KS Bancorp’s $0.27 Dividend: A Steady Hand in a Volatile Landscape

The recent announcement of a $0.27 per share quarterly dividend by KS Bancorp (OTC PINK: KSBI) underscores the bank’s commitment to rewarding shareholders while maintaining robust financial discipline. This dividend, a continuation of its long-standing payout policy, comes amid strong first-quarter earnings growth and a solid capital position. For income-oriented investors, KS Bancorp’s track record of gradual dividend increases—paired with its community-focused business model—merits closer examination.

Dividend Growth Reflects Financial Resilience

KS Bancorp’s dividend history reveals a pattern of measured but consistent growth. Since 2022, the quarterly payout has risen from $0.20 to $0.25 in 2023, $0.26 in 2024, and now $0.27 in 2025. This trajectory reflects the bank’s ability to balance shareholder returns with reinvestment in growth. For context, the latest dividend represents a 14.4% payout ratio (calculated using Q1 2025 EPS of $1.87), leaving ample room for future increases.

The dividend’s 2.25% yield (based on a $48 stock price) is competitive for a regional bank, particularly given the sector’s sensitivity to interest rate cycles. While the bank’s shares trade at a P/E ratio of 8.86—indicating undervaluation relative to its peers—its earnings growth of 50% year-over-year to $2.1 million in Q1 2025 highlights operational strength.

Financial Health: A Strong Foundation

KS Bancorp’s Q1 2025 results demonstrate resilience in a challenging environment. Key metrics include:
- Net interest income up 23.5% year-over-year to $6.3 million, driven by deposit and loan growth.
- Total assets rose to $722.1 million, with deposits increasing by $39.4 million (a 6.3% jump) and loans climbing to $561.6 million.
- Asset quality remains pristine, with nonperforming assets at just 0.10% of total assets, supported by a robust allowance for credit losses of $4.4 million (0.79% of loans).

These figures align with the bank’s Community Bank Leverage Ratio of 9.31%, comfortably exceeding the 7% threshold for “well-capitalized” institutions. Such metrics reduce vulnerability to economic downturns and position KS Bancorp to withstand potential rate hikes or loan demand fluctuations.

Stock Price Stability Amid Minimal Volatility

KS Bancorp’s stock price has remained steady at $48 per share since mid-April 2025, as seen in recent trading data. While this represents a slight dip from its March 2025 high of $52, the stability reflects the bank’s low-risk profile and predictable earnings. Minimal trading volume (typically below 200 shares daily) suggests it remains a niche holding, potentially undervalued given its fundamentals.

Risks and Considerations

• Interest Rate Sensitivity: Like all banks, KS Bancorp’s net interest margin is tied to Fed policies. Rising rates could boost lending margins, but prolonged high rates might strain borrowers.
• Geographic Concentration: With 10 branches in eastern North Carolina, the bank’s performance hinges on local economic conditions.
• Payout Ratio Discrepancy: While calculated at 14.4%, the provided data lists a payout ratio of “0,” likely an error. Investors should verify this with updated disclosures.

Conclusion: A Steady Earnings Machine with Upside Potential

KS Bancorp’s $0.27 dividend announcement is more than a routine payout—it’s a testament to its financial acumen and shareholder-friendly ethos. With a dividend yield of 2.25%, a P/E ratio of 8.86, and a capital position that outperforms regulatory benchmarks, the bank offers income investors a stable income stream with room for growth.

The bank’s 50% year-over-year net income growth, coupled with disciplined lending and deposit growth, positions it to weather macroeconomic headwinds. While its small-cap status limits liquidity, this also creates an opportunity for long-term investors to capitalize on its undervaluation.

In a sector where volatility reigns, KS Bancorp’s steady hand makes it a compelling choice for portfolios seeking reliable dividends and capital preservation.