LSB Financial Corp. Announces Profitable Quarter and Payment of a Cash Dividend

LAFAYETTE, Ind., May 11 /PRNewswire-FirstCall/ -- LSB Financial Corp. (Nasdaq:
LSBI), the parent company of Lafayette Savings Bank, FSB, today reported
quarterly earnings of $302,000 or $0.20 diluted earnings per share compared to
$515,000 or $0.33 diluted earnings per share a year earlier. The decrease in
net income was primarily due to an increase in the provision for loan losses
of $319,000 to $569,000 compared to $250,000 for the prior year. The loan
loss reserve now stands at $3.9 million and represents 1.20% of total loans,
up from 1.12% at the end of last year. Randolph F. Williams, president and
CEO stated "Given that we are operating in the worst economic environment in
nearly 60 years, we are pleased to announce that we remain profitable and are
taking steps to further strengthen our company. While the local economy is in
better shape than much of the country, it is weaker than in previous years."

Williams continued, "The fundamentals of the bank are strong with the $156,000
or 6.1% decrease in net interest income more than made up by the $507,000 gain
on sale of loans. Residential lending activity is brisk, especially
refinancings. We sold over $21.5 million of loans in the secondary market in
the first three months compared to $1.8 million in the same period last year.
We were able to increase total deposits by $17.1 million or 6.6% since
year-end, with core deposits growing 15.5% during that time. People are
moving their money to banks and into FDIC-insured deposits, products where
they know their initial investment will be safe and will only increase in
value."

The bank continues to maintain a strong capital base with a capital ratio at
March 31, 2009 of 8.92% which is in excess of well-capitalized which is
defined by the regulators as 5.00%. Williams stated, "While the future
direction of the economy is unclear, based on the stress tests we have
performed on our loan portfolio, we believe that the combination of our
continued profitability, a $3.9 million loan loss reserve and $15.0 million in
excess capital should be adequate to allow us to work through the issues
presented by this struggling economy." At quarter end, non-performing assets
totaled $12.9 million or 3.36% of total assets, compared to $11.6 million or
3.26%, at the same time last year. The bank is working closely with Freddie
Mac on the "Affordability & Stability" program announced by the President in
order to provide relief to homeowners who are having difficulty making their
mortgage payments.

The Company also announced that it will pay a quarterly cash dividend of
$0.125 per share to shareholders of record as of the close of business on May
8, 2009 with a payment date of June 5, 2009. Williams stated, "We are pleased
to be able to provide this dividend to our shareholders representing 64% of
quarterly earnings and a yield of 3.6%. While the need to build equity is
paramount in these times, we want to reward shareholder loyalty whenever
earnings make that possible."

The closing market price of LSB stock on May 8, 2009 was $13.75 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)

Three months ended Year ended
Selected balance sheet data: March 31, 2009 December 31, 2008

Cash and due from banks $1,528 $2,046
Short-term investments 24,657 9,179
Securities available-for-sale 12,138 11,853
Loans held for sale 2,962 1,342
Net portfolio loans 319,570 325,297
Allowance for loan losses 3,920 3,697
Premises and equipment, net 6,443 6,461
Federal Home Loan Bank stock, at cost 3,997 3,997
Bank owned life insurance 5,899 5,841
Other assets 6,387 6,996
Total assets 383,581 373,012

Deposits 275,683 258,587
Advances from Federal Home Loan Bank 71,500 78,500
Other liabilities 2,200 1,850

Shareholders' equity 34,198 34,075
Book value per share $22.01 $21.92
Equity / assets 8.92% 9.14%
Total shares outstanding 1,553,525 1,553,525

Asset quality data:
Non-accruing loans $10,320 $7,976
Loans past due 90 days still on
accrual 656 ---
Other real estate / assets owned 1,897 1,412
Total non-performing assets 12,873 9,388
Non-performing loans / total loans 3.36% 2.41%
Non-performing assets / total assets 3.36% 2.52%
Allowance for loan losses /
non-performing loans 35.71% 46.35%
Allowance for loan losses /
non-performing assets 30.45% 39.38%
Allowance for loan losses / total loans 1.20% 1.12%
Loans charged off
(quarter-to-date and
year-to-date, respectively) $351 $1,183
Recoveries on loans previously
charged off 5 77

Three months ended March 31,
Selected operating data: 2009 2008

Total interest income $4,973 $5,421
Total interest expense 2,586 2,878
Net interest income 2,387 2,543
Provision for loan losses 569 250
Net interest income after
provision for loan losses 1,818 2,293
Non-interest income:
Deposit account service charges 336 396
Gain on sale of mortgage loans 523 16
Gain on sale of securities 0 0
Net gain on sale of real estate owned 33 91
Other non-interest income 244 279
Total non-interest income 1,136 782
Non-interest expense:
Salaries and benefits 1,352 1,227
Occupancy and equipment, net 352 344
Computer service 134 135
Advertising 57 69
Other 652 558
Total non-interest expense 2,547 2,333
Income before income taxes 407 742
Income tax expense 105 227
Net income 302 515

Weighted average number of
diluted shares 1,536,201 1,560,997
Diluted earnings per share $0.20 $0.33

Return on average equity 3.52% 6.03%
Return on average assets 0.32% 0.59%
Average earning assets $357,610 $327,333
Net interest margin 2.67% 3.11%
Efficiency ratio 84.56% 75.87%

SOURCE LSB Financial Corp.

Randolph F. Williams, President/CEO, +1-765-742-1064, Fax: +1-765-429-5932