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 4, 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 August 4, 2011, LSB Financial Corp. issued a press release reporting its results of operations and financial condition for the quarter ended June 30, 2011.

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 4, 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: August 4, 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 August 4, 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:

Randolph F. Williams

President/CEO

(765) 742-1064

Fax: (765) 429-5932

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

August 4, 2011, Lafayette, IN - LSB Financial Corp. (NASDAQ:LSBI), the parent company of Lafayette Savings Bank, FSB, today reported quarterly earnings of $477,000 or $0.31 diluted earnings per share compared to $457,000 or $0.29 diluted earnings per share a year earlier.  Year-to-date earnings were $681,000 or $0.44 diluted earnings per share compared to $989,000 or $0.64 per share for the comparable period in 2010.  We believe the fundamentals of the bank are strong.  The largest positive impact on our income comes from low market interest rates which translated into a $579, 000 increase in our net interest margin year-to-date and a $163,000 increase for the quarter, primarily because of lower interest rates on deposits and borrowings.  The largest negative impact continues to come from the provision for loan losses which was $952,000 over last year for the first six months and $210,000 higher for the quarter.

Randolph F. Williams, president and CEO stated, “Despite additional credit related expenses, including the increased loan loss provision, OREO write downs and appraisal driven value adjustments on non-performing loans, this quarter represents our sixth straight profitable quarter.  Additionally, we increased capital, improved our net interest margin, and further built up our loan loss reserves.

Williams noted, “The bank continues to benefit from lower interest rates in the economy which have resulted in an increase in our net interest margin from 3.54% for the six months ended June 30, 2010 to 3.96% for the same period in 2011.  Additionally, we have kept expenses virtually unchanged for the first six months of 2011, increasing only $27,000 over the first six months of 2010.  Expenses for the second quarter were $149,000 lower than the first quarter of 2010.   We have done this through targeted expense control rather than the reductions in staff that we so frequently see in the mega banks.  Our people are critical to attracting and maintaining customer relationships that are at the heart of the traditional community bank model.”

Williams continued, “An area that continues to plague nearly all banks to some extent is problem loans.  At June 30, 2011, our non-performing assets (loans and OREO properties) totaled $21.3 million or 5.92% of total assets, up from the $19.3 million or 5.18% at the end of 2010.  We are encouraged by our success in selling bank properties during the quarter.  We have reduced our level of OREO to $130,000 compared $1.2 million at the start of this year.  While we continually work to reduce problem loan balances, as a community bank we believe that there is little to be gained from routinely putting borrowers on a track to foreclosure at the first sign of delinquency.   Of the $21.2 million of problem loans we held on our books at June 30, 2011, nearly 50% of these borrowers continued to make payments and $3.6 million of those are actually paid current.  In the meantime we will continue to work with our borrowers to bring about the best possible outcome.  To recognize potential losses in our loan portfolio, we have added $1.9 million to our reserve for loan losses in the first six months of 2011, compared to $899,000 for the first six months of 2010.  The contribution to this reserve for the quarter was $675,000 compared to $465,000 last year in the second quarter.  This brings our reserve to $7.0 million or 2.20% of total loans compared to $5.3 million and 1.65% at December 31, 2010.  This equates to 33.2% of our non-performing loans, up from 29.0% last year at the same time.  We believe this amount will be adequate to cover losses based on our quarterly evaluation and loan mix.”

The bank continues to maintain a strong capital base with a Tier I capital ratio of 10.09% at June 30, 2011 compared to 9.57% at December 31, 2010.  Mr. Williams stated, “There is considerable uncertainty about where the economy is headed, both nationally and to a lesser extent here in Greater Lafayette. We believe that the combination of our continued profitability, a $7.0 million loan loss reserve and over 10.00% capital should be adequate to allow us to work through the issues presented by this struggling economy.”

“The Company will refrain from paying a quarterly cash dividend again this quarter,” Williams stated. “Because the new banking regulations are expected to address and likely revise capital levels for banks, we believe it is prudent to use our earnings to build our capital levels to make sure the bank continues on a firm capital foundation.”

The closing market price of LSB stock on August 3, 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:	Six months ended June 30, 2011			Year ended December 31, 2010
Cash and due from banks	$	10,061		$	10,593
Interest bearing deposits		3,283			2,980
Securities available-for-sale		12,024			11,805
Loans held for sale		1,342			2,265
Net portfolio loans		311,644			320,810
Allowance for loan losses		7,028			5,343
Premises and equipment, net		6,192			6,116
Federal Home Loan Bank stock, at cost		3,185			3,583
Bank owned life insurance		6,348			6,264
Other assets		5,782			7,431
Total assets		359,861			371,847
Deposits		303,779			311,458
Advances from Federal Home Loan Bank		18,000			22,500
Other liabilities		1,756			2,312
Shareholders’ equity		36,326			35,577
Book value per share	$	23.37		$	22.90
Equity / assets		10.09	%		9.57	%
Total shares outstanding		1,554,275			1,553,525
Asset quality data:
Non-accruing loans	$	20,366		$	17,370
Loans past due 90 days still on accrual		790			676
Other real estate / assets owned		130			1,214
Total non-performing assets		21,286			19,260
Non-performing assets / total assets		5.92	%		5.18	%
Allowance for loan losses / non-performing loans		33.22	%		29.61	%
Allowance for loan losses / non-performing assets		33.02	%		27.74	%
Allowance for loan losses / total loans		2.20	%		1.65	%
Loans charged off (quarter-to-date and year-to-date, respectively)	$	204		$	1,382
Recoveries on loans previously charged off		38			229

	Three months ended June 30,						Six months ended June 30,
Selected operating data:	2011			2010			2011			2010
Total interest income	$	4,358		$	4,721		$	8,834		$	9,393
Total interest expense		1,046			1,572			2,157			3,295
Net interest income		3,312			3,149			6,677			6,098
Provision for loan losses		675			465			1,851			899
Net interest income after provision		2,637			2,684			4,826			5,199
Non-interest income:
Deposit account service charges		319			397			611			764
Gain on sale of mortgage loans		226			92			390			177
Gain(loss) on sale of available-for-sale securities		2			0			2			0
Gain(loss) on sale OREO		(311	)		(228	)		(336	)		(261	)
Other non-interest income		278			283			538			558
Total non-interest income		514			544			1,205			1,238
Non-interest expense:
Salaries and benefits		1,372			1,349			2,782			2,641
Occupancy and equipment, net		268			326			596			665
Computer service		147			148			289			275
Advertising		57			78			115			134
FDIC Insurance Premium		134			164			318			323
Other		432			494			900			935
Total non-interest expense		2,410			2,559			5,000			4,973
Income before income taxes		741			669			1,031			1,464
Income tax expense		264			212			350			475
Net income		477			457			681			989
Weighted average number of diluted shares		1,556,146			1,553,538			1,556,525			1,553,525
Diluted earnings per share	$	0.31		$	0.29		$	0.44		$	0.64
Return on average equity		5.27	%		5.31	%		3.78	%		5.77	%
Return on average assets		0.53	%		0.48	%		0.35	%		0.53	%
Average earning assets	$	333,808		$	347,658		$	336,854		$	344,570
Net interest margin		3.97	%		3.62	%		3.96	%		3.54	%
Efficiency ratio		76.48	%		79.28	%		82.90	%		77.26	%