LSB Financial (LSBI) 8-K Results of Operations and Financial Condition

FOR IMMEDIATE RELEASE	For further information contact:
August 3, 2005	Randolph F. Williams
	President/CEO
	(765) 742-1064

LSB Financial Corp. Announces Second Quarter Results up 18%

and Payment of a Cash Dividend

LSB Financial Corp. (NASDAQ:LSBI), (the “Company”), the parent company of Lafayette Savings Bank, FSB, today reported earnings for the quarter ended June 30, 2005. Net income increased $139,000 or 18.44% for the second quarter of 2005 to $893,000 compared to the same quarter in 2004, resulting in diluted earnings per share of $0.60. The increase was primarily due to a $260,000 increase in net interest income. Net income for the first six months of 2005 was $1.7 million compared to $1.5 million for the same period in 2004, an increase of 13.3% or $1.13 per share.

LSB President and CEO Randolph F. Williams stated, “I am extremely proud of the team we have assembled at Lafayette Savings Bank. Our dedication to remaining a community bank, offering customized solutions in a personal and highly responsive manner is clearly valued by our customers and paying dividends for our shareholders. We rank near the top of the 25 publicly traded thrifts in Indiana. Our return on equity for the year-to-date is 10.6% and the return on assets is 0.91%”.

“We continue, however, to view our local economy with guarded optimism. Despite an Indiana Department of Workforce Development preliminary unemployment rate of 4.0% for the county, we are still feeling the impact of the sluggish economy. Our non-performing assets are virtually unchanged from last quarter at $8.6 million with over 99% of those loans secured by real estate property. We monitor these loans regularly and based on our analysis we have adequate reserves to cover anticipated losses on those loans”.

Further, the Company announced today that it will pay a quarterly cash dividend of $0.16 per share to shareholders of record as of the close of business on August 5, 2005, with a payment date of September 2, 2005. This represents a 6.7% increase in the dividend when compared to the same period in 2004.

The closing market price of LSB stock on August 2, 2005, was $28.20 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:	Six months ended June 30, 2005			Year ended December 31, 2004
Cash and due from banks	$	1,782		$	2,395
Short-term investments		7,327			6,818
Securities available-for-sale		8,715			7,947
Loans held for sale		779			1,050
Net portfolio loans		329,474			317,877
Allowance for loan losses		2,264			3,098
Premises and equipment, net		6,672			6,750
Federal Home Loan Bank stock, at cost		4,197			4,110
Bank owned life insurance		2,671			2,627
Other assets		5,762			5,471
Total assets		367,379			355,045
Deposits		259,671			256,631
Advances from Federal Home Loan Bank		74,008			66,808
Other liabilities		1,864			1,213
Shareholders’ equity		31,836			30,393
Book value per share	$	21.90		$	20.26
Equity / assets		8.67	%		8.57	%
Total shares outstanding		1,466,256			1,437,250
Asset quality data:
Non-accruing loans	$	7,043		$	4,207
Loans past due 90 days still on accrual		778			484
Other real estate / assets owned		781			1,231
Total non-performing assets		8,602			5,922
Non-performing loans / total loans		2.35	%		1.46	%
Non-performing assets / total assets		2.34	%		1.67	%
Allowance for loan losses / non-performing loans		28.95	%		66.04	%
Allowance for loan losses / non-performing assets		26.32	%		52.31	%
Allowance for loan losses / total loans		0.68	%		0.96	%
Loans charged off (quarter-to-date and year-to-date, respectively)	$	161		$	1,520
Recoveries on loans previously charged off		30			17

	Three months ended June 30,						Six months ended June 30,
Selected operating data:	2005			2004			2005			2004
Total interest income	$	5,299		$	4,760		$	10,421		$	9,421
Total interest expense		2,348			2,069			4,593			4,062
Net interest income		2,951			2,691			5,828			5,359
Provision for loan losses		125			125			300			250
Net interest income after provision		2,826			2,566			5,528			5,109
Non-interest income:
Deposit account service charges		281			223			487			435
Gain on sale of mortgage loans		108			139			173			266
Gain on sale of securities		0			11			0			11
Other non-interest income		218			229			431			404
Total non-interest income		607			602			1,091			1,116
Non-interest expense:
Salaries and benefits		1,096			1,081			2,288			2,142
Occupancy and equipment, net		265			338			541			631
Computer service		127			94			226			190
Advertising		109			104			150			182
Other		476			440			911			774
Total non-interest expense		2,073			2,057			4,116			3,919
Income before income taxes		1,360			1,111			2,503			2,306
Income tax expense		467			357			843			832
Net income		893			754			1,660			1,474
Weighted average number of diluted shares		1,478,163			1,463,180			1,473,243			1,460,799
Diluted earnings per share	$	0.60		$	0.51		$	1.13		$	1.01
Return on average equity		11.27	%		10.44	%		10.60	%		10.32	%
Return on average assets		0.97	%		0.88	%		0.91	%		0.88	%
Average earning assets	$	351,522		$	326,788		$	348,266		$	319,294
Net interest margin		3.36	%		3.29	%		3.35	%		3.36	%
Efficiency ratio		60.38	%		64.93	%		62.18	%		62.96	%