other income                     39          12        94        52
                              -------     -------   --------  --------

     TOTAL NON-INTEREST INCOME    439         309       839       610
                              -------     -------   --------  --------

NON-INTEREST EXPENSE
  Compensation and benefits     1,164       1,066     2,326     2,101
  Occupancy and equipment         198         188       399       377
  Data processing and outside 
   service fees                   188         174       369       333
  Advertising                      52          36        81        58
  Net foreclosed real estate       16          (3)       23        39
  Other                           267         248       520       455
                              -------     --------  -------   --------

     TOTAL NON-INTEREST 
      EXPENSE                   1,885       1,709     3,721     3,363
                              -------     --------  -------   --------

    INCOME BEFORE INCOME TAXES    782         583     1,419     1,113

INCOME TAXES                      210         161       375       300
                              -------     --------  -------   --------

                   NET INCOME $   572     $   422   $ 1,044   $   813
                              =======     ========  =======   ========

NET INCOME PER COMMON SHARE                                           
  Basic                       $   .44     $   .30   $   .80   $   .57
                              =======     =======   =======   ========
  Diluted                     $   .44     $   .30   $   .80   $   .57
                              =======     =======   =======   ========

DIVIDENDS PER COMMON SHARE    $   .13     $   .13   $   .26   $   .26 
                              =======     =======   =======   ========
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