SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------


                                   FORM 10-QSB

[X]         QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended September 30, 1999

[  ]        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT

              For the transition period from ______ to ________

                         Commission file number 0-25070.

                               LSB FINANCIAL CORP.
--------------------------------------------------------------------------------
      (Exact Name of Small Business Issuer as Specified in its Charter)

                 Indiana                                  35-1934975
--------------------------------------------------------------------------------
  (State or other jurisdiction of                         (I.R.S. Employer
   Incorporation or organization)                         Identification No.)

      101 Main Street, Lafayette, Indiana                          47902
--------------------------------------------------------------------------------
  (Address or principal executive offices)                       (Zip Code)

Issuer's telephone number, including area code: (765) 742-1064

      Check  whether  the Issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the Issuer was required to file such  reports),  and (2) has
been subject to such requirements for the past 90 days. YES [X] NO[ ]

      State the number of shares  outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

      CLASS                               OUTSTANDING AT NOVEMBER 10, 1999
---------------------                     --------------------------------
Common stock, par value $.01 per share                  1,381,118

         Transitional Small Business Disclosure YES [  ]  NO [X]



<PAGE>

LSB FINANCIAL CORP.

INDEX


PART I.     FINANCIAL INFORMATION....................................  1
Item 1.     Financial Statements (Unaudited).........................  1

Consolidated Statements of Financial Condition.......................  1
Consolidated Statements of Income....................................  2
Consolidated Statements of Changes in Shareholders' Equity...........  3
Consolidated Statements of Cash Flow.................................  4
Notes to Consolidated Financial Statements...........................  5

Item 2.     Management's Discussion of Recent Operating Results...... 12

PART II.    OTHER INFORMATION........................................ 12


            SIGNATURES............................................... 13

            EXHIBIT INDEX............................................ 14


<PAGE>

                               LSB FINANCIAL CORP.
                        STATEMENTS OF FINANCIAL CONDITION
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                      December 31,       September 30,
                                                                         1998                1999
                                                                ----------------------------------------
<S>                                                                      <C>                 <C>
Assets
  Cash and cash equivalents                                              $9,646              $6,650
  Available-for-sale securities                                          12,675              10,871
  Loans held for sale                                                     2,694                 329
   Gross loans receivable                                               198,230             221,885
  Less: Allowance for loan losses                                        (1,578)             (1,668)
                                                            ----------------------------------------
    Loans, net of allowance                                             196,652             220,217

  Premises and equipment, net                                             5,805               5,940
  FHLB stock, at cost                                                     2,825               3,050
  Accrued interest receivable and other assets                            2,514               2,833
                                                            ----------------------------------------
   Total Assets                                                        $232,811            $249,890
                                                            ========================================

Liabilities and Shareholders' Equity

Liabilities
  Deposits                                                             $161,781            $175,156
  Advances from FHLB                                                     51,500              54,000
  Note payable                                                              156                 130
  Accrued interest payable and other liabilities                          1,180               1,275
                                                            ----------------------------------------
    Total liabilities                                                   214,617             230,561


Shareholders' Equity
  Common stock                                                                9                  14
  Additional paid-in-capital                                              8,064               8,138
  Retained earnings                                                      10,703              11,775
  Unearned ESOP shares                                                     (492)               (436)
  Unamortized cost of recognition and retention plan                       (152)                (85)
  Accumulated other comprehensive income                                     62                 (77)
                                                            ----------------------------------------
    Total shareholders' equity                                           18,194              19,329
                                                            ----------------------------------------
Total liabilities and shareholders' equity                             $232,811            $249,890
                                                            ========================================
</TABLE>

       See accompanying notes

                                       1
<PAGE>


                               LSB FINANCIAL CORP.
                              STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                             Three months ended                 Nine months ended
                                                                                September 30,                      September 30,
                                                                         1999                1998              1999           1998
                                                            -----------------------------------------------------------------------
<S>                                                                       <C>                 <C>               <C>            <C>
Interest Income
  Loans, including related fees                                          $4,385              $4,092         $12,833        $11,863
  Available-for-sale securities                                             198                 199             663            617
  FHLB stock                                                                 63                  59             181            161
                                                            -----------------------------------------------------------------------
    Total interest income                                                 4,646               4,350          13,677         12,641

Interest Expense
  Deposits                                                                1,790               1,741           5,321          4,984
  Borrowings                                                                789                 772           2,424          2,272
                                                            -----------------------------------------------------------------------
    Total interest expense                                                2,579               2,513           7,745          7,256

Net interest income                                                       2,067               1,837           5,932          5,385
  Provision for loan losses                                                  30                  30              90             84
                                                            -----------------------------------------------------------------------
Net interest income after provision for loan losses                       2,037               1,807           5,842          5,301

Noninterest Income
  Service charges and fees                                                  148                 131             432            401
  Gain on sale of securities and assets                                       0                   0               0              0
  Net gain on mortgage loans originated for sale                             15                  90             123            329
  Other                                                                     123                  98             362            283
                                                            -----------------------------------------------------------------------
    Total noninterest income                                                287                 319             917          1,013


Noninterest Expense
  Salaries and benefits                                                     780                 710           2,282          2,070
  Occupancy and equipment, net                                              203                 238             657            646
  Computer service                                                           56                  65             213            190
  Advertising                                                               108                  80             293            257
  Other                                                                     351                 309             998            885
                                                            -----------------------------------------------------------------------
    Total noninterest expense                                             1,498               1,402           4,443          4,048

Income before income taxes                                                  826                 724           2,316          2,266
  Less: income taxes                                                        327                 295             924            923
                                                            -----------------------------------------------------------------------
Net income                                                                 $498                $429          $1,392         $1,343
                                                            =======================================================================

Earnings per share (Note 3)                                               $0.38               $0.32           $1.07          $1.03
Diluted Earnings per Share                                                $0.37               $0.31           $1.04          $0.99
Book value per share                                                     $14.77              $13.83          $14.77         $13.83
</TABLE>

       See accompanying notes
                                       2
<PAGE>

<TABLE>
<CAPTION>
                       CONSOLIDATED STATEMENTS OF CHANGES
                             IN SHAREHOLDERS' EQUITY
                             (Dollars in thousands)
                                                                                        Unamortized
                                                                                          Cost of       Accumulated
                                                Additional                  Unearned    Recognition       Other
                                     Common      Paid-In      Retained       ESOP       and Retention  Comprehensive
                                      Stock      Capital      Earnings      Shares         Plan           Income         Total
                               ---------------------------------------------------------------------------------------------------
<S>                                 <C>         <C>               <C>          <C>            <C>        <C>               <C>

Balance at January 1, 1998              $9       $7,854      $10,677        ($570)       ($242)            $6        $17,734
Exercise of stock option                 1           19                                                                   20
ESOP shares earned                                  129                        60                                        189
RRP expense                                                                                 67                            67
Treasury stock acquired                            (952)                                                                (952)
Dividends paid                                                  (280)                                                   (280)
  Comprehensive income                  (1)       1,359       (1,366)                                                     (8)
    Net income
    Change in unrealized
    gain/(loss)                                                1,343                                                   1,343
Total comprehensive income                                                                                 65             65
                                                                                                                     -------
                                                                                                                       1,408
Balance at September 30, 1998
                               ---------------------------------------------------------------------------------------------
                                        $9       $8,409      $10,374        ($510)       ($175)           $71        $18,178
                               =============================================================================================


Balance at January 1, 1999              $9       $8,064      $10,703        ($492)       ($152)           $62        $18,194
Adjustment for stock split               5           (5)
Exercise of stock option                             28                                                                   28
ESOP shares earned                                  111                        56                                        167
RRP expense                                                                                 67                            67
Treasury stock acquired                             (60)                                                                 (60)
Dividends paid                                                  (320)                                                   (320)
  Comprehensive income
    Net income                                                 1,392                                                   1,392
    Change in unrealized
     gain/(loss)                                                                                         (139)          (139)
                                                                                                                     -------

Total comprehensive income                                                                                             1,253

                               ---------------------------------------------------------------------------------------------
Balance at September 30, 1999          $14       $8,138      $11,775        ($436)        ($85)          ($77)       $19,329
                               =============================================================================================
</TABLE>

       See accompanying notes
                                       3
<PAGE>


                               LSB FINANCIAL CORP.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                               For the nine months ended September 30,
                                                                           1998                  1999
                                                            -----------------------------------------
<S>                                                              <C>                      <C>
Cash Flows from Operating Activities
Net Income                                                               $1,343              $1,392
Adjustments to reconcile net income to net
  cash from operating activities
    Depreciation and amortization                                           294                 323
    Net amortization/(accretion) on securities                               (2)                 48
    Gain on sale of securities                                                0                   0
    Writedown  of loans held for sale                                         0                   0
    Gain on sale of loans                                                  (329)               (123)
    Loans originated for sale, net of sales proceeds                     (1,403)              2,488
    Deferred loan fees, net                                                 (64)                (15)
    Provision for loan losses                                                84                  90
    Employee stock ownership plan shares earned                             189                 167
    Change in assets and liabilities
      Accrued interest receivable                                           (91)                 17
      Other assets                                                           72                (176)
      Accrued interest payable                                              (21)                 15
      Other liabilities                                                     137                (108)
                                                            ----------------------------------------
Net cash from operating activities                                          209               4,118

Cash Flows from Investing Activities
Purchases of available-for-sale securities                               (6,297)             (1,486)
Proceeds from paydowns and maturities of
  available-for-sale securities                                           3,497               3,011
Sales of available-for-sale securities                                        0                   0
Purchase of Federal Home Loan Bank stock                                   (225)               (225)
Loans made to customers net of payments received                        (14,232)            (23,640)
Property and equipment expenditures                                        (347)               (459)
                                                            ----------------------------------------
Net cash from investing activities                                      (17,604)            (22,799)

Cash Flows from Financing Activities
Net change in deposits                                                   19,702              13,375
Proceeds from Federal Home Loan Bank advances                            12,500              29,000
Payments on Federal Home Loan Bank advances                             (12,500)            (26,500)
Net change in advances from borrowers
  for taxes and insurance                                                   223                 188
Payments on note payable                                                    (25)                (26)
Treasury Stock Purchased                                                   (952)                (60)
Dividends paid                                                             (288)               (320)
Stock options exercised                                                      20                  28
                                                            ----------------------------------------
Net cash from financing activities                                       18,680              15,685

Net change in cash and equivalents                                        1,285              (2,996)
Cash and equivalents at January 1                                         9,938               9,646
                                                            ----------------------------------------

Cash and equivalents at June 30                                         $11,223              $6,650
                                                            ========================================
</TABLE>

       See accompanying notes
                                       4

<PAGE>


                               LSB FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

Note 1 - General

These  interim  financial  statements  were  prepared  in  accordance  with  the
instructions  for  Form  10-  QSB  and,  therefore,  do not  include  all of the
disclosures necessary for a complete presentation of financial position, results
of operations and cash flows in conformity  with generally  accepted  accounting
principles.  These interim  financial  statements  have been prepared on a basis
consistent with the annual financial  statements and include,  in the opinion of
management,  all adjustments,  consisting of only normal recurring  adjustments,
necessary for a fair  presentation  of the results of  operations  and financial
position for and at the end of such interim  periods.  The results of operations
for the interim periods  disclosed herein are not necessarily  indicative of the
results that may be expected for a full year.

Note 2 - Principles of Consolidation

The  accompanying  financial  statements  include the accounts of LSB  Financial
Corp.,  its wholly owned  subsidiary  Lafayette  Savings Bank, FSB and Lafayette
Savings'  wholly  owned  subsidiaries,  LSB Service  Corporation  and  Lafayette
Insurance and Investments,  Inc. All significant intercompany  transactions have
been eliminated upon consolidation.

Note 3 - Earnings per share

Earnings per share are computed based upon the weighted average number of shares
outstanding  during the period.  Diluted  earnings per share further  assume the
issuance  of any  potentially  dilutive  shares.  Unearned  ESOP  shares are not
considered to be outstanding for the earnings per share computation.  On June 4,
1999,  a 3-for-2  stock  split in the form of a 50% stock  dividend  was paid to
shareholders of record on May 14, 1999.  This dividend  resulted in the issuance
of an additional  459,365 shares. All share and per share data has been restated
to reflect the effect of this split.  The following  table presents  information
about the number of shares used to compute earnings per share and the results of
the computations:
                                    Quarter ended            Nine months ended
                                     September 30              September 30
                                  1999        1998           1999        1998
                               ---------   ---------       --------    --------
Weighted average shares
 outstanding (excluding
 unearned ESOP shares)         1,305,922   1,331,483     1,301,582     1,297,091

Shares used to compute
 diluted earnings per
 share                         1,345,790   1,387,515     1,344,883     1,351,125

Basic earnings per share           $0.38       $0.32         $1.07         $1.03

Diluted earnings per share         $0.37       $0.31         $1.04         $0.99

                                      5

<PAGE>



       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATION


FORWARD LOOKING STATEMENTS

      LSB  Financial   Corp.  may  from  time  to  time  make  written  or  oral
forward-looking  statements,  including statements contained in our filings with
the Securities and Exchange Commission,  including this Quarterly Report on Form
10-QSB and its exhibits,  and in other  communications  by us, which are made in
good faith  pursuant to the safe  harbor  provisions  of the Private  Securities
Litigation  Reform Act of 1995.  The words "may",  "could",  "should",  "would",
"believe",  "anticipate",  "estimate",  "expect",  "intend",  "plan" and similar
expressions are intended to identify forward-looking  statements.  References in
this  Form  10-QSB  to "we",  "us",  and "our"  refer to LSB  Financial  and its
subsidiaries as the context requires.

      Forward-looking statements include statements with respect to our beliefs,
plans, objectives, goals, expectations, anticipations, estimates and intentions,
that are subject to significant risks and uncertainties.  The following factors,
many of which are subject to change based on various  other  factors  beyond our
control,  could cause our financial  performance to differ  materially  from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements:

      o      the  strength  of the United  States  economy  in general  and the
             strength of the local economies in which we conduct our operations;
      o      the  effects  of,  and  changes  in,  trade,  monetary  and fiscal
             policies and laws, including interest rate policies of the Federal
             Reserve Board;
      o      inflation, interest rate, market and monetary fluctuations;
      o      the timely  development  of and acceptance of our new products and
             services and the perceived  overall  value of these  products  and
             services by users, including the features, pricing and quality
             compared to competitors' products and services;
      o      the willingness of users to substitute  competitors'  products and
             services for our products and services;
      o      the impact of changes in financial  services' laws and regulations
             (including laws concerning taxes, banking, securities and
             insurance);
      o      the impact of  technological changes;
      o      acquisitions;
      o      changes in consumer spending and saving habits; and
      o      our success at managing the risks involved in the foregoing.

      This list of important  factors is not  exclusive.  We do not undertake to
update any forward-looking statement, whether written or oral, that we may make.


IMPACT OF THE YEAR 2000

      The  approaching  millennium  is causing  organizations  of all types to
review their computer

                                      6

<PAGE>



systems for the ability to properly  accommodate  the year 2000.  When  computer
systems were first developed, two digits were used to designate the year in date
calculations  and  "19" was  assumed  for the  century.  As a  result,  there is
significant concern about the integrity of date sensitive  calculations when the
calendar rolls over to January 1, 2000. An older system could interpret 01/01/00
as January 1, 1900 potentially  causing major problems including but not limited
to calculating interest, payment, delinquency and/or maturity dates. An internal
committee  comprised of four  officers has been formed to address the  potential
risk that the year 2000 poses to our  business.  This  committee  reports to the
audit  committee of the board and the full board of directors  quarterly or more
often as warranted.

      Financial  institution  regulators  have issued  guidance  concerning  the
responsibilities  of senior  management  and  directors.  The Federal  Financial
Institutions  Examination Council has issued several  interagency  statements on
Year 2000 Project  Management  Awareness.  These  statements  require  financial
institutions to, among other things, examine the year 2000 issue with respect to
their  customers,  suppliers and borrowers.  These  statements also require each
federally insured financial institution to survey its exposure, measure its risk
and  prepare a plan to address  the year 2000 issue.  In  addition,  the federal
banking regulators have issued safety and soundness guidelines to be followed by
insured depository institutions to assure resolution of any year 2000 problems.

      Accurate  data  processing  is  essential  to our  operations.  A lack  of
accurate processing by our vendors or us could have a significant adverse impact
on our financial  condition and results of  operations.  We have been assured by
our outside data processing  service that their computer  services will function
properly on and after January 1, 2000. We have, however, developed a contingency
plan, in the unlikely event that our data  processing  service does not function
properly  on or  after  January  1,  2000.  This  plan  contemplates  conducting
operations  in a  manual  mode,  including  the  recording  of  transactions  on
spreadsheets.

      We have  also  received  year  2000  updates  from  most of our  material,
non-information system providers, including but not limited to security cameras,
credit card and ATM card processors, the vault alarm, check printers,  telephone
systems,  participation  loan servicers,  and  institutions we invest through or
with.  Based on these updates,  we do not anticipate any  significant  year 2000
issues. We have identified  certain hardware and software that was not Year 2000
compliant and have  purchased,  installed and tested  replacement  equipment and
software. Expenditures for this equipment were approximately $184,000.

      In addition to expenses related to our own systems,  we could incur losses
if loan  payments  are delayed due to year 2000  problems  affecting  any of our
significant borrowers or impairing the payroll systems of large employers in our
market  area.  We have been  communicating  with our  vendors  to  assess  their
progress in evaluating their systems and  implementing  any corrective  measures
required  by them to be  prepared  for the year  2000.  We also  sent  year 2000
readiness  request letters to certain  borrowers.  These borrowers were selected
based on the aggregate  amounts owed to us, the type of loans  outstanding,  and
the perceived  year 2000 risk based on our  knowledge of the loan  customers and
their  operations.  We have been advised by such parties that they have plans in
place to address and correct the issues  associated  with the year 2000 problem;
however,  no assurance  can be given as to the adequacy of these plans or to the
timeliness of their implementation.

                                      7

<PAGE>

Additionally,  systems  are in place to  evaluate  the year  2000  status of new
borrowers based on the above  criteria,  but due to the types of borrowers doing
business  with us and the nature of our loans with  these  borrowers,  we do not
consider the year 2000 issue a major part of our underwriting criteria.

FINANCIAL CONDITION

     COMPARISON  OF FINANCIAL  CONDITION AT SEPTEMBER  30, 1999 AND DECEMBER 31,
1998.

     Our total assets increased from $232.8 million to $249.9 million,  or $17.1
million,  during the nine months from  December 31, 1998 to September  30, 1999.
This  increase  was  primarily  due to a  $23.6  million  increase  in our  loan
portfolio  offset  by a $2.4  million  decrease  in  loans  held  for sale as we
continued our efforts to grow by aggressively seeking to attract new residential
mortgage borrowers and to increase the size of our higher-yielding multi-family,
commercial real estate,  land and land development and consumer loan portfolios.
Cash and cash  equivalents  and  securities  decreased $4.8 million as money was
moved from lower yielding  securities into higher yielding loan  portfolios.  We
used a $13.4  million  increase in deposits and a net $2.5  million  increase in
Federal Home Loan Bank  advances  primarily to fund loan growth.  Non-performing
loans at September 30, 1999 were at $3.1 million,  consisting  primarily of $2.1
million of purchased  equipment  leases and $717,000 of residential  real estate
loans,  compared to $2.7  million at December  31,  1998.  Shareholders'  equity
increased  from $18.2 million at December 31, 1998 to $19.3 million at September
30,  1999,  an increase of $1.1 million due  primarily  to net income  partially
offset by the payment of a cash dividend.

RESULTS OF OPERATIONS

COMPARISON  OF  OPERATING  RESULTS  FOR THE NINE  MONTHS AND THE  QUARTER  ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1999.

     GENERAL.  Net income for the nine months ended  September 30, 1999 was $1.4
million,  an  increase  of $49,000 or 3.65% from net income for the nine  months
ended  September  30, 1998.  This  increase was  primarily  due to a $547,000 or
10.17%  increase  in net  interest  income  and a $110,000  increase  in service
charges and other  non-interest  income for the first nine  months of 1999.  The
increases were partially  offset by a $395,000  increase in operating  expenses,
and a $206,000  decrease in the gain on mortgage loans  originated for sale. Net
income for the third  quarter of 1999 was $498,000  compared to $429,000 for the
same period in 1998 due primarily to a $230,000  increase in net interest income
offset by a $96,000 increase in non-interest  expenses and a $75,000 decrease in
the gain on mortgage loans originated for sale.

     NET  INTEREST  INCOME.  Net  interest  income  for the  nine  months  ended
September 30, 1999 was $5.9 million,  an increase of $547,000,  or 10.16%,  over
the same  period in 1998.  Net  interest  income  for the third  quarter of 1999
increased  $230,000,  or 12.54%,  over the same period in 1998.  These increases
were primarily volume driven due to management's  success in growing the balance
sheet.  Our  net  interest  margin  (net  interest  income  divided  by  average
interest-earning  assets)  decreased  from  3.49%  for  the  nine  months  ended
September 30, 1998 to 3.33% for the nine months

                                      8

<PAGE>



ended September 30, 1999. Average  interest-earning assets increased from $206.0
million for the first nine months of 1998 to $237.9  million for the nine months
of 1999, while our interest rate spread for the same period decreased from 3.31%
for 1998 to 3.10% for 1999.

     Interest  income on loans  increased  $970,000 or 8.18% for the nine months
ended September 30, 1999 compared to the same nine months in 1998, primarily the
result of an  increase  of $25.1  million in  average  loans  outstanding.  This
increase was primarily due to an active  residential  real estate market in 1999
due to continued  low  interest  rates,  a strong local  economy and the ongoing
success of our focus on  increasing  our  originations  of the  higher  yielding
multi-family  and commercial real estate,  land  development and consumer loans.
These  higher-yielding  portfolios  increased from $92.4 million at December 31,
1998 to $101.7 million at September 30, 1999. Despite this increase, the average
yield on loans  decreased  from 8.45% for the first nine months of 1998 to 8.06%
for the first nine months of 1999,  due to continued low market  interest  rates
and the increasing number of our 3-year  adjustable rate mortgages  repricing to
substantially lower interest rates.  Interest income on loans increased $293,000
for the  third  quarter  of 1999  compared  to the  third  quarter  of 1998  due
primarily to a $24.7 million increase in average loans.

     Interest  earned on other  investments  and  Federal  Home Loan Bank  stock
increased by $66,000 for the nine months ended  September  30, 1999  compared to
the same period in 1998. A $6.7 million increase in the average balance of other
investments  was offset by a decrease  in the  average  yield from 5.51% for the
first three quarters of 1998 to 4.40% over the same period in 1999 partially due
to our maintaining higher levels of short-term  investments early in the year to
fund loans as short-term  data  processing  conversion  problems were  resolved.
Interest  earned on other  investments  and Federal Home Loan Bank stock for the
three month period ended September 30, 1999 was virtually  unchanged compared to
the same period in 1998.

     Interest  expense for the nine months ended  September  30, 1999  increased
$489,000 or 6.74% over the same period in 1998.  This increase was primarily due
to an  increase  of  $27.3  million  in  average  interest-bearing  liabilities,
consisting  of an additional  $21.2  million in the average  balance of customer
deposit  accounts and a $6.4 million  increase in the average balance of Federal
Home Loan Bank  advances  drawn to fund loan  demand.  The average  rate paid on
interest bearing  liabilities  decreased  slightly from 4.87% for the first nine
months of 1998 to 4.57% for the same period in 1999.  Interest expense increased
$66,000 for the third quarter of 1999 over the same period in 1998 primarily due
to a $25.2 million increase in average  interest-bearing  liabilities  partially
offset by a decrease  in the  average  rate paid from 4.87% for the three  month
period in 1998 to 4.58% for the same period in 1999.

     PROVISION FOR LOAN LOSSES. We establish our provision for loan losses based
on a  systematic  analysis of risk factors in the loan  portfolio.  The analysis
includes  evaluation of concentration of credit,  past loss experience,  current
economic conditions, the amount and composition of the loan portfolio, estimated
fair  value  of  the  underlying  collateral,   loan  commitments   outstanding,
delinquencies and industry  standards.  From time to time,  management also uses
the  services  of a  consultant  to  assist  in the  evaluation  of its  growing
multi-family  and commercial real estate loan portfolio.  Management's  analysis
results in the allocations of allowance amounts for each loan type. The majority
of our non-performing loans relate to a situation involving

                                      9

<PAGE>

the Bennett  Funding  Group of Syracuse,  New York through which we had acquired
$2.4 million of equipment  leases.  Upon learning of the  fraudulent  activities
involving  Bennett,  $970,000  was  initially  reserved  against the  leases.  A
settlement reached in June of 1997 resulted in a write-down of $319,000, leaving
$651,000 in reserves on $2.1 million of the  remaining  leases.  The leases were
then divided into a $1.4  million  restructured  loan due to pay off at December
31,  1999 for  which  there  are no  concerns,  and a  $671,000  lease of office
equipment to a company. The entire $651,000 reserve will likely be used to write
off this lease in the fourth quarter.  We also recorded a $90,000  provision for
loan losses  during the nine months of 1999 as a result of  analyzing  the risks
inherent in our current loan portfolios.  This compares to an $84,000  provision
for the first nine months of 1998.  In  addition to the $2.1  million of Bennett
Funding Group leases there were $1.1 million of  non-performing  or restructured
loans at September 30, 1999. At September 30, 1999, our allowance  equaled 0.75%
of gross loans receivable  compared to 0.79% at September 30, 1998 and 53.44% of
non-performing loans compared to 61.48% at September 30, 1998.

     NON-INTEREST  INCOME.   Non-interest  income  for  the  nine  months  ended
September 30, 1999 decreased by $96,000,  or 9.48%,  compared to the same period
in 1998.  This was primarily due to a $206,000  decrease in the gain on the sale
of mortgage loans in the secondary  market  resulting  from the decreased  sales
activity  and lower  average  gains on loans sold.  We sell the  majority of our
fixed rate  mortgage  loans on the  secondary  market,  and with the increase in
market  rates,  customer  preference  is for  adjustable  rate  mortgages.  This
decrease was offset by a $31,000 increase in service charges and fees on deposit
accounts due to the increased  number of these accounts,  a $50,000  increase in
fees on various debit and credit card products and a $29,000  increase in income
from our insurance and investment subsidiary.  Non-interest income for the third
quarter  of 1999  decreased  by  $32,000  compared  to the same  period in 1998,
primarily  due to a  $75,000  decrease  in the  gain on the sale of loans in the
secondary  market  partially offset by a $17,000 increase in service charges and
various fees and a $26,000 increase in other fees.

     NON-INTEREST  EXPENSE.  Non-interest  expense  for the  nine  months  ended
September 30, 1999  increased  $395,000 over the same period in 1998.  The major
components  of this  increase  included  a $212,000  increase  in  salaries  and
employee  benefits due to normal cost of living  adjustments  and the  increased
number of employees  required to handle the additional  customer and transaction
activities  corresponding  to a $22.8  million  growth in asset size,  a $59,000
increase in data  processing  and  advertising  costs due partially to Year 2000
remediation and communication efforts. Noninterest expense for the third quarter
of 1999  increased by $96,000 over the same period in 1998, due primarily to the
same reasons described above.

     INCOME TAX EXPENSE.  Income taxes remained virtually unchanged for the nine
months  ended  September  30,  1999  compared  to the same  period in 1998.  The
Company's income taxes for the third quarter of 1999 increased  $32,000 over the
same period in 1998 primarily due to the increase in income.

     LIQUIDITY.  Liquidity management is both a daily and long-term function for
our senior  management.  We adjust our  investment  strategy,  within the limits
established by the investment  policy,  based upon  assessments of expected loan
demand,  expected  cash flows,  FHLB advance  opportunities,  market  yields and
objectives of our asset/liability management program. Base levels

                                      10

<PAGE>



of liquidity have generally been invested in interest-earning overnight and time
deposits with the FHLB of Indianapolis. Funds for which a demand is not foreseen
in the near  future are  invested in  investment  and other  securities  for the
purpose of yield enhancement and asset/liability management.

     Lafayette  Savings is required to maintain  minimum  levels of liquidity as
defined by regulatory agencies.  The liquidity  requirement,  which can vary, is
based upon a percentage of deposits and short term  borrowings  and is currently
4.0%.  Our internal  policy for  liquidity is 6% to 8%;  however at December 31,
1998 and  September  30,  1999,  our  liquidity  ratio  was  11.77%  and  8.70%,
respectively.  The  decrease  in the number of loans  being  refinanced  and the
offsetting decrease in the need for additional  short-term funding are combining
to bring the liquidity levels back within the desired range.

     CAPITAL RESOURCES.  Shareholders' equity totaled $19.3 million at September
30, 1999  compared to $18.2  million at December 31,  1998,  an increase of $1.1
million or 6.24%,  due to net income of $1.4  million,  and  $234,000  of earned
Employee Stock Ownership Plan shares and the recognized cost of shares under our
restricted   stock  plan,   offset  by  $320,000  of  cash   dividends  paid  to
shareholders,  $60,000 used to  repurchase  our common stock in the open market,
and a $139,000 unrealized holding loss on available-for-sale securities. Federal
regulations  require  Lafayette  Savings to maintain  certain  minimum levels of
regulatory  capital.  The  regulations  currently  require  tangible  capital as
defined by regulation  to be at least 1.5% of total  assets,  as also defined by
regulation,  that core capital as defined be 4.0% of total assets, and that risk
based capital be at least 8.0% of risk-based  assets as defined by  regulations.
At September 30, 1999, our capital ratios were as follows:

                                    Amount                 Percent of
                                     (000)               applicable assets
                                 -----------             -----------------
      Tangible capital              $18,280                    7.32%
      Requirement                     3,746                    1.50
                                    -------                   -----
      Excess                        $14,534                    5.82%
                                    =======                   =====


      Core capital                  $18,280                    7.32%
      Requirement                     9,989                    4.00
                                    -------                   -----
      Excess                        $ 8,291                    3.32%
                                    =======                   =====

      Risk-based Capital            $19,297                   11.73%
      Requirement                    13,165                    8.00
                                    -------                   -----
      Excess                        $ 6,132                    3.73%
                                    =======                   =====


                                      11

<PAGE>



                           PART II - OTHER INFORMATION



Item 1.  LEGAL PROCEEDINGS

      From time to time,  we are  involved as  plaintiff or defendant in various
legal  actions  arising in the normal  course of  business.  While the  ultimate
outcome of these  proceedings  cannot be  predicted  with  certainty,  it is the
opinion of management,  after  consultation with counsel  representing us in the
proceedings, that the resolution of any prior and pending proceedings should not
have a material effect on our financial condition or results of operations.

Item 2.  CHANGES IN SECURITIES

None to be reported.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None to be reported.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None to be reported.

Item 5. OTHER INFORMATION

None to be reported.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits:

            See Exhibit Index

      (b) No reports on Form 8-K were filed for the quarter ended  September 30,
1999.



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<PAGE>



                                   SIGNATURES

      In accordance  with the  requirements  of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.



                                          LSB FINANCIAL CORP.
                                                (Registrant)



 Date   November 10, 1999                 /s/ John W. Corey
        ----------------------------      ------------------------------------
                                          John W. Corey, President
                                          (Principal Executive Officer)


Date   November 10, 1999                  /s/ Mary Jo David
       -----------------------------      ------------------------------------
                                          Mary Jo David, Treasurer
                                          (Principal  Financial and Accounting
                                          Officer)



                                      13

<PAGE>




                                INDEX TO EXHIBITS


Exhibit
NUMBER

    11      Computation of Per Share Earnings
    27      Financial Data Schedule








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