KS Bancorp (PK) (USOTC:KSBI)
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KS Bancorp, Inc. (the “Company”)
(OTCBB: KSBI), parent company of KS Bank, Inc., today announced second
quarter financial results for the 2007 fiscal year.
Consolidated earnings for the second quarter of 2007 were $238,000, or
$0.18 per diluted share, compared to earnings of $572,000, or $0.44 per
diluted share, for the same period in 2006. For the six-months ended
June 30, 2007, consolidated net income was $668,000, or $.51 per diluted
share, a decrease of $376,000, compared to $1,044,000 or $0.80 per
diluted share for the comparable six-month period of 2006. The decrease
in earnings is primarily attributed to pre-tax losses of $525,000 on the
sale of investment securities.
During the month of April 2007, the Company sold approximately $18.0
million of available-for-sale investment securities with a net realized
pre-tax loss. The securities chosen to be sold were those with the least
attractive yield, cash flow, and interest rate risk characteristics.
Subsequent to these security sales, the Company purchased approximately
$18.0 million of new securities with an overall yield 118 basis points
higher than that of the securities that were sold. Because of this
investment portfolio restructuring, the Company expects pre-tax interest
income to be enhanced by approximately $237,000 per year, thereby
resulting in an estimated 2.2 year “recovery
period” for the security losses recognized
during the current quarter. Excluding the losses we recorded to
restructure our investment portfolio, consolidated earnings for the
second quarter of 2007 would have otherwise totaled $540,000, or $0.41
per diluted share (a non-GAAP measure).
For the six months ended June 30, 2007, the Company’s
net interest income before loan loss provision was $4.8 million, an
increase of $217,000 or 4.7%, over the same period in 2006. In addition,
non-interest income increased 10.7% for the period when compared to the
six months ended June 30, 2006. This increase is primarily due to
increases in fee income on pre-sold mortgage loans. Other than the
losses recorded on the sale of investment securities, non-interest
expenses increased 14.4% for the first six months in 2007 as compared to
2006. This increase in non-interest expense is primarily attributed to
start up costs and compensation expenses associated with opening of the
Company’s new branch location in Wendell, NC.
The Company’s consolidated total assets
increased $20.8 million, or 7.2%, to $307.5 million as of June 30, 2007,
as compared to $286.7 million at December 31, 2006. Total assets at
March 31, 2007 were $303.1 million. The increase in total assets is
primarily attributable to the Company’s strong
loan demand. Loans totaled $229.1 million, an increase of $14.7 million,
at June 30, 2007 as compared to $214.3 million at December 31, 2006.
During the first six months of 2007 the Company made additional
investments in its property and equipment totaling approximately $1.9
million. This additional investment was most significantly comprised of
the Company’s purchase of its previously
leased Garner, North Carolina branch, as well as equipment that was
purchased for the Company’s new branch
located in Wendell, North Carolina.
Funding for the growth in total assets was provided from a 6.4%, or
$13.6 million, increase in total deposits. Total deposits were $227.3
million at June 30, 2007 as compared to $213.7 million at December 31,
2006. Demand deposits increased 16.7% to $72.4 million at June 30, 2007
compared to $62.1 million at December 31, 2006.
Commenting on the second quarter 2007 results, Harold Keen, President
and CEO, stated, “Our results from operations
in the second quarter remain solid. The restructuring of our securities
portfolio was a good business decision for the Company, even though our
second quarter earnings are dramatically affected. In the long run the
increased earnings from the securities portfolio will help our net
interest margin and overall profits. The Company remains focused on
building a solid banking franchise and long-term shareholder value
rather than emphasizing quarter to quarter profit goals.”
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 23, 2007, with payment to be made on
August 2, 2007.
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 offering traditional banking products and
services through its operation of seven full service branches located in
Kenly, Selma, Clayton, Garner, Goldsboro, Wilson, Smithfield, and
Wendell, 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 SubsidiaryConsolidated Statements
of Financial Condition
June 30,
2007
Dec. 31,
2006(a)
(Unaudited)
(Dollars in thousands)
ASSETS
Cash and due from banks:
Interest-earning
$
8,149
$
2,925
Noninterest-earning
1,874
3,180
Time Deposit
100
100
Investment securities:
Available for sale
50,909
51,112
Federal Home Loan Bank stock, at cost
2,757
2,494
Presold mortgages in process of settlement
513
1,313
Loans
231,691
216,822
Less Allowance for loan losses
(2,600
)
(2,449
)
Net loans
229,091
214,373
Accrued interest receivable
1,712
1,626
Foreclosed assets, net
669
560
Property and equipment, net
9,108
7,188
Other assets
2,649
1,859
TOTAL ASSETS
$
307,531
$
286,730
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
$
227,300
$
213,672
Short-term borrowings
7,431
16,352
Long-term borrowings
54,048
38,048
Accrued interest payable
503
530
Accounts payable and accrued expenses
1,023
817
TOTAL LIABILITIES
290,305
269,419
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 1,309,501 shares issued and outstanding in 2007 and 2006,
respectively
1,607
1,607
Retained earnings, substantially restricted
16,178
15,850
Accumulated other comprehensive loss
(559
)
(146
)
TOTAL STOCKHOLDERS' EQUITY
17,226
17,311
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$
307,531
$
286,730
(a) Derived from audited financial statements
KS Bancorp, Inc. and SubsidiaryConsolidated Statements
of Operations (Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2007
2006
2007
2006
(Inthousands, except per share data)
INTEREST INCOME
Loans
$
4,688
$
4,050
$
9,169
$
7,733
Investment securities:
Taxable
264
242
532
484
Tax-exempt
318
240
603
473
Dividends
41
40
79
69
Interest-earning deposits
42
36
74
81
TOTAL INTEREST INCOME
5,353
4,608
10,457
8,840
INTEREST EXPENSE
Deposits
2,169
1,720
4,276
3,273
Borrowings
713
510
1,366
969
TOTAL INTEREST EXPENSE
2,882
2,230
5,642
4,242
NET INTEREST INCOME
2,471
2,378
4,815
4,598
PROVISION FOR LOAN LOSSES
20
150
153
300
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
2,451
2,228
4,662
4,298
NON-INTEREST INCOME
Service charges on deposit accounts
327
305
616
587
Fees from presold mortgages
119
91
207
161
Other income
66
39
109
94
TOTAL NON-INTEREST INCOME
512
435
932
842
NON-INTEREST EXPENSE
Compensation and benefits
1,328
1,164
2,645
2,326
Occupancy and equipment
238
198
471
399
Data processing and outside service fees
191
188
391
369
Advertising
65
52
117
81
(Gain) loss on sale of investments
561
(4
)
525
3
Net foreclosed real estate
-
16
19
23
Other expense
338
267
615
520
TOTAL NON-INTEREST EXPENSE
2,721
1,881
4,783
3,721
INCOME BEFORE INCOME TAXES
242
782
811
1,419
INCOME TAXES
4
210
143
375
NET INCOME
$
238
$
572
$
668
$
1,044
NET INCOME PER COMMON SHARE
Basic
$
.18
$
.44
$
.51
$
.80
Diluted
$
.18
$
.44
$
.51
$
.80
DIVIDENDS PER COMMON SHARE
$
.13
$
.13
$
.26
$
.26