Annual Report

Time Tested,
Financially Trusted
To Our Shareholders, Customers
Contents
Letter to Shareholders 3
Financial Data
4
2015
Core Values Winners
6
Wealth
Management Team 7
Director Spotlight
8
Executive
9
Management Staff
Board of Directors
10
KS Bancorp
Information 11
Employees
11
The discussions included in this
document and the documents
referenced herein may contain
forward
looking
statements
within the meaning of the Private
Securities Litigation Act of 1995,
including Section 21E of the
Securities Exchange Act of 1934
and Section 27A of the Securities
Act of 1933. Such statements
involve known and unknown
risks, uncertainties and other
factors that may cause actual
results to differ materially. For
the purposes of these discussions,
any statements that are not
statements of historical fact may
be deemed to be forward looking
statements.
Such statements
are often characterized by the
use of qualifying words such as
“expects,” “anticipates,” “believes,”
“estimates,” “plans,” “projects,”
or other statements concerning
opinions or judgments of the
Company and its management
about future events.
The
accuracy of such forward looking
statements could be affected by
such factors as, including but not
limited to, the financial success or
changing conditions or strategies
of the Company’s customers,
fluctuations in interest rates,
competitive product and pricing
pressures within our markets,
technological changes, changes in
law and regulations, changes in
fiscal, monetary, regulatory and
tax policies, monetary fluctuations,
actions of government regulators,
the availability of capital and
personnel
and/or
general
economic or other conditions. You
should not place undue reliance
on forward looking statements. We
undertake no obligation to revise
or update these statements
following the date of this report.
2
Dear Fellow Shareholders,
This report of the results of 2015 for KS Bancorp, Inc. and its subsidiary, KS Bank, Inc., is written with
great enthusiasm for the immediate results shown, and for the solid groundwork that continues to be
established for the future. 2015 was a year of continued balance sheet growth, increased profits and
the addition of many solid customer relationships for KS Bank. We are also very proud of the additional
products and services added during 2015. For the year ended December 31, 2015, the Company reported
net income of $1,415,911 or $1.08 per diluted share compared to $933,490 or $.76 per diluted share at
December 31, 2014. Contributing to this 42% increase in per share earnings were the redemption of
Preferred Stock completed in September 2014, the increase in outstanding loans of $26.2 million and the
limited increase in interest expense of $125,351.
During 2015, the Company grew its balance sheet at a very moderate pace. Consolidated total assets
at December 31, 2015 were $337,434,276, an increase of 5.96% over the same period in 2014. Net loans
increased $26,225,793, or 11.85% to $247,627,288 at December 31, 2015 as compared to $221,401,495
at December 31,2014. Total deposits increased $8,598,729, or 3.45%, to $257,513,535, as compared to
$248,914,806 at December 31, 2014. Total stockholders’ equity increased 5.24% to $22,908,294 at December
31, 2014. In February 2015, the Company paid an annual dividend to stockholders of $.06 per share.
Including the KS Mortgage Services location
in Greenville, our offices can be found in five
counties and ten communities.
KS Bancorp, Inc. is a Smithfield, North
Carolina-based, single bank holding company
with approximately $337 million in assets
as of December 31, 2015. KS Bank, Inc., a
state-chartered savings bank, is KS Bancorp’s
sole subsidiary.
The Bank conducts its operations through
nine full service branch offices that are located
in Kenly, Goldsboro, Wilson, Garner, Selma,
Clayton, Wendell, Four Oaks and Smithfield,
North Carolina, as well as a mortgage
origination office in Greenville, NC. There are
87 employees at the time of this writing.
The Company emphasizes being a
community-oriented financial institution
and offers a broad range of personal and
business banking products and services,
mortgage products and wealth management.
KS Personal Services offers a complete suite
of deposit and loan products that are tailored
to specific needs, while KS Business Services
includes not only deposit and loan products
but also payroll services (through Flex Pay),
merchant card services, cash management
and remote deposit.
KS BANCORP, INC. – ANNUAL REPORT 2015
KS Mortgage Services offers competitive
mortgage products through a responsive team
of mortgage specialists. Finally, KS Wealth
Management Services offers a broad array
of services to help clients manage, protect
and build upon their financial resources.
Selected wealth management services include
investments, college savings programs,
lifetime charitable giving, business succession
planning, insurance and risk management.
In addition, the Company recently launched
a Trust Services Division which has an office
in Asheboro and a presence in Waynesville
and Wilmington, through which it offers a
complete line of trust services, such as money
management, IRAs, trust administration
and estate administration. Currently, the
Company’s stock is traded on the over-the
counter bulletin board (www.otcbb.com)
and the Pink Sheets (www.pinksheets.com)
under the symbol “KSBI.” KS Bancorp had
1,309,501 shares of common stock, which
were held by approximately 200 stockholders
of record, as of December 31, 2015.
During 2015, KS Bank made two significant additions to its products and services that will enhance
the growth of the bank and build increased value for the Company. In August, the bank added Mobile
Banking with Remote Deposit Anywhere for individual customers to its line of digital services that were
already available to business customers. The ability to complete most banking transactions through a
tablet or smartphone allows KS Bank to serve customers at their location. With transactions moving
from the teller counter to a smartphone, our team can now focus more time and energy on customer
service and ensuring that we fully meet our customers’ financial needs.
The second significant addition during 2015 was Trust and Wealth Management Services. In January,
the Bank added a full time Wealth Management and Investment Officer to replace a third party
relationship. In July, the Bank added a team of three experienced Trust Officers who brought with
them many long-time customer relationships. (Please see Wealth Management Team on page 7.) The
addition of our experienced team of Wealth Management Officers and a full complement of Wealth
Management Services is a major enhancement to KS Bank’s product offerings and will build for the
Company into the future. At December 31, 2015, Wealth Management Services had $103 million of assets
under management.
Our commitment to each of you has been one of building long-term value and continuing to build the
Company and KS Bank into the highest quality community bank. That commitment is even more present
as we enter 2016. We ask that you continue to give us your guidance, recommendations and support.
Respectfully,
Harold T. Keen
President/Chief Executive Officer
James C. Parker
Chairman of the Board
KS BANCORP, INC. – ANNUAL REPORT 2015
3
KS Bancorp, Inc. and Subsidiary
Selected Financial Data
$337,434
350,000
2015
2014
2013
2012
2011
(In Thousands, Except Per Share Amounts)
Financial Condition Data:
$305,395
$314,939
$322,932
300,000
250,000
$337,434
Total assets
73,512
Investments (1)
247,627
Loans receivable, net
257,514
Deposits
53,935
FHLB advances/other borrowings
22,908
Stockholders’ equity
17.49
Book value per common share
$318,451
200,000
$318,451
79,016
221,401
248,915
45,085
21,768
16.62
$305,395
92,082
193,642
230,083
48,463
24,338
$15.40
$314,939
94,079
196,855
243,996
43,404
25,322
$16.19
$322,932
98,000
195,370
246,464
50,181
24,316
$15.45
150,000
1,600
100,000
$1,416
1,400
50,000
0
1,200
2015
2014
2013
2012
2011
Total Assets
$994
1,000
$788
800
$531
600
Operating Data:
400
$247,627
Interest income Interest expense
Net interest income
Provision for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Income tax (benefit) expense
$13,203
2,694
10,509
114
2,083
10,345
2,133
717
$12,663
2,569
10,094
1,981
10,315
1,760
490
$12,585
2,965
9,620
161
2,315
10,459
1,315
266
$13,676
3,846
9,830
207
2,620
11,479
764
(26)
$15,057
4,850
10,207
1,483
1,574
10,461
(163)
(573)
Net (loss) income
Dividends on preferred stock
Accretion of discount on preferred stock
Net Income available to common stockholders
$1,416
$1,270
$1,049
$790
$410
5,000
$1,416
(246)
(30)
$994
(218)
(43)
$788
(218)
(41)
$531
(218)
(38)
$154
0
$154
250,000
200
$221,401
$193,642 $196,855 $195,370
0
200,000
2015
2014
2013
2012
2011
Net Income Available
To Common Stockholders
150,000
100,000
100%
90%
80%
2015
2014
2013
2012
2011
Loans Receivable, Net
70%
60%
50%
40%
Selected Other Data:
Basic earnings (loss) per share
Diluted earnings (loss) per share
Dividends per share
Return on avg assets
Return on avg equity
Avg equity to avg assets
Total risk based capital
30%
$1.08
$1.08
$0.06
0.43%
6.27%
6.86%
$0.76
$0.76
$0.00
0.32%
4.20%
7.60%
$0.60
$0.60
$0.00
0.26%
3.18%
8.04%
$0.41
$0.41
$0.00
0.17%
2.12%
7.90%
$0.12
$0.12
$0.00
0.05%
0.65%
7.19%
14.09%
15.41%
17.41%
16.70%
15.94%
(1) Includes interest-earning deposits, time deposits, investment securities, and Federal Home Loan Bank stock.
300,000
20%
$257,514
$248,915
$230,083
250,000
$243,996 $246,464
15.41%
17.41%
16.70%
15.94%
2012
2011
10%
0%
200,000
14.09%
2015
2014
2013
Total Risk Based Capital
150,000
100,000
5,000
0
2015
2014
2013
2012
2011
Deposits
4
KS BANCORP, INC. – ANNUAL REPORT 2015
KS BANCORP, INC. – ANNUAL REPORT 2015
5
KS Bank 2015 Core Values Winners
KS Bank recognizes employees throughout the year who exemplify our bank’s core values. We would
like to highlight the winners in 2015 and congratulate them for living the values we think are important.
Create Win-Win for Customer and Bank
We build and maintain personal relationships that are mutually beneficial. Through honesty and
integrity, we earn the trust of our customers. We know our customers’ names and understand what
is really important.
Pictured from left to right are Carolyn Allen- Selma Financial Counselor,
Kelly Aycock- Selma Relationship Manager and Tynisha Lucas- Wilson Financial Counselor
Learn for Life
Although employees are important for any business, this is especially true in community banking. Our success is
dependent on the experience and expertise of our employees. We provide many opportunities for growth and
personal development to staff members who are committed to serving our customers.
Pictured from left to right are Ashley Davis- Smithfield Office Manager and Peggy Fitzgerald- Accounting Technician
Make a Difference at Work & In Our Communities
We invest our time and resources, both individually and organizationally,
in the local community. We are committed to helping our communities
grow and to improving the quality of life for local residents.
Pictured from left to right are Susan Narron- Smithfield Financial
Counselor, Gail McLamb- Four Oaks Financial Counselor, Tammy
Mitchell- Business Development Officer, Cassy Massengill- Smithfield
Head Teller, Susan Narron- Smithfield Financial Counselor, Ashley DavisSmithfield Office Manager, Denise Drewry- Smithfield Customer Service
Representative and Doug Cockrell- Credit Analyst
Wealth Management Team
KS Bank added Trust Services in 2015 as part of the bank’s Wealth
Management Services. In addition to our investment and asset management
services, KS Bank clients will now have access to trust and estate planning through KS Wealth Management Services. KS Wealth Management
can also help businesses with various types of employee benefit trusts
and plans.
Sound management and investment of accumulated wealth has become
increasingly important in today’s marketplace. KS Bank is very fortunate
to bring this level of knowledge and experience to our customers.
Tim C. Britt, Chief Wealth Officer, has twenty-one years of experience in
Wealth Management, most recently as Director of Wealth Management
managing a $500 million wealth management division with $235 million
in trust assets. His background includes experience in investment
management, tax, estate and financial planning as well as administration
of various types of employee benefit trusts/plans. Tim maintains offices
in Smithfield and in Asheboro.
Jim L. Watts, Senior Portfolio Manager, has twenty-two years of
fiduciary experience. He has served as Senior Investment Strategist and
Relationship Officer. His experience includes an extensive background in
investment management, personal trust, tax planning and estate
settlement. Jim will focus on clients located in the Triad area as well as
clients in the Wilmington area.
Roger K. Thomas, Senior Wealth Consultant, has nine years of fiduciary
experience. His background includes investment management, personal
tax, tax planning and estate planning as well as administration of
employee benefit accounts (specifically 401k plans). He has served as a
Relationship Manager and Employee Benefits Officer. Roger will focus on
serving clients in Waynesville, Wilkesboro, North Wilkesboro, Lexington
and Triad areas.
Matt T. Keen, Wealth Management Financial Advisor, holds Series 7
and 66 securities licenses (held with LPL Financial), as well as NC Life
and Health licenses. Matt’s experience includes working as a private
financial advisor for a regional financial institution in Maryland. He is
responsible for delivering advisory solutions for investments, insurance,
retail lending, mortgages, financial planning and estate planning.
W. Nikki Murray rounds out our Wealth Management team as Wealth
Management Assistant. She joined KS Bank in 2014 as a Customer
Service Representative in the Smithfield Retail Office.
Always Do the Right Thing
Our success is dependent upon our ability to work together as a team. We value cooperation
and collaboration. Our commitment to trust, relationships and personal service must extend to
our interactions with each other.
Pictured from left to right are Cassy Massengill- Smithfield Head Teller, Nikki MurrayWealth Management Assistant, Melissa Curry- Kenly Customer Service Representative,
Tammy Oldham- Credit Analyst and Kathy Salzmann- Deposit Operations Specialist
Work with Focus & 100% Engagement
We want to develop existing relationships and continue to expand our locations and
services into more communities. In order to do this, we need to recognize and adapt to
the changing needs of our customers and communities.
Pictured from left to right are Tammy Mitchell- Business Development Officer,
Linda Holloman- Director of Operations, Jessica MacDougall- Loan Processor and
Nikki Murray, Wealth Management Assistant
6
KS BANCORP, INC. – ANNUAL REPORT 2015
Pictured from left to right are Jim Watts- Senior Portfolio Manager,
Nikki Murray- Wealth Management Assistant, Matt Keen- Wealth
Management Financial Advisor, Roger Thomas- Senior Wealth
Management Consultant, and Tim Britt- Chief Wealth Officer
KS BANCORP, INC. – ANNUAL REPORT 2015
7
Director Spotlight
Harold T. Keen,
KS Bank President/CEO
Being born and raised in Johnston
County, Harold T. Keen contends
that he is one of the luckiest people
alive because he continues to live
on his family farm in Four Oaks
today. Harold built his house as a
single young man and he and his
wife, Barbara, have lived there since
they were married. They raised a
daughter, Catherine, and a son,
Matthew, on the farm, and now,
their granddaughter, Clara, visits the
family farm when she comes from
Greensboro, NC.
Harold’s career started in the
military as an Army helicopter pilot.
During his three and a half years in
the Army, he spent a year flying a
helicopter in the Vietnam War. After
serving his country, Harold spent
two years working with his brother in
a company that helped people with
little or no education get semi-skilled
jobs. Then he spent a year owning
a Sizzler Family Steakhouse with
his brother and decided that the
restaurant business was not for him.
As luck would have it, when Harold
came home to be with his father and
to complete his accounting degree
at Johnston Community College, a
visit to Smithfield Savings & Loan
Association for a home loan ended
with a loan and a job opportunity.
In October of 1975, Harold joined
Smithfield Savings & Loan
Association and he has remained
in banking ever since.
In January of 1983, Smithfield
S & L merged with Raleigh Federal
Savings Bank and increased
responsibilities eventually led Harold
to the corporate office in downtown
Raleigh. An opportunity to work
back in Johnston County came in
1990 with the retirement of Harold
McRae who had managed Kenly
Savings & Loan Association for
many years. Working with a Board
of Directors who wanted to see
Kenly Savings & Loan move forward
to become a community bank was
a growth opportunity that Harold
eagerly accepted.
Under Harold’s leadership, the
organization expanded into offering
checking accounts and other bank
products/services for the first time
since its establishment in 1924.
With that progression, Harold has
seen other significant events in the
8
life of KS Bank. These changes
include the transition from a mutual
S & L to a stockholder owned
company. The organization became
a traditional savings bank offering a
full range of banking products and
services. Through the years, the
bank has continued to evolve and
now offers state-of-the-art technology
and electronic/mobile banking.
Harold’s hope for KS Bank in
the future is that we continue to
be a financial provider that truly
helps businesses and individuals
realize their financial goals and
dreams. He believes our strengths
are that we are integrated into the
local communities through our
employees and directors. Also, we
focus on making sound business
decisions and avoid taking undo
risks. Operating as a locally owned
and controlled financial institution
in Eastern North Carolina is another
major strength for KS Bank.
When asked to describe his “perfect
day”, Harold quickly says that he
gets to live his perfect day most
every day of his life. He gets to
live on a farm that has been in his
family since the 1780’s, he gets to
share “this endeavor we call work”
with folks who share his focus on
serving the community, and he has
a supportive family around him who
have always encouraged and helped
him in his career and everyday
life. What would make his day even
better than perfect is if he could get
KS BANCORP, INC. – ANNUAL REPORT 2015
a hug from his granddaughter every
day!
Harold adds, “Barbara and I are very
blessed. We raised our family on our
farm and they are good young adults
who prepared themselves, through
education and life experiences,
to be on their own. We live in a
community where we grew up with
loving, caring adults and now we get
to interact with them as colleagues
to enhance the quality of life in Four
Oaks and Johnston County.
Harold’s family includes his daughter,
Catherine K. Hock, who works as a
counselor for Masters and Doctoral
students in the School of Music at
UNC- Greensboro. She is married to
Noah, who is the Business Manager
for the School of Music at UNC –
Greensboro, and their daughter is
Clara. Harold’s son, Matthew, is
currently working with KS Bank
as part of the Wealth Management
Services team. He is responsible
for delivering advisory solutions for
investments, insurance, financial
planning and estate planning.
Harold has been involved in many
civic and professional organizations
throughout his career; however, if
he had to choose one that meant a
lot to him, he would say that being
a founding member of the Johnston
County Education Foundation
was especially meaningful. He
was instrumental in bringing
Showcase of Stars to the county
which continues today as the largest
fundraiser for the foundation. He
received an Honorary Hero Award
from Johnston County Schools
for his work with the Education
Foundation.
Other organizations in which he
has been involved include the
NC Banking Commission, the
NC Teachers & State Employees’
Retirement System Board of
Trustees, Coastal Pines of Carolina
Girl Scouts Board member, First
Baptist Church of Four Oaks, Four
Oaks Civitan Club, South Johnston
High School Advisory Board, and
Greater Smithfield-Selma Chamber
of Commerce. He is most proud of
two awards he received during his
career. They are the Order of the
Long Leaf Pine award from the State
of North Carolina in 2000, while
Governor Jim Hunt was in office,
and the 2010 Distinguished Citizen
Award from the Greater SmithfieldSelma Area Chamber of Commerce.
Executive Management Staff
Harold T. Keen
President/CEO
Earl W. Worley, Jr.
Chief Operating Officer
Regina J. Smith
Chief Financial Officer
Tim Britt
Chief Wealth Officer
Timothy N. Taylor
Chief Credit Officer
H. Geoffery Kokiko
Senior Retail Officer
Deborah A. Pattison
Director of Human Resources
KS BANCORP, INC. – ANNUAL REPORT 2015
9
Board of Directors
James C. Parker
Chairman
Gordon C. Woodruff
Vice-Chairman
Harold T. Keen
President/CEO
KS Bancorp Information
Annual Meeting
The Annual Shareholder’s Meeting
will be held on May 12, 2016 at
7:00 PM in the Corporate Office at
1031 North Brightleaf Blvd in
Smithfield, North Carolina.
President/CEO
Harold T. Keen
Corporate Information
1031 N Brightleaf Blvd
Smithfield, NC 27577
Phone 919-938-3101
Fax
919-938-2681
http://www.ksbankinc.com
Chief Financial Officer
Regina J. Smith
Annual Report
A copy of KS Bancorp’s Annual
Report can be furnished without
a charge by writing to:
Regina J. Smith, CFO/SVP
KS Bank, Inc.
P.O. Box 661
Smithfield, NC 27577
Common Stock
The Company had 1,309,501
shares of Common Stock
outstanding, which were held
by approximately 200 holders of
record (excluding shares held in
street name), as of December 31,
2015. The Common Stock was
listed for quotation on the OTC
Bulletin Board and the “Pink
Sheets” at www.pinksheets.com
and trades under the symbol KSBI.
R. Edward Scott, Jr.
Director
Sidney E. Sauls
Director
B. Kenneth Jones II
Director
Stock Transfer Agent:
Shareholders needing information
on stock-transfer requirement or
lost certificates write to:
Issuer Direct Corporation
500 Perimeter Park Drive
Suite D
Morrisville, NC 27560
Independent Certified Public
Accountants for 2015:
Dixon Hughes Goodman, LLC
1003 Red Banks Rd
P.O. Drawer 20157
Greenville, NC 27858
Special Legal Counsel:
Brooks, Pierce, McLendon,
Humphrey & Leonard, LLP
P.O. Box 26000
Greensboro, NC 27420
Eugene D. Jackson
Director
10
KS BANCORP, INC. – ANNUAL REPORT 2015
Lisa H. Brogdon
Director
Earl W. Worley, Jr.
Director
Photography Credit:
Photos by Tracy McKinley
Smithfield, NC
Graphic Design & Layout:
CHO Design Studios
Clint Overby
Four Oaks, NC
Chief Operating Officer
Earl W. Worley, Jr.
Corporate Secretary
Joy B. Watson
Denise W. Elliott
Executive Management
Timothy C. Britt
H. Geoffrey Kokiko
Deborah A. Pattison
Timothy N. Taylor
BRANCH PERSONNEL
Clayton Branch
Charles Marcom
Jessica Fromer
Tina Willis
Four Oaks Branch
Gail McLamb
Michelle Pearce
Garner Branch
John Kerr
Charlotte Truelove
Audra Hannig
Anna Wommack
Goldsboro Branch
David Barber
Dawn Skelton
Felicia Carter
Hannah Giddens
Jennifer Smith
Kenly Branch
Shannon Kirby
Melissa Curry
Karrie King
Selma Branch
Kelly Aycock
Carolyn Allen
Karen Davis
Vicky Wall
Smithfield Branch
Bill Clarke
Ashley Davis
Susan Narron
Cassy Massengill
Denise Drewry
Wendell Branch
Kyle Williams
Mary Griffin
Doreen Hogan
Wilson Branch
Justin Keene
Tynisha Lucas
Alyshia Mooring
Roving Tellers
Sarah Langston
Rusty Renfrow
Kaye Wood
Mortgage Banking
Tracie Worley
Greg Fader (Greenville)
ADMINISTRATION
Accounting
Regina Smith
Peggy Fitzgerald
Helen Pollock
Deborah Whaley
Diana Whitehurst
Business Development
Tammy Mitchell
Credit Administration
Timothy N. Taylor
Doug Cockrell
Blair Hester
Tammy Oldham
John Parker
Shaye Wagaman
Director of Operations
Linda Holloman
Deposit Operations
Wendy Langston
Kathy Salzmann
Stephanie Simpson Ryan
E-Banking
Brandy Ward
Loan Operations
Emily Rhodes
Karen Aycock
Candace Bennett
Crystal Boswell
Connie Brown
Wanda Daniels
Greta Edwards
Candy Johnson
Jessica MacDougall
Executive
Administrator
Denise Elliott
Human Resources
Deborah A. Pattison
Heidi Watkins
Joy Watson
Information Technology
Tracy McKinley
Gary Langston
Chase Smith
Internal
Auditor/Compliance
Marilyn Logan
Marketing
Michele Grady
KS Wealth Management
Services
Timothy C. Britt
Matt Keen
Nikki Murray
Roger Thomas
Jimmy Watts
Couriers
Ted Morgan
Mack Ward
“KS Bank is an Equal Opportunity/Affirmative Action
Employer – Minority/Women/Disabled/Veteran”
“EEO Is The Law”
KS BANCORP, INC. – ANNUAL REPORT 2015
11