SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

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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, 2004                                
|[  ] | 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
(State or other jurisdiction of
Incorporation or organization)       |  | 35-1934975
(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------------- |  | -----------------------------------------------
|101 Main Street, Lafayette, Indiana
(Address or principal executive offices) |  | 47902
(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 registrant was required to file such reports), and (2) has been subject to such filing 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 5, 2004
|-------------------------------------- |  | -------------------------------
|Common stock, par value $.01 per share |  | 1,440,993                      

Transitional Small Business Disclosure Format: YES [  ] NO [X]

LSB FINANCIAL CORP.

INDEX

|PART I.                                                              | FINANCIAL INFORMATION                               | 1   
|-------------------------------------------------------------------- | --------------------------------------------------- | ----
|Item 1.                                                              | Financial Statements (Unaudited)                    | 1   
|Consolidated Condensed Balance Sheets                                | 1                                                  
|Consolidated Condensed Statements of Income and Comprehensive Income | 2                                                  
|Consolidated Condensed Statements of Changes in Shareholders' Equity | 3                                                  
|Consolidated Condensed Statements of Cash Flows                      | 4                                                  
|Notes to Financial Statements                                        | 5-6                                                
|Item 2.                                                              | Management's Discussion of Recent Operating Results | 7-15
|Item 3.                                                              | Controls and procedures                             | 16  
|PART II.                                                             | OTHER INFORMATION                                   | 17  
|                                                                     | SIGNATURES                                          | 18  
|                                                                     | EXHIBIT INDEX                                       | 19  

|LSB FINANCIAL CORP.CONSOLIDATED CONDENSED BALANCE SHEETS(Dollars in thousands except for per share data)
|--------------------------------------------------------------------------------------------------------
|                                                                                                        
|                                                                                                        
|Assets                                                                                                  
|                                                                                                        
|Cash and due from banks                                                                                 
|Short-term investments                                                                                  
|                                                                                                        
|Cash and cash equivalents                                                                               
|                                                                                                        
|Securities available-for-sale                                                                           
|Loans held for sale                                                                                     
|Total loans                                                                                             
|Less: Allowance for loan losses                                                                         
|                                                                                                        
|Net loans                                                                                               
|                                                                                                        
|Premises and equipment, net                                                                             
|FHLB stock, at cost                                                                                     
|Bank owned life insurance                                                                               
|Accrued interest receivable and other assets                                                            
|                                                                                                        
|Total Assets                                                                                            
|                                                                                                        
|Liabilities and Shareholders' Equity                                                                    
|                                                                                                        
|Liabilities                                                                                             
|Deposits                                                                                                
|Advances from FHLB                                                                                      
|Accrued interest payable and other liabilities                                                          
|                                                                                                        
|Total liabilities                                                                                       
|                                                                                                        
|                                                                                                        
|Shareholders' Equity                                                                                    
|Common stock                                                                                            
|Additional paid-in-capital                                                                              
|Retained earnings                                                                                       
|Unearned ESOP shares                                                                                    
|Unamortized cost of recognition and retention plan                                                      
|Accumulated other comprehensive income (loss)                                                           
|                                                                                                        
|Total shareholders' equity                                                                              
|                                                                                                        
|Total liabilities and shareholders' equity                                                              
|                                                                                                        
|                                                                                                        
|Book value (shareholder's equity) per share                                                             
|                                                                                                        
|See accompanying notes                                                                                  

|LSB FINANCIAL CORP.CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(Dollars in thousands, except per share data)(Unaudited) |                                 |                               
|----------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------
|                                                                                                                                                |                                 |                               
|                                                                                                                                                | Three months endedSeptember 30, | Nine months endedSeptember 30,
|                                                                                                                                                | 2004                            | 2003                          
|                                                                                                                                                |                                
|Interest Income                                                                                                                                 |                                 |                               
|Loans, including related fees                                                                                                                   | $ 4,737                         | $ 4,641                       
|Securities available-for-sale                                                                                                                   | 95                              | 154                           
|FHLB stock                                                                                                                                      | 45                              | 46                            
|                                                                                                                                                |                                
|Total interest income                                                                                                                           | 4,877                           | 4,841                         
|                                                                                                                                                |                                 |                               
|Interest Expense                                                                                                                                |                                 |                               
|Deposits                                                                                                                                        | 1,365                           | 1,270                         
|Borrowings                                                                                                                                      | 787                             | 803                           
|                                                                                                                                                |                                
|Total interest expense                                                                                                                          | 2,152                           | 2,073                         
|                                                                                                                                                |                                 |                               
|Net interest income                                                                                                                             | 2,725                           | 2,768                         
|Provision for loan losses                                                                                                                       | 125                             | 150                           
|                                                                                                                                                |                                
|Net interest income after provision for loan losses                                                                                             | 2,600                           | 2,618                         
|                                                                                                                                                |                                 |                               
|Noninterest Income                                                                                                                              |                                 |                               
|Service charges and fees                                                                                                                        | 232                             | 185                           
|Net gain on mortgage loans originated for sale                                                                                                  | 104                             | 614                           
|Gain on sale of securities                                                                                                                      | 0                               | 0                             
|Other income                                                                                                                                    | 133                             | 128                           
|                                                                                                                                                |                                
|Total noninterest income                                                                                                                        | 469                             | 927                           
|                                                                                                                                                |                                 |                               
|Noninterest Expense                                                                                                                             |                                 |                               
|Salaries and benefits                                                                                                                           | 1,099                           | 1,163                         
|Occupancy and equipment, net                                                                                                                    | 262                             | 276                           
|Computer service                                                                                                                                | 91                              | 89                            
|Advertising                                                                                                                                     | 47                              | 88                            
|Other                                                                                                                                           | 402                             | 363                           
|                                                                                                                                                |                                
|Total noninterest expense                                                                                                                       | 1,901                           | 1,979                         
|                                                                                                                                                |                                 |                               
|Income before income taxes                                                                                                                      | 1,168                           | 1,566                         
|Less: income taxes                                                                                                                              | 440                             | 620                           
|                                                                                                                                                |                                
|Net income                                                                                                                                      | $ 728                           | $ 946                         
|                                                                                                                                                |                                
|                                                                                                                                                |                                 |                               
|Total comprehensive income                                                                                                                      | $ 784                           | $ 842                         
|                                                                                                                                                |                                
|                                                                                                                                                |                                 |                               
|Earnings per share                                                                                                                              | $ 0.51                          | $ 0.68                        
|Diluted Earnings per share                                                                                                                      | $ 0.50                          | $ 0.65                        
|                                                                                                                                                |                                 |                               
|See accompanying notes                                                                                                                          |                                 |                               

|LSB FINANCIAL CORP.CONSOLIDATED CONDENSED STATEMENTS OF CHANGESIN SHAREHOLDERS' EQUITY(Dollars in thousands)(Unaudited)
|-----------------------------------------------------------------------------------------------------------------------
|                                                                                                                       
|                                                                                                                       
|Balance at January 1, 2003                                                                                             
|Exercise of stock options                                                                                              
|ESOP shares earned                                                                                                     
|RRP expense                                                                                                            
|Treasury stock acquired and retired                                                                                    
|Dividends paid ($0.38 per share year-to-date)                                                                          
|Comprehensive income                                                                                                   
|Net income                                                                                                             
|Change in unrealized gain/(loss)                                                                                       
|Total comprehensive income                                                                                             
|                                                                                                                       
|Balance at September 30, 2003                                                                                          
|                                                                                                                       
|                                                                                                                       
|Balance at January 1, 2004                                                                                             
|Exercise of stock options                                                                                              
|ESOP shares earned                                                                                                     
|RRP expense                                                                                                            
|Dividends paid ($0.44 per share year-to-date)                                                                          
|Comprehensive income                                                                                                   
|Net income                                                                                                             
|Change in unrealized gain/(loss)                                                                                       
|Total comprehensive income                                                                                             
|                                                                                                                       
|Balance at September 30, 2004                                                                                          
|                                                                                                                       
|See accompanying notes                                                                                                 

|LSB FINANCIAL CORP.CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(Dollars in thousands)(Unaudited)
|---------------------------------------------------------------------------------------------------
|                                                                                                   
|                                                                                                   
|                                                                                                   
|Cash Flows from Operating Activities                                                               
|Net Income                                                                                         
|Adjustments to reconcile net income to net  cash from operating activities                         
|Depreciation                                                                                       
|Net amortization/(accretion) on securities                                                         
|Gain on sale of securities                                                                         
|Provision for loan losses                                                                          
|Federal Home Loan Bank stock dividend                                                              
|Employee stock ownership plan shares earned                                                        
|Change in assets and liabilities                                                                   
|Loans originated for sale, net of sales proceeds                                                   
|Accrued interest receivable and other assets                                                       
|Accrued interest payable and other liabilities                                                     
|                                                                                                   
|Net cash provided by operating activities                                                          
|                                                                                                   
|Cash Flows from Investing Activities                                                               
|Proceeds from paydowns and maturities ofsecurities available-for-sale                              
|Purchases of securities available-for-sale                                                         
|Proceeds from sales of securities available-for-sale                                               
|Loans made to customers net of payments received                                                   
|Purchase of premises and equipment                                                                 
|                                                                                                   
|Net cash (used in) provided by investing activities                                                
|                                                                                                   
|Cash Flows from Financing Activities                                                               
|Net change in deposits                                                                             
|Proceeds from Federal Home Loan Bank advances                                                      
|Payments on Federal Home Loan Bank advances                                                        
|Dividends paid                                                                                     
|Stock options exercised                                                                            
|Repurchase of stock                                                                                
|                                                                                                   
|Net cash (used in) provided by financing activities                                                
|                                                                                                   
|Net change in cash and equivalents                                                                 
|Cash and equivalents at January 1                                                                  
|                                                                                                   
|                                                                                                   
|Cash and equivalents at September 30                                                               
|                                                                                                   
|                                                                                                   
|See accompanying notes                                                                             

LSB FINANCIAL CORP.NOTES TO FINANCIAL STATEMENTSSEPTEMBER 30, 2004

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 United States 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.  These consolidated condensed financial statements should be read in conjunction with the consolidated statements included in the Company's Form 10-KSB annual report for 2003 filed with the Securities and Exchange Commission.  The results of operations for the period are not necessarily indicative of the results to be expected for the full year.

Stock Options: Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost for stock options is reflected in net income,
as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and
earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No.123, *Accounting for Stock-Based Compensation*.

|                                                                                  | 3 months ended September 30, | 9 months ended September 30,
|--------------------------------------------------------------------------------- | ---------------------------- | ----------------------------
|                                                                                  | 2004                         | 2003                        
|Net income as reported                                                            | $728                         | $946                        
|Deduct: Stock-based compensation expense determined under fair value based method | (4)                          | (2)                         
|Pro forma net income                                                              | $724                         | $944                        
|Basic earnings per share as reported                                              | 0.52                         | 0.68                        
|Pro forma basic earnings per share                                                | 0.52                         | 0.68                        
|Diluted earnings per share as reported                                            | 0.50                         | 0.65                        
|Pro forma diluted earnings per share                                              | 0.50                         | 0.65                        

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. 7,875 shares were not included in the diluted earnings per shares calculation as they were considered anti-dilutive.  The following table presents information about the number of shares used to compute earnings per
share and the results of the computations:

|                                                                    | **Quarter ended September 30,** | **Year-to-Date**
|------------------------------------------------------------------- | ------------------------------- | ----------------
|                                                                    | **2004**                        | **2003**        
|Weighted average shares outstanding(excluding unearned ESOP shares) | 1,412,602                       | 1,392,800       
|Shares used to compute dilutedearnings per share                    | 1,467,145                       | 1,448,956       
|Earnings per share                                                  | $0.52                           | $0.68           
|Diluted earnings per share                                          | $0.50                           | $0.65           

**MANAGEMENT'S DISCUSSION OF RECENT OPERATING RESULTS**

**Executive Summary**

LSB Financial Corp. is an Indiana corporation which was organized in 1994 by Lafayette Savings Bank, FSB for the purpose of becoming a thrift institution holding
company. Lafayette Savings is a federally chartered stock savings bank headquartered in Lafayette, Indiana. References in this Form 10-KSB to "we", "us", and "our" refer to LSB Financial and/or
Lafayette Savings as the context requires.

Lafayette Savings Bank has been, and intends to continue to be, a community-oriented financial institution. Our principal business consists of attracting retail
deposits from the general public and investing those funds primarily in permanent first mortgage loans secured by owner-occupied, one-to four-family residences, and to a lesser extent, non-owner
occupied one- to four-family residential, commercial real estate, multi-family, construction and development, consumer and commercial business loans. Our revenues are derived principally from
interest on mortgage and other loans and interest on securities.

Tippecanoe County and the eight surrounding counties comprise Lafayette Savings' primary market area. Lafayette is the county seat of Tippecanoe County, and West
Lafayette is the home of Purdue University.. The Greater Lafayette area consistently shows better growth and lower unemployment rates than Indiana or the national economy because of the diverse
employment base. The unemployment rate at December 2003 was 4.0% in the greater Lafayette area and 5.1% for the State of Indiana compared to September 2004 unemployment rates of 3.7% and 4.8%,
respectively.

Our primary source of revenue is interest income primarily on loans and to a much lesser extent, on investments which we hold mainly as a source of liquidity, and on
Federal Home Loan Bank stock. In periods of very low interest rates when many borrowers refinance their mortgages, often to fixed rate products, we typically generate income by selling these loans on
the secondary market at a gain. While we forego future interest income by selling these mortgages, we also avoid the risk of having a large portfolio of low rate, fixed rate loans should interest
rates rise and remain high. Our loan portfolio typically consists of about 75% variable rate products.

Market rates have been steadily increasing over 2004 and are expected to continue. Rising rates could be expected to have a positive impact
on interest income. Rising rates generally increase borrower preference for variable rate products which we typically keep in our portfolio. Additionally, existing adjustable rate loans can be
expected to reprice to higher rates, both of which could be expected to have a favorable impact on interest income. Alternatively,
continuing low interest rates could have a negative impact on our interest income as new loans are put on the books at comparatively low rates and our existing adjustable
rate loans reprice to lower rates. Even if rates do fall, because so many borrowers refinanced their mortgages in the last few years, we don't expect

to see a return to a high volume of refinancing. However low rates may be expected to encourage borrowers to initiate additional real estate related purchases

Our primary expense is interest on deposits and Federal Home Loan Bank advances which are use
to fund loan growth. We offer customers in our market area time deposits for terms ranging from three months to five years, demand deposit accounts and savings accounts. We also purchase brokered
deposits and Federal Home Loan Bank advances as needed to provide funding or to improve our interest
rate risk position. Generally when interest rates are low, depositors will choose shorter term products and conversely when rates are high, they will choose longer
term products. We also purchase brokered deposits when the rates are favorable and when needed to address interest rate risk issues.

We consider expected changes in interest rates when structuring our interest earning assets and our interest bearing liabilities. If rates are expected to increase we
try to book shorter term assets that will reprice relatively quickly to higher rates over time, and book longer term liabilities that will remain for a longer time at lower rates. Conversely, if
rates are expected to fall, we would like our balance sheet to be structured such that loans will reprice more slowly to lower rates and deposits will reprice more quickly. We currently offer a three
year and a five year certificate of deposit that allows depositors one opportunity to have their rate adjusted to the market rate at a future date to encourage them to choose longer term deposit
products. However since we are not able to predict market interest rate fluctuations, our asset-liability management strategy may not prevent interest rate changes from having an adverse affect on
our results of operations and financial condition.

Our net interest income depends on the size of our net interest margin - the difference between the income generated from loans and the cost of the funding. Our
deposits are generally priced off shorter term rates and our loans generally off longer term rates. A flattening yield curve can be expected to have an adverse effect on our interest margins, while a
steepening curve can have a beneficial effect.

Our results of operations may also be affected by general and local competitive conditions, particularly those with respect to changes in market interest rates,
government policies and actions of regulatory authorities.

**Financial Condition**

***Comparison of Financial Condition at September 30, 2004 and December 31, 2003.***

Our total assets increased $32.2 million or 10.09% during the nine months from December 31, 2003 to September 30, 2004. This increase was primarily due to a $36.5 million
increase in total net loans. Management attributes the increase in loans primarily to rising interest rates to which borrowers' responded by selecting lower rate, adjustable rate mortgage products
which we keep in our portfolio. The increase in assets was primarily funded by a $22.4 million increase in deposits, a $7.5 million increase in borrowing and a $4.7 million decrease in securities
available for sale. The

increase in deposits was primarily due to the purchase of brokered deposits as needed to provide funding or to improve our interest rate risk position. Shareholders' equity
increased from $27.7 million at December 31, 2003 to $29.6 million at September 30, 2004, an increase of $1.8 million, due primarily to net income, offset in part by the payment of a cash
dividend.

Non-performing assets, which include non-accruing loans, accruing loans 90 days past due and foreclosed assets, increased from $4.6 million at December 31, 2003 to $5.7 million
at September 30, 2004. Non-performing loans at September 30, 2004 consisted of $4.0 million of loans on residential real estate, $1.6 million of loans on land or commercial property, $68,000 of
commercial business loans and $66,000 of non-accruing consumer loans. Non-performing assets also include $717,000 in foreclosed assets. At September 30, 2004, our allowance for loan losses equaled
0.89% of total loans (including loans held for sale) compared to 1.10% at December 31, 2003. Non-performing assets as a percentage of the allowance for loan losses at September 30, 2004 totaled
43.97% of nonperforming assets compared to 67.55% at December 31, 2003, and 49.49% of non-performing loans at September 30, 2004 compared to 72.96% at December 31, 2003. Our non-performing assets
equaled 1.83% of total assets at September 30, 2004 compared to 1.44% at December 31, 2003.

Non-performing assets at September 30, 2004 included $4.2 million in loans that were in litigation. Because Indiana has the second largest number of bankruptcies in the nation,
the court systems frequently have backlogs in scheduling loan hearings. It may take up to two years for a loan to move through the system to the point where we can obtain title to and dispose of a
property. When a non-performing loan is added to our classified loan list, an impairment analysis is completed to determine expected losses upon final disposition of the property. This analysis is
updated quarterly. An adjustment to loan loss reserves is made at that time for any anticipated losses. Consequently, although the non-performing loan balance remains high, we believe that our
allowance to be adequate to cover any losses upon the final disposition of these loans.

Non-performing assets totaling $658,000 were charged off in the first nine months of 2004. These charge offs were largely covered by existing reserves and, based on management's
analysis, no additional provisions to the allowance was necessary for the amounts charged off. Although we believe we use the best information available to determine the adequacy of our allowance for
loan losses, future adjustments to the allowance may be necessary, and net income could be significantly affected, if circumstances and/or economic conditions cause substantial changes in the
estimates we use in making the determinations about the levels of the allowance for losses. Additionally, various regulatory agencies, as an integral part of their examination process, periodically
review our allowance for loan losses. These agencies may require the recognition of additions to the allowance based upon their judgements of information available at the time of their
examination.

**Results of Operations**

***Comparison of Operating Results for the Nine Months and the Quarter Ended September 30, 2004 and September 30, 2003.***

***General.*** Net income for the nine months ended September 30, 2004 was $2.2 million, a decrease of $155,000 or 6.58%, from the
nine months ended September 30, 2003. Net income for the quarter ended September 30, 2004 was $728,000, a decrease of $218,000 or 23.04% from the comparable quarter in 2003. The decrease in net
income for the three and nine month periods ended September 30, 2004, compared to the same periods the prior year were primarily the result of decreases in the gain on the sale of loans due to the
decreased originations and refinancings of fixed- rate mortgage loans and the sale of such loans on the secondary market for a gain, partially offset by decreases in the provision for loan losses
based on a review of risk factors in the loan portfolio, increases in net interest income and increases in other non-interest income. The details of these changes are set forth below.

***Net Interest Income.*** Net interest income for the nine months ended September 30, 2004 increased $160,000, or 2.02%, over the
same period in 2003. This increase was primarily due to lower interest rates paid on interest bearing liabilities. Our net interest margin (net interest income divided by average interest-earning
assets) decreased from 3.51% for the nine months ended September 30, 2003 to 3.33% for the nine months ended September 30, 2004. The decrease in net interest margin is primarily the result of the
sustained period of low market interest rates which decreased the average yield earned on interest earning assets from 6.40% for the nine months ended September 30, 2003 to 5.89% for the nine months
ended September 30, 2004 as borrowers took advantage of the opportunity to refinance to lower rate loans. The decrease in the yield earned on interest-earning assets was offset by a $23.1 million
increase in average net interest earning assets. Net interest income for the third quarter of 2004 decreased $43,000, or 1.55%, compared to the same period in 2003, also primarily due to lower rates
earned on interest earning assets. Our net interest margin decreased from 3.68% to 3.28% from the third quarter of 2004 compared to the same period in 2003, with average interest-earning assets
increasing from $500,000 for the third quarter of 2003 compared to the same period the prior year.

Interest income on loans increased $22,000 or 0.16% for the nine months ended September 30, 2004 compared to the same nine months in 2003. This was primarily the net result of a
decrease in the average yield on loans, from 6.97% for the first nine months of 2003 to 6.19% for the first nine months of 2003, due to lower interest rates in the economy, and a $33.6 million
increase in average loans outstanding. The increase in the loan portfolio was due largely to borrowers continuing to take advantage of relatively low market interest rates to refinance existing
mortgages and initiate other real estate related purchases. Interest income on loans increased $96,000 for the third quarter of 2004 compared to the third quarter of 2003 due primarily to the
increase in average loans receivable.

Interest earned on other investments and Federal Home Loan Bank stock decreased by $165,000 for the nine months ended September 30, 2004 compared to the same period in 2003.
This was primarily the result of a decrease of $10.5 million in average balances from the first nine months of 2003 to the same period in 2004 as funds were reinvested into higher yielding loans. The
yields over this period increased slightly from 2.30% to 2.39%. Interest income on other investments and Federal Home Loan Bank stock decreased $60,000 for the third quarter of 2004 compared to the
third quarter of 2003 due to a decrease of $13.7 million in average balances partially offset by an increase in the average yield on the average balance of other investments and Federal Home Loan
Bank stock from 2.26% for the third quarter of 2003 to 2.57% over the same period in 2004, due to rising rates in the economy.

Interest expense for the nine months ended September 30, 2004 decreased $303,000, or 4.65%, over the same period in 2003. This decrease was primarily due to a decrease in the
average rate paid on interest bearing liabilities from 3.04% for the first nine months of 2003 to 2.68% for the first nine months of 2004 despite a $23.6 million increase in average interest-bearing
liabilities. $20.4 million of the increase in average interest earning liabilities was in lower rate demand accounts and certificates of deposit rather than the higher rate, longer term Federal Home
Loan Bank advances. Interest expense increased $79,000 for the third quarter of 2004 from the same period in 2003 primarily due to a $31.0 million increase in average interest-bearing liabilities,
offset by a decrease in the average rate paid on average interest-bearing liabilities from 2.90% in 2003 to 2.71% from the three month period in 2003 to the same period in 2004.

***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
consideration of concentrations of credit, past loss experience, current economic conditions, the amount and composition of the loan portfolio, estimated fair value of the underlying collateral,
delinquencies and industry standards. On at least a quarterly basis, a formal analysis of the adequacy of the allowance is prepared and reviewed by management and the Board of Directors. This
analysis serves as a point in time assessment of the level of the allowance and serves as a basis for provisions for loan losses.

Our analysis of the loan portfolio begins at the time the loan is originated, when each loan is assigned a risk rating. If the loan is a commercial credit, the borrower will also be assigned a
similar rating. Loans that continue to perform as agreed will be included in one of ten non-classified loan categories. Portions of the allowance are allocated to loan portfolios in the various risk
grades, based upon a variety of factors including, historical loss experience, trends in the type and volume of the loan portfolios, trends in delinquent and non-performing loans, and economic trends
affecting our market. Loans no longer performing as agreed are assigned a lower risk rating, eventually resulting in their being regarded as classified loans. A collateral re-evaluation is completed
on all classified loans. This process results in the allocation of specific amounts of the allowance to individual problem loans, generally based on an analysis of the collateral securing those
loans. These components are added together and compared to the balance of our allowance at the evaluation date.

Non-classified loan categories include first mortgage loans on the following types of properties: one-to-four family owner occupied, one-to-four family non-owner occupied, multi family,
non-residential, land and land development, and construction. Additional categories include: second mortgage and home equity loans, unsecured commercial business loans, secured commercial business
loans, and consumer loans.

The provision for loan losses for the nine months ended September 30, 2004 was $375,000 compared to $850,000 for the same period in 2003. The decrease in the provision in 2004 was based on our
analysis of our loan portfolios which led us to believe the lower provision would be adequate to absorb probable incurred losses in the loan portfolio. At September 30, 2004 our allowance for losses
equaled 0.89% of net loans receivable and 49.49% of non-performing loans compared to 1.10% and 72.96% at December 31, 2003, respectively. In 2003 we determined a likely impairment and allocated
reserves on a large loan, and the charge-off of that loan is largely responsible for the decrease in the percentages noted above.

***Non-Interest Income***. Non-interest income for the nine months ended September 30, 2004 decreased by $978,000, or 38.16%, compared to the same period in 2003. This was
primarily due to a $1.3 million decrease in the gain on the sale of mortgage loans in the secondary market resulting from decreased sales due to the rising interest rate environment beginning in the
fourth quarter of 2003. This decrease was partially offset by a $353,000 increase in other income, primarily the result of a $230,000 increase in mortgage loan servicing fees and a $77,000 increase
in the value of our bank owned life insurance. This increase in servicing fees was caused by a $169,000 reduction in the mortgage servicing right valuation allowance and in the amortization and write
down of mortgage servicing rights due to decreased prepayments, and a $61,000 increase in servicing fees on our loan servicing portfolio. Mortgage serving rights represent the allocated value of
servicing rights retained on loans sold. The value is the net present value of the expected servicing fee income over the life of a loan and is recorded at the time the loan is sold. It is amortized
to expense over the expected life of the loan and offsets the monthly service fee recorded in other income. Management monitors the prepayment of sold loans and adjusts the amortization of the
originated servicing right asset to recognize the repayment and prepayment of sold loans and to assure that the balance does not exceed the expected fair value of the servicing right asset.
Non-interest income for the third quarter of 2004 decreased by $458,000 over the same period in 2003, and experienced the same types of changes set forth above.

***Non-Interest Expense.*** Non-interest expense for the nine months ended September 30, 2004 increased $72,000 over the same period in 2003, due primarily to a $207,000
increase in other non-interest expenses consisting primarily of expenses on foreclosed properties and real estate owned, as well as increased legal and accounting fees primarily the result of the
increased costs of complying with new regulations. Non-interest expense for the third quarter of 2004 decreased by $78,000 over the same period in 2003, due largely to a decrease in the commissions
paid to loan originators caused by the decline in the number of people seeking to refinance their mortgages.

***Income Tax Expense.*** Our income tax provision decreased by $260,000 for the nine months ended September 30, 2004 compared to the nine months
ended September 30, 2003 due to the decrease in income before income taxes, and by the effect of an increase in tax credits due to increased enterprise zone lending. Our income tax provision
decreased by $180,000 for the third quarter of 2004 compared to the same periodin2003 primarily due to the same reasons mentioned above.

***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 anticipate that we will have sufficient funds available to meet current funding commitments. At September 30, 2004, we had outstanding commitments to originate loans and available lines of
credit totaling $63.3 million and commitments to provide funds to complete current construction projects in the amount of $6.4 million. In addition we had commitments to sell $3.3 million of fixed
rate residential loans. Certificates of deposit which will mature in one year or less at September 30, 2004 totaled $68.2 million. Based on our experience, our certificates of deposit have been a
relatively stable source of long-term funds as such certificates are generally renewed upon maturity since we have established long-term banking relationships with our customers. Therefore, we
believe a significant portion of such deposits will remain with us, although this cannot be assured. At September 30, 2004, $35.3 million of the deposits mentioned above were in brokered deposits,
$3.1 million of which will mature in one year or less. These deposits can be expected not to renew at maturity and will have to be replaced with other funding upon maturity. We also have $22.8
million of Federal Home Loan Bank advances maturing in the next twelve months. Deposit growth for the first nine months of 2004 was $22.4 million with Federal Home Loan Bank advances increasing by
$7.5 million. For the first nine months of 2004 we also received loan repayments and prepayments of $68.8 million.

***Capital Resources.*** Shareholders' equity totaled $29.6 million at September 30, 2004 compared to $27.7 million at December 31, 2003, an increase of $1.8 million or 6.66%,
due primarily to net income of $2.1 million, offset by $592,000 of cash dividends paid to shareholders.

Federal insured savings institutions are required to maintain a minimum level of regulatory capital. If the requirement is not met, regulatory authorities may take legal or administrative actions,
including restrictions on growth or operations. As of December 31, 2003 and September 30, 2004, Lafayette Savings Bank was categorized as well capitalized. Our actual and required capital amounts and
ratios at December 31, 2003 and September 30, 2004 are presented below:

|                                                 | Actual                 | OTSFor CapitalAdequacyPurposes | FDICTo Be WellCapitalized UnderCorrective ActionProvisions
|------------------------------------------------ | ---------------------- | ------------------------------ | ----------------------------------------------------------
|                                                 |                       
|                                                 | Amount                 | Ratio                          | Amount                                                    
|                                                 | (Dollars in thousands)
|**As of September 30, 2004**                     |                        |                                |                                                           
|Total Capital (to risk-weighted assets)          | $31,183                | 11.50%                         | $21,698                                                   
|Tier 1 (Core) Capital (to risk weighted assets)  | 28,969                 | 10.68%                         | 10,849                                                    
|Tier 1 (Core) Capital (to adjusted total assets) | 28,969                 | 8.24%                          | 10,545                                                    
|Tangible Capital (to adjusted assets)            | 28,969                 | 8.24%                          | 5,272                                                     
|                                                 |                        |                                |                                                           
|**As of December 31, 2003**                      |                        |                                |                                                           
|Total Capital (to risk-weighted assets)          | $29,348                | 12.10%                         | $19,408                                                   
|Tier 1 (Core) Capital (to risk weighted assets)  | 26,830                 | 11.06%                         | 9,704                                                     
|Tier 1 (Core) Capital (to adjusted total assets) | 26,830                 | 8.40%                          | 9,577                                                     
|Tangible Capital (to adjusted assets)            | 26,830                 | 8.40%                          | 4,789                                                     

**Disclosure Regarding Forward-Looking Statements**

This document, including information included or incorporated by reference, contains, and future filings by LSB Financial on Form 10-KSB, Form 10-QSB and Form 8-K and future oral and written
statements by LSB Financial and our management may contain, forward-looking statements about LSB Financial and its subsidiaries which we believe are within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities,
interest rates, cost savings and funding advantages expected or anticipated to be realized by management. Words such as may, could, should, would, believe, anticipate, estimate, expect, intend, plan
and similar expressions are intended to identify forward-looking statements. Forward-looking statements by LSB Financial and its management are based on beliefs, plans, objectives, goals,
expectations, anticipations, estimates and intentions of management and are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statements based
on the occurrence of future events, the receipt of new information or otherwise. The important factors we discuss below and elsewhere in this document, as well as other factors discussed under the
caption Management's Discussion of Recent Operating Results in this document and identified in our filings with the SEC and those presented elsewhere by our management from time to time, could cause
actual results to differ materially from those indicated by the forward-looking statements made in this document.

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:

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

**Item 3. CONTROLS AND PROCEDURES**.

An evaluation of the Company's disclosure controls and procedures (as defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934 (the "Act")), as of September 30, 2004, was carried out under
the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and several other members of the Company's senior management. The Company's Chief
Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures currently in effect are effective in ensuring that the information required to be
disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial
Officer) in a timely manner and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no changes in our internal control
over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended September 30, 2004, that has materially affected, or is reasonably likely to affect, our internal
control over the financial reporting.

The Company intends to continually review and evaluate the design and effectiveness of its disclosure controls and procedures and to improve its controls and procedures over time and to correct
any deficiencies that it may discover in the future. The goal is to ensure that senior management has timely access to all material financial and non-financial information concerning the Company's
business. While the Company believes the present design of its disclosure controls and procedures is effective to achieve its goal, future events affecting its business may cause the Company to
modify its disclosure controls and procedures.

**PART II - OTHER INFORMATION**

Item 1. LEGAL PROCEEDINGS

The Company, from time to time, is 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 Company in the proceedings, that the resolution of any prior and pending proceedings should
not have a material effect on the Company or the Bank's financial condition or results of operations.

Item 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY 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.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

See Exhibit Index

(b) Reports on Form 8-K

None

**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, 2004 |  | /S/RANDOLPH F. WILLIAMSRandolph F. Williams, President(Principal Executive Officer) 
|Date November 10, 2004 |  | /S/MARY JO DAVIDMary Jo David, Treasurer(Principal Financial and Accounting Officer)

**INDEX TO EXHIBITS**

|RegulationS-K ExhibitNumber | Document                                                                                                                                                                                                                                         
|--------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           
|3.1                         | Registrant's Articles of Incorporation, filed on March 21, 1994, as an exhibit to Registrant's Registration Statement on Form S-1 (File No. 33-84266), are incorporated by reference.                                                            
|3.2                         | Registrant's Bylaws, as amended and restated, filed as Exhibit 3.2 to Registrant's Report on Form 10-KSB for the fiscal year ended December 31, 2002 (File No. 0-25070), is incorporated herein by
reference.                                    
|4                           | Registrant's Specimen Stock Certificate, filed on March 21, 1994 as exhibits to Registrant's Registration Statement on Form S-1 (File No. 33-84266), is incorporated by reference.                                                               
|10.1                        | Registrant's 1995 Stock Option and Incentive Plan, filed on July 11, 1995 as Appendix A to Registrant's Proxy Statement on Schedule 14A (File No. 0-25070), is incorporated herein by
reference.                                                 
|10.3                        | Registrant's 1995 Recognition and Retention Plan, filed on July 11, 1995 as Appendix B to Registrant's Proxy Statement on Schedule 14A (File No. 0-25070), is incorporated herein by
reference.                                                  
|10.4                        | Employment Agreement by and between the Registrant and Randolph F. Williams, filed as Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended September 30, 2001
(File No. 0-25070), is incorporated by reference.
|11                          | Statement re computation of per share earnings                                                                                                                                                                                                   
|31.1                        | Rule 13(a) - 14(a) Certifications (CEO)                                                                                                                                                                                                          
|31.2                        | Rule 13(a) - 14(a) Certifications (CFO)                                                                                                                                                                                                          
|32                          | Rule 1350 Certifications