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 MARCH 31, 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 March 31, 2004 was 4,418,391.


                                       1
<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.                                         10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk         15

Item 4.  Controls and Procedures                                            15

PART II. OTHER INFORMATION

Item 1.       Legal Proceedings                                             16
Item 2.       Changes in Securities, Use of Proceeds and
                Issuer Purchases of Equity Securities                       16
Item 3.       Defaults Upon Senior Securities                               16
Item 4.       Submission of Matters to a Vote of Security Holders           16
Item 5.       Other Information                                             16
Item 6.       Exhibits and Reports on Form 8-K                              16

SIGNATURES                                                                  17

CERTIFICATIONS                                                              18

                                       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>

PART I  FINANCIAL INFORMATION
Item 1.  Financial Statements
<TABLE>
<CAPTION>

                                                    LINCOLN BANCORP AND SUBSIDIARY
                                                 Consolidated Condensed Balance Sheets

                                                                                     March 31,           December 31,
                                                                                        2004                 2003
                                                                                --------------------- --------------------
                                                                                      (Unaudited)
  Assets
<S>                                                                             <C>                   <C>
       Cash and due from banks                                                  $     2,120,195       $     1,946,033
       Short-term interest-bearing demand deposits in other banks                     4,541,517            14,829,890
                                                                                --------------------- --------------------
           Cash and cash equivalents                                                  6,661,712            16,793,923
       Investment securities
           Available for sale                                                        88,649,866            94,136,926
           Held to maturity (market value $1,720,000 and $1,745,000)                  1,720,000             1,745,000
                                                                                --------------------- --------------------
                Total investment securities                                          90,369,866            95,881,926
       Loans held for sale                                                            1,577,250               354,900
       Loans, net of allowance for loan losses of $3,675,074 and $3,532,000         440,345,471           437,671,971
       Premises and equipment                                                         8,079,245             7,647,150
       Investments in limited partnerships                                            1,216,777             1,249,777
       Federal Home Loan Bank stock                                                   9,386,400             9,270,200
       Interest receivable                                                            2,277,734             2,441,270
       Goodwill                                                                       1,563,594             1,563,594
       Cash surrender value life insurance                                           12,643,563            12,506,227
       Other assets                                                                   6,235,601             6,304,312
                                                                                --------------------- --------------------
           Total assets                                                         $   580,357,213         $ 591,685,250
                                                                                ===================== ====================

  Liabilities
       Deposits
           Noninterest-bearing                                                  $    17,590,573         $  17,175,958
           Interest-bearing                                                         304,081,674           304,663,176
                                                                                --------------------- --------------------
                Total deposits                                                      321,672,247           321,839,134
       Borrowings                                                                   171,701,165           184,692,618
       Interest payable                                                                 890,394               913,705
       Other liabilities                                                              5,736,846             5,013,042
                                                                                --------------------- --------------------
           Total liabilities                                                        500,000,652           512,458,499
                                                                                --------------------- --------------------

  Commitments and Contingencies

  Shareholders' Equity
       Common stock, without par value
           Authorized - 20,000,000 shares
           Issued and outstanding - 4,418,391 and 4,411,891 shares                   43,464,636            43,383,386
       Retained earnings                                                             40,893,371            40,526,766
       Accumulated other comprehensive income (loss)                                    430,697               (8,118)
       Unearned recognition and retention plan (RRP) shares                            (759,413)            (918,983)
       Unearned employee stock ownership plan (ESOP) shares                          (3,672,730)          (3,756,300)
                                                                                --------------------- --------------------
           Total shareholders' equity                                                80,356,561            79,226,751
                                                                                --------------------- --------------------

           Total liabilities and shareholders' equity                           $   580,357,213         $ 591,685,250
                                                                                ===================== ====================
</TABLE>

  See notes to consolidated condensed financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>


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

                                                                                                  Three Months Ended
                                                                                                       March 31
                                                                                         ------------------ -------------------
                                                                                               2004                2003
                                                                                         ------------------ -------------------
Interest Income
<S>                                                                                      <C>                <C>
     Loans, including fees                                                               $  6,669,171       $  6,154,725
     Investment securities                                                                    692,707          1,114,643
     Deposits with financial institutions                                                      17,046             51,140
     Dividend income                                                                          116,960            104,235
                                                                                         ------------------ -------------------
         Total interest and dividend income                                                 7,495,884          7,424,743
                                                                                         ------------------ -------------------

Interest Expense
     Deposits                                                                               1,433,185          1,614,008
     Federal Home Loan Bank advances                                                        2,034,194          1,971,144
                                                                                         ------------------ -------------------
         Total interest expense                                                             3,467,379          3,585,152
                                                                                         ------------------ -------------------

Net Interest Income                                                                         4,028,505          3,839,591
     Provision  for loan losses                                                               200,172            164,531
                                                                                         ------------------ -------------------
Net Interest Income After Provision for Loan Losses                                         3,828,333          3,675,060
                                                                                         ------------------ -------------------

Other Income
     Service charges on deposit accounts                                                      213,956            199,559
     Net realized and unrealized gains on loans                                                70,366            251,136
     Net realized losses on sales of available-for-sale securities                                 --            (25,718)
     Equity in losses of limited partnerships                                                 (33,000)           (36,000)
     Point of sale income                                                                      86,689             72,357
     Loan servicing fees                                                                       82,901            106,504
     Increase in cash value of life insurance                                                 137,336            169,309
     Other income                                                                             113,238            125,038
                                                                                         ------------------ -------------------
         Total other income                                                                   671,486            862,185
                                                                                         ------------------ -------------------

Other Expenses
     Salaries and employee benefits                                                         1,853,601          1,769,682
     Net occupancy expenses                                                                   237,103            216,458
     Equipment expenses                                                                       185,787            239,377
     Advertising and business development                                                     102,997            109,758
     Data processing fees                                                                     360,719            325,714
     Professional fees                                                                        114,952            113,552
     Director and committee fees                                                               79,679             70,202
     Other expenses                                                                           506,234            515,426
                                                                                         ------------------ -------------------
         Total other expenses                                                               3,441,072          3,360,169
                                                                                         ------------------ -------------------

Income Before Income Tax                                                                    1,058,747          1,177,076
     Income tax expense                                                                       246,999            274,110
                                                                                         ------------------ ------------------

Net Income                                                                               $    811,748       $    902,966
                                                                                         ================== ===================

Basic earnings per share                                                                 $        .21       $        .23
Diluted earnings per share                                                                        .20                .22
Dividends per share                                                                               .13                .12
</TABLE>


See notes to consolidated condensed financial statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>

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



                                                                                         Three Months Ended
                                                                                             March 31,
                                                                                -------------------------------------
                                                                                      2004               2003
                                                                                ------------------ ------------------

<S>                                                                                  <C>                 <C>
  Net Income                                                                         $ 811,748           $902,966
  Other comprehensive income, net of tax
        Unrealized gains (losses) on securities available for sale
            Unrealized holding gains (losses) arising during the period, net
            of tax expense (benefit) of $226,147 and $(102,859)                        438,815           (195,169)
            Less:  Reclassification adjustment for losses included in net
            income, net of tax benefit of $8,744                                            --            (16,974)
                                                                                ------------------ ------------------
                                                                                       438,815           (178,195)
                                                                                ------------------ ------------------
   Comprehensive income                                                             $1,250,563          $ 724,771
                                                                                ================== ==================

</TABLE>

See notes to consolidated condensed financial statements.

                                       6
<PAGE>
<TABLE>
<CAPTION>

                                                    LINCOLN BANCORP AND SUBSIDIARY
                                       Consolidated Condensed Statement of Shareholders' Equity
                                               For the Three Months Ended March 31, 2004
                                                              (Unaudited)

                                       Common Stock                       Accumulated
                               ---------------------------                   Other                       Unearned
                                  Shares                     Retained    Comprehensive    Unearned         ESOP
                                Outstanding      Amount      Earnings    Income (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                                     811,748                                                   811,748
  Unrealized gains on
    securities, net of
    reclassification
    adjustment                                                              438,815                                       438,815
  Stock options exercised             6,500         81,250                                                                 81,250
  ESOP shares earned                                             86,996                                     83,570        170,566
  Amortization of unearned
    compensation expense                                         (6,580)                    159,570                       152,990
  Cash dividends ($.13 per
    share)                                                     (525,559)                                                 (525,559)
                               -------------- ------------ --------------------------- --------------- ------------- ---------------

Balances, March 31, 2004          4,418,391   $ 43,464,636 $ 40,893,371    $430,697      $ (759,413)   $(3,672,730)   $80,356,561
                               ============== ============ =========================== =============== ============= ===============
</TABLE>


See notes to consolidated condensed financial statements.

                                       7
<PAGE>
<TABLE>
<CAPTION>
                                                    LINCOLN BANCORP AND SUBSIDIARY
                                            Consolidated Condensed Statements of Cash Flows
                                                              (Unaudited)

                                                                                                 Three Months Ended
                                                                                                      March 31,
                                                                                         -------------------- -------------------
                                                                                               2004                2003
                                                                                         -------------------- -------------------
  Operating Activities
<S>                                                                                      <C>                  <C>
       Net income                                                                        $     811,748        $     902,966
       Adjustments to reconcile net income to net cash provided
         by (used in) operating activities
         Provision for loan losses                                                             200,172              164,531
         Investment securities accretion, net                                                  (57,703)              39,565
         Loans originated for sale in the secondary market                                  (5,785,900)          (5,862,619)
         Proceeds from sale of loans in the secondary market                                 4,611,948            8,859,153
         Gain on sale of loans                                                                 (70,366)            (251,136)
         Amortization of net loan origination fees                                             (71,035)            (179,419)
         Depreciation and amortization                                                         179,047              184,602
         Amortization of unearned compensation expense                                         152,990              162,580
         ESOP shares earned                                                                    170,566              149,238
         Net change in:
           Interest receivable                                                                 163,536               53,101
           Interest payable                                                                    (23,311)             (30,924)
         Other adjustments                                                                    (268,850)            (585,210)
                                                                                         -------------------- -------------------
                Net cash provided by operating activities                                       12,842            3,606,428
                                                                                         -------------------- -------------------

  Investing Activities
       Purchases of securities available for sale                                           (17,468,470)        (18,983,123)
       Proceeds from sales of securities available for sale                                         --            1,043,661
       Proceeds from maturities of securities available for sale                            23,678,176           16,409,049
       Proceeds from maturities of securities held to maturity                                  25,000               10,000
       Net change in loans                                                                  (2,950,367)         (26,951,205)
       Purchases of property and equipment                                                    (611,142)            (188,203)
       Proceeds from sale of foreclosed  real estate                                           116,000                   --
                                                                                         -------------------- -------------------
                Net cash provided by (used in) investing activities                          2,789,197          (28,659,821)
                                                                                         -------------------- -------------------

  Financing Activities
       Net change in
          Noninterest-bearing, interest-bearing demand,
          money market and savings deposits                                                  5,136,503           18,790,866
          Certificates of deposit                                                           (5,303,390)          (2,029,430)
       Proceeds from borrowings                                                              8,000,000           15,000,000
       Repayment of borrowings                                                             (21,000,000)         (10,248,501)
       Dividends paid                                                                         (524,714)            (511,937)
       Exercise of stock options                                                                81,250               85,182
       Purchase of common stock                                                                     --           (4,307,258)
       Net change in advances by borrowers for taxes and insurance                             676,101              687,691
                                                                                         -------------------- -------------------
                Net cash provided by (used in) financing activities                        (12,934,250)          17,466,613
                                                                                         -------------------- -------------------

  Net Change in Cash and Cash Equivalents                                                  (10,132,211)          (7,586,780)

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

  Cash and Cash Equivalents, End of Period                                               $   6,661,712        $  19,711,313
                                                                                         ==================== ===================

  Additional Cash Flows and Supplementary Information
       Interest paid                                                                     $   3,490,690        $   3,616,076
       Income tax paid                                                                                              250,000
       Loan balances transferred to foreclosed real estate                                     166,652              203,192
</TABLE>


  See notes to consolidated condensed financial statements.

                                       8
<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 March 31, 2004,  and for the
three months ended March 31, 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  period ended March 31, 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
                                                March 31, 2004                             March 31, 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              $ 811,748    3,950,280         $ .21        $ 902,966      3,987,113       $ .23
                                                                       =====                                       =====

     Effect of dilutive RRP
     awards and stock options                          159,954                                       141,962
                                        ----------   ----------                     ---------      ----------
     Diluted earnings per share
       Income available to
       common shareholders and
       assumed conversions
                                        $ 811,748   4,110,234          $ .20         $ 902,966     4,129,075       $ .22
                                        =========   =========          ======        =========     =========       ======
</TABLE>


                                       9
<PAGE>

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 Ended    Three Months Ended March
                                                                             March 31, 2004              31, 2003
                                                                        ----------------------------------------------------

<S>                                                                              <C>                      <C>
           Net income, as reported                                               $ 811,748                $ 902,966
           Less:  Total stock-based employee compensation cost
              determined under the fair value based method, net of
              income taxes                                                           9,104                   36,257
                                                                        ----------------------------------------------------

           Pro forma net income                                                  $ 802,644                $ 866,709
                                                                        ====================================================

           Earnings per share:
               Basic - as reported                                                 $   .21                  $   .23
               Basic - pro forma                                                   $   .20                  $   .22
               Diluted - as reported                                               $   .20                  $   .22
               Diluted - pro forma                                                 $   .20                  $   .21
</TABLE>

Note 4:  Business Combination

On March 10, 2004,  the Company  signed a definitive  agreement to acquire First
Shares Bancorp, Inc., Greenwood,  Indiana (First Shares). Under the terms of the
agreement,  the Company will exchange either .75 shares of the Company's  common
stock or $14.80 in cash for each share of First Shares'  common stock.  However,
50  percent  of the  aggregate  consideration  must  be paid  in  shares  of the
Company's  stock, and there may be pro rata allocations of cash or stock made to
the  shareholders of First Shares to ensure that this  requirement is satisfied.
The  transaction is subject to approval by the  shareholders  of the Company and
First Shares as well as regulatory  authorities.  As of December 31, 2003, First
Shares had total assets and equity of $175,788,000 and $9,033,000, respectively.

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.

                                       10
<PAGE>

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.

Lincoln  currently  owns three  subsidiaries.  First,  LF Service,  whose assets
consist of an investment in Family  Financial  Life Insurance  Company  ("Family
Financial")  and  in  Bloomington  Housing  Associates,   L.P.  ("BHA").  Family
Financial is an Indiana stock insurance company that primarily engages in retail
sales of  mortgage  and  credit  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 has been  completed  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 to builders, who construct homes for sale to home buyers. Third,
LF  Portfolio,  which is located in Nevada and 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

                                       11
<PAGE>

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.

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  $580.4  million at March 31, 2004, a decrease from December 31,
2003 of $11.3  million.  The  decline in assets  occurred  in cash and  interest
bearing deposits in other banks, down $10.1 million,  and investment  securities
available for sale, down $5.5 million.  This decline was partially  offset by an
increase  in net  loans,  including  loans  held  for  sale,  up  $3.9  million.
Commercial loans increased by $7.8 million while  residential loans decreased by
$3.8 million.

                                       12
<PAGE>

Total deposits were $321.7 million at March 31, 2004,  virtually  unchanged from
the $321.8  million at  December  31,  2003.  Growth  occurred  in money  market
deposits,  up $5.0 million, and savings deposits,  up $1.5 million.  This growth
was offset by lower balances in checking, down $1.4 million, and certificates of
deposit,  down $5.3  million.  Federal Home Loan Bank  advances  declined  $13.0
million from December 31, 2003 to March 31, 2004.

Shareholders'  Equity increased $1.1 million from December 31, 2003 to March 31,
2004.  The  increase  was a result of net income of  $812,000,  an  increase  in
unrealized gains on investment securities available for sale of $439,000,  stock
options  exercised of $81,000,  Employee  Stock  Ownership Plan shares earned of
$171,000 and unearned  compensation  amortization  of $153,000.  These increases
were partially offset by cash dividends of $526,000.

Comparison  of  Operating  Results for the Three Months Ended March 31, 2004 and
2003

Net income for the first quarter ended March 31, 2004 was $812,000,  or $.21 for
basic and $.20 for diluted  earnings per share.  This compared to net income for
the  comparable  period in 2003 of $903,000,  or $.23 for basic and $.22 diluted
earnings per share. Return on assets was .55% and return on equity was 4.04% for
the first quarter of 2004 compared to .68% and 4.50%, respectively, for the same
period last year.

Interest  income  for the  first  quarter  of 2004 was  $7,496,000  compared  to
$7,425,000 for the same period in 2003. The increase was a result of an increase
in the average balance of  interest-earning  assets from period to period offset
by a decrease in the average yield on interest-earning  assets. Interest expense
for the first quarter of 2004 was $3,467,000 compared to $3,585,000 for the same
period in 2003.  The decrease was a result of a decrease in the average costs of
interest-bearing  liabilities  partially  offset by an  increase  in the average
balance of  interest-bearing  liabilities  from period to period.  Net  interest
income for the first quarter of 2004 was  $4,029,000  compared to $3,840,000 for
the same  period in 2003.  Net  interest  margin  was 2.88% for the  three-month
period ended March 31, 2004  compared to 3.07% for the same period in 2003.  The
average  yield on earning  assets  declined 58 basis points in the first quarter
2004   compared  to  the  same  period  in  2003  while  the  average   cost  of
interest-bearing  liabilities declined 50 basis points for the same period. This
decreased  spread from 2.59% at March 31, 2003 to 2.51% at March 31, 2004,  or 8
basis points.

The Bank's  provision for loan losses for the first quarter of 2004 was $200,000
compared to $165,000  for the same period in 2003.  The  increased  provision in
2004  was  primarily   the  result  of  an  increase  in  the  loan   portfolio.
Nonperforming  loans to total loans at March 31, 2004 increased slightly to .44%
from .43% at December 31, 2003.  Nonperforming  assets to total assets were .49%
at March 31, 2004 compared to .46% at December 31, 2003.  The allowance for loan
losses  as a  percent  of loans  at March  31,  2004 was .82%  compared  .80% at
December 31, 2003.

Other income for the three months ended March 31, 2004 was $671,000  compared to
$862,000  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 $70,000 in the
first quarter of 2004 compared to $251,000  during the same period of 2003.  The
decrease in gain on sale of loans was the result of selling fewer loans and at a
lower price than during the first  quarter of 2004  compared to the same quarter
in 2003.  Proceeds from loan sales were $4,612,000 for the first quarter of 2004
compared to $8,859,000  for the first 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  $3,441,000  for the three  months  ended  March 31,  2004
compared to $3,360,000 for the same three months of 2003.  The primary  increase
was in salaries and employee benefits,  which increased $84,000 during the first
quarter of 2004 compared to the same period in 2003.

Income tax expense was  approximately 23% of pretax income for the first quarter
of 2004 and 2003.

                                       13
<PAGE>

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
$7.9 million and $5.2 million of loans classified as special mention as of March
31, 2004 and  December  31, 2003,  respectively.  In addition,  Lincoln had $3.9
million and $2.5 million of loans  classified as  substandard  at March 31, 2004
and December 31, 2003, respectively. At March 31, 2004 and December 31, 2003, no
loans were  classified as doubtful or loss. At March 31, 2004,  and December 31,
2003,  respectively,  non-accrual  loans were $1.7 million and $1.6 million.  At
March 31, 2004 and December 31, 2003, respectively, accruing loans delinquent 90
days or more totaled  $253,000 and $272,000.  At March 31, 2004 and December 31,
2003,  the  allowance  for loan  losses  was  $3.7  million  and  $3.5  million,
respectively or approximately  .82% 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 March  31,  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 March 31, 2004,  Lincoln's  capital levels
exceeded all applicable  regulatory  capital  requirements  in effect as of that
date.

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.

                                       14
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Presented  below, as of December 31, 2003 and 2002, 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.

<TABLE>
<CAPTION>
                                                      December 31, 2003
                                                      -----------------
                                  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           $56,836         $(15,957)           (22)%               9.77%           (208) bp
    +200 bp            64,353           (8,441)           (12)               10.84            (102) bp
    +100 bp            69,694           (3,099)            (4)               11.53             (32) bp
       0 bp            72,794                                                11.85
    -100 bp            71,494           (1,300)            (2)               11.52             (34) bp

                                                      December 31, 2002
                                                      -----------------
                                Net Portfolio Value                       NPV as % of PV of Assets
    Changes
    In Rates         $ Amount         $ Change           %Change            NPV Ratio          Change
    --------         --------         --------           -------            ---------           ------
                                        (Dollars in thousands)
    +300 bp           $68,068          $(6,156)            (8)%              13.23%            (51) bp
    +200 bp            72,441           (1,783)            (2)               13.81               7  bp
    +100 bp            75,504            1,280              2                14.14              40  bp
       0 bp            74,224                                                13.74
    -100 bp            69,200           (5,024)            (7)               12.71            (103) bp
</TABLE>

Management  believes at March 31,  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.

                                       15
<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 be  repurchased  under that
          program. No shares were repurchased during the quarter ended March 31,
          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 first quarter of 2004.

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. ss. 240.13a-14(a)

               31(2) Certification required by 17 C.F.R. ss. 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 two Current Reports on Form 8-K during the
               quarter ended March 31, 2004:

               (1)  Date of report: January 22, 2004

                    Items reported:     News  release  dated  January  20,  2004
                                        regarding the announcement of results of
                                        operations  for  the  quarter  and  year
                                        ended December 31, 2004.

               (2)  Date of report: March 11, 2004

                    Items reported:     The  Company  filed a current  report on
                                        Form 8-K  disclosing  the merger between
                                        Lincoln   Bancorp   and   First   Shares
                                        Bancorp, Inc., the Agreement and Plan of
                                        Reorganization  attached  to which is as
                                        exhibit thereto.

                                       16
<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:         May 17, 2004             By: /s/ T. Tim Unger
                                          --------------------------------------
                                          T. Tim Unger
                                          President and Chief Executive Officer

Date:         May 17, 2004             By: /s/ John M. Baer
                                          --------------------------------------
                                          John M. Baer
                                          Treasurer

                                       17