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 SEPTEMBER 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 September 30, 2004 was 5,340,638.
<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                                          12

Item 3.  Quantitative and Qualitative Disclosures about Market Risk         18

Item 4.  Controls and Procedures                                            19


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                  19
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds        19
Item 3.  Defaults Upon Senior Securities                                    19
Item 4.  Submission of Matters to a Vote of Security Holders                20
Item 5.  Other Information                                                  20
Item 6.  Exhibits                                                           20

SIGNATURES                                                                  21

EXHIBITS



                                       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


                                                                                   September 30,         December 31,
                                                                                        2004                 2003
                                                                                --------------------- --------------------
                                                                                      (Unaudited)
<S>                                                                             <C>                     <C>
  Assets
       Cash and due from banks                                                  $    10,925,518         $   1,946,033
       Short-term interest-bearing demand deposits in other banks                    20,699,111            14,829,890
       Federal funds sold                                                             7,032,000                    --
                                                                                --------------------- --------------------
           Cash and cash equivalents                                                 38,656,629            16,793,923
       Investment securities
           Available for sale                                                       116,309,211            94,136,926
           Held to maturity (market value $1,695,000 and $1,745,000)                  1,695,000             1,745,000
                                                                                --------------------- --------------------
                Total investment securities                                         118,004,211            95,881,926
       Loans held for sale                                                            3,841,536               354,900
       Loans, net of allowance for loan losses of $5,645,660 and $3,532,475         586,378,878           437,671,971
       Premises and equipment                                                        13,072,534             7,647,150
       Investments in limited partnerships                                            1,150,777             1,249,777
       Federal Home Loan Bank stock                                                  10,317,100             9,270,200
       Interest receivable                                                            3,094,860             2,441,270
       Goodwill                                                                      23,796,216             1,563,594
       Core deposit intangible                                                        4,212,849               634,148
       Cash surrender value life insurance                                           17,576,346            12,506,227
       Other assets                                                                   8,765,495             5,670,164
                                                                                --------------------- --------------------

           Total assets                                                         $   828,867,431         $ 591,685,250
                                                                                ===================== ====================

  Liabilities
       Deposits
           Noninterest-bearing                                                  $    39,953,186          $ 17,175,958
           Interest-bearing                                                         497,937,376           304,663,176
                                                                                --------------------- --------------------
                Total deposits                                                      537,890,562           321,839,134
       Borrowings                                                                   182,043,465           184,692,618
       Interest payable                                                               1,355,582               913,705
       Other liabilities                                                              6,308,709             5,013,042
                                                                                --------------------- --------------------
           Total liabilities                                                        727,598,318           512,458,499
                                                                                --------------------- --------------------

  Commitments and Contingencies

  Shareholders' Equity
       Common stock, without par value
           Authorized - 20,000,000 shares
           Issued and outstanding - 5,340,638 and 4,411,891 shares                   62,919,163            43,383,386
       Retained earnings                                                             41,980,327            40,526,766
       Accumulated other comprehensive gain (loss)                                      513,599                (8,118)
       Unearned recognition and retention plan (RRP) shares                            (638,386)             (918,983)
       Unearned employee stock ownership plan (ESOP) shares                          (3,505,590)           (3,756,300)
                                                                                --------------------- --------------------
           Total shareholders' equity                                               101,269,113            79,226,751
                                                                                --------------------- --------------------

           Total liabilities and shareholders' equity                           $   828,867,431         $ 591,685,250
                                                                                ===================== ====================

  See notes to consolidated condensed financial statements.

</TABLE>

                                       4
<PAGE>
<TABLE>
<CAPTION>

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

                                                               Three Months Ended                    Nine Months Ended
                                                                   September 30,                         September 30,
                                                        ------------------ ------------------ ----------------- ------------------
                                                              2004               2003               2004              2003
                                                        ------------------ ------------------ ----------------- ------------------
<S>                                                         <C>                <C>                <C>               <C>
Interest Income
     Loans, including fees                                  $ 8,022,734        $ 6,549,026        $21,313,964       $19,125,978
     Investment securities                                      992,319            866,764          2,287,644         2,962,482
     Deposits with financial institutions                        79,097             22,345            105,173           129,846
     Dividend income                                            113,692            103,523            324,908           325,803
                                                        ------------------ ------------------ ----------------- ------------------
         Total interest and dividend income                   9,207,842          7,541,658         24,031,689        22,544,109
                                                        ------------------ ------------------ ----------------- ------------------

Interest Expense
     Deposits                                                 1,965,247          1,592,419          4,792,084         4,880,658
     Federal Home Loan Bank advances                          2,075,825          2,042,617          6,139,914         6,021,573
     Other borrowings                                            14,436                 --             14,436                --
                                                        ------------------ ------------------ ----------------- ------------------
         Total interest expense                               4,055,508          3,635,036         10,946,434        10,902,231
                                                        ------------------ ------------------ ----------------- ------------------

Net Interest Income                                           5,152,334          3,906,622         13,085,255        11,641,878
     Provision  for loan losses                                 116,035            188,635            539,488           622,798
                                                        ------------------ ------------------ ----------------- ------------------
Net Interest Income After Provision for Loan Losses           5,036,299          3,717,987         12,545,767        11,019,080
                                                        ------------------ ------------------ ----------------- ------------------

Other Income
     Service charges on deposit accounts                        495,576            228,126          1,014,566           635,807
     Net realized and unrealized gains on loans                 180,312             74,619            318,719           737,708
     Net realized losses on sales of
        available-for-sale securities                                --                 --                 --           (34,824)

     Point of sale income                                       114,276             79,854            303,540           233,370
     Loan servicing fees                                         96,099             92,230            260,805           297,311
     Increase in cash value of life insurance                   162,892            141,843            416,279           471,306
     Equity in losses of limited partnerships                   (33,000)           (33,000)           (99,000)         (105,000)
     Other income                                               154,036            161,188            427,192           496,806
                                                        ------------------ ------------------ ----------------- ------------------
         Total other income                                   1,170,191            744,860          2,642,101         2,732,484
                                                        ------------------ ------------------ ----------------- ------------------

Other Expenses
     Salaries and employee benefits                           2,399,065          1,818,628          5,894,589         5,262,858
     Net occupancy expenses                                     310,621            199,685            778,159           612,945
     Equipment expenses                                         290,625            211,219            698,676           691,336
     Advertising and business development                       132,950            104,972            368,172           314,429
     Data processing fees                                       439,398            304,746          1,175,853           955,297
     Professional fees                                          118,995             90,465            353,582           291,582
     Director and committee fees                                 88,671             66,848            179,061           203,222
     Other expenses                                             861,196            522,054          1,855,205         1,700,728
                                                        ------------------ ------------------ ----------------- ------------------
         Total other expenses                                 4,641,521          3,318,617         11,303,297        10,032,397
                                                        ------------------ ------------------ ----------------- ------------------

Income Before Income Tax                                      1,564,969          1,144,230          3,884,571         3,719,167
     Income tax expense                                         379,964            306,220            951,619           941,087
                                                        ------------------ ------------------ ----------------- ------------------

Net Income                                               $    1,185,005      $     838,010      $   2,932,952     $   2,778,080
                                                        ================== ================== ================= ==================

Basic earnings per share                                 $         .26       $        .21       $        .70      $        .70
Diluted earnings per share                                         .25                .20                .68               .68
Dividends per share                                                .13                .12                .39               .36


</TABLE>
                                       5

<PAGE>
<TABLE>
<CAPTION>


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



                                                                      Three Months Ended                  Nine Months Ended
                                                                         September 30,                      September 30,
                                                               ----------------- ---------------- ----------------- ----------------
                                                                     2004             2003              2004             2003
                                                               ----------------- ---------------- ----------------- ----------------
<S>                                                              <C>                <C>             <C>              <C>
Net Income                                                       $ 1,185,005        $ 838,010       $ 2,932,952      $ 2,778,080
Other comprehensive income, net of tax
      Unrealized losses on securities available for sale

          Unrealized holding gains (losses) arising during
          the period, net of tax expense (benefit) of
          $402,104, $(101,011), $302,969 and $(367,596)              714,282         (196,083)          521,717         (699,829)
          Less:  Reclassification adjustment for losses
          included in net income, net of tax benefit of
          $11,840                                                          -                -                 -          (22,984)
                                                               ----------------- ---------------- ----------------- ----------------

                                                                     714,282         (196,083)          521,717         (676,845)
                                                               ----------------- ---------------- ----------------- ----------------

 Comprehensive income                                            $ 1,899,287        $ 641,927       $ 3,454,669      $ 2,101,235
                                                               ================= ================ ================= ================



See notes to consolidated condensed financial statements.




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

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




                                        Common Stock                        Accumulated
                                --------------------------                    Other                         Unearned
                                   Shares                    Retained     Comprehensive      Unearned         ESOP
                                Outstanding      Amount      Earnings      Gain (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                                   2,932,952                                                   2,932,952
  Unrealized gains (losses) on
    securities, net of
    reclassification adjustment                                               521,717                                       521,717
  Stock options exercised            50,062       604,564                                                                   604,564
  Shares issued in
    acquisition, net of cost        878,685    18,931,213                                                                18,931,213
  ESOP shares earned                                            227,059                                       250,710       477,769
  Amortization of unearned
    compensation expense                                         (8,972)                      280,597                       271,625
  Cash dividends ($.39
    per share)                                               (1,697,478)                                                 (1,697,478)
                                ------------ ------------- ------------- ---------------- --------------  ------------ -------------

Balances, September 30, 2004      5,340,638   $62,919,163   $41,980,327     $ 513,599       $(638,386)    $(3,505,590) $101,269,113
                                ============ ============= ============= ================ ==============  ============ =============




See notes to consolidated condensed financial statements.


                                       7

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

                                                                                                  Nine Months Ended
                                                                                                    September 30,
                                                                                         -------------------- -------------------
                                                                                               2004                2003
                                                                                         -------------------- -------------------
<S>                                                                                      <C>                  <C>
  Operating Activities
       Net income                                                                        $   2,932,952        $   2,778,080
       Adjustments to reconcile net income to net cash provided by (used in)
        operating activities
         Provision for loan losses                                                             539,488              622,798
         Investment securities accretion, net                                                  351,165              166,912
         Investment securities losses                                                               --               34,824
         Loans originated for sale in the secondary market                                 (22,915,420)         (23,714,904)
         Proceeds from sale of loans in the secondary market                                19,693,303           27,086,101
         Gain on sale of loans                                                                (318,719)            (737,708)
         Amortization of net loan origination fees                                            (209,625)            (520,467)
         Depreciation and amortization                                                         639,200              541,750
         Amortization of unearned compensation expense                                         271,625              459,573
         ESOP shares earned                                                                    477,769              469,009
         Net change in:
           Interest receivable                                                                  69,757             (188,418)
           Interest payable                                                                    209,529              (61,694)
         Other adjustments                                                                  (1,501,280)          (1,222,371)
                                                                                         -------------------- -------------------
                Net cash provided by operating activities                                      239,744            5,713,485
                                                                                         -------------------- -------------------

  Investing Activities
       Purchases of securities available for sale                                          (86,893,910)         (39,234,451)
       Proceeds from sales of securities available for sale                                         --            1,950,580
       Proceeds from maturities of securities available for sale                           104,987,196           42,376,558
       Proceeds from maturities of securities held to maturity                                  50,000               35,000
       Net change in loans                                                                 (21,383,619)         (76,636,447)
       Purchases of property and equipment                                                  (3,072,261)            (660,162)
       Proceeds from sale of foreclosed real estate                                            725,184             143,028
       Net cash received in acquisition of First Shares Bancorp                             11,680,842                   --
       Other investing activities                                                                1,365                   --
                                                                                         -------------------- -------------------
                Net cash provided by (used in) investing activities                          6,094,797          (72,025,894)
                                                                                         -------------------- -------------------

  Financing Activities
       Net change in
          Noninterest-bearing, interest-bearing demand, money market and                    23,596,819           46,803,406
           savings deposits
          Certificates of deposit                                                            9,319,611            7,792,491
       Proceeds from FHLB advances                                                           1,292,458           31,000,000
       Repayment of FHLB advances                                                           67,250,000          (26,000,000)
       Payment on note payable to limited partnership                                      (85,300,000)            (248,501)
       Dividends paid                                                                          404,604           (1,480,044)
       Exercise of stock options                                                            (1,577,391)             594,389
       Purchase of common stock                                                                     --           (6,083,849)
       Net change in advances by borrowers for taxes and insurance                             542,064            1,066,959
                                                                                         -------------------- -------------------
                Net cash provided by financing activities                                   15,528,165           53,444,851
                                                                                         -------------------- -------------------

  Net Change in Cash and Cash Equivalents                                                   21,862,706          (12,867,558)

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

  Cash and Cash Equivalents, End of Period                                               $  38,656,629        $  14,430,535
                                                                                         ==================== ===================

  Additional Cash Flows and Supplementary Information
       Interest paid                                                                     $  10,736,906        $  10,963,925
       Income tax paid                                                                         532,000            1,245,000
       Loan balances transferred to foreclosed real estate                                   1,619,265              577,965
       Securitization of loans                                                              25,756,736                   --

  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 September 30, 2004, and for the
three and nine months ended  September 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  nine-month
periods ended September 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.


<TABLE>
<CAPTION>

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.


                                                 Three Months Ended                         Three Months Ended
                                                 September 30, 2004                         September 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             $1,185,005    4,610,144         $ .26         $838,010     3,944,284       $ .21
                                                                   =========                                 ==========

     Effect of dilutive RRP
     awards and stock options                          141,727                                      148,694
                                   -----------------------------                -----------------------------
     Diluted earnings per share
       Income available to
       common shareholders and
       assumed conversions
                                       $1,185,005    4,751,871         $ .25         $838,010     4,092,978       $ .20
                                   =========================================    =======================================




                                       9
<PAGE>


                                                 Nine Months Ended                          Nine Months Ended
                                                 September 30, 2004                         September 30, 2003
                                                 ------------------                         ------------------
                                                  Weighted            Per                         Weighted      Per
                                                   Average           Share                         Average     Share
                                      Income       Shares           Amount           Income        Shares      Amount
                                      ------      --------          ------           ------       --------    -------
     Basic earnings per share
       Income available to
       common shareholders             $2,932,952    4,178,243         $ .70       $2,778,080     3,946,873       $ .70
                                                                   =========                                 ==========

     Effect of dilutive RRP
     awards and stock options                          141,552                                      146,264
                                   -----------------------------                -----------------------------
     Diluted earnings per share
       Income available to
       common shareholders and
       assumed conversions
                                       $2,932,952    4,319,795         $ .68       $2,778,080     4,093,137       $ .68
                                   ============== ==========================    =======================================

</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    Nine Months     Nine Months
                                                           Ended            Ended           Ended          Ended
                                                       September 30,    September 30,   September 30,  September 30,
                                                            2004             2003           2004            2003
                                                     -----------------------------------------------------------------
<S>                                                     <C>                 <C>           <C>             <C>
   Net income, as reported                              $1,185,005          $838,010      $2,932,952      $2,778,080
   Less:  Total stock-based employee compensation
      cost determined under the fair value based
      method, net of income taxes                           24,173            36,257          40,501         108,772
                                                     -----------------------------------------------------------------

   Pro forma net income                                 $1,160,832          $801,753      $2,892,451      $2,669,308
                                                     =================================================================

   Earnings per share:
       Basic - as reported                                  $  .26            $  .21          $  .70          $  .70
       Basic - pro forma                                       .25               .20             .69             .68
       Diluted - as reported                                   .25               .20             .68             .68
       Diluted - pro forma                                     .24               .20             .67             .65

</TABLE>



                                       10
<PAGE>


Note 4:  Business Combination

On August 2, 2004, the Company acquired First Shares Bancorp,  Inc.,  Greenwood,
Indiana (First Shares), the holding company of First Bank, an Indiana commercial
Bank.  First  Shares  was  merged  with  and into the  Company  and  immediately
thereafter, First Bank was merged into the Lincoln Bank.

On August 2, 2004,  the Company  issued 878,685 shares of common stock at a cost
of  approximately  $18.9  million  net of  registration  costs of  approximately
$90,000,  and  paid  cash  of  approximately  $17.3  million  to  First  Shares'
shareholders.  The  Company has also paid or accrued an  additional  $350,000 in
merger related expenses.  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
$329,000 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.

The acquisition  was accounted for under the purchase method of accounting,  and
accordingly,  the net assets were recorded at their estimated fair values at the
date of  acquisition.  Fair value  adjustments  on the  assets  and  liabilities
purchased are being  amortized  over the  estimated  useful lives of the related
assets and liabilities. The excess of the purchase price over the estimated fair
value of the  underlying  net assets of $22.2  million was allocated to goodwill
and is not deductible for tax purposes.  Additionally,  core deposit intangibles
of $3.8 million were recognized and are being amortized over 8.3 years using the
150% declining balance method. First Shares' results of operations and financial
position  were  included  in the  Company's  consolidated  financial  statements
beginning  August 2, 2004.  The following  table  summarizes  the estimated fair
values  of  the  assets  acquired  and  liabilities   assumed  at  the  date  of
acquisition.  The Company is in the process of finalizing  valuations of certain
assets and liabilities; thus, the allocation of the purchase price is subject to
refinement.

                                                          (In thousands)

         Cash and cash equivalents                           $ 29,790
         Investment securities available for sale              14,145
         Loans, net of allowance for loan losses              154,927
         Premises and equipment                                 2,994
         Goodwill                                              22,233
         Core deposit intangible                                3,759
         Cash surrender value life insurance                    4,657
         Other assets                                           2,913
                                                         --------------
                  Total assets acquired                     $ 235,418
                                                         --------------

         Deposits                                           $ 183,227
         Borrowings                                            14,088
         Other liabilities                                      1,272
                                                         --------------
                  Total liabilities acquired                $ 198,587
                                                         --------------

                  Net assets acquired                        $ 36,831
                                                         ==============



                                       11
<PAGE>


The  following  pro forma  information,  including  the  effect of the  purchase
accounting  adjustments,  depicts the results of operations as though the merger
had taken place at the beginning of each period.

                                     Three Months Ended       Nine Months Ended
                                        September 30,            September 30,
                                     2004         2003        2004         2003
                                     ----         ----        ----        ----
                                      (In thousands, except per share amounts)

     Net Interest Income            $ 5,913     $ 5,866     $ 17,890    $ 17,209
     Net Income (Loss)                   (3)        578        1,868       3,280
     Net Income (Loss) Per Share
              Basic                      --         .12          .38         .68
              Diluted                    --         .12          .37         .65

The pro forma  results of  operations  do not  purport to be  indicative  of the
results which would  actually have been obtained had the merger  occurred on the
date indicated or which may be obtained in the future. Included in the pro forma
results  for  the  three  and  nine  months  ended   September   30,  2004  were
approximately  $585,000 and $1.3 million,  net of tax, of nonrecurring  expenses
related to stock option  compensation and acquisition  expenses  included in the
financial results of First Shares.


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 1, 2003,  the Bank adopted the name Lincoln Bank. On
August 2, 2004,  the Company  acquired First Shares  Bancorp,  Inc., the holding
company of First Bank, an Indiana  commercial Bank. First Shares was merged with
and into the  Company  and  immediately  thereafter,  First Bank was merged into
Lincoln  Bank.  Lincoln  currently  conducts its business  from 16  full-service
offices located in Hendricks,  Johnson, Morgan, Clinton,  Montgomery,  and Brown
Counties, Indiana, with its main office located in Plainfield.

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.



                                       12
<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.



                                       13
<PAGE>

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.

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.



                                       14
<PAGE>

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  $828.9 million at September 30, 2004, an increase from December
31, 2003 of $237.2 million.  The First Shares  acquisition  accounted for nearly
the  entire  increase  in assets  as the First  Shares assets  acquired  totaled
approximately $235.4 million.

Deposits  totaled  $537.9  million at September  30, 2004, an increase of $216.1
million from December 31, 2003.  First Shares  provided  $183.2  million of this
increase with the remaining  $32.9 million coming  primarily from an increase in
money  market  deposits  and  certificates  of deposit.  Excluding  the deposits
acquired from First Shares,  money market deposits  increased $24.7 million from
December 31, 2003 to September 30, 2004 and  certificates  of deposit  increased
$9.3 million for the same period. Borrowed funds at September 30, 2004 decreased
approximately  $2.7 million to $182.0 million even after adding $14.1 million of
borrowings  due to the First  Shares  acquisition.  Borrowings  were  reduced by
available funds as a result of increased deposits.

Shareholders' equity increased $22.0 million from December 31, 2003 to September
30, 2004. The increase was primarily due to shares issued in connection with the
acquisition of First Shares,  net of costs, of approximately  $18.9 million.  In
addition,  shareholders'  equity  increased  due to net income of $2.9  million,
stock options exercised of $605,000, Employee Stock Ownership Plan shares earned
of $478,000,  unearned compensation  amortization of $272,000 and an increase in
unrealized gains on investment securities available for sale of $522,000.  These
increases were partially offset by cash dividends of $1.7 million.


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

Net income for the third quarter ended  September  30, 2004 was  $1,185,000,  or
$.26 for basic and $.25 for diluted  earnings  per share.  This  compared to net
income for the comparable period in 2003 of $838,000, or $.21 for basic and $.20
for diluted  earnings per share.  Return on assets was .64% and return on equity
was  5.03%  for  the  third   quarter  of  2004  compared  to  .59%  and  4.25%,
respectively, for the same period last year.

Net interest  income for the third  quarter of 2004 was  $5,152,000  compared to
$3,907,000  for the same period in 2003.  The increase was  primarily due to the
First  Shares  acquisition.  Net interest  margin was 3.02% for the  three-month
period ended  September  30, 2004 compared to 2.89% for the same period in 2003.
The average yield on earning assets decreased .18% for the third quarter of 2004
compared  to the same  period  in 2003.  The  average  cost of  interest-bearing
liabilities  decreased  .45% from the third quarter of 2003 to the third quarter
of 2004.  This  increased net interest  spread from 2.46% for the 2003 period to
2.73% for the 2004 period,  or .27%. The  acquisition of First Shares provided a
boost to net interest margin with a spread of approximately  3.80% and margin of
approximately 4.00% at the merger date.



                                       15
<PAGE>


The Bank's  provision for loan losses for the third quarter of 2004 was $116,000
compared to $189,000 for the same period in 2003.  Non-performing loans to total
loans at September 30, 2004 were .68% compared to .43% at December 31, 2003, and
non-performing  assets to total assets were .74% at September  30, 2004 compared
to .46% at December 31, 2003. The increase in non-performing  loans at September
30,  2004,  was the result of a $2.3 million  commercial  real estate loan being
placed in nonaccrual  status.  This loan is secured by  commercial  real estate;
however,  the borrower has filed chapter 11 bankruptcy.  It is anticipated  that
the  final   disposition  of  the  debt  will  not  be  determined  until  2005.
Approximately  $344,000 in  reserves  has been  allocated  to this  credit.  The
increase in non-performing  assets was the result of transferring a $1.1 million
loan on a commercial  property into other real estate  owned.  The allowance for
loan losses as a percentage  of loans at September 30, 2004 was .95% compared to
..80% at December 31,  2003.  The  increase of the  allowance as a percentage  of
loans was in part the result of consolidating First Bank's allowance at 1.12% of
loans into Lincoln's allowance for loan losses.

Other  income for the three  months  ended  September  30,  2004 was  $1,170,000
compared to $745,000 for the same quarter of 2003.  The increase in other income
was  primarily  due to an increase in service  charges on deposit  accounts  and
gains on sale of loans.  Service  charges on deposit  accounts were $496,000 for
the third quarter of 2004 compared to $228,000 for the same period in 2003. This
increase was partially the result of the First Shares acquisition and the Bank's
efforts to increase the number of customers with checking accounts. However, the
primary reason for the increase in service charge income was the introduction of
Lincoln  Advantage,  the Bank's  courtesy  overdraft  product  introduced in the
second  quarter  of 2004.  Gains on sale of loans  were  $181,000  for the third
quarter of 2004  compared to $75,000  for the same period in 2003.  In the third
quarter of 2003,  the  Company  adopted a strategy to reduce the number of loans
sold  into  the  secondary  market.  The  decision  to sell or  retain  loans is
evaluated regularly depending on the Bank's interest rate sensitivity.

Other  expenses were  $4,642,000  for the three months ended  September 30, 2004
compared  to  $3,319,000  for the same  three  months of 2003,  an  increase  of
$1,323,000.  The increase in the 2004 period was primarily from the  acquisition
of First Shares with an operating  expense level of  approximately  $1.1 million
for the two month  period  after the  effective  date of the merger on August 2,
2004.  The expense  level for First Shares was  estimated  based on First Bank's
actual  other  operating  expenses of $3.9 million for the first seven months of
2004.  First Shares' holding company expenses were excluded from the estimate as
these expenses were primarily related to the acquisition and other non-recurring
expenses.  Core deposit  intangible  amortization  increased by $117,000 for the
quarter ended September 30, 2004 to $140,000 from $23,000 for the same period in
2003 as a result  of the First  Shares  acquisition.  Other  real  estate  owned
expenses were $146,000 for the third quarter of 2004 compared to a net credit of
$17,000 for the same period of 2003 or an increase of $163,000.

Income tax expense was  approximately 24% of pretax income for the third quarter
of 2004 compared to 27% for the same period in 2003.



                                       16
<PAGE>

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

Net income for the nine-month period ended September 30, 2004 was $2,933,000, or
$.70 for basic  and $.68 for  diluted  earnings  per  share.  This  compared  to
$2,778,000,  or $.70 for basic and $.68 for diluted  earnings  per share for the
same period of 2003.  For the nine months ended  September  30, 2004,  return on
average  assets was .61% and return on average equity was 4.59% compared to .67%
and 4.67%, respectively, for same period in 2003.

Net interest  income  year-to-date  through  September 30, 2004 was  $13,085,000
compared  to  $11,642,000  for the same  period  in 2003.  Net  interest  income
increased  primarily due to the First Shares  acquisition  offset by a declining
net interest  margin.  The Company's net interest  margin was 2.91% for the nine
months  ended  September  30, 2004 as compared to 2.97% for the same  nine-month
period one year ago.

The  provision  for loan losses for the first nine  months of 2004 was  $539,000
compared to $623,000 last year for the same period.

Other  income  for the nine  months  ended  September  30,  2004 was  $2,642,000
compared to $2,732,000  for the same period in 2003. The decline in other income
was  primarily  the  result of a $419,000  reduction  in gains on sale of loans.
Gains  on  sale of  loans  totaled  $319,000  for the  nine-month  period  ended
September  30,  2004  compared to  $738,000  for the same  period in 2004.  This
decline  was  the  result  of  less  residential  mortgage  loan  volume  as the
refinancing boom experienced in 2003 did not continue into 2004. This decline in
gains on sale of loans was partially offset by an increase in service charges on
deposit  accounts,  up $379,000 to $1,015,000  for the  nine-month  period ended
September 30, 2004 from $636,000 for the same period in 2003.

Other  expenses for the nine months ended  September  30, 2004 were  $11,303,000
compared to $10,032,000 for the same period last year. As discussed  above,  the
First Shares acquisition was the primary reason for the increase.

Income tax expense was  approximately  25% of pretax  income for the nine months
ended September 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
$10.9  million and $5.2  million of loans  classified  as special  mention as of
September 30, 2004 and December 31, 2003, respectively. In addition, Lincoln had
$6.1 million and $2.5 million of loans  classified as  substandard  at September
30, 2004 and December 31, 2003, respectively. At September 30, 2004 and December
31, 2003,  no loans were  classified as doubtful or loss. At September 30, 2004,
and  December 31, 2003,  respectively,  non-accrual  loans were $3.7 million and
$1.6  million.  At  September  30, 2004 and  December  31,  2003,  respectively,
accruing  loans  delinquent 90 days or more totaled  $280,000 and  $272,000.  At
September 30, 2004 and December 31, 2003, the allowance for loan losses was $5.6
million and $3.5 million,  respectively or approximately .95% and .80% of loans,
including loans held for sale, respectively.



                                       17
<PAGE>

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 a rule 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 September  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  September  30,  2004,  Lincoln's  capital
levels exceeded all applicable  regulatory capital  requirements in effect as of
that date.

Lincoln's  previously  announced intention to convert from a federally chartered
savings bank to a state chartered commercial bank is expected to be completed in
the first quarter of 2005.

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.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Presented below, as of September 30, 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.

                             September 30, 2004
                             ------------------
                  Net Portfolio Value             NPV as % of PV of Assets
 Changes
In Rates   $ Amount    $ Change       %Change       NPV Ratio     Change
--------   --------    --------       -------       ---------     ------
                       (Dollars in thousands)
+300 bp     $72,865    $(13,382)       (16)%           9.25%     (128) bp
+200 bp      78,753      (7,495)        (9)            9.86       (67) bp
+100 bp      83,576      (2,671)        (3)           10.33       (20) bp
   0 bp      86,248                                   10.53
-100 bp      83,952      (2,295)        (3)           10.17       (36) bp



                             September 30, 2003
                             ------------------
                  Net Portfolio Value             NPV as % of PV of Assets
 Changes
In Rates   $ Amount    $ Change       %Change       NPV Ratio     Change
--------   --------    --------       -------       ---------     ------
                       (Dollars in thousands)
+300 bp     $53,695    $(14,510)       (21)%           9.43%     (192) bp
+200 bp      60,118      (8,086)       (12)           10.35       (99) bp
+100 bp      65,319      (2,885)        (4)           11.04       (30) bp
   0 bp      68,204                                   11.34
-100 bp      66,410      (1,794)        (3)           10.92       (42) bp



                                       18
<PAGE>

Management  believes at September 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.


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.   Unregistered Sales of Equity Securities and Use of Proceeds

          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
          September 30, 2004. The repurchase program does not have an expiration
          date.


Item 3.   Defaults Upon Senior Securities

          None.



                                       19
<PAGE>

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

          On  July  15,  2004,  the  Company  held  its  Annual  Meeting  of the
          Shareholders, at which the following proposals were voted upon:

          (1) Merger  Proposal.  A total of 3,793,491 shares were represented in
          person  or by proxy at the  meeting.  The  shareholders  approved  the
          Agreement and Plan of Reorganization dated March 10, 2004 (the "Merger
          Agreement"), by and among Lincoln Bancorp, First Shares Bancorp, Inc.,
          Lincoln Bank, a wholly-owned  subsidiary of Lincoln, and First Bank, a
          wholly-owned  subsidiary of First Shares.  2,315,547 shares were voted
          in favor of the merger,  164,403 shares were voted against the merger,
          1,292,900 were broker non votes and 20,641 votes were withheld.

          (2) Election of  Directors.  W. Thomas Harmon was elected to the Board
          of Directors for a three-year term expiring in 2007.  3,603,754 shares
          were voted in favor of the  election of the nominee and 189,737  votes
          were  withheld.  Jerry  R.  Holifield  was  elected  to the  Board  of
          Directors  for a three-year  term expiring in 2007.  3,455,462  shares
          were voted in favor of the  election of the nominee and 338,029  votes
          were  withheld.  John  C.  Milholland  was  elected  to the  Board  of
          Directors  for a three-year  term expiring in 2007.  3,604,643  shares
          were voted in favor of the nominee and 188,848 votes were withheld.

          The term of office  of the  following  directors  of  Lincoln  Bancorp
          continued after the Annual Shareholder Meeting:

                  Name                         Term Expires In
                  ----                         ---------------

              Lester N. Bergum, Jr.                  2006
              Dennis W. Dawes                        2006
              T. Tim Unger                           2005
              John L. Wyatt                          2005
              David Mansfield                        2005

          Following  consummation of the merger on August 2, 2004,  three former
          directors of First Shares  Bancorp - Jerry Engle,  Frank A. Rogers and
          R.J.  McConnell  - were  appointed  to the  Lincoln  Bancorp  Board of
          Directors.

Item 5.   Other Information

          None.


Item 6.   Exhibits

            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 pursuant to Section 906 of the Sarbanes-Oxley Act
                       of 2002



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<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:   November 12, 2004            By: /s/ T. Tim Unger
                                         ---------------------------------------
                                         T. Tim Unger
                                         President and Chief Executive Officer



Date:   November  12, 2004           By: /s/ John M. Baer
                                         ---------------------------------------
                                         John M. Baer
                                         Secretary and Treasurer







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