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)   March 11, 2011
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 March 11, 2011, LSB Financial Corp. issued a press release reporting its results of operations and financial condition for the quarter and year ended December 31, 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 March 11, 2011

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: March 11, 2011	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 March 11, 2011	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:
March 11, 2011	Randolph F. Williams
	President/CEO
	(765) 742-1064
	Fax: (765) 429-5932

LSB Financial Corp. Announces Year-end and Fourth Quarter Results

Lafayette, IN - LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported net income for 2010 of $2.1 million or $1.36 per share, compared to net income of $460,000 or $0.30 per share for 2009.  This represents a 360% improvement in earnings and a 353% increase in earnings per share. The largest factor in this increase was a $2.5 million or 24% increase in net interest income.  The provision for loan losses remained high at $2.8 million but compared favorably to last year’s provision of $3.2 million.  Our loan loss reserve at December 31, 2010 was $5.3 million, up 43% from $3.7 million at December 31, 2009 which we believe is adequate to cover estimated losses.  Fourth quarter income was $602,000 compared to a $178,000 loss in the fourth quarter of 2009.

LSB President and CEO, Randolph F. Williams, stated, “The core profitability of the bank remains strong.  As a measure of that, our 2010 pre-tax, pre-provision return on assets was 1.59%, nearing the 2004 pre-recession level.  Our net interest margin - net interest income divided by average interest-earning assets - grew 70 basis points to 3.68% in 2010 and through careful management we reduced non-interest expenses by 5.4% compared to 2009 without having to resort to staff layoffs.

“Our balance sheet shows our success in attracting local deposits as well as the tentative nature of the lending market. We increased core deposits by 35% or $38 million and reduced our level of non-local funding by a comparable amount.  Total loan volume however remained almost flat during the year, increasing only 0.6% from $321.2 million to $323.1 million.  Residential lending was a bright spot as borrowers continued to take advantage of lower mortgage rates by refinancing their existing mortgages.   The bank was able to generate and sell $49.4 million in residential loans, generating fees from the sale of these loans of $1.0 million.”  Mr. Williams added, “The recent announcement by the Federal Housing Finance Agency which showed the Lafayette Metropolitan Statistical Area (MSA) as the 40th best out of 309 MSAs in year-over-year housing appreciation speaks to the vibrancy of our home ownership market compared to others in the U.S.

 “We continue to work with borrowers who have been negatively impacted by the recession.  As a result, our non-performing assets were $19.3 million at year-end, up from $14.4 million the previous year.   This is a concern to management, although somewhat lessened by the fact that the holders of 25% or $4.9 million of these loans have actually resumed making their payments but will be considered non-performing until they can establish a history of remaining current.  As a community bank, we consider working harder with struggling borrowers especially in a recession as part of our mission.

 “We continue to be encouraged that the worst of the recession is behind us.  January home sales showed an increase of 5.9%, established companies including Subaru and Wabash National and new businesses Nanshan and Sycamore Springs have announced their decision to add local jobs, the county released its ten-year population figures showing a growth rate of 16%, and the county unemployment rate for December fell to 7.9% .  While it may take years to get back to the pre-recession levels, the positive signs all indicate the recovery here has started.”

The closing price of LSB stock on March 10, 2011 was $15.40 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:	Year ended December 31, 2010			Year ended December 31, 2009
Cash and due from banks	$	10,593		$	8,084
Short-term investments		2,980			4,817
Securities available-for-sale		11,805			11,345
Loans held for sale		2,265			3,303
Net portfolio loans		320,810			317,860
Allowance for loan losses		5,343			3,737
Premises and equipment, net		6,116			6,209
Federal Home Loan Bank stock, at cost		3,583			3,997
Bank owned life insurance		6,264			6,071
Other assets		7,431			9,364
Total assets		371,847			371,050
Deposits		311,458			277,866
Advances from Federal Home Loan Bank		22,500			57,000
Other liabilities		2,312			2,300
Shareholders’ equity		35,577			33,884
Book value per share	$	22.90		$	21.81
Equity / assets		9.57	%		9.13	%
Total shares outstanding		1,553,525			1,553,525
Asset quality data:
Non-accruing loans over 90 days past due	$	17,370		$	12,554
Other real estate / assets owned		1,214			1,892
Total non-performing assets		19,260			14,446
Non-performing assets / total assets		5.18	%		3.91	%
Allowance for loan losses / non-performing loans		29.61	%		29.65	%
Allowance for loan losses / non-performing assets		27.67	%		25.87	%
Allowance for loan losses / total loans		1.65	%		1.16	%
Loans charged off (year-to-date)	$	1,382		$	3,185
Recoveries on loans previously charged off		229			28

	Three months ended December 31,						Year ended December 31,
Selected operating data:	2010			2009			2010			2009
Total interest income	$	4,626		$	4,754		$	18,895		$	19,659
Total interest expense		1,331			1,964			6,115			9,335
Net interest income		3,295			2,790			12,780			10,324
Provision for loan losses		950			1,375			2,759			3,197
Net interest income after provision		2,345			1,415			10,021			7,127
Non-interest income:
Deposit account service charges		365			431			1,522			1,525
Gain on sale of mortgage loans		477			246			1,019			1,386
Gain(loss) on the sale of real estate owned		8			(77	)		(441	)		(183	)
Other non-interest income		174			281			980			1,059
Total non-interest income		1,024			881			3,080			3,787
Non-interest expense:
Salaries and benefits		1,275			1,159			5,288			5,137
Occupancy and equipment, net		317			312			1,303			1,307
Computer service		147			138			569			562
Advertising		79			104			282			301
Other		635			963			2,490			3,196
Total non-interest expense		2,453			2,676			9,932			10,503
Income before income taxes		916			(380	)		3,169			411
Income tax expense		314			(202	)		1,052			(49	)
Net income		602			(178	)		2,117			460
Weighted average number of diluted shares		1,554,697			1,554,723			1,554,720			1,554,707
Diluted earnings per share	$	0.39		$	(0.11	)	$	1.36		$	0.30
Return on average equity		6.77	%		(2.08	)%		6.09	%		1.34	%
Return on average assets		0.64	%		(0.19	)%		0.56	%		0.12	%
Average earning assets	$	345,930		$	341,428		$	347,299		$	351,757
Net interest margin		3.95	%		3.27	%		3.68	%		2.94	%
Efficiency ratio		72.81	%		116.55	%		75.81	%		96.23	%