NEWS RELEASE

FOR IMMEDIATE RELEASE                           FOR MORE INFORMATION CONTACT:

                                                John W. Corey
                                                President and CEO (765) 742-1064


            LAFAYETTE SAVINGS BANK RECOUPS MAJORITY OF INVESTMENT IN
                          BENNETT FUNDING CORP. LEASES

Lafayette, Ind. -- Jan. 3, 2000 -- LSB Financial Corp. (NASDAQ: LSBI), announced
that its wholly owned subsidiary,  Lafayette Savings Bank FSB, has received $1.4
million from Bennett Funding Corp. of Syracuse,  NY  ("Bennett"),  pursuant to a
settlement agreement entered into with the trustee in bankruptcy.  This recovery
closes a long  battle  against  the East Coast  company  that began in 1995 when
equipment  leases sold to 200 financial  institutions  were called into question
after Bennett filed for Chapter 11 bankruptcy protection.

     "We are  pleased  that our  pursuit of this  matter has  resulted in such a
favorable outcome," said John Corey, President and CEO of Lafayette Savings Bank
and LSB Financial Corp. "Our initial reserve against  potential  lossess in this
matter proved to be both  accurate and  adequate,  and with the receipt of these
funds  we are  able  to put the  matter  behind  us and  focus  on  consistently
providing a good return to our shareholders."

     Lafayette  Savings Bank is headquartered in downtown  Lafayette at 101 Main
St., next to James F. Riehle Plaza.  It also  operates  branches on  Lafayette's
east side at 1501 Sagamore  Pkwy.  North;  on the south side of Lafayette at 833
Twyckenham Blvd.; and in West Lafayette at 1020A Sagamore Park Centre.

                                      ###