8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported)   August 13, 2010
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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ 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))

Item 2.02  Results of Operations and Financial Condition.

On August 13, 2010, LSB Financial Corp. issued a press release reporting its results of operations and financial condition for the quarter and six months ended June 30, 2010.

A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by this reference. The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits
Exhibit No.	Description
99.1	Press Release issued August 13, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

Date: August 13, 2010	LSB Financial Corp.
	By:	/s/ Mary Jo David
		Mary Jo David, Treasurer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number	Exhibit Description	Location
99.1	Press Release, dated August 13, 2010	Attached

EX-99.1

Exhibit 99.1

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:
August 13, 2010	Randolph F. Williams
	President/CEO
	(765) 742-1064
	Fax: (765) 429-5932

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

Suspension of Quarterly Dividend

Lafayette, IN. - LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported quarterly earnings of $457,000 or $0.29 diluted earnings per share compared to $312,000 or $0.20 diluted earnings per share a year earlier.  Earnings year-to-date were $989,000 or $0.64 diluted earnings per share compared to $614,000 or $0.40 per share in 2009.   Randolph F. Williams, president and CEO stated, “We are pleased to report that despite the continued slow economy, we achieved another profitable quarter and further positioned the Bank for the ongoing economic challenges. As with most community banks, net interest income - the difference between the income generated from loans and investments and the cost of funding - represents a sig nificant portion of our earnings. Our improved performance this quarter was fueled by a substantial $613,000 or 24% increase in our net interest margin.  This increase is reflected in our net interest margin which increased from 2.74% in June of last year to the current level of 3.54%. A positive sign for the local economic recovery is that in the first half of the year a surprising 50% of our residential volume came from people purchasing new homes rather than from borrowers refinancing existing mortgages.  Noninterest expenses were down $132,000 in the second quarter of 2010 from $2.7 million the second quarter of 2009 to $2.6 million for the second quarter of 2010.  For the year-to-date, non-interest expenses were down $265,000.”

Our net interest income was offset by a $76,000 increase in the provision for loan losses from $389,000 to $465,000 compared to the second quarter last year.  For the year-to-date the provision for loan losses was down slightly from $958,000 to $899,000.  The gain on sale of loans in the quarter decreased $360,000, a $797,000 decrease year-to-date, primarily due to a strategic decision to keep a larger share of residential loan originations in the Bank’s own portfolio to stay within regulatory thresholds rather than to sell them on the secondary market. We also showed a $127,000 increase in the loss on OREO properties for the quarter, $195,000 year-to-date, as we made adjustments to recognize new valuations or property deterioration.  The Bank continues to maintain a strong capital base with a Tier I capital ratio at June 30, 2010 of 9.11% which is in excess of the 5.00% required to remain categorized as well-capitalized as defined by the regulators but down slightly from the 9.13% at December 31, 2009.

Mr. Williams stated, “Despite the positives mentioned above, we remain tentative about the economic recovery, the negative impact of unemployment on our local market and the chance of a double-dip recession. The recent adoption of the new Dodd-Frank Wall Street Reform and Consumer Protection Act introduced additional uncertainty into the banking industry.  Among other things, that legislation could impose higher capital requirements on bank and thrift holding companies.  Consequently, until the ramifications of the legislation and the prospects for economic recovery become clearer, the Company will not be paying a dividend to shareholders.  We intend to focus our attention on reducing the level of non-performing assets which remain a challenge, and this will be a key priority for the remainder of 20 10.  We will also focus our efforts on growing capital, maintaining liquidity, improving our operational efficiencies, building core customer relationships and ultimately improving shareholder value.

The closing market price of LSB stock on August 12, 2010 was $11.30 per share as reported by the Nasdaq Global Market.

LSB FINANCIAL CORP. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands except share and per share amounts)
Selected balance sheet data:	Three months ended June 30, 2010			Year ended December 31, 2009
Cash and due from banks	$	5,648		$	8,084
Short-term investments		3,381			4,817
Securities available-for-sale		11,362			11,345
Loans held for sale		853			3,303
Net portfolio loans		332,699			317,860
Allowance for loan losses		4,240			3,737
Premises and equipment, net		6,195			6,209
Federal Home Loan Bank stock, at cost		3,997			3,997
Bank owned life insurance		6,171			6,071
Other assets		8,274			9,364
Total assets		378,580			371,050
Deposits		300,721			277,866
Advances from Federal Home Loan Bank		41,000			57,000
Other liabilities		2,366			2,300
Shareholders’ equity		34,493			33,884
Book value per share	$	22.20		$	21.81
Equity / assets		9.11	%		9.13	%
Total shares outstanding		1,553,525			1,553,525
Asset quality data:
Non-accruing loans	$	14,621		$	12,604
Loans past due 90 days still on accrual		---			---
Other real estate/assets owned		1,210			1,892
Total non-performing assets		15,831			14,496
Non-performing loans / total loans		4.38	%		3.92	%
Non-performing assets / total assets		4.18	%		3.91	%
Allowance for loan losses / non-performing loans		29.00	%		29.65	%
Allowance for loan losses / non-performing assets		26.78	%		25.78	%
Allowance for loan losses / total loans		1.27	%		1.16	%
Loans charged off (quarter-to-date and year-to-date, respectively)	$	353		$	3,186
Recoveries on loans previously charged off		7			28

	Three months ended June 30,						Six months ended June 30,
Selected operating data:	2010			2009			2010			2009
Total interest income	$	4,721		$	5,059		$	9,393		$	10,031
Total interest expense		1,572			2,523			3,295			5,109
Net interest income		3,149			2,536			6,098			4,922
Provision for loan losses		465			389			899			958
Net interest income after provision		2,684			2,147			5,199			3,964
Non-interest income:
Deposit account service charges		397			370			764			706
Gain on sale of mortgage loans		92			451			177			974
Gain(loss) on sale of securities and other assets		(228	)		(100	)		(261	)		(66	)
Other non-interest income		283			250			558			494
Total non-interest income		544			971			1,238			2,108
Non-interest expense:
Salaries and benefits		1,349			1,380			2,641			2,732
Occupancy and equipment, net		326			317			665			670
Computer service		148			147			275			281
Advertising		78			60			134			117
FDIC Insurance Premium		164			235			323			368
Other		494			552			935			1,070
Total non-interest expense		2,559			2,691			4,973			5,238
Income before income taxes		669			427			1,464			834
Income tax expense		212			115			475			220
Net income		457			312			989			614
Weighted average number of diluted shares		1,553,525			1,555,084			1,553,525			1,553,525
Diluted earnings per share	$	0.29		$	0.20		$	0.64		$	0.40
Return on average equity		5.31	%		3.63	%		5.77	%		3.58	%
Return on average assets		0.48	%		0.33	%		0.53	%		0.32	%
Average earning assets	$	347,657		$	361,361		$	344,569		$	359,463
Net interest margin		3.62	%		2.81	%		3.54	%		2.74	%
Efficiency ratio		79.28	%		86.31	%		77.26	%		86.25	%