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 June 30, 1999

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

                For the transition period from ______ to ________

                         Commission file number 0-25070.

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

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

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

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

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

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

         CLASS                                  OUTSTANDING AT JULY 30, 1999
         -----                                  ----------------------------

Common stock, par value $.01 per share                    1,378,991

   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

Item 2.           Management's Discussion of Recent Operating Results......6-11

PART II.          OTHER INFORMATION.......................................12-13

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

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


<PAGE>


<TABLE>
<CAPTION>

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

                                                        December 31,    June 30,
                                                           1998           1999
                                                        ------------    --------
<S>                                                       <C>             <C>
Assets
  Cash and cash equivalents                             $   9,646     $  11,168
  Available-for-sale securities                            12,675        11,653
  Loans held for sale                                       2,694         3,075
  Total loans                                             198,230       213,973
  Less: Allowance for loan losses                          (1,578)       (1,638)
                                                        ---------     ---------
    Net loans                                             196,652       212,335

  Premises and equipment, net                               5,805         5,868
  FHLB stock, at cost                                       2,825         3,050
  Accrued interest receivable and other assets              2,514         2,693
                                                        ---------     ---------
   Total Assets                                         $ 232,811     $ 249,842
                                                        =========     =========

Liabilities and Shareholders' Equity

Liabilities
  Deposits                                              $ 161,781     $ 171,867
  Advances from FHLB                                       51,500        58,000
  Note payable                                                156           139
  Accrued interest payable and other liabilities            1,180           961
                                                        ---------     ---------
    Total liabilities                                     214,617       230,967


Shareholders' Equity
  Common stock                                                  9            14
  Additional paid-in-capital                                8,064         8,103
  Retained earnings                                        10,703        11,390
  Unearned ESOP shares                                       (492)         (455)
  Unamortized cost of recognition and retention plan         (152)         (107)
  Accumulated other comprehensive income                       62           (69)
                                                        ---------     ---------
    Total shareholders' equity                             18,194        18,876
                                                        ---------     ---------
Total liabilities and shareholders' equity              $ 232,811     $ 249,843
                                                        =========     =========

       See accompanying notes

</TABLE>

<PAGE>


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

                                                            Three months ended           Six months ended
                                                                  June 30,                   June 30,
                                                            1999          1998          1999          1998
                                                            ----          ----          ----          ----

<S>                                                        <C>           <C>           <C>           <C>
Interest Income
  Loans, including related fees                            $4,285        $3,931        $8,447        $7,771
  Available-for-sale securities                               242           202           466           419
  FHLB stock                                                   58            50           118           101
                                                           ------        ------        ------        ------
    Total interest income                                   4,585         4,183         9,031         8,291

Interest Expense
  Deposits                                                  1,761         1,633         3,531         3,242
  Borrowings                                                  829           758         1,635         1,501
                                                           ------        ------        ------        ------
    Total interest expense                                  2,590         2,391         5,166         4,743

Net interest income                                         1,995         1,792         3,865         3,548
  Provision for loan losses                                    30            30            60            54
                                                           ------        ------        ------        ------
Net interest income after provision for loan losses         1,965         1,762         3,805         3,494

Noninterest Income
  Service charges and fees                                    155           147           284           270
  Net gain on mortgage loans originated for sale               50           154           108           239
  Gain on sale of securities                                    0             0             0             0
  Other                                                       134            87           238           185
                                                           ------        ------        ------        ------
    Total noninterest income                                  339           388           630           694


Noninterest Expense
  Salaries and benefits                                       754           681         1,498         1,360
  Occupancy and equipment, net                                230           210           454           407
  Computer service                                             79            63           157           125
  Advertising                                                  91            92           186           177
  Other                                                       328           302           646           577
                                                           ------        ------        ------        ------
    Total noninterest expense                               1,482         1,348         2,941         2,646

Income before income taxes                                    822           802         1,494         1,542
  Less: income taxes                                          326           332           598           628
                                                           ------        ------        ------        ------
Net income                                                 $  496        $  470        $  896        $  914
                                                           ======        ======        ======        ======

Earnings per share (Note 3)                                $ 0.38        $ 0.35        $ 0.69        $ 0.68
Diluted Earnings per Share                                 $ 0.37        $ 0.33        $ 0.67        $ 0.65
Book value per share                                       $14.48        $13.64        $14.48        $13.64

</TABLE>

       See accompanying notes

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                               Unamortized
                                                                                                 Cost of       Accumulated
                                                     Additional                   Unearned     Recognition        Other
                                          Common      Paid-In        Retained       ESOP      and Retention   Comprehensive
                                          Stock       Capital        Earnings      Shares         Plan           Income       Total

<S>                                        <C>         <C>          <C>           <C>            <C>              <C>        <C>
Balance at January 1, 1998                 $9          $7,854       $10,677       $(570)         $(242)           $6         $17,734
Exercise of stock option                    1               4                                                                      5
ESOP shares earned                                         84                         40                                         124
RRP expense                                                                                          45                           45
Treasury stock acquired                                 (268)         (184)                                                    (452)
Dividends paid                                          1,359       (1,366)                                                      (7)
  Comprehensive income
    Net income                                                          914                                                      914
    Change in unrealized gain/(loss)                                                                              14              14
                                                                                                                             -------
Total comprehensive income                                                                                                       928

Balance at June 30, 1998                  $10          $9,033       $10,041       $(530)         $(197)          $20         $18,377
                                          ===          ======       =======       =====          =====           ===         =======




Balance at January 1, 1999                 $9          $8,064       $10,703       $(492)         $(152)          $62         $18,194
Adjustment for stock split                  5             (5)
Exercise of stock option                                   27                                                                     27
ESOP shares earned                                         77                         37                                         114
RRP expense                                                                                          45                           45
Treasury stock acquired                                  (60)                                                                   (60)
Dividends paid                                                        (209)                                                    (209)
  Comprehensive income
    Net income                                                          896                                                      896
    Change in unrealized gain/(loss)                                                                           (131)           (131)
                                                                                                                             -------
Total comprehensive income                                                                                                       765

Balance at June 30, 1999                  $14          $8,103       $11,390       $(455)         $(107)        $(69)         $18,876
                                          ===          ======       =======       =====          =====         ====          =======

</TABLE>

       See accompanying notes

<PAGE>



LSB FINANCIAL CORP.

STATEMENTS OF CASH FLOWS
(Dollars in thousands)

                                                            For the six months
                                                              ended June 30,
                                                             1998         1999
                                                           --------    ---------
Cash Flows from Operating Activities
Net Income                                                 $    914    $    896
Adjustments to reconcile net income to net
  cash from operating activities
    Depreciation and amortization                               192         237
    Net amortization/(accretion) on securities                   (8)         31
    Gain on sale of securities                                    0           0
    Writedown  of loans held for sale                             0           0
    Gain on sale of loans                                      (239)       (154)
    Loans originated for sale, net of sales proceeds           (767)       (227)
    Deferred loan fees, net                                     (52)        (14)
    Provision for loan losses                                    54          60
    Employee stock ownership plan shares earned                 124         114
    Change in assets and liabilities
      Accrued interest receivable                               (80)        (68)
      Other assets                                              397          22
      Accrued interest payable                                   (7)         17
      Other liabilities                                         116        (244)
                                                           --------    --------
Net cash from operating activities                              644         670

Cash Flows from Investing Activities
Purchases of available-for-sale securities                   (5,462)     (1,482)
Proceeds from paydowns and maturities of
  available-for-sale securities                               2,574       2,254
Sales of available-for-sale securities                            0           0
Purchase of Federal Home Loan Bank stock                       (225)       (225)
Loans made to customers net of payments received             (9,475)    (15,729)
Property and equipment expenditures                            (223)       (300)
                                                           --------    --------
Net cash from investing activities                          (12,811)    (15,482)

Cash Flows from Financing Activities
Net change in deposits                                        9,771      10,086
Proceeds from Federal Home Loan Bank advances                 6,000      29,000
Payments on Federal Home Loan Bank advances                  (4,500)    (22,500)
Net change in advances from borrowers
  for taxes and insurance                                        44           8
Payments on note payable                                        (16)        (17)
Treasury Stock Purchased                                       (268)        (60)
Dividends paid                                                 (191)       (209)
Stock options exercised                                           5          27
                                                           --------    --------
Net cash from financing activities                           10,845      16,335

Net change in cash and equivalents                           (1,322)      1,523
Cash and equivalents at January 1                             9,938       9,646
                                                           --------    --------

Cash and equivalents at June 30                            $  8,616    $ 11,169
                                                           ========    ========

       See accompanying notes


<PAGE>



                               LSB FINANCIAL CORP.
                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 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 computed based upon the weighted average number of shares
outstanding  during the period.  Diluted  earnings per share further  assume the
issuance  of any  potentially  dilutive  shares.  Unearned  ESOP  shares are not
considered to be outstanding for the earnings per share computation.  On June 4,
1999, a 3-for-2  stock split in the form of a 50.00% stock  dividend was paid to
shareholders of record on May 14, 1999.  This dividend  resulted in the issuance
of an additional  459,365 shares. All share and per share data has been restated
to reflect the effect of this split.  The following  table presents  information
about the number of shares used to compute earnings per share and the results of
the computations:

<TABLE>
<CAPTION>
                                                     Quarter ended                       Six months ended
                                                        June 30                               June 30
                                                1999               1998              1999               1998
                                                ----               ----              ----               ----
<S>                                          <C>                <C>                <C>                <C>
Weighted average shares outstanding
(excluding unearned ESOP shares)             1,301,408          1,345,580          1,299,439          1,347,567

Shares used to compute diluted
    earnings per share                       1,352,561          1,402,488          1,346,667          1,402,331

Earnings per share                               $0.38              $0.35              $0.69              $0.68

Diluted earnings per share                       $0.37              $0.33              $0.67              $0.65


</TABLE>


<PAGE>




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


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.





<PAGE>



IMPACT OF THE YEAR 2000

      The approaching millennium is causing organizations of all types to review
their computer  systems for the ability to properly  accommodate  the year 2000.
When computer  systems were first  developed,  two digits were used to designate
the year in date calculations and "19" was assumed for the century. As a result,
there is significant concern about the integrity of date sensitive  calculations
when the calendar rolls over to January 1, 2000. An older system could interpret
01/01/00 as January 1, 1900 potentially causing major problems including but not
limited to calculating interest, payment,  delinquency and/or maturity dates. An
internal  committee  comprised  of four  officers has been formed to address the
potential  risk that the year 2000 poses 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.  A lack  of
accurate processing by our vendors or us could have a significant adverse impact
on our financial  condition and results of  operations.  We have been assured by
our outside data processing  service that their computer  services will function
properly on and after January 1, 2000. We have, however, developed a contingency
plan in  the unlikely event that our data  processing  service does not function
properly on or after January 1, 2000. This plan 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  purchased,  installed and tested  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



<PAGE>



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

FINANCIAL CONDITION

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

      Our total assets increased from $232.8 million to $249.8 million, or $17.0
million,  during the six months from  December 31, 1998 to June 30,  1999.  This
increase was  primarily due to a $15.7  million  increase in our loan  portfolio
augmented  by a $381,000  increase  in loans held for sale as we  continued  our
efforts to grow by  aggressively  seeking to attract  new  residential  mortgage
borrowers  and  to  increase  the  size  of  our  higher-yielding  multi-family,
commercial real estate,  land and land development and consumer loan portfolios.
Cash and cash  equivalents and securities  increased  $501,000.  We used a $10.1
million  increase in deposits and a $6.5  million  increase in Federal Home Loan
Bank  Advances  to fund loan  growth and provide  liquidity  for future  lending
activity.  Nonperforming  loans  remained  constant at $2.7 million,  consisting
primarily of $2.1 million of purchased  equipment leases.  Shareholders'  equity
increased  from $18.2  million at December 31, 1998 to $18.9 million at June 30,
1999,  an increase of $682,000 due primarily to net income  partially  offset by
the payment of a cash dividend.

RESULTS OF OPERATIONS

COMPARISON  OF OPERATING  RESULTS FOR THE SIX MONTHS AND THE QUARTER  ENDED JUNE
30, 1998 AND JUNE 30, 1999.

      GENERAL. Net income for the six months ended June 30, 1999 was $896,000, a
decrease  of $18,000 or 1.97%  from net  income of  $914,000  for the six months
ended June 30, 1998.  This decrease was primarily due to a $295,000  increase in
operating  expenses and a $64,000  decrease in non- interest income in the first
six months of 1999,  offset by a $317,000 increase in net interests income and a
$30,000  decrease in the provision  for income taxes.  Net income for the second
quarter of 1999 was  $496,000  compared to $470,000  for the same period in 1998
due primarily to a $203,000 increase in net interest income offset by a $134,000
increase in non-interest expenses and a $49,000 decrease in non-interest income.

      NET INTEREST INCOME. Net interest income for the six months ended June 30,
1999 was $3.9 million,  an increase of $317,000,  or 8.93%, over the same period
in 1998. Net interest income for the second quarter of 1999 increased  $203,000,
or 11.33%,  over the same period in 1998.  These increases were primarily volume
driven due to  management's  success  in  growing  the  balance  sheet.  Our net
interest margin (net interest income divided by average interest-earning assets)
decreased from 3.51% for the six months ended June 30, 1998 to 3.28% for the six



<PAGE>



months  ended June 30, 1999.  The decline in net  interest  margin was offset by
increased  volume as  average  interest-earning  assets  increased  from  $201.9
million for the first six months of 1998 to $235.6 million for the six months of
1999. The interest rate spread for the first six months decreased from 3.36% for
1998 to 3.07% for 1999.

      Interest  income on loans  increased  $676,000 or 8.70% for the six months
ended  June 30,  1999  compared  to the same six months in 1998,  primarily  the
result of an  increase  of $25.3  million in  average  loans  outstanding.  This
increase was primarily due to an active  residential  real estate market in 1999
due to continued  low  interest  rates,  a strong local  economy and the ongoing
success of our focus on increasing our portfolio of higher yielding multi-family
and  commercial  real  estate,   land  development  and  consumer  loans.  These
higher-yielding  portfolios increased from $92.4 million at December 31, 1998 to
$99.3  million at June 30, 1999.  Despite this  increase,  the average  yield on
loans  decreased  from  8.44% for the first six  months of 1998 to 8.07% for the
first six months of 1998, due to continued low interest rates and the increasing
number of 3-year  adjustable  rate mortgages  repricing to  substantially  lower
interest  rates.  Interest  income on loans  increased  $354,000  for the second
quarter of 1999 compared to the second  quarter of 1998 due primarily to a $27.4
million increase in average loans.

      Interest  earned on other  investments  and  Federal  Home Loan Bank stock
increased by $64,000 for the six months ended June 30, 1999 compared to the same
period in 1998.  This was the result of an overall $8.4 million  increase in the
average balance of other investments,  offset by a decrease in the average yield
from 5.84% for the first two  quarters  of 1998 to 4.46% 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 six months ended June 30, 1999 increased $423,000
or 8.92% over the same period in 1998.  This  increase was  primarily  due to an
increase of $29.1 million in average interest-bearing liabilities, consisting of
an additional  $21.8 million in the average balance of customer deposit accounts
and a $7.3  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 4.85% for the first six months of 1998 to
4.60% the same  period in 1999.  Interest  expense  increased  $199,000  for the
second  quarter of 1999 over the same  period in 1998  primarily  due to a $31.7
million increase in average  interest-bearing  liabilities partially offset by a
decrease in the average  rate paid from 4.88% for the three month period in 1998
to 4.55% for the same period in 1999.

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



<PAGE>



Group of Syracuse,  New York through which we acquired $2.4 million of equipment
leases.  Management has allocated  $651,000 of the $1.6 million allowance to the
remaining  leases and the related  restructured  loan to provide  for  potential
losses.  Management  believes that this reserve allocation will be sufficient to
cover any  anticipated  losses.  We also  recorded a $60,000  provision for loan
losses  during the six months of 1999 as a result of analyzing  our current loan
portfolios.  This  compares to a $54,000  provision  for the first six months of
1998. In addition to the $2.1 million of Bennett Funding Group leases there were
$667,000 of non-performing  or restructured  loans at June 30, 1999. At June 30,
1999, our allowance equaled 0.75% of gross loans receivable compared to 0.80% at
June 30, 1998.

      NON-INTEREST INCOME. Non-interest income for the six months ended June 30,
1999 decreased by $64,000,  or 9.22%,  compared to the same period in 1998. This
was  primarily  due to a $131,000  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, a $14,000  increase in service  charges and
fees on  deposit  accounts  due to the  increased  number of these  accounts,  a
$32,000 increase in fees on various debit and credit card products and a $21,000
increase in income from our insurance and  investment  subsidiary.  Non-interest
income for the second quarter of 1999 decreased by $49,000  compared to the same
period in 1998,  primarily due to a $104,000 decrease in the gain on the sale of
loans in the secondary  market partially offset by a $47,000 increase in service
charges and various fees.

      NON-INTEREST  EXPENSE.  Non-interest expense for the six months ended June
30, 1999 increased  $295,000 over the same period in 1998. The major  components
of this increase  included a $138,000 increase in salaries and employee benefits
due to  normal  cost of living  adjustments  and the  addition  of 7.5 full time
equivalent employees,  a $47,000 increase in occupancy and equipment expense due
to the  purchase of a building  to house  back-office  operations  and a $32,000
increase  in data  processing  costs  due  partially  to Year  2000  remediation
efforts.  Non-interest  expense  for the  second  quarter of 1999  increased  by
$134,000 over the same period in 1998,  primarily  due to a $73,000  increase in
salaries and employee benefits,  a $20,000 increase in occupancy expenses due to
the  purchase  of a  building  to house  back-office  operations  and a  $16,000
increase in data processing costs.

      INCOME TAX  EXPENSE.  The  Company's  income tax  provision  decreased  by
$30,000 for the six months  ended June 30,  1999  compared to the same period in
1998. This was primarily due to the decrease in income before income taxes.  The
Company's  income tax provision for the second quarter of 1999 decreased  $6,000
over the same period in 1998.

      LIQUIDITY. Liquidity management is both a daily and long-term function for
the Bank's senior management. Lafayette Savings adjusts its investment strategy,
within the limits established by the investment  policy,  based upon assessments
of expected loan demand, expected cash flows, FHLB advance opportunities, market
yields and objectives of its asset/liability  management program. Base levels of
liquidity have generally  been invested in  interest-earning  overnight and time
deposits with the FHLB of Indianapolis. Funds for which a demand is not foreseen
in the near  future are  invested in  investment  and other  securities  for the
purpose of yield enhancement and asset/liability management.



<PAGE>



      Lafayette  Savings is required to maintain  minimum levels of liquidity as
defined by regulatory agencies.  The liquidity  requirement,  which can vary, is
based upon a percentage of deposits and short term  borrowings  and is currently
4.0%. Our internal  policy for liquidity is 6% to 8%;  however,  at December 31,
1998 and June 30, 1999 our liquidity ratio was 11.77% and 10.56%,  respectively.
Because of the decrease in the number of loans being refinanced,  the offsetting
decrease in the need for additional  short-term  funding should make it possible
to bring the liquidity levels back within the desired range.

      CAPITAL RESOURCES.  Shareholders' equity totaled $18.9 million at June 30,
1999  compared to $18.2 million at December 31, 1998, an increase of $682,000 or
3.75%. Increases due to net income of $896,000 and $159,000 due to benefit plans
were  partially  offset by  $209,000  of cash  dividends  paid to  shareholders,
$60,000  used to  repurchase  our common stock in the open market and a $131,000
unrealized holding loss on  available-for-sale  securities.  Federal regulations
require  Lafayette  Savings to maintain  certain  minimum  levels of  regulatory
capital.  The  regulations  currently  require  tangible  capital  as defined by
regulation to be at least 1.5% of total assets,  as also defined by  regulation,
that core  capital  as  defined  be 4.0% of total  assets,  and that risk  based
capital be at least 8.0% of risk-based assets as defined by regulations. At June
30, 1999 Lafayette Savings' capital ratios were as follows:

                                      Amount              Percent of
                                       (000)          applicable assets
                                      -------         -----------------

Tangible capital                      $17,525               7.02%
Requirement                             3,746               1.50
                                      -------              -----
Excess                                $13,779               5.52%
                                      =======              =====


Core capital                          $17,525               7.02%
Requirement                             9,988               4.00
                                      -------              -----
Excess                                $ 7,537               3.02%
                                      =======              =====


Risk-based Capital                    $18,575              11.54%
Requirement                            12,877               8.00
                                      -------              -----
Excess                                $ 5,698               3.54%
                                      =======              =====



<PAGE>



                           PART II - OTHER INFORMATION



Item 1.  LEGAL PROCEEDINGS

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

Item 2.  CHANGES IN SECURITIES

None to be reported.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None to be reported.

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

      (a) On April 21, 1999,  LSB  Financial  Corp.  held its Annual  Meeting of
Stockholders ("Meeting").

      (b) Not applicable.

      (c)  Stockholders  of the Company  voted on the  following  matters at the
meeting.

Election of the following persons as directors of the Company for terms of three
years:

                                            Votes             Votes
                                             For            Withheld
                                             ---            --------

Peter Neisel                                621,646           3,886
Thomas R. McCully                           621,470           4,062
Jeffrey A. Poxon                            621,866           3,666
Mary Jo David                               622,087           3,445



<PAGE>




                           Votes        Votes                      Broker
                            For        Against    Abstentions     Non-votes

Ratification of           619,614       1,883        4,035            -0-
the appointment
of Crowe, Chizek
and Company LLP
as auditors of the
Company for the
fiscal year ended
December 31, 1999.


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

            On April 21, 1999,  the  Registrant  filed a Current Report on
            Form 8-K  with the SEC  which  contained  a copy of the  press
            release  announcing a 3 for 2 stock split payable June 4, 1999,
            to  shareholders of record at the close of business on May 14,
            1999.




<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   August 5, 1999               /s/John W. Corey
        --------------               -------------------------------------
                                    John W. Corey, President
                                    (Principal Executive Officer)


Date   August 5, 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