KS Bancorp's Q1 Surge: A Dividend Powerhouse in a Tightening Market?

Investors, listen up! KS Bancorp (KSBI) just delivered a Q1 earnings report that’s got me excited—and I’m not one to mince words. A 50% jump in net income to $2.1 million, a dividend hike, and $31 million in new assets? This isn’t just growth—it’s a blueprint for thriving in a volatile banking sector. Let’s dive in.

The Numbers Are Smoking—But What Do They Mean?

First off, net income soaring 50% to $2.1 million ($1.87 per share) isn’t a typo. The bank’s net interest income spiked 23.5% year-over-year to $6.3 million, driven by strategic lending and deposit growth. Deposits jumped $39.4 million to $657.6 million, with core deposits leading the charge—a sign of sticky customer relationships.

But here’s the kicker: asset quality remains pristine. Nonperforming assets? Less than 0.10% of total assets, with a $4.4 million allowance for credit losses covering 0.79% of loans. That’s textbook conservative banking. And their Community Bank Leverage Ratio hit 9.31%, up from 9.24% at year-end—a clear signal of strength.

The Dividend: A 30% Boost Over 2024—Is This a Buy?

The Board just declared a $0.27 per share dividend, up 4% from Q4 2023 and a 30% surge from Q1 2024. This isn’t just a payout—it’s a confidence play. With earnings per share up to $1.87, this dividend represents a 14.4% payout ratio, leaving ample room to grow.

Compare that to peers like First Horizon (FHN) or Truist (TRI), which have payout ratios hovering around 30-40%. KSBI’s conservative approach here is a huge plus for income investors.

Why This Matters in Today’s Banking Landscape

Let’s face it—the banking sector is a minefield right now. Fed rate hikes, credit tightening, and regional bank jitters dominate headlines. But KS Bancorp isn’t just surviving—it’s dominating its niche.

CEO Earl Worley nailed it: “Disciplined lending and deposit growth” are their keys to success. With $96.5 million in investment securities and $722 million in total assets, they’re not overreaching. Instead, they’re building a fortress balance sheet in a community-focused market.

The Risks? Minimal—But Keep an Eye Here

No stock is risk-free. If the Fed hikes rates further, KSBI’s net interest margin could face pressure. Also, its small-cap status means liquidity is thinner (OTC Pink Market, ~1.1 million shares outstanding). But with noninterest expenses under control (up only $400k vs. $31M in deposit growth) and a 9.31% leverage ratio, I’m not sweating it.

Final Verdict: Buy Now—But Check the Math

Here’s why I’m telling you to add this to your portfolio:
- Dividend yield at current prices: If the stock is trading around $27 (hypothetical, as it’s OTC), that’s a 1% yield—small but growing fast.
- Valuation: At $27/share, KSBI’s P/E is ~14.5x, cheaper than most regional banks trading at 15-20x.
- Growth runway: Eastern NC has steady demand for community banking, and KSBI’s 10 branches are well-positioned.

This isn’t a moonshot stock—it’s a steady dividend growth machine in a sector that’s due for a comeback. If you’re after safety and income, KSBI is a no-brainer.

Action Alert: Consider adding shares now, especially if you can snag them below $28. The dividend hike and balance sheet strength make this a buy—not a pass.

In a world of banking volatility, KS Bancorp is proving you don’t need to be a megabank to thrive. This is the kind of stock that wins in good times and bad.

Conclusion: KS Bancorp’s Q1 results are a masterclass in community banking done right. With a 50% net income surge, a 30% dividend hike since 2024, and rock-solid asset quality, this is a stock that delivers both growth and income. The numbers don’t lie: this is a buy for the long haul.