KS Bancorp : Fourth Quarter 2016-December 31, 2016

KS BANCORP, INC P.O. BOX 661 SMITHFIELD, NC 27577 PRESS RELEASE

Contact: Harold T. Keen Regina J Smith

President and Chief Executive Officer Chief Financial Officer

[phone] [phone]

KS Bancorp, Inc. (KSBI) Announces Fourth Quarter 2016 Financial Results and Dividend

Smithfield, NC-(Globe Newswire)-January 25, 2017 KS Bancorp, Inc. (the "Company") (OTCBB: KSBI), parent company of KS Bank, Inc. (the "Bank"), announced unaudited net income of $610,000, or $.47 per diluted share, for the three months ended December 31, 2016, compared to a net income of $417,000, or $.32 per diluted share, for the three months ended December 31, 2015.

For the twelve months ended December 31, 2016, net income totaled $2.1 million, a $693,000 increase, or 49% from $1.4 million for the same period ended December 31, 2015. Net income per common share increased from $1.08 at December 31, 2015 to $1.61 at December 31, 2016.

Net interest income for the three months ended December 31, 2016 was $2.9 million, compared to $2.7 million for the same period in 2015. Non-interest income for the three months ended December 31, 2016 was $739,000, compared to $615,000 for the same period ended December 31, 2015. There was a slight increase in noninterest expense for the three months ended December 31, 2016. Noninterest expense was $2.6 million for the three months ended December 31, 2016, as compared to $2.5 million for the same period ended December 31, 2015.

For the twelve months ended December 31, 2016, net interest income was $11.2 million compared to $10.5 million for the twelve months ended December 31, 2015. Noninterest income increased 33% or $699,000 from $2.1 million for the twelve months ended December 31, 2015 to $2.8 million for the same period ended December 31, 2016. The increase in noninterest income is primarily attributable to income from the Company's Trust Department Division. For the twelve months ended December 31, 2016, noninterest expense was $10.7 million, as compared to $10.3 million for the same period ended December 31, 2015.

The Company's unaudited consolidated total assets increased $22.3 million to $359.7 million at December 31, 2016, compared to $337.4 million at December 31, 2015. Net loan balances increased $18.4 million with a balance of $266.0 million at December 31, 2016, compared to

$247.6 million at December 31, 2015. The Company's investment securities totaled $66.2 million at December 31, 2016, compared to $67.6 million at December 31, 2015 which reflects a

$1.4 million decrease. Total deposits increased 11.0% or $28.2 million to $285.7 million at December 31, 2016, compared to $257.5 million at December 31, 2015. Total stockholders' equity increased $1.5 million from $22.9 million at December 31, 2015 to $24.4 million at December 31, 2016.

Nonperforming assets, which includes nonaccrual loans and foreclosed real estate, represent less than 1.0 % of the total assets. The nonperforming assets consist of $193,000 in foreclosed real estate and $2.1 million in nonaccrual loans. For the twelve months ended December 31, 2016,

$5,000 was expensed to the provision for loan losses. The allowance for loan losses at December 31, 2016 totaled $3.8 million, or 1.40% of all outstanding loans.

KS Bank continues to be well-capitalized according to regulatory standards with total risk- based capital of 14.02%, tier 1 risk- based capital of 12.95%, common equity tier 1 risk- based capital of 12.76%, and a tier 1 leverage ratio of 9.69% at December 31, 2016. The minimum levels to be considered well capitalized for each of these ratios are 10.0%, 8.0%, 6.5%, and 5.0%, respectively.

In addition, the Company announced today that its Board of Directors voted to declare an annual dividend based on 2016 earnings of $.12 per share for stockholders of record on January 30, 2017 with payment to be made on February 14, 2017.

Commenting on the year end results, Harold T. Keen, President/CEO stated, "Reflecting on 2016, we are extremely pleased that we were able to increase net income by 49% over the 2015 year end results. The Bank continues to experience steady asset growth with increased profitability due to our ability to grow loans and core deposits. Our Team has made great efforts in all of these areas. We will continue to focus on community banking and serving the communities where we live, work, play, 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. The Bank offers a broad range of personal and business banking products and services, mortgage products and wealth management advisory services. 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. In addition, KS Wealth Management has an office in Asheboro, NC and maintains a presence in Waynesville and Wilmington, 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

Dec 31 2016 December 31, (unaudited) 2015*
ASSETS	(Dollars in thousands)
Cash and due from banks: Interest-earning	$ 8,744 $ 3,839
Noninterest-earning	1,708 836
Time Deposit	100 100
Investment securities available for sale, at fair value	66,208 67,582
Federal Home Loan Bank stock, at cost	1,791 1,991
Loans	269,843 251,163
Less allowance for loan losses	(3,772) (3,535)
Net loans	266,071 247,628
Accrued interest receivable	1,086 1,008
Foreclosed real estate and repossessions, net	193 753
Property and equipment, net	7,767 8,059
Other assets	6,029 5,638
Total assets	$ 359,697 $ 337,434

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities Deposits	$	285,755	$	257,514
Short-term borrowings	2,789	10,687
Long-term borrowings	43,248	43,248
Accrued interest payable	281	272
Accrued expenses and other liabilities		3,233		2,805
Total liabilities		335,306		314,526
Stockholder's Equity: Common stock, no par value, authorized 20,000,000 shares; 1,309,501 shares issued and outstanding in 2016 and 2015	1,607	1,607
Retained earnings, substantially restricted	23,513	21,508
Accumulated other comprehensive (loss)		(729)		(207)
Total stockholders' equity		24,391		22,908
Total liabilities and stockholders' equity	$	359,697	$	337,434
* Derived from audited financial statements

KS Bancorp, Inc and Subsidiary

Consolidated Statements of Income (Unaudited)

Three Months Ended Twelve Months Ended Dec 31, Dec 31,

2016 2015 2016 2015

( In thousands, except per share data)
Interest and dividend income:
Loans	$ 3,200	$ 2,999 $ 12,516	$ 11,584
Investment securities
Taxable	289	310 1,191	1,261
Tax-exempt	55	50 195	267
Dividends	21	24 87	84
Interest-bearing deposits	5	1 25	7

Total interest and dividend income 3,570 3,384 14,014 13,203

Interest expense:

Deposits	334	314	1,320	1,248
Borrowings		375		364		1,469		1,446
Total interest expense		709		678		2,789		2,694
Net interest income	2,861	2,706	11,225	10,509
Provision for loan losses		-		114		5		114
Net interest income after provision for loan losses		2,861		2,592		11,220		10,395
Noninterest income: Service charges on deposit accounts	338	332	1,364	1,257
Fees from presold mortgages	92	18	311	145
(Loss) on sale of investments	-	-	(26)	-
Other income		309		265		1,133		681
Total noninterest income		739		615		2,782		2,083
Noninterest expenses: Compensation and benefits	1,636	1,671	6,621	6,431
Occupancy and equipment	317	269	1,261	1,065
Data processing & outside service fees	158	239	762	925
Advertising	24	23	95	63
Net foreclosed real estate	(11)	(147)	(96)	(116)
Other		533		488		2,080		1,977
Total noninterest expenses		2,657		2,543		10,723		10,345
Income before income taxes	943	664	3,279	2,133
Income tax		333		247		1,170		717
Net income	$	610	$	417	$	2,109	$	1,416
Basic and Diluted earnings per share	$	0.47	$	0.32	$	1.61	$	1.08