SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004 OR

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO


                        Commission file number: 000-25219


                                 LINCOLN BANCORP
               (Exact name of registrant specified in its charter)


              Indiana                                         35-2055553
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                          Identification Number)


                              1121 East Main Street
                         Plainfield, Indiana 46168-0510
          (Address of principal executive offices, including Zip Code)


                                 (317) 839-6539
              (Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  report),  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The  number of shares of the  Registrant's  common  stock,  without  par  value,
outstanding as of June 30, 2004 was 4,430,391.






<PAGE>



                         LINCOLN BANCORP AND SUBSIDIARY
                                    FORM 10-Q

                                      INDEX

                                                                        Page No.

FORWARD LOOKING STATEMENT                                                     3

PART I.  FINANCIAL INFORMATION                                                4

Item 1.  Financial Statements                                                 4

             Consolidated Condensed Balance Sheets                            4

             Consolidated Condensed Statements of Income                      5

             Consolidated Condensed Statements of Comprehensive Income        6

             Consolidated Condensed Statement of Shareholders' Equity         7

             Consolidated Condensed Statements of Cash Flows                  8

             Notes to Unaudited Consolidated Condensed Financial Statements   9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.                                          11

Item 3.  Quantitative and Qualitative Disclosures about Market Risk          16

Item 4.  Controls and Procedures                                             16

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                   17
Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of
            Equity Securities                                                17
Item 3.  Defaults Upon Senior Securities                                     17
Item 4.  Submission of Matters to a Vote of Security Holders                 17
Item 5.  Other Information                                                   17
Item 6.  Exhibits and Reports on Form 8-K                                    17

SIGNATURES                                                                   18

CERTIFICATIONS                                                               19



                                       2
<PAGE>



                            FORWARD LOOKING STATEMENT

This  Quarterly  Report on Form 10-Q ("Form  10-Q")  contains  statements  which
constitute  forward  looking  statements  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include  statements  regarding the intent,  belief,
outlook, estimate or expectations of the Company (as defined in the notes to the
consolidated  condensed  financial  statements),  its  directors or its officers
primarily with respect to future events and the future financial  performance of
the  Company.  Readers  of this Form 10-Q are  cautioned  that any such  forward
looking  statements  are not  guarantees  of future  events or  performance  and
involve risks and  uncertainties,  and that actual results may differ materially
from those in the forward looking statements as a result of various factors. The
accompanying  information  contained  in this  Form  10-Q  identifies  important
factors that could cause such  differences.  These  factors  include  changes in
interest   rates;   loss  of  deposits  and  loan  demand  to  other   financial
institutions;  substantial changes in financial markets;  changes in real estate
values and the real estate market; or regulatory changes.







                                       3
<PAGE>
<TABLE>
<CAPTION>

PART I  FINANCIAL INFORMATION
Item 1.  Financial Statements

                         LINCOLN BANCORP AND SUBSIDIARY
                      Consolidated Condensed Balance Sheets


                                                                                      June 30,           December 31,
                                                                                        2004                 2003
                                                                                --------------------- --------------------
                                                                                      (Unaudited)
<S>                                                                             <C>                   <C>
  Assets
       Cash and due from banks                                                  $     2,473,782         $   1,946,033
       Short-term interest-bearing demand deposits in other banks                     3,649,430            14,829,890
                                                                                --------------------- --------------------
           Cash and cash equivalents                                                  6,123,212            16,793,923
       Investment securities
           Available for sale                                                       103,407,030            94,136,926
           Held to maturity (market value $1,720,000 and $1,745,000)                  1,720,000             1,745,000
                                                                                --------------------- --------------------
                Total investment securities                                         105,127,030            95,881,926
       Loans held for sale                                                            2,186,730               354,900
       Loans, net of allowance for loan losses of $3,834,405 and $3,532,475         425,477,401           437,671,971
       Premises and equipment                                                         8,256,571             7,647,150
       Investments in limited partnerships                                            1,183,777             1,249,777
       Federal Home Loan Bank stock                                                   9,491,000             9,270,200
       Interest receivable                                                            2,402,132             2,441,270
       Goodwill                                                                       1,563,594             1,563,594
       Cash surrender value life insurance                                           12,759,614            12,506,227
       Other assets                                                                   6,598,578             6,304,312
                                                                                --------------------- --------------------

           Total assets                                                         $   581,169,639         $ 591,685,250
                                                                                ===================== ====================

  Liabilities
       Deposits
           Noninterest-bearing                                                  $    18,439,891         $  17,175,958
           Interest-bearing                                                         299,185,441           304,663,176
                                                                                --------------------- --------------------
                Total deposits                                                      317,625,332           321,839,134
       Borrowings                                                                   176,009,712           184,692,618
       Interest payable                                                                 842,754               913,705
       Other liabilities                                                              6,138,256             5,013,042
                                                                                --------------------- --------------------
           Total liabilities                                                        500,616,054           512,458,499
                                                                                --------------------- --------------------

  Commitments and Contingencies

  Shareholders' Equity
       Common stock, without par value
           Authorized - 20,000,000 shares
           Issued and outstanding - 4,430,391 and 4,411,891 shares                   43,621,386            43,383,386
       Retained earnings                                                             41,366,394            40,526,766
       Accumulated other comprehensive loss                                            (200,683)               (8,118)
       Unearned recognition and retention plan (RRP) shares                            (644,352)             (918,983)
       Unearned employee stock ownership plan (ESOP) shares                          (3,589,160)           (3,756,300)
                                                                                --------------------- --------------------
           Total shareholders' equity                                                80,553,585            79,226,751
                                                                                --------------------- --------------------

           Total liabilities and shareholders' equity                           $   581,169,639         $ 591,685,250
                                                                                ===================== ====================

  See notes to consolidated condensed financial statements.



                                       4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                         LINCOLN BANCORP AND SUBSIDIARY
                   Consolidated Condensed Statements of Income
                                   (Unaudited)

                                                                    Three Months Ended                     Six Months Ended
                                                                           June 30,                             June 30,
                                                             ------------------ ------------------ ----------------- ---------------
                                                                   2004               2003               2004              2003
                                                             ------------------ ------------------ ----------------- ---------------
<S>                                                              <C>                <C>                <C>             <C>
Interest Income
     Loans, including fees                                       $ 6,622,058        $ 6,422,227        $13,291,230     $12,576,952
     Investment securities                                           602,618            981,075          1,295,325       2,095,718
     Deposits with financial institutions                              9,030             56,361             26,076         107,501
     Dividend income                                                  94,256            118,045            211,216         222,280
                                                             ------------------ ------------------ ----------------- ---------------
         Total interest and dividend income                        7,327,962          7,577,708         14,823,847      15,002,451
                                                             ------------------ ------------------ ----------------- ---------------

Interest Expense
     Deposits                                                      1,393,652          1,674,231          2,826,837       3,288,239
     Federal Home Loan Bank advances                               2,029,895          2,007,812          4,064,089       3,978,956
                                                             ------------------ ------------------ ----------------- ---------------
         Total interest expense                                    3,423,547          3,682,043          6,890,926       7,267,195
                                                             ------------------ ------------------ ----------------- ---------------

Net Interest Income                                                3,904,415          3,895,665          7,932,921       7,735,256
     Provision  for loan losses                                      223,281            269,632            423,453         434,163
                                                             ------------------ ------------------ ----------------- ---------------
Net Interest Income After Provision for Loan Losses                3,681,134          3,626,033          7,509,468       7,301,093
                                                             ------------------ ------------------ ----------------- ---------------

Other Income
     Service charges on deposit accounts                             305,034            208,122            518,990         407,681
     Net realized and unrealized gains on loans                       68,041            411,953            138,407         663,089
     Net realized losses on sales of available-for-sale
         securities                                                       --             (9,106)                --         (34,824)
     Point of sale income                                            102,575             81,159            189,264         153,516
     Loan servicing fees                                              81,805             98,576            164,706         205,081
     Increase in cash value of life insurance                        116,051            160,164            253,387         329,463
     Equity in losses of limited partnerships                        (33,000)           (36,000)           (66,000)        (72,000)
     Other income                                                    159,918            210,571            273,156         335,618
                                                             ------------------ ------------------ ----------------- ---------------
         Total other income                                          800,424          1,125,439          1,471,910       1,987,624
                                                             ------------------ ------------------ ----------------- ---------------

Other Expenses
     Salaries and employee benefits                                1,641,923          1,674,548          3,495,524       3,444,230
     Net occupancy expenses                                          230,435            196,802            467,538         413,260
     Equipment expenses                                              222,263            240,740            408,051         480,117
     Advertising and business development                            132,225             99,699            235,222         209,457
     Data processing fees                                            375,737            324,837            736,455         650,551
     Professional fees                                               119,634             87,565            234,587         201,117
     Director and committee fees                                      10,712             66,172             90,390         136,374
     Other expenses                                                  487,775            663,248            994,009       1,178,674
                                                             ------------------ ------------------ ----------------- ---------------
         Total other expenses                                      3,220,704          3,353,611          6,661,776       6,713,780
                                                             ------------------ ------------------ ----------------- ---------------

Income Before Income Tax                                           1,260,855          1,397,861          2,319,602       2,574,937
     Income tax expense                                              324,656            360,757            571,655         634,867
                                                             ------------------ ------------------ ----------------- ---------------

Net Income                                                       $   936,199        $ 1,037,104        $ 1,747,947     $ 1,940,070
                                                             ================== ================== ================= ===============

Basic earnings per share                                         $       .24        $       .27        $       .44     $       .49
Diluted earnings per share                                               .23                .26                .43             .47
Dividends per share                                                      .13                .12                .26             .24




                                       5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                         LINCOLN BANCORP AND SUBSIDIARY
            Consolidated Condensed Statements of Comprehensive Income
                                   (Unaudited)



                                                                   Three Months Ended            Six Months Ended
                                                                        June 30,                     June 30,
                                                              --------------------------    --------------------------
                                                                  2004           2003           2004          2003
                                                              ------------   -----------    -----------    -----------

<S>                                                           <C>            <C>            <C>            <C>
Net Income                                                    $   936,199    $ 1,037,104    $ 1,747,947    $ 1,940,070
Other comprehensive income, net of tax
      Unrealized losses on securities available for sale

          Unrealized holding losses arising during the
          period, net of tax benefit of $325,263, $163,726,
          $99,135, and $266,585                                  (631,380)      (308,577)      (192,565)      (503,746)

          Less:  Reclassification adjustment for losses
          included in net income, net of tax benefit of $0,
          $3,096, $0 and $11,840                                       --         (6,010)            --        (22,984)
                                                              -----------    -----------    -----------    -----------

                                                                 (631,380)      (302,567)      (192,565)      (480,762)
                                                              -----------    -----------    -----------    -----------


 Comprehensive income                                         $   304,819    $   734,537    $ 1,555,382    $ 1,459,308
                                                              ===========    ===========    ===========    ===========



See notes to consolidated condensed financial statements.



                                       6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                         LINCOLN BANCORP AND SUBSIDIARY
            Consolidated Condensed Statement of Shareholders' Equity
                     For the Six Months Ended June 30, 2004
                                   (Unaudited)




                                       Common Stock                     Accumulated
                               --------------------------                  Other                         Unearned
                                  Shares                   Retained    Comprehensive      Unearned         ESOP
                                Outstanding     Amount     Earnings        Loss         Compensation      Shares         Total
                               -------------- ----------- -----------  -------------    ------------     ---------     -----------

<S>               <C>            <C>         <C>          <C>             <C>             <C>           <C>            <C>
Balances, January 1, 2004        4,411,891   $43,383,386  $40,526,766     $  (8,118)      $(918,983)    $(3,756,300)   $79,226,751

  Net income for the period                                 1,747,947                                                    1,747,947
  Unrealized losses on
    securities, net of
    reclassification
    adjustment                                                             (192,565)                                      (192,565)
  Stock options exercised           18,500       238,000                                                                   238,000
  ESOP shares earned                                          155,105                                       167,140        322,245
  Amortization of unearned
    compensation expense                                      (10,746)                      274,631                        263,885
  Cash dividends ($.26
     per share)                                            (1,052,678)                                                  (1,052,678)

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

Balances, June 30, 2004          4,430,391   $43,621,386  $41,366,394     $(200,683)     $ (644,352)    $(3,589,160)   $80,553,585
                               ===========   ===========  ===========     =========      ==========     ===========    ===========




See notes to consolidated condensed financial statements.




                                       7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                         LINCOLN BANCORP AND SUBSIDIARY
                 Consolidated Condensed Statements of Cash Flows
                                   (Unaudited)

                                                                                                  Six Months Ended
                                                                                                      June 30,
                                                                                         -------------------- -------------------
                                                                                               2004                2003
                                                                                         -------------------- -------------------
<S>                                                                                      <C>                  <C>
  Operating Activities
       Net income                                                                        $   1,747,947        $   1,940,070
       Adjustments to reconcile net income to net cash provided
        by (used in) operatingactivities
         Provision for loan losses                                                             423,453              434,163
         Investment securities accretion, net                                                  145,594              107,075
         Investment securities losses                                                               --               34,824
         Loans originated for sale in the secondary market                                 (10,494,480)         (25,168,691)
         Proceeds from sale of loans in the secondary market                                 8,759,295           21,853,037
         Gain on sale of loans                                                                (138,407)            (663,089)
         Amortization of net loan origination fees                                            (130,138)            (352,469)
         Depreciation and amortization                                                         369,267              373,091
         Amortization of unearned compensation expense                                         263,885              311,076
         ESOP shares earned                                                                    322,245              304,709
         Net change in:
           Interest receivable                                                                  39,138             (202,887)
           Interest payable                                                                    (70,951)             (71,008)
         Other adjustments                                                                      45,483             (168,556)
                                                                                         -------------------- -------------------
                Net cash provided by (used in) operating activities                          1,282,331           (1,268,655)
                                                                                         -------------------- -------------------

  Investing Activities
       Purchases of securities available for sale                                          (34,776,645)         (28,976,092)
       Proceeds from sales of securities available for sale                                         --            1,952,511
       Proceeds from maturities of securities available for sale                            52,042,457           32,156,276
       Proceeds from maturities of securities held to maturity                                  25,000               10,000
       Net change in loans                                                                 (15,643,150)         (46,799,928)
       Purchases of property and equipment                                                    (980,206)            (407,670)
       Purchases of Federal Home Loan Bank stock                                                    --             (865,600)
       Proceeds from sale of foreclosed real estate                                            493,218               25,659
       Other investing activities                                                                1,365                   --
                                                                                         -------------------- -------------------
                Net cash provided by (used in) investing activities                          1,162,039          (42,904,844)
                                                                                         -------------------- -------------------

  Financing Activities
       Net change in
          Noninterest-bearing, interest-bearing demand, money market and savings
             deposits                                                                       (2,366,972)          31,623,955
          Certificates of deposit                                                           (1,846,830)          (6,575,637)
       Proceeds from FHLB advances                                                          51,800,000           20,000,000
       Repayment of FHLB advances                                                          (60,500,000)         (10,000,000)
       Payment on note payable to limited partnership                                               --             (248,501)
       Dividends paid                                                                       (1,050,273)            (996,925)
       Exercise of stock options                                                               238,000              268,152
       Purchase of common stock                                                                     --           (4,920,913)
       Net change in advances by borrowers for taxes and insurance                             610,994            1,028,690
                                                                                         -------------------- -------------------
                Net cash provided by (used in) financing activities                        (13,115,081)          30,178,821
                                                                                         -------------------- -------------------

  Net Change in Cash and Cash Equivalents                                                  (10,670,711)         (13,994,678)

  Cash and Cash Equivalents, Beginning of Period                                            16,793,923           27,298,093
                                                                                         -------------------- -------------------

  Cash and Cash Equivalents, End of Period                                               $   6,123,212        $  13,303,415
                                                                                         ==================== ===================

  Additional Cash Flows and Supplementary Information
       Interest paid                                                                     $   6,961,877        $   7,338,203
       Income tax paid                                                                         472,000              820,000
       Loan balances transferred to foreclosed real estate                                     499,100              275,536
       Securitization of loans                                                              27,068,072                   --

  See notes to consolidated condensed financial statements.



                                       8
</TABLE>
<PAGE>



                         LINCOLN BANCORP AND SUBSIDIARY
         Notes to Unaudited Consolidated Condensed Financial Statements


Note 1:  Basis of Presentation

The consolidated  financial  statements  include the accounts of Lincoln Bancorp
(the  "Company"),  its  wholly  owned  subsidiary,  Lincoln  Bank,  a  federally
chartered  savings bank  ("Lincoln" or the "Bank"),  and Lincoln's  wholly owned
subsidiaries,  LF Service  Corporation  ("LF  Service")  and  Citizens  Loan and
Service  Corporation  ("CLSC"),  both  Indiana  corporations,  and LF  Portfolio
Services,  Inc.  ("LF  Portfolio"),   a  Delaware  corporation.   A  summary  of
significant  accounting  policies  is set forth in Note 1 of Notes to  Financial
Statements included in the December 31, 2003 Annual Report to Shareholders.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

The interim  consolidated  financial statements have been prepared in accordance
with instructions to Form 10-Q, and therefore do not include all information and
footnotes  necessary for a fair presentation of financial  position,  results of
operations  and cash flows in  conformity  with  generally  accepted  accounting
principles.

The interim  consolidated  financial  statements  at June 30, 2004,  and for the
three and six months  ended  June 30,  2004 and 2003,  have not been  audited by
independent  accountants,  but  reflect,  in  the  opinion  of  management,  all
adjustments  (which  include  only normal  recurring  adjustments)  necessary to
present fairly the financial position,  results of operations and cash flows for
such  periods.  The results of  operations  for the  three-month  and  six-month
periods ended June 30, 2004, are not necessarily indicative of the results which
may be expected for the entire year. The consolidated condensed balance sheet of
the  Company  as of  December  31,  2003  has  been  derived  from  the  audited
consolidated balance sheet of the Company as of that date.


Note 2:  Earnings Per Share

Earnings per share have been  computed  based upon the  weighted-average  common
shares  outstanding.  Unearned  Employee  Stock  Ownership Plan shares have been
excluded from the computation of average common shares outstanding.

<TABLE>
<CAPTION>

                                              Three Months Ended                              Three Months Ended
                                                June 30, 2004                                   June 30, 2003
                                                -------------                                   -------------
                                                   Weighted          Per                           Weighted        Per
                                                    Average         Share                           Average       Share
                                         Income      Shares         Amount            Income         Shares       Amount
                                         ------      ------         ------            ------         ------       ------
<S>                                      <C>        <C>                 <C>        <C>              <C>             <C>
     Basic earnings per share
       Income available to
       common shareholders               $936,199   3,970,084           $.24       $ 1,037,104      3,910,399       $ .27
                                                                   =========                                    =========

     Effect of dilutive RRP
     awards and stock options                         122,720                                         148,136
                                   --------------------------                      --------------------------
     Diluted earnings per share
       Income available to
       common shareholders and
       assumed conversions
                                         $936,199   4,092,804           $.23       $ 1,037,104      4,058,535       $ .26
                                   =========================================       ========================================




                                       9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                               Six Months Ended                               Six Months Ended
                                                June 30, 2004                                   June 30, 2003
                                                -------------                                   -------------
                                                   Weighted          Per                           Weighted        Per
                                                    Average         Share                           Average       Share
                                         Income      Shares         Amount            Income         Shares       Amount
                                         ------      ------         ------            ------         ------       ------
<S>                                    <C>          <C>                <C>         <C>              <C>             <C>
     Basic earnings per share
       Income available to
       common shareholders             $1,747,947   3,960,111          $ .44       $ 1,940,070      3,948,503       $ .49
                                                                   =========                                    =========

     Effect of dilutive RRP
     awards and stock options                         141,337                                         145,050
                                   ---------------------------                     --------------------------
     Diluted earnings per share
       Income available to
       common shareholders and
       assumed conversions
                                       $1,747,947   4,101,448          $ .43        $1,940,070      4,093,553       $ .47
                                   =========================================       ========================================

</TABLE>


Note 3:  Stock Options

The Company has a stock-based  employee  compensation  plan,  which is described
more fully in Notes to  Financial  Statements  included in the December 31, 2003
Annual  Report to  Shareholders.  The Company  accounts  for this plan under the
recognition  and  measurement  principles of APB Opinion No. 25,  Accounting for
Stock Issued to Employees, and related interpretations.  No stock-based employee
compensation  cost is reflected in net income,  as all options granted under the
plan had an exercise  price equal to the market value of the  underlying  common
stock on the grant  date.  The  following  table  illustrates  the effect on net
income  and  earnings  per  share if the  Company  had  applied  the fair  value
provisions  of  Statement of Financial  Accounting  Standards  ("SFAS") No. 123,
Accounting for Stock-Based Compensation, to stock-based employee compensation.

<TABLE>
<CAPTION>




                                                                 Three Months   Three Months     Six Months     Six Months
                                                                     Ended          Ended           Ended         Ended
                                                                 June 30, 2004  June 30, 2003   June 30, 2004  June 30, 2003
                                                                ------------------------------------------------------------

<S>                                                                 <C>         <C>              <C>           <C>
           Net income, as reported                                  $ 936,199   $ 1,037,104      $ 1,747,947   $ 1,940,070
           Less:  Total stock-based employee compensation
              cost determined under the fair value based
              method, net of income taxes                               7,224        36,257           16,328        72,515
                                                                ------------------------------------------------------------

           Pro forma net income                                     $ 928,975   $ 1,000,847      $ 1,731,619  $  1,867,555
                                                                ============================================================

           Earnings per share:
               Basic - as reported                                     $  .24        $  .27           $  .44       $   .49
               Basic - pro forma                                          .23           .26              .44           .47
               Diluted - as reported                                      .23           .26              .43           .47
               Diluted - pro forma                                        .23           .25              .42           .46

</TABLE>

                                       10
<PAGE>

Note 4:  Business Combination

On August 2, 2004, the Company  announced the  completion of the  acquisition of
First Shares  Bancorp,  Inc.,  Greenwood,  Indiana (First  Shares),  the holding
company  of First  Bank,  an  Indiana  commercial  bank.  Under the terms of the
agreement, shareholders of First Shares could elect to receive in exchange for a
share of First Shares  common stock  either .75 shares of the  Company's  common
stock or $14.80 in cash; provided that an aggregate of 878,685 shares of Company
stock  were  to be  issued  in the  acquisition.  As a  result  of  the  various
shareholder  elections  made,  all  shareholders  who elected  only cash and all
shareholders  who failed to make a proper election by the July 14, 2004 deadline
will  receive  $14.80  for each share of First  Shares  they own.  Because  more
shareholders elected stock than were permitted in the transaction,  shareholders
electing  Company stock will receive for each share of First Shares common stock
approximately  .55 shares of Company  common  stock and  approximately  $4.00 in
cash, based on a stock exchange pro ration factor of .7293141, an exchange ratio
of .75 and a cash payment of $14.80.  Cash will be paid for fractional shares in
an amount determined by multiplying the fractional interest by $19.73.

In the  aggregate,  the Company  issued  878,685  shares of common  stock in the
transaction and paid cash in the aggregate of approximately  $17.3 million.  The
cash consideration was derived from borrowings by Lincoln Bank that were paid to
the Company in the form of dividend  distributions and borrowings by the Company
under its line of credit.

In  addition,  options  for  31,500  shares of First  Shares  common  stock were
purchased at the closing of the  transaction  by the Company for an aggregate of
$329,490 in cash.  Moreover,  options for an aggregate of 93,186  Company shares
with an average  option price per share of $7.42 were  exchanged for options for
124,250  shares of First  Shares  common  stock with an average  option price of
$5.56 per share.

On August 2, 2004,  First Bank merged into Lincoln  Bank.  The  transaction  was
approved  by the  shareholders  of the  Company  and  First  Shares  as  well as
regulatory   authorities.   Total  assets  of  Lincoln   after  the  merger  are
approximately $815 million.


Item 2: Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

General

The Company was  organized in September  1998. On December 30, 1998, it acquired
the common stock of Lincoln upon the conversion of Lincoln from a federal mutual
savings bank to a federal stock savings bank.

Lincoln Bank was originally organized in 1884 as Ladoga Federal Savings and Loan
Association,  located in Ladoga,  Indiana.  In 1979 Ladoga  Federal  merged with
Plainfield  First Federal  Savings and Loan  Association,  a federal savings and
loan association located in Plainfield,  Indiana which was originally  organized
in 1896.  Following  the merger,  the Bank  changed its name to Lincoln  Federal
Savings and Loan  Association  and, in 1984,  adopted the name,  Lincoln Federal
Savings Bank.  On September  26, 2000,  the Company  acquired  Citizens  Bancorp
("Citizens"),  the  holding  company  of  Citizens  Savings  Bank  of  Frankfort
("Citizens  Savings"),  a federally  chartered savings bank. Citizens was merged
into the Company and Citizens  Savings was merged into the Bank.  Citizens  Loan
and Service Corporation ("CLSC"), a wholly-owned subsidiary of Citizens Savings,
continues as a subsidiary of Lincoln.  Lincoln  currently  conducts its business
from nine  full-service  offices  located  in  Hendricks,  Montgomery,  Clinton,
Johnson  and  Morgan  Counties,   Indiana,  with  its  main  office  located  in
Plainfield. On September 1, 2003, the Bank adopted the name Lincoln Bank.

Lincoln offers a variety of lending, deposit and other financial services to its
retail and  commercial  customers.  The Bank's  principal  business  consists of
attracting  deposits  from the general  public and  originating  fixed-rate  and
adjustable-rate  loans  secured  primarily  by first  mortgage  liens on one- to
four-family  residential real estate.  Lincoln's deposit accounts are insured up
to applicable  limits by the Savings  Association  Insurance Fund of the Federal
Deposit Insurance  Corporation.  Lincoln offers a number of financial  services,
which  includes:  (i) one-to  four-family  residential  real estate loans;  (ii)
commercial real estate loans;  (iii) real estate  construction  loans; (iv) land
loans; (v) multi-family  residential loans; (vi) consumer loans,  including home
equity loans and automobile loans;  (vii) commercial loans;  (viii) money market
demand  accounts;  (ix)  savings  accounts;  (x)  checking  accounts;  (xi)  NOW
accounts; (xii) certificates of deposit; and (xiii) financial planning.



                                       11
<PAGE>

Lincoln  currently  owns three  subsidiaries.  First,  LF Service,  whose assets
consist of an investment in Family Financial Holdings, Inc. ("Family Financial")
and in Bloomington Housing Associates,  L.P. ("BHA"). Family Financial primarily
engages  in  retail  sales  of  insurance  products  in  connection  with  loans
originated by its shareholder financial institutions.  BHA is an Indiana limited
partnership  that  was  organized  to  construct,  own and  operate  a  130-unit
apartment  complex in Bloomington,  Indiana (the "BHA Project").  Development of
the BHA Project was  completed in 1993 and the project is performing as planned.
Second,  CLSC, which primarily engages in the purchase and development of tracts
of undeveloped land. Because CLSC engages in activities that are not permissible
for a national  bank,  OTS  regulations  prohibit  Lincoln  from  including  its
investment in CLSC in its  calculation  of regulatory  capital.  CLSC  purchases
undeveloped land,  constructs  improvements and  infrastructure on the land, and
then sells lots for residential home construction. Third, LF Portfolio, which is
located  in  Nevada,  holds  and  manages a  significant  portion  of  Lincoln's
investment portfolio.

Lincoln's  results of operations depend primarily upon the level of net interest
income,   which  is  the  difference  between  the  interest  income  earned  on
interest-earning assets, such as loans and investments,  and costs incurred with
respect to  interest-bearing  liabilities,  primarily  deposits and  borrowings.
Results of  operations  also  depend  upon the level of  Lincoln's  non-interest
income,  including  fee  income  and  service  charges  and  the  level  of  its
non-interest expenses, including general and administrative expenses.


Critical Accounting Policies

Note 1 to the  consolidated  financial  statements  contains  a  summary  of the
Company's  significant  accounting  policies presented on pages 28 through 31 of
the Annual Report to  Shareholders  for the year ended December 31, 2003,  which
was filed on Form 10-K with the Securities and Exchange  Commission on March 30,
2004.  Certain of these policies are important to the portrayal of the Company's
financial condition, since they require management to make difficult, complex or
subjective  judgments,  some of which may relate to matters that are  inherently
uncertain.  Management  believes that its critical  accounting  policies include
determining the allowance for loan losses,  the valuation of mortgage  servicing
rights, and the valuation of intangible assets.


Allowance for loan losses

The  allowance  for loan  losses  represents  management's  estimate of probable
losses inherent in the Company's loan portfolios. In determining the appropriate
amount of the allowance for loan losses,  management makes numerous assumptions,
estimates and assessments.

The  Company's  strategy  for  credit  risk  management  includes  conservative,
centralized credit policies,  and uniform underwriting criteria for all loans as
well as an overall  credit  limit for each  customer  significantly  below legal
lending limits.  The strategy also emphasizes  diversification  on a geographic,
industry  and customer  level,  regular  credit  quality  reviews and  quarterly
management   reviews  of  large   credit   exposures   and  loans   experiencing
deterioration  of credit  quality.  A standard  credit scoring system is used to
assess credit risks during the loan approval process of all consumer loans while
commercial  loans are  individually  reviewed  by a credit  analyst  with formal
presentations to the Bank's Loan Committee.

The Company's  allowance  consists of two components:  probable losses estimated
from  individual  reviews of specific loans and probable  losses  estimated from
historical loss rates.  Also,  probable losses  resulting from economic or other
deterioration  above and beyond what is reflected in the first two components of
the allowance are considered.

Larger  commercial loans that exhibit probable or observed credit weaknesses are
subject to  individual  review.  Where  appropriate,  reserves are  allocated to
individual  loans based on  management's  estimate of the borrower's  ability to
repay the loan given the availability of collateral,  other sources of cash flow
and legal options available to the Company. Included in the review of individual
loans are those that are  impaired as provided  in SFAS No. 114,  Accounting  by
Creditors  for  Impairment  of a Loan.  Any  allowances  for impaired  loans are
measured based on the present value of expected future cash flows  discounted at
the loan's effective  interest rate or fair value of the underlying  collateral.
The Company  evaluates the  collectibility  of both  principal and interest when
assessing the need for a loss accrual. Estimated loss rates are applied to other
commercial loans not subject to specific reserve  allocations  Homogenous loans,
such as consumer installment and residential mortgage loans are not individually
risk graded.  Rather,  standard credit scoring systems are used to assess credit
risks. Reserves are established for each category of loans based on the expected
net charge-offs for one year. Loss rates are based on the average net charge-off
estimated by loan category.

                                       12
<PAGE>


An unallocated  reserve is maintained to recognize the imprecision in estimating
and measuring loss when evaluating  reserves for individual  loans or categories
of loans.  Allowances on individual loans and historical loss rates are reviewed
quarterly and adjusted as necessary based on changing borrower and/or collateral
conditions.

The  Company's  primary  market  area  for  lending  is  central  Indiana.  When
evaluating  the adequacy of allowance,  consideration  is given to this regional
geographic  concentration  and the closely  associated  effect changing economic
conditions have on the Company's customers.

The Company has not substantively  changed any aspect to its overall approach in
the determination of the allowance for loan losses.  There have been no material
changes in  assumptions  or  estimation  techniques as compared to prior periods
that impacted the determination of the current period allowance.


Mortgage servicing rights

The Company  recognizes  the rights to service sold  mortgage  loans as separate
assets in the  consolidated  balance sheet. The total cost of loans when sold is
allocated between loans and mortgage servicing rights based on the relative fair
values of each. Mortgage servicing rights are subsequently  carried at the lower
of the  initial  carrying  value,  adjusted  for  amortization,  or fair  value.
Mortgage  servicing  rights are evaluated for impairment based on the fair value
of those  rights.  Factors  included  in the  calculation  of fair  value of the
mortgage  servicing  rights include,  estimating the present value of future net
cash flows,  market loan  prepayment  speeds for similar loans,  discount rates,
servicing costs, and other economic factors. Servicing rights are amortized over
the estimated period of net servicing revenue.  It is likely that these economic
factors will change over the life of the mortgage servicing rights, resulting in
different  valuations of the mortgage servicing rights. The differing valuations
will  affect  the  carrying  value  of  the  mortgage  servicing  rights  on the
consolidated  balance sheet as well as the amounts  recorded in the consolidated
income statement.


Intangible assets

Management  periodically  assesses  the  impairment  of  its  goodwill  and  the
recoverability of its core deposit intangible.  Impairment is the condition that
exists when the carrying  amount of goodwill  exceeds its implied fair value. If
actual external conditions and future operating results differ from management's
judgments,  impairment and/or increased amortization charges may be necessary to
reduce the carrying value of these assets to the appropriate value.


Financial Condition

Assets  totaled  $581.2  million at June 30, 2004, a decrease  from December 31,
2003 of $10.5  million.  This  decline  occurred  in cash  and  interest-bearing
deposits at other banks, down $10.7 million from yearend 2003.  Additionally net
loans  declined by $10.4 million and  investment  securities  available for sale
increased  $9.3  million.  This was the  result of the  securitization  of $27.0
million of mortgage loans into  investment  securities and their transfer to the
Bank's  investment  portfolio  offset  by growth in other  loan  categories  and
maturity  of other  investment  securities.  Excess cash was used to pay Federal
Home Loan Bank advances down $8.7 million.

Deposits  totaled  $317.6  million at June 30,  2004, a decrease of $4.2 million
from December 31, 2003. No major changes  occurred in any deposit  category from
December 31, 2003 to June 30, 2004.  Federal Home Loan Bank  advances  decreased
$8.7 million to $176.0  million as a result of the payoff of advances  utilizing
excess cash.

Shareholders'  equity  increased $1.3 million from December 31, 2003 to June 30,
2004.  The increase was a result of net income of $1.7  million,  stock  options
exercised of $238,000,  Employee Stock  Ownership Plan shares earned of $322,000
and  unearned  compensation  amortization  of  $264,000.  These  increases  were
partially offset by cash dividends of $1.1 million and an increase in unrealized
losses on investment securities available for sale of $193,000.



                                       13
<PAGE>

Comparison  of  Operating  Results for the Three  Months Ended June 30, 2004 and
2003

Net income for the second quarter ended June 30, 2004 was $936,000,  or $.24 for
basic and $.23 for diluted  earnings per share.  This compared to net income for
the  comparable  period  in 2003 of  $1,037,000,  or $.27 for basic and $.26 for
diluted  earnings per share.  Return on assets was .64% and return on equity was
4.62% for the second  quarter of 2004 compared to .75% and 5.25%,  respectively,
for the same period last year.

Net interest  income for the second quarter of 2004 was  $3,904,000  compared to
$3,895,000  for the same period in 2003.  Net interest  margin was 2.79% for the
three-month  period ended June 30, 2004 compared to 2.96% for the same period in
2003. The average yield on earning assets  decreased .52% for the second quarter
of  2004   compared   to  the  same  period  in  2003.   The  average   cost  of
interest-bearing  liabilities  decreased .42% from the second quarter of 2003 to
the second quarter of 2004. This decreased spread from 2.50% for the 2003 period
to 2.40% for the 2004 period, or .10%.

The Bank's  provision  for loan losses for the second  quarter 2004 was $223,000
compared to $269,000 for the same period in 2003.  Non-performing loans to total
loans at June 30, 2004 were .95%  compared to .43% at December 31,  2003,  while
non-performing  assets to total  assets were .85% at June 30,  2004  compared to
..46% at December 31,  2003.  The  increase in  non-performing  loans at June 30,
2004,  was the result of loans to two large  commercial  real  estate  borrowers
being placed in nonaccrual  status. In addition,  the securitization of mortgage
loans  discussed  above removed $27.0 million of performing  loans from the loan
portfolio resulting in a higher concentration of non-performing loans. The loans
to the two  commercial  real estate  borrowers  total $3.5  million and are well
secured.  Only one loan in the amount of $149,000  was past due more than ninety
days. We do not anticipate a loss in principal on the loans. Additional reserves
were   provided  in  the   allowance   for  loan  losses  for  the  increase  in
non-performing  loans,  however,  this was  partially  offset by a reduction  in
reserves  for  residential  mortgages  due to the  securitization  of  mortgages
discussed  above. The allowance for loan losses as a percentage of loans at June
30, 2004 was .89% compared to .80% at December 31, 2003.

Other income for the three  months ended June 30, 2004 was $801,000  compared to
$1,126,000  for the same  quarter  of 2003.  The  decrease  in other  income was
primarily  related to the decrease in net realized and unrealized  gains on sale
of loans. Net realized and unrealized gains on sale of loans were $68,000,  down
from  $412,000  during the same period in 2003.  The decrease in gain on sale of
loans was the result of selling fewer loans and at a lower price than during the
second quarter of 2004 compared to the same quarter in 2003.  Proceeds from loan
sales were $4,147,000 for the second quarter of 2004 compared to $12,994,000 for
the second quarter of 2003. The decline in loan sales was a product of a decline
in refinancing activity and a policy change made in 2003 to retain certain types
of residential  loan  production  that had previously been sold in the secondary
market. The decision to sell or retain loans is evaluated regularly depending on
the Bank's interest rate sensitivity and excess investable funds.

Other expenses were $3,221,000 for the three months ended June 30, 2004 compared
to $3,354,000 for the same three month period of 2003, a decrease of $133,000.

Income tax expense was approximately 26% of pretax income for the second quarter
of 2004 and 2003.


Comparison of Operating Results for the Six Months Ended June 30, 2004 and 2003

Net income for the six-month period ended June 30, 2004 was $1,748,000,  or $.44
for basic and $.43 for diluted  earnings per share.  This compared to $1,940,000
or $.49 for basic and $.47 for diluted earnings per share for the same period of
2003.  Return on average  assets was .59% and return on average equity was 4.33%
compared to .72% and 4.87%, respectively, for same period ended June 30, 2003.

Net interest income  year-to-date  through June 30, 2004 was $7,933,000 compared
to $7,735,000 for the same period in 2003. Net interest margin was 2.83% through
June 30, 2004 down from 3.01% for the same  six-month  period one year ago.  Net
interest income was down from one year age as a result of declining  margins and
reduced spreads.

The provision for the first six months of 2004 was $423,000 compared to $434,000
last year for the same six-month period.


                                       14
<PAGE>


Other income for the six months ended June 30, 2004 was  $1,472,000  compared to
$1,988,000  during the same  period in 2003.  The  decline  in other  income was
primarily the result of $525,000 less net realized and unrealized  gains on sale
of loans down from $663,000  during the six-month  period ended June 30, 2003 to
$138,000 for the same period in 2004. As stated previously, the decrease in gain
on sale of loans was the result of selling fewer loans and at a lower price than
during  2004  compared  to same  period in 2003.  Proceeds  from loan sales were
$8,759,000 during the first six months of 2004 as compared to $21,853,000 during
the comparable 2003 period.

Other expenses for the six months ended June 30, 2004 were  $6,662,000  compared
to $6,714,000 for the same period last year.

Income tax expense  was  approximately  25% of pretax  income for the six months
ended June 30, 2004 and 2003.


Asset Quality

The Company currently classifies loans as special mention, substandard, doubtful
and loss to assist  management  in addressing  collection  risks and pursuant to
regulatory  requirements.  Special  mention  loans  represent  credits that have
potential  weaknesses  that  deserve  management's  close  attention.   If  left
uncorrected,  these  potential  weaknesses  may result in  deterioration  of the
repayment   prospects  or  Lincoln's   credit  position  at  some  future  date.
Substandard  loans represent credits  characterized by the distinct  possibility
that some loss will be sustained if deficiencies on the loans are not corrected.
Doubtful loans possess the  characteristics of substandard loans, but collection
or  liquidation in full is doubtful  based upon existing  facts,  conditions and
values.  A loan  classified as a loss is considered  uncollectible.  Lincoln had
$9.7 million and $5.2 million of loans  classified as special mention as of June
30, 2004 and  December  31, 2003,  respectively.  In addition,  Lincoln had $4.1
million and $2.5 million of loans classified as substandard at June 30, 2004 and
December 31,  2003,  respectively.  At June 30, 2004 and  December 31, 2003,  no
loans were  classified as doubtful or loss.  At June 30, 2004,  and December 31,
2003,  respectively,  non-accrual  loans were $4.0 million and $1.6 million.  At
June 30, 2004 and December 31, 2003, respectively,  accruing loans delinquent 90
days or more  totaled  $57,000 and  $272,000.  At June 30, 2004 and December 31,
2003,  the  allowance  for loan  losses  was  $3.8  million  and  $3.5  million,
respectively or approximately  .89% and .80% of loans,  including loans held for
sale, respectively.


Liquidity and Capital Resources

The Financial  Regulatory Relief and Economic  Efficiency Act of 2000, which was
signed into law on December 27, 2000, repealed the former statutory  requirement
that all savings associations maintain an average daily balance of liquid assets
in a minimum  amount of not less than 4% or more than 10% of their  withdrawable
accounts plus  short-term  borrowings.  The OTS adopted an interim final rule in
March 2001 that implemented this revised statutory requirement, although savings
associations remain subject to the OTS regulation that requires them to maintain
sufficient liquidity to ensure their safe and sound operation.

Pursuant  to OTS  capital  regulations  in  effect  at June  30,  2004,  savings
associations were required to maintain a 1.5% tangible capital requirement, a 4%
leverage ratio (or core capital) requirement,  and a total risk-based capital to
risk-weighted  assets ratio of 8%. At June 30, 2004,  Lincoln's  capital  levels
exceeded all applicable  regulatory  capital  requirements  in effect as of that
date.


Recent Development

On August 2, 2004, the Company  announced the  completion of the  acquisition of
First Shares  Bancorp,  Inc.,  and of First Bank,  as discussed in Note 4 to the
Financial Statements.


Other

The  Securities  and  Exchange  Commission  maintains  a Web site that  contains
reports,   proxy  information   statements,   and  other  information  regarding
registrants that file electronically with the Commission, including the Company.
The address is http://www.sec.gov.



                                       15
<PAGE>
<TABLE>
<CAPTION>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Presented below, as of March 31, 2004 and 2003, is an analysis  performed by the
OTS of  Lincoln's  interest  rate risk as measured by changes in  Lincoln's  net
portfolio value ("NPV") for instantaneous  and sustained  parallel shifts in the
yield  curve,  in 100 basis point  increments,  up 300 basis points and down 100
basis points.

                                 March 31, 2004
                                 --------------
                                  Net Portfolio Value                       NPV as % of PV of Assets
    Changes
    In Rates         $ Amount         $ Change           %Change            NPV Ratio           Change
    --------         --------         ---------          -------            ---------           ------
                                          (Dollars in thousands)
<S>  <C>              <C>             <C>                 <C>                 <C>              <C>
    +300 bp           $57,463         $(15,678)           (21)%               10.08%           (204) bp
    +200 bp            64,278           (8,863)           (12)                11.04            (107) bp
    +100 bp            70,145           (2,996)            (4)                11.81             (30) bp
       0 bp            73,141                                                 12.12
    -100 bp            70,819           (2,322)            (3)                11.61             (50) bp



                                 March 31, 2003
                                 --------------
                                Net Portfolio Value                       NPV as % of PV of Assets
   Changes
   In Rates          $ Amount         $ Change           %Change            NPV Ratio           Change
   --------          --------         ---------          -------            ---------           ------
                                        (Dollars in thousands)
    +300 bp           $64,069         $(13,093)           (17)%               12.17%           (162) bp
    +200 bp            70,557           (6,605)            (9)                13.10             (69) bp
    +100 bp            75,789           (1,373)            (2)                13.77              (2) bp
       0 bp            77,162                                                 13.78
    -100 bp            75,933           (1,229)            (2)                13.38             (40) bp


</TABLE>


Management  believes  at March 31,  2004 and June 30,  2004  there  have been no
material changes in Lincoln's  interest rate sensitive  instruments  which would
cause  a  material  change  in  the  market  risk  exposures  which  affect  the
quantitative  and  qualitative  risk  disclosures as presented in Item 7A of the
Company's Annual Report on Form 10-K for the period ended December 31, 2003.


Item 4.  Controls and Procedures

(a)  Evaluation  of disclosure  controls and  procedures.  The  Company's  chief
executive   officer  and  chief   financial   officer,   after   evaluating  the
effectiveness of the Company's disclosure controls and procedures (as defined in
Sections  13a-15(e)  and  15d-15(e)  of the  regulations  promulgated  under the
Securities  Exchange Act of 1934, as amended),  as of the end of the most recent
fiscal quarter covered by this quarterly  report (the "Evaluation  Date"),  have
concluded that as of the Evaluation Date, the Company's  disclosure controls and
procedures  were adequate and are designed to ensure that  material  information
relating to the Company  would be made known to such  officers by others  within
the Company on a timely basis.

(b)  Changes in  internal  controls.  There were no  significant  changes in the
Company's  internal  control over financial  reporting  identified in connection
with the Company's  evaluation  of controls  that occurred  during the Company's
last fiscal quarter that has  materially  affected,  or is reasonably  likely to
materially affect, the Company's internal control over financial reporting.



                                       16
<PAGE>


PART II.   OTHER INFORMATION

Item 1. Legal Proceedings

          Although the Company and its subsidiaries  are involved,  from time to
          time, in various legal  proceedings  arising in the ordinary course of
          business,  there are no material legal proceedings to which they are a
          party or to which their property is subject.


Item 2. Changes in  Securities,  Use of Proceeds and Issuer  Purchases of Equity
        Securities

          The Company  announced a stock  repurchase  program on April 23, 2003,
          and up to 127,963  additional  shares may still be  repurchased  under
          that program. No shares were repurchased during the quarter ended June
          30, 2004. The repurchase program does not have an expiration date.


Item 3. Defaults Upon Senior Securities.

          None.


Item 4. Submission of Matters to Vote of Security Holders.

          No matter was submitted to a vote of the Company's shareholders during
          the second quarter of 2003.


Item 5. Other Information.

          None.


Item 6. Exhibits and Reports on Form 8-K.

     (a)  Exhibits

          31(1) Certification required by 17 C.F.R. Section 240.13a-14(a)
          31(2) Certification required by 17 C.F.R. Section 240.13a-14(a)
          32    Certification pursuant to 18 U.S.C. Section 1350, as adopted to
                Section 906 of the Sarbanes-Oxley Act of 2002.

     (b)  Lincoln  Bancorp  filed  one  Current  Report on Form 8-K  during  the
          quarter ended June 30, 2004:

          (1)  Date of report: April 23, 2004

               Items reported:  News release dated April 21, 2004 regarding the
                                announcement of results of  operations  for the
                                quarter ended March 31, 2004.



                                       17
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                 LINCOLN BANCORP




Date:  August 16, 2004              By: /s/ T. Tim Unger
                                        ----------------------------------------
                                        T. Tim Unger
                                        President and Chief Executive Officer



Date:  August 16, 2004              By: /s/ John M. Baer
                                        ----------------------------------------
                                        John M. Baer
                                        Treasurer







                                       18