NEWS RELEASE




FOR IMMEDIATE RELEASE                   Contact:  John W. Corey
May 28, 1996                                      President
                                                  (317) 742-1064


LSB Financial Corp. Announces Intention to Increase Loan Loss
Reserves
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     LSB Financial Corp. (NASDAQ: LSBI), the parent company of
Lafayette Savings Bank, FSB, announced its intention to record an
$800,000 provision for loan losses.  The reason for the provision
is to proactively provide for potential losses related to the
Bank's $2.4 million in loans to the Bennett Funding Group, Inc.,
which are secured by small business equipment leases and office
equipment.  The amount of the Bank's allowance for loan losses
allocated to the Bennett Funding Group will now total $970,000.  On
March 29, 1996, the Bennett Funding Group, Inc. filed for Chapter
11 bankruptcy protection.

     John W. Corey, President and Chief Executive Officer of the
Company, stated, "the investigation into the financial status of
the Bennett Funding Group, Inc. by the trustee in bankruptcy is
continuing.  We have no knowledge that any of the leases we hold
are fictitious or duplicates.  Nevertheless, because of the
bankruptcy, certain leases have past due payments and there is
considerable uncertainty as to when these payments will be brought
current.  We are continuing to aggressively protect our interests
and want to be certain our loss reserves remain appropriate."

     At March 31, 1996, the Company's net loan portfolio totaled
$140.7 million.  At that date, the Company had $162.5 million in
assets and stockholders' equity of $17.3 million.