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 March 31, 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 MAY 13, 1999
              -----                                  ---------------------------

Common stock, par value $.01 per share                        918,946

     Transitional Small Business Disclosure Format:        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.................................. 5-6

Item 2.           Management's Discussion of Recent Operating Results...... 7-12

PART II.          OTHER INFORMATION........................................   13

                  SIGNATURES................................................  14

                  EXHIBIT INDEX.............................................  15


<PAGE>


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

<TABLE>
<CAPTION>
                                                              December 31,       March 31,
                                                                 1998              1999
                                                              ------------------------------
Assets
<S>                                                            <C>               <C>
Cash and cash equivalents                                      $   9,646         $  13,674
Available-for-sale securities                                     12,675            11,656
Loans held for sale                                                2,694               945
Total loans                                                      198,230           209,505
  Less: Allowance for loan losses                                 (1,578)           (1,608)
                                                              ------------------------------
    Net loans                                                    196,652           207,897

Premises and equipment, net                                        5,805             5,834
FHLB stock, at cost                                                2,825             3,050
Accrued interest receivable and other assets                       2,514             3,041
                                                              ------------------------------
   Total Assets                                                $ 232,811         $ 246,097
                                                              ==============================
Liabilities and Shareholders' Equity

Liabilities
Deposits                                                       $ 161,781         $ 168,119
Advances from FHLB                                                51,500            57,500
Note payable                                                         156               147
Accrued interest payable and other liabilities                     1,180             1,867
                                                              ------------------------------
  Total liabilities                                              214,617           227,633


Shareholders' Equity
Common stock                                                           9                 9
Additional paid-in-capital                                         8,064             8,052
Retained earnings                                                 10,703            10,993
Unearned ESOP shares                                                (492)             (473)
Unamortized cost of recognition and retention plan                  (152)             (130)
Accumulated other comprehensive income
  Total shareholders' equity                                          62                13
                                                              ------------------------------
Total liabilities and shareholders' equity                        18,194            18,464
                                                              ------------------------------
                                                               $ 232,811         $ 246,097
                                                              ==============================
                                                               $   20.17         $   21.32
</TABLE>

     See accompanying notes


<PAGE>


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

<TABLE>
<CAPTION>

                                                                    Three months ended
                                                                         March 31,
                                                               1998                   1999
                                                              -----------------------------
<S>                                                           <C>                    <C>
Interest Income
  Loans, including related fees                               $3,840                 $4,162
  Available-for-sale securities                                  216                    224
  FHLB stock                                                      51                     60
                                                              -----------------------------
    Total interest income                                      4,107                  4,446

Interest Expense
  Deposits                                                     1,609                  1,770
  Borrowings                                                     743                    806
                                                              -----------------------------
    Total interest expense                                     2,352                  2,576

Net interest income                                            1,755                  1,870
  Provision for loan losses                                       24                     30
                                                              -----------------------------
Net interest income after provision for loan losses            1,731                  1,840

Noninterest Income
  Service charges and fees                                       122                    129
  Net gain on mortgage loans originated for sale                  86                     58
  Gain on sale of securities                                       0                      0
  Other income                                                   100                    104
                                                              -----------------------------
    Total noninterest income                                     308                    291


Noninterest Expense
  Salaries and benefits                                          680                    744
  Occupancy and equipment, net                                   198                    224
  Computer service                                                62                     78
  Advertising                                                     85                     95
  Other                                                          274                    318
                                                              -----------------------------
    Total noninterest expense                                  1,299                  1,459

Income before income taxes                                       740                    672
  Less: income taxes                                             295                    272
                                                              -----------------------------
Net income                                                    $  445                 $  400
                                                              =============================

Earnings per share                                            $ 0.49                 $ 0.46
Diluted Earnings per share                                    $ 0.48                 $ 0.45
Book value per share                                          $20.17                 $21.32
</TABLE>

     See accompanying notes


<PAGE>


<TABLE>
<CAPTION>

                                                                       LSB FINANCIAL CORP.
                                                               CONSOLIDATED STATEMENTS OF CHANGES
                                                                     IN SHAREHOLDERS' EQUITY
                                                                     (Dollars in thousands)


                                                                                          Unamortized
                                                                                          Cost of Bank   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                                     0                                                                   0
ESOP shares earned                                          38                     20                                           58
RRP expense                                                                                     22                              22
Treasury stock acquired                                                                                                          0
Dividends paid                                                         (92)                                                    (92)
  Comprehensive income
    Net income                                                         445                                                     445
    Change in unrealized gain/(loss)                                                                            12              12
                                                                                                                     -------------
Total comprehensive income                                                                                                     457

----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1998                  $      9   $  7,892    $ 11,030     ($ 550)       ($220)       $     18        $ 18,179
==================================================================================================================================


Balance at January 1, 1999                 $      9   $  8,064    $ 10,703     ($ 492)       ($152)       $     62        $ 18,194
Exercise of stock option                                     9                                                                   9
ESOP shares earned                                          39                     19                                           58
RRP expense                                                                                     22                              22
Treasury stock acquired                                    (60)                                                                (60)
Dividends paid                                                        (110)                                                   (110)
  Comprehensive income
    Net income                                                         400                                                     400
    Change in unrealized gain/(loss)                                                                           (49)            (49)
                                                                                                                     -------------
Total comprehensive income                                                                                                     351
----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999                  $      9   $  8,052    $ 10,993     ($ 473)       ($130)       $     13        $ 18,464
==================================================================================================================================
</TABLE>


<PAGE>


                               LSB FINANCIAL CORP.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                  For the 3 months ended March 31,
                                                                   1998                      1999
                                                                 ----------------------------------
<S>                                                              <C>                       <C>
Cash Flows from Operating Activities
Net Income                                                       $    445                  $    400
Adjustments to reconcile net income to net
  cash from operating activities
    Depreciation and amortization                                      93                       115
    Net amortization/(accretion) on securities                        (11)                       17
    Gain on sale of securities                                          0                         0
    Gain on sale of loans                                             (86)                      (58)
    Loans originated for sale, net of sales proceeds                 (677)                    1,807
    Provision for loan losses                                          24                        30
    Employee stock ownership plan shares earned                        58                        58
    Change in assets and liabilities
      Accrued interest receivable and other assets                    (11)                     (472)
      Accrued interest payable and other liabilities                  489                       687
                                                                 ----------------------------------
Net cash from operating activities                                    324                     2,584

Cash Flows from Investing Activities
Purchases of available-for-sale securities                         (4,867)                        0
Proceeds from paydowns and maturities of
  available-for-sale securities                                     2,315                       920
Sales of available-for-sale securities                                  0                         0
Purchase of Federal Home Loan Bank stock                                0                      (225)
Loans made to customers net of payments received                   (4,157)                  (11,275)
Property and equipment expenditures                                   (83)                     (144)
                                                                 ----------------------------------
Net cash from investing activities                                 (6,792)                  (10,724)

Cash Flows from Financing Activities
Net change in deposits                                              8,555                     6,338
Proceeds from Federal Home Loan Bank advances                           0                    20,000
Payments on Federal Home Loan Bank advances                             0                   (14,000)
Payments on note payable                                               (8)                       (9)
Treasury Stock Purchased                                                0                       (60)
Dividends paid                                                        (92)                     (110)
Stock options exercised                                                 0                         9
                                                                 ----------------------------------
Net cash from financing activities                                  8,455                    12,168

Net change in cash and equivalents                                  1,987                     4,028
Cash and equivalents at January 1                                   9,938                     9,646
                                                                 ----------------------------------
Cash and equivalents at March 31                                 $ 11,925                  $ 13,674
                                                                 ==================================
</TABLE>

     See accompanying notes


<PAGE>


                               LSB FINANCIAL CORP.
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 1999


Note 1 - General

The 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.

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  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.  The
following table presents  information about the number of shares used to compute
earnings per share and the results of the computations:

                                                           Quarter ended
                                                             March 31,
                                                      1998                1999
                                                      ----                ----

Weighted average shares outstanding                  857,383             864,779
(excluding unearned ESOP shares)

Shares used to compute diluted
    earnings per share                               888,900             898,102

Earnings per share                                  $   0.49            $   0.46

Diluted earnings per share                          $   0.48            $   0.45


<PAGE>


     On June 30, 1998, a 5.00% stock dividend was paid to shareholders of record
on June 8, 1998. This dividend  resulted in the issuance of 45,268 shares with a
value at the record date of $1.4 million.  All share and per share data has been
restated to reflect the effect of this dividend.

Note 4 - Accounting Changes

Effective January 1, 1997, LSB Financial adopted a new accounting standard which
requires  disclosure  of  comprehensive  income for all  periods.  Comprehensive
income  includes  both  net  income  and  other  comprehensive   income.   Other
comprehensive  income  includes  the  change in  unrealized  gains and losses on
securities  available for sale, foreign currency  translation  adjustments,  and
additional minimum pension liability adjustments.


<PAGE>


               MANAGEMENT'S DISCUSSION OF RECENT OPERATING RESULTS

Forward Looking Statements

     LSB Financial Corp. and its wholly-owned subsidiary Lafayette Savings Bank,
FSB 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/or Lafayette Savings 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


<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  calculating  interest,
payment,  delinquency or maturity dates. An internal committee comprised of four
officers has been formed to address the potential  risk that the year 2000 poses
for Lafayette  Savings.  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 recently have increased their focus upon
year  2000   compliance   issues  and  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  and 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. A  contingency  plan,  however,  has been
developed by Lafayette  Savings in the unlikely  event that our data  processing
service  does not  function  properly  on or after  January 1,  2000.  This plan
focuses on 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 already  purchased  replacement  equipment and software.  Our
anticipated expenditure on this equipment is 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 have also sent year 2000
readiness  request letters to certain  borrowers.  These borrowers were selected
based on the  aggregate  amounts  owed to Lafayette  Savings,  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


<PAGE>


implementation.  Currently,  due to the types of borrowers  doing  business with
Lafayette  Savings and the nature of our loans with these  borrowers,  we do not
consider the year 2000 issue as part of our underwriting criteria.

Financial Condition

   Comparison of Financial Condition at March 31, 1999 and December 31, 1998.

     Our total  assets  increased  $13.3  million  during the three  months from
December 31, 1998 to March 31, 1999.  This increase was primarily due to a $11.3
million  increase  in our loan  portfolio,  partially  offset by a $1.7  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 investment  securities  increased $3.0 million.  We used a $6.3
million  increase in deposits and a $6.0  million  increase in Federal Home Loan
Bank  Advances  to fund loan  growth and provide  liquidity  for future  lending
activity.  Non-performing loans increased from $2.7 million at December 31, 1998
to $2.9  million at March 31,  1999,  consisting  primarily  of $2.1  million of
purchased equipment leases. Shareholders' equity increased from $18.2 million at
December 31, 1998 to $18.5  million at March 31,  1999,  an increase of $270,000
due primarily to net income partially offset by the payment of a cash dividend.

Results of Operations

Comparison  of  Operating  Results for the Three Months Ended March 31, 1999 and
March 31, 1998.

     General. Net income for the three months ended March 31, 1999 was $400,000,
a decrease of $45,000 or 10.11% from net income of $445,000 for the three months
ended March 31, 1998. This decrease was primarily due to a $160,000  increase in
operating expenses offset by a $115,000 increase in net interest income.

     Net Interest  Income.  Net interest income for the three months ended March
31,  1999  increased  $115,000,  or 6.55%  over the same  period  in 1998.  This
increase was 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 three months ended March
31,  1998 to 3.22% for the three  months  ended March 31,  1999.  The decline in
yield  was  offset  by  increased  volume  as  average  interest-earning  assets
increased  from $201.4  million for the first quarter of 1998 to $232.1  million
for the first quarter of 1999.

     Interest income on loans  increased  $322,000 or 8.39% for the three months
ended March 31, 1999  compared to the same three months in 1998,  primarily  the
result of an  increase  of $23.2  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, the ongoing success
of our focus on multi-family,  commercial real estate, land and land development
and consumer loan production.  These  higher-yielding  portfolios increased from
$92.4 million at December 31,


<PAGE>

1998 to $98.6  million at March 31, 1999.  This increase in volume was partially
offset by a  decrease  in the  average  yield on loans  from 8.45% for the first
three  months  of 1998 to 8.12%  for the  first  three  months  on 1999,  due to
continued low interest rates and the increasing number of 3-year adjustable rate
mortgages repricing to substantially lower interest rates.

     Interest  earned on other  investments  and  Federal  Home Loan Bank  stock
increased by $17,000 for the three  months ended March 31, 1999  compared to the
same period in 1998. This was the result of an overall $7.5 million  increase in
the average  balance of other  investments,  offset by a decrease in the average
yield from 5.47% for the first  quarter of 1998 to 4.19% over the same period in
1999 partially due to our maintaining higher levels of short-term investments to
fund loans as short-term data processing conversion problems were resolved.

     Interest  expense  for the three  months  ended  March 31,  1999  increased
$224,000 or 9.52% over the same period in 1998.  This increase was primarily due
to an  increase  of  $23.1  million  in  average  interest-bearing  liabilities,
consisting  of an additional  $16.3  million in the average  balance of customer
deposit  accounts and a $6.8 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 4.82% for the first quarter
of 1998 to 4.72% the first quarter of 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 the Bennett Funding
Group of Syracuse,  New York through which we acquired $2.4 million of equipment
leases.  Management  allocates  $651,000 of the $1.6  million  allowance  to the
remaining  leases and the related  restructured  loan to provide  for  potential
losses. It is believed that this reserve  allocation will be sufficient to cover
any losses.  We also  recorded a $30,000  provision  for loan losses  during the
three months of 1999 as a result of analyzing our current loan  portfolios  This
compares to a $24,000  provision  for the first  quarter of 1998. In addition to
the $2.1  million  of Bennett  Funding  Group  leases  there  were  $814,000  of
non-performing  or restructured  loans at March 31, 1999. At March 31, 1999, our
allowance  equaled 0.76% of net loans receivable  compared to 0.81% at March 31,
1998.

     Non-Interest  Income.  Non-interest income for the three months ended March
31, 1999  decreased by $17,000,  or 5.52%,  compared to the same period in 1998.
This was primarily due to a $28,000 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  which  was  partially  offset  by a $7,000
increase in service  charges and fees on deposit  accounts due to the  increased
number of these accounts.


<PAGE>


     Non-Interest Expense. Non-interest expense for the three months ended March
31, 1999 increased  $160,000 over the same period in 1998. The major  components
of this increase included a $64,000 increase in salaries and employee  benefits,
a $26,000  increase in occupancy and equipment  expense due to the purchase of a
building  to  house  back-office  operations  and a  $16,000  increase  in  data
processing costs due partially to Year 2000 compliance costs.

     Income Tax Expense.  Our income tax provision  decreased by $23,000 for the
quarter ended March 31, 1999 compared to the quarter ended March 31, 1998.  This
was primarily due to the decrease in income before income taxes.

     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,  Federal  Home Loan Bank  advance  opportunities,
market yields and objectives of our  asset/liability  management  program.  Base
levels of liquidity have generally been invested in  interest-earning  overnight
and time  deposits  with the Federal Home Loan Bank 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.

     We are  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%. Our liquidity  ratios at December 31,
1998 and March 31,  1999 were  11.77% and  11.01%,  respectively.  We expect the
liquidity  level to decline with the expected  growth in the loan  portfolio and
through scheduled maturities of Federal Home Loan Bank advances.

     Capital Resources.  Shareholders' equity totaled $18.5 million at March 31,
1999  compared to $18.2 million at December 31, 1998, an increase of $270,000 or
1.48%, due to net income of $400,000,  offset by $110,000 of cash dividends paid
to shareholders and $60,000 used to repurchase shares.

     Federal  regulations  require  us to  maintain  certain  minimum  levels of
regulatory capital. The regulations  currently require that core capital be 4.0%
of total  assets,  and that risk based  capital  be at least 8.0% of  risk-based
assets. At March 31, 1999 our capital ratios were as follows:

                               Amount         Percent of
                               (000)       applicable assets
                              ------------------------------
Tangible capital              $16,877             6.88%
Requirement                     3,680             1.50
                              -------            -----
Excess                        $13,197             5.38%
                              =======            =====


Core capital                  $16,877             6.88%
Requirement                     9,814             3.00
                              -------            -----
Excess                        $ 7,063             3.88%
                              =======            =====

Risk-based Capital            $17,920            10.98%
Requirement                    13,052             8.00
                              -------            -----
Excess                        $ 4,868             2.98%
                              =======            =====


<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 the Bank 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)  Reports on Form 8-K

          An 8-K was filed on January 27, 1999  announcing the completion of our
          5% stock repurchase.


<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   May 11, 1999                 /s/ JOHN W. COREY
----   ------------                 --------------------------------------------
                                    John W. Corey, President
                                    (Principal Executive Officer)


Date   May 11, 1999                 /s/ MARY JO DAVID
----   ------------                 --------------------------------------------
                                    Mary Jo David, Treasurer
                                    (Principal Financial and Accounting Officer)


<PAGE>


                                INDEX TO EXHIBITS


Exhibit
Number
------

    11      Computation of Per Share Earnings
    27      Financial Data Schedule



<PAGE>


<TABLE>
<CAPTION>
                                                                                       LSB FINANCIAL CORP.
                                                                                COMPUTATION OF PER SHARE EARNINGS
                                                                                      (Dollars in thousands)

                                                                                   For the three months ended
                                                                     March 31, 1999                           March 31, 1998

                                                                        Weighted
                                                                         Average    Per share                  Average    Per share
                                                           Income        Shares      Amount         Income     Shares       Amount
<S>                                                       <C>           <C>          <C>           <C>         <C>        <C>
Basic EPS
  Income available to common shareholders                 $   400       864,779      $   0.46      $    445    857,383    $     0.49

Effect of dilutive securities
  Options                                                                33,323                                 31,517

Diluted EPS
  Income available to common shareholders                 $   400       898,102      $   0.45           445    888,900    $     0.48
</TABLE>