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LSB Financial Corp. announces Q1 results, payment of cash dividend

LAFAYETTE, Ind. — LSB Financial Corp. (Nasdaq: LSBI), the parent company of Lafayette Savings Bank, FSB, today reported earnings for the quarter ended March 31, 2008. Compared to the first quarter of 2007, net income was $515,000, down 33.9%, resulting in diluted earnings per share of $0.33. LSB Financial President & CEO, Randolph F. Williams stated, “The current banking environment is extremely challenging, and I am pleased with our recent growth and positive trends. We are starting to see activity in the real estate market and loans were up $7.1 million, or 2.3%, compared to year-end. Deposits also increased over $8.5 million, or 3.7%, during the quarter.”

Williams continued, “Largely as a result of the Fed cutting short term interest rates, an unprecedented 3.0% in just six months, the net interest margin for the first quarter of 2008 was down 37 basis points to 3.11% when compared to the previous year. This translates to a $424,000 decrease in net interest income. While interest rate changes are out of our control, our managers have done a remarkable job of improving asset quality, growing core deposits, and containing expenses. At quarter end, non-performing loans totaled $8.3 million or 2.69% of total loans, compared to $10.0 million, or 3.32%, at December 31, 2007 and $12.5 million, or 3.97%, one year ago.”

Williams continued, “Despite the fact that Tippecanoe County’s unemployment rate has been increasing since year end, we are seeing signs of an improving economy. Our delinquent loans are at a 19-month low, properties are selling at closer to the appraised values and there has been a slowing in the rate of local foreclosures and bankruptcies. Data from March of this year indicates that Indiana is now 11th in the country in foreclosures, with one out of every 538 households facing foreclosure. Last year Indiana was ranked in the top three.”

The Company also announced that it will pay a quarterly cash dividend of $0.25 per share to shareholders of record as of the close of business on May 9, 2008 with a payment date of June 6, 2008. Williams stated, “At slower growth times like this, we are pleased to be able to return equity to our shareholders in the form of a higher dividend. This is particularly significant based on the current favorable dividend tax rate.”

The closing market price of LSB stock on May 1, 2006 was $18.00 per share as reported by the NASDAQ National Market.

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