lsb_8k1106.htm

101 Main St.

P.O. Box 1628

Lafayette, IN 47902

(765) 742-1064

www.LSBANK.com

lsbmail@LSBANK.com

FOR IMMEDIATE RELEASE:		FOR FURTHER INFORMATION CONTACT:
November 6, 2008		Randolph F. Williams
		President/CEO
		(765) 742-1064
		Fax: (765) 429-5932

LSB Financial Corp. Announces Third Quarter and Year-to-Date Results

and Payment of a Cash Dividend

Lafayette, IN - LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported third quarter earnings of $392,000 or $0.25 per share, and earnings for the first nine months of 2008 of $1,429,000 or $0.92 per share. These results compared to 2007 third quarter and year-to-date earnings of $0.46 and $1.22 per share, are encouraging considering the current economy. Our net portfolio loans were $323.0 million as of the end of September 2008, up almost 9% since year-end, with deposits up 9.6% at $254.2 million for that same period.

LSB President & CEO, Randolph F. Williams stated, “Last quarter we started our comments by saying that the national economic picture was bleak. The recently released Consumer Confidence Index, at an all-time low, confirms consumer worries. The Federal Reserve’s most recent rate lowering of key interest rates is one of several steps intended to help the nation climb out of recession. While improvements in the local economy continue to be encouraging, national economic concerns remain. The unemployment rate for Tippecanoe County dropped to 4.5% in September, while the State of Indiana’s unemployment level dropped to 6.2%. According to the most recent data released by the Office of Federal Housing Enterprise Oversight, the Lafayette market now ranks near the top third of the 292 largest Metropolitan Statistical Areas in housing appreciation with a 12-month increase of 1.33%. Tippecanoe County clearly seems to have weathered the housing storm better than hard-hit markets like Stockton, California and Naples, Florida where the housing appreciation is -31.6% and -22.1% respectively.

Williams continued, “We planned for 2008 to be a difficult year and we are pleased with our progress. Our team continues to work diligently to monitor and improve the credit quality of our loan portfolio. Non-performing loans as of September 30, 2008 were $8.7 million compared to $10.0 million at December 31, 2007 and $11.2 million at September 30, 2007. Out of the $8.7 million of non-performing loans, $1.8 million are loans we have restructured and which are now paying as agreed. Other real estate owned stands at $1.7 million, down 57% from year-end 2007. Our loan loss reserve is at $3.6 million or 1.11% of total loans.

Williams continued, “We continue to see pressure on the net interest margin. For the first nine months of 2008 our margin was 3.02%, a decrease of 47 basis points when compared to the first nine months of 2007. Some of this decrease is a reflection of the prime rate which is currently at 4.00% compared to 7.75% at the same time last year, a decrease of 375 basis points. Conversely, deposit rates are down less than 50 basis points as the liquidity needs of larger banks keep them active in the deposit market. We have attempted to offset these trends by focusing on non-interest income, up 5.3% and managing our non-interest expenses which are up only 1.6% compared to the same period last year”.

Williams added, “Our capital ratio at 9.28% at September 30, 2008, is considered well-capitalized by the federal regulators. As a community bank we focus on maintaining strong capital levels as an assurance that our depositors’ money is safe. Capital is widely considered the first line of defense against unforeseen losses of any type.”

The Company also announced that it will pay a quarterly cash dividend of $0.25 per share to shareholders of record as of the close of business on November 20, 2008 with a payment date of December 5, 2008. Williams stated, “We are pleased to be able to return equity to our shareholders in the form of a higher dividend. The annualized dividend rate is 6.7% and is particularly valuable based on the favorable dividend tax rate.”

The closing market price of LSB stock on November 5, 2008 was $15.01 per share as reported by the NASDAQ National Market.

LSB FINANCIAL CORP. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands except share and per share amounts)
Selected balance sheet data:	September 30, 2008			December 31, 2007

Cash and due from banks	$	1,370		$	1,644
Short-term investments		8,281			4,846
Securities available-for-sale		11,938			13,221
Loans held for sale		548			---
Net portfolio loans		322,430			296,908
Allowance for loan losses		3,614			3,702
Premises and equipment, net		6,569			6,815
Federal Home Loan Bank stock, at cost		3,997			3,997
Bank owned life insurance		5,784			5,613
Other assets		6,440			8,966
Total assets		367,357			342,010

Deposits		254,246			232,030
Advances from Federal Home Loan Bank		76,756			74,256
Other liabilities		2,246			1,792

Shareholders’ equity		34,109			33,932
Book value per share	$	21.96		$	21.78
Equity / assets		9.28	%		9.92	%
Total shares outstanding		1,553,525			1,557,968

Asset quality data:
Non-accruing loans	$	6,905		$	8,317
Loans past due 90 days still on accrual		---			59
Loans restructured in the last 12 months		1,778			1,618
Other real estate / assets owned		1,686			3,944
Total non-performing assets		10,369			13,938
Non-performing loans / total loans		2.69	%		3.37	%
Non-performing assets / total assets		2.82	%		4.08	%
Allowance for loan losses / non-performing loans		41.62	%		37.04	%
Allowance for loan losses / non-performing assets		34.85	%		26.56	%
Allowance for loan losses / total loans		1.11	%		1.23	%
Loans charged off	$	959		$	672
Recoveries on loans previously charged off		19			38

	Three months ended September 30,						Nine months ended September 30,
Selected operating data:	2008			2007			2008			2007

Total interest income	$	5,295		$	5,769		$	16,090		$	17,366
Total interest expense		2,855			2,929			8,507			8,686
Net interest income		2,440			2,840			7,583			8,680
Provision for loan losses		352			180			852			920
Net interest income after provision		2,088			2,660			6,731			7,760
Non-interest income:
Deposit account service charges		465			486			1,293			1,371
Gain on sale of mortgage loans		34			37			58			174
Gain(loss) on sale of securities and other assets		11			(115	)		31			(148	)
Other non-interest income		288			293			920			790
Total non-interest income		798			701			2,302			2,187
Non-interest expense:
Salaries and benefits		1,095			996			3,467			3,430
Occupancy and equipment, net		361			320			1,046			990
Computer service		138			127			409			364
Advertising		61			77			201			229
Other		689			702			1,869			1,868
Total non-interest expense		2,344			2,222			6,992			6,881
Income before income taxes		542			1,139			2,041			3,066
Income tax expense		150			422			612			1,120
Net income		392			717			1,429			1,946

Weighted average number of diluted shares		1,554,245			1,573,546			1,557,381			1,594,100
Diluted earnings per share	$	0.25		$	0.46		$	0.92		$	1.22

Return on average equity		4.58	%		8.27	%		5.57	%		7.43	%
Return on average assets		0.43	%		0.83	%		0.53	%		0.73	%
Average earning assets	$	344,590		$	323,013		$	334,301		$	331,335
Net interest margin		2.83	%		3.52	%		3.02	%		3.49	%
Efficiency ratio		81.22	%		66.11	%		77.41	%		69.18	%

Date of report (Date of earliest event reported) November 6, 2008

LSB Financial Corp.
(Exact Name of Registrant as Specified in Its Charter)

Indiana	0-25070	35-1934975
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

101 Main Street, Lafayette, Indiana		47901
(Address of Principal Executive Offices)		(Zip Code)

(765) 742-1064
(Registrant’s Telephone Number, Including Area Code)


(Former Name or Former Address, if Changed Since Last Report)

	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

	(d) Exhibits

	Exhibit No.		Description
	99.1		Press Release issued November 6, 2008

Date: November 7, 2008	LSB Financial Corp.

	By:	/s/ Mary Jo David
		Mary Jo David, Treasurer (Principal Financial and Accounting Officer)