**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE
      COMMISSION**


**WASHINGTON,D.C.20549**




**FORM
      10-Q**




**(MARK
      ONE)**






ý
            QUARTERLY
                REPORT PURSUANT TO
                SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF
                1934For
                the quarterly period endedJune 30,
                2007ORo
            TRANSITION
                REPORT PURSUANT TO
                SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF
                1934For
                the transition period from
                ________________ to ________________





Commission
      file number:
      000-25219




**LINCOLNBANCORP**


(Exact
      name of registrant as specified
      in its charter)





**Indiana**
            
            **35-2055553**(State
                or other jurisdiction of
                incorporation or organization)
            
            (I.R.S.
                Employer Identification
                No.)**905
                Southfield Drive,Plainfield,Indiana**
            
            **46168**(Address
                of principal executive
                offices)
            
            (Zip
                Code)





**(317)
      839-6539**


(Registrant’s
      telephone number,
      including area code)





**[None]**


(Former
      name, former address and former
      fiscal year, if changed since last report)






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 reports),
      and
      (2) has been subject to such filing requirements for the past 90
      days.




YesýNoo




Indicate
      by check mark whether the
      registrant is a large accelerated filer, an accelerated filer, or a
      non-accelerated filer. See definition of “accelerated filer and large
      accelerated filer” in Rule 12b-2 of the Exchange Act.




Large
      accelerated fileroAccelerated
      filerýNon-accelerated
      filero




Indicate
      by check mark whether the
      registrant is a shell company (as defined in Rule 12b-2 of the Exchange
      Act).




YesoNoý




The
      number of shares of the Registrant’s
      common stock, without par value, outstanding as ofJune 30, 2007was 5,353,481.







**LINCOLNBANCORP AND
      SUBSIDIARY**




**FORM
      10-Q**




**INDEX**




Page
                No.FORWARD-LOOKING
                STATEMENTS
            3PARTI.FINANCIAL
                INFORMATION
            4Item
                1. Financial
                Statements
            4Consolidated
                Condensed Balance
                Sheets
            4Consolidated
                Condensed Statements
                of Operations
            5Consolidated
                Condensed Statements
                of Comprehensive Income
            6Consolidated
                Condensed Statement
                of Shareholders’ Equity
            7Consolidated
                Condensed Statements
                of Cash Flows
            8Notes
                to Unaudited Consolidated
                Condensed Financial Statements
            10Item
                2. Management’s Discussion
                and Analysis of Financial Condition and Results of
                Operations
            12Item
                3. Quantitative and
                Qualitative Disclosures about Market Risk
            18Item
                4. Controls and
                Procedures
            19PART
                II. OTHER
                INFORMATIONItem
                1. Legal
                Proceedings
            19Item
                1A. Risk
                Factors
            19Item
                2. Unregistered Sales of
                Equity Securities and Use of Proceeds
            19Item
                3. Defaults Upon Senior
                Securities
            19Item
                4. Submission of Matters to a
                Vote of Security Holders
            19Item
                5. Other
                Information
            20Item
                6.
                Exhibits
            20SIGNATURES
            21EXHIBIT
                INDEX
            21





2


**FORWARD-LOOKING
      STATEMENTS**




This
      Quarterly Report on Form 10-Q
      (“Form 10-Q”) contains statements that 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
      statementsare made as of the date
      of this report
      andare not guarantees of
      future events or performance and involve risks and uncertainties, and that
      actual results may differ materially from those in theforward-lookingstatements 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.We do not undertake to
      update any
      forward-looking statement that we may make in this Form
      10-Q.





3


**PART
      I FINANCIAL
      INFORMATION**




**Item
      1.                      Financial
      Statements**




**LINCOLNBANCORP AND
      SUBSIDIARY**


Consolidated
      Condensed Balance
      Sheets





**June30,2007**
              **(Unaudited)**
            
            
            **December 31,
                2006****Assets**Cash
                and due from
                banks
            
            $
            3,651,853
            
            
            $
            4,457,257Interest-bearing
                demand deposits
                in other banks
            
            
            25,715,125
            
            
            
            13,951,460Cash
                and cash
                equivalents
            
            
            29,366,978
            
            
            
            18,408,717Investment
                securities available
                for sale
            
            
            177,248,872
            
            
            
            151,237,001Loans
                held for
                sale
            
            
            2,040,675
            
            
            
            3,713,010Loans,
                net of allowance for loan
                losses of $6,246,388 and $6,129,069
            
            
            606,049,989
            
            
            
            629,283,375Premises
                and
                equipment
            
            
            16,014,351
            
            
            
            14,296,685Investments
                in limited
                partnerships
            
            
            1,213,719
            
            
            
            1,252,091Federal
                Home Loan Bank
                stock
            
            
            8,808,200
            
            
            
            8,808,200Interest
                receivable
            
            
            5,082,439
            
            
            
            4,785,639Goodwill
            
            
            23,906,877
            
            
            
            23,906,877Core
                deposit
                intangible
            
            
            2,415,795
            
            
            
            2,690,255Cash
                value of life
                insurance
            
            
            20,594,055
            
            
            
            20,171,426Other
                assets
            
            
            6,210,981
            
            
            
            4,989,513Total
                assets
            
            $
            898,952,931
            
            
            $
            883,542,789**Liabilities**DepositsNoninterest-bearing
            
            $
            58,322,684
            
            
            $
            51,062,255Interest-bearing
            
            
            641,165,555
            
            
            
            604,601,833Total
                deposits
            
            
            699,488,239
            
            
            
            655,664,088Securities
                sold under repurchase
                agreements
            
            
            15,673,728
            
            
            
            16,863,656Borrowings
            
            
            77,051,073
            
            
            
            103,608,175Interest
                payable
            
            
            2,435,984
            
            
            
            2,460,498Other
                liabilities
            
            
            6,235,589
            
            
            
            5,646,466Total
                liabilities
            
            
            800,884,613
            
            
            
            784,242,883**Commitments
                and
                Contingencies****Shareholders’
                Equity**Common
                stock, without par
                valueAuthorized
                - 20,000,000
                sharesIssued
                and outstanding - 5,353,481
                and 5,329,687 shares
            
            
            62,347,029
            
            
            
            62,020,927Retained
                earnings
            
            
            40,139,699
            
            
            
            41,035,822Accumulated
                other comprehensive
                loss
            
            
            (1,772,190
            )
            
            
            (961,453
            )Unearned
                employee stock ownership
                plan (ESOP) shares
            
            
            (2,646,220
            )
            
            
            (2,795,390
            )Total
                shareholders’
                equity
            
            
            98,068,318
            
            
            
            99,299,906Total
                liabilities and
                shareholders’ equity
            
            $
            898,952,931
            
            
            $
            883,542,789














See
      notes to consolidated condensed
      financial statements.


4


**LINCOLN
      BANCORP AND SUBSIDIARY**




Consolidated
      Condensed Statements of Operations


(Unaudited)




**Three
                  Months
                  Ended**
                **June
                  30,**
            
            
            **Six
                  Months
                  Ended**
                **June
                  30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Interest
                Income**Loans
                receivable, including
                fees
            
            $
            11,019,204
            
            
            $
            10,366,654
            
            
            $
            21,969,324
            
            
            $
            20,102,934Investment
                securities
            
            
            2,245,184
            
            
            
            2,135,844
            
            
            
            4,220,467
            
            
            
            4,059,440Deposits
                with financial
                institutions
            
            
            131,199
            
            
            
            135,206
            
            
            
            316,233
            
            
            
            343,557Dividend
                income
            
            
            87,961
            
            
            
            139,302
            
            
            
            202,818
            
            
            
            275,852Total
                interest and dividend
                income
            
            
            13,483,548
            
            
            
            12,777,006
            
            
            
            26,708,842
            
            
            
            24,781,783**Interest
                Expense**Deposits
            
            
            6,826,510
            
            
            
            5,679,864
            
            
            
            13,512,435
            
            
            
            10,713,780Short-term
                borrowings
            
            
            157,471
            
            
            
            98,297
            
            
            
            317,167
            
            
            
            178,561Federal
                Home Loan Bank
                advances
            
            
            1,163,202
            
            
            
            1,272,548
            
            
            
            2,182,258
            
            
            
            2,569,707Total
                interest
                expense
            
            
            8,147,183
            
            
            
            7,050,709
            
            
            
            16,011,860
            
            
            
            13,462,048**Net
                Interest
                Income**
            
            
            5,336,365
            
            
            
            5,726,297
            
            
            
            10,696,982
            
            
            
            11,319,735Provision
                for loan
                losses
            
            
            100,000
            
            
            
            266,202
            
            
            
            307,000
            
            
            
            501,751**Net
                Interest Income After
                Provision for Loan Losses**
            
            
            5,236,365
            
            
            
            5,460,095
            
            
            
            10,389,982
            
            
            
            10,817,984**Other
                Income**Service
                charges on deposit
                accounts
            
            
            644,416
            
            
            
            553,810
            
            
            
            1,186,211
            
            
            
            1,041,693Net
                realized and unrealized gains
                (losses) on loans held for sale
            
            
            (166,860
            )
            
            
            67,155
            
            
            
            (1,173,139
            )
            
            
            121,945Net
                realized gains (losses) on
                sales of securities
            
            
            365,772
            
            
            
            --
            
            
            
            (52,951
            )
            
            
            3,697Point
                of sale
                income
            
            
            233,960
            
            
            
            182,630
            
            
            
            427,648
            
            
            
            349,895Loan
                servicing
                fees
            
            
            75,486
            
            
            
            85,940
            
            
            
            152,416
            
            
            
            175,973Increase
                in cash value of life
                insurance
            
            
            210,384
            
            
            
            164,576
            
            
            
            422,629
            
            
            
            326,618Gain
                on termination of forward
                commitment
            
            
            358,750
            
            
            
            --
            
            
            
            358,750
            
            
            
            --Other
                income
            
            
            162,046
            
            
            
            250,988
            
            
            
            381,995
            
            
            
            483,676Total
                other
                income
            
            
            1,883,954
            
            
            
            1,305,099
            
            
            
            1,703,559
            
            
            
            2,503,497**Other
                Expenses**Salaries
                and employee
                benefits
            
            
            3,069,558
            
            
            
            2,834,179
            
            
            
            6,165,422
            
            
            
            5,645,816Net
                occupancy
                expenses
            
            
            591,279
            
            
            
            491,744
            
            
            
            1,136,532
            
            
            
            1,026,311Equipment
                expenses
            
            
            418,892
            
            
            
            383,540
            
            
            
            844,861
            
            
            
            755,809Data
                processing
                fees
            
            
            674,366
            
            
            
            566,045
            
            
            
            1,206,263
            
            
            
            1,198,168Professional
                fees
            
            
            176,793
            
            
            
            209,604
            
            
            
            321,030
            
            
            
            435,946Director
                and committee
                fees
            
            
            96,516
            
            
            
            111,763
            
            
            
            212,992
            
            
            
            226,586Advertising
                and business
                development
            
            
            296,528
            
            
            
            186,343
            
            
            
            578,505
            
            
            
            338,724Core
                deposit intangible
                amortization
            
            
            137,231
            
            
            
            162,200
            
            
            
            274,461
            
            
            
            324,401Other
                expenses
            
            
            732,995
            
            
            
            763,765
            
            
            
            1,391,491
            
            
            
            1,338,627Total
                other
                expenses
            
            
            6,194,158
            
            
            
            5,709,183
            
            
            
            12,131,557
            
            
            
            11,290,388**Income
                (Loss) Before Income
                Tax**
            
            
            926,161
            
            
            
            1,056,011
            
            
            
            (38,016
            )
            
            
            2,031,093Income
                taxexpense
                (benefit)
            
            
            122,934
            
            
            
            269,750
            
            
            
            (416,119
            )
            
            
            466,215**Net
                Income**
            
            $
            803,227
            
            
            $
            786,261
            
            
            $
            378,103
            
            
            $
            1,564,878**Basic
                Earnings per
                Share**
            
            $
            0.16
            
            
            $
            0.16
            
            
            $
            0.07
            
            
            $
            0.31**Diluted
                Earnings per
                Share**
            
            $
            0.15
            
            
            $
            0.15
            
            
            $
            0.07
            
            
            $
            0.30**Dividends
                per
                Share**
            
            $
            0.14
            
            
            $
            0.14
            
            
            $
            0.28
            
            
            $
            0.28




See
      notes
      to consolidated condensed financial statements.


5


**LINCOLNBANCORP AND
      SUBSIDIARY**


Consolidated
      Condensed Statements of
      Comprehensive Income


(Unaudited)





**Three
                  Months
                  Ended**
                **June
                  30,**
            
            
            **Six
                  Months
                  Ended**
                **June
                  30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Net
                Income
            
            $
            803,227
            
            
            $
            786,261
            
            
            $
            378,103
            
            
            $
            1,564,878Other
                comprehensive income (loss),
                net of taxUnrealized
                losses on securities
                available for saleUnrealized
                holding losses arising
                during the period, net of tax benefit of  $631,959, $470,307,
                $493,735, and $847,731
            
            
            (1,130,617
            )
            
            
            (827,655
            )
            
            
            (870,789
            )
            
            
            (1,501,243
            )Less:
                Reclassification adjustment
                for realized gains (losses) included in net income, net of tax expense
                (benefit) of 141,987, -0- , $(4,329) and $1,257
            
            
            223,785
            
            
            
            -0-
            
            
            
            (48,622
            )
            
            
            2,440Reclassification
                adjustment for
                amortization of additional pension liability recognized in expense
                under
                FAS 158,net of tax benefit of
                $3,748,-0-,
                7,496 and-0-
            
            
            5,715
            
            
            
            -0-
            
            
            
            11,430
            
            
            
            -0-(1,348,687
            )
            
            
            (827,655
            )
            
            
            (810,737
            )
            
            
            (1,503,683
            )Comprehensive
                income
                (loss)
            
            $
            (545,460
            )
            
            $
            (41,394
            )
            
            $
            (432,634
            )
            
            $
            61,195









See
      notes to consolidated condensed
      financial statements.





6


**LINCOLNBANCORP AND
      SUBSIDIARY**


Consolidated
      Condensed Statement of
      Shareholders’ Equity


For
      the Six Months EndedJune 30, 2007


(Unaudited)





**Common
                Stock**
            
            
            
            
            
            **Accumulated
                Other****Shares
                Outstanding**
            
            
            **Amount**
            
            
            **Retained
                Earnings**
            
            
            **Comprehensive
                Loss**
            
            
            **UnearnedESOPShares**
            
            
            **Total****Balances,January
                1,
                2007**
            
            
            5,329,687
            
            
            $
            62,020,927
            
            
            $
            41,035,822
            
            
            $
            (961,453
            )
            
            $
            (2,795,390
            )
            
            $
            99,299,906Net
                income for the
                period
            
            
            
            
            
            
            
            
            
            
            378,103
            
            
            
            
            
            
            
            
            
            
            
            378,103Unrealized
                losses on securities,
                net of reclassification adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (822,167
            )
            
            
            
            
            
            
            (822,167
            )Purchase
                of common
                stock
            
            
            (7,937
            )
            
            
            (148,950
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (148,950
            )Stock
                options
                exercised
            
            
            31,731
            
            
            
            396,638
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            396,638Stock
                option
                expense
            
            
            
            
            
            
            38,100
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            38,100ESOP
                shares
                earned
            
            
            
            
            
            
            
            
            
            
            138,769
            
            
            
            
            
            
            
            149,170
            
            
            
            287,939Amortization
                of unearned
                compensation expense
            
            
            
            
            
            
            40,314
            
            
            
            8,857
            
            
            
            
            
            
            
            
            
            
            
            49,171Amortization
                of additional pension
                liability recognized under FAS 158
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            11,430
            
            
            
            
            
            
            
            11,430Cash
                dividends ($.28 per
                share)
            
            
            
            
            
            
            
            
            
            
            (1,421,852
            )
            
            
            
            
            
            
            
            
            
            
            (1,421,852
            )**Balances,June
                30,
                2007**
            
            
            5,353,481
            
            
            $
            62,347,029
            
            
            $
            40,139,699
            
            
            $
            (1,772,190
            )
            
            $
            (2,646,220
            )
            
            $
            98,068,318




See
      notes to consolidated condensed
      financial statements.


7


**LINCOLNBANCORP AND
      SUBSIDIARY**


Consolidated
      Condensed Statements of
      Cash Flows


(Unaudited)


**Six
                Months
                Ended****June
                30,****2007**
            
            
            **2006****Operating
                Activities**Net
                income
            
            $
            378,103
            
            
            $
            1,564,878Adjustments
                to reconcile net
                income to net cash provided by (used in) operating
                activitiesProvision
                for loan
                losses
            
            
            307,000
            
            
            
            501,751Investment
                securities
                (amortization) accretion, net
            
            
            13,968
            
            
            
            15,192Investment
                securities (gains)
                losses
            
            
            52,951
            
            
            
            (3,697
            )Loans
                originated for
                sale
            
            
            (36,491,298
            )
            
            
            (10,814,656
            )Proceeds
                from sale of loans and
                payments received on loans held for sale
            
            
            40,108,216
            
            
            
            10,580,143Net
                realized and unrealized
                (gains) losses on loans held for sale
            
            
            1,173,139
            
            
            
            (121,945
            )Amortization
                of net loan
                origination costs (fees)
            
            
            342,840
            
            
            
            281,798Amortization
                of purchase
                accounting adjustments
            
            
            158,456
            
            
            
            121,839Depreciation
                and
                amortization
            
            
            878,748
            
            
            
            904,755Amortization
                of unearned
                compensation expense
            
            
            49,171
            
            
            
            55,651ESOP
                shares
                earned
            
            
            287,939
            
            
            
            274,669Net
                change
                in:Interest
                receivable
            
            
            (296,800
            )
            
            
            (527,795
            )Interest
                payable
            
            
            (24,514
            )
            
            
            76,808Other
                adjustments
            
            
            (346,624
            )
            
            
            257,030Net
                cash provided by operating
                activities
            
            
            6,591,295
            
            
            
            3,166,421**Investing
                Activities**Purchases
                of securities available
                for sale
            
            
            (62,910,328
            )
            
            
            (22,031,191
            )Proceeds
                from sales of securities
                available for sale
            
            
            --
            
            
            
            211,577Proceeds
                from maturities of
                securities available for sale
            
            
            5,432,665
            
            
            
            9,530,398Proceeds
                from sales of securities
                held for trading
            
            
            66,982,682
            
            
            
            --Proceeds
                from maturities of
                securities held for trading
            
            
            402,552
            
            
            
            --Net
                change in
                loans
            
            
            (18,209,133
            )
            
            
            (28,430,677
            )Purchases
                of property and
                equipment
            
            
            (2,613,162
            )
            
            
            (409,837
            )Proceeds
                from sales of foreclosed
                real estate
            
            
            202,673
            
            
            
            349,370Other
                investing
                activities
            
            
            2,801
            
            
            
            --Net
                cash used in investing
                activities
            
            
            (10,709,250
            )
            
            
            (40,780,360
            )**Financing
                Activities**Net
                change
                inNoninterest-bearing,
                interest-bearing demand, money market and savings
                deposits
            
            
            15,977,875
            
            
            
            40,216,271Certificates
                of
                deposit
            
            
            27,892,131
            
            
            
            18,675,629Short
                term
                borrowings
            
            
            (1,189,928
            )
            
            
            1,755,880Proceeds
                from FHLB
                advances
            
            
            126,307,857
            
            
            
            37,500,000Repayment
                of FHLB
                advances
            
            
            (152,857,857
            )
            
            
            (61,200,000
            )Dividends
                paid
            
            
            (1,418,521
            )
            
            
            (1,423,105
            )Purchase
                of common
                stock
            
            
            (148,950
            )
            
            
            (289,500
            )Exercise
                of stock
                options
            
            
            396,638
            
            
            
            148,279Net
                change in advances by
                borrowers for taxes and insurance
            
            
            116,971
            
            
            
            67,334Net
                cash provided by financing
                activities
            
            
            15,076,216
            
            
            
            35,450,788





8





**Net
                Change in Cash and Cash
                Equivalents**
            
            
            10,958,261
            
            
            
            (2,163,151
            )**Cash
                and Cash Equivalents,
                Beginning of Period**
            
            
            18,408,717
            
            
            
            16,735,797**Cash
                and Cash Equivalents, End of
                Period**
            
            $
            29,366,978
            
            
            $
            14,572,646**Additional
                Cash Flows and
                Supplementary Information**Interest
                paid
            
            $
            16,036,374
            
            
            $
            13,385,240Income
                tax
                paid
            
            
            --
            
            
            
            340,000Loan
                balances transferred to
                foreclosed real estate
            
            
            114,578
            
            
            
            879,373Transfer
                of loans to held for sale
                loans - net
            
            
            40,741,148
            
            
            
            --Transfer
                of investment securities
                available for sale to trading securities
            
            
            29,718,011
            
            
            
            --Securitization
                of
                loans
            
            
            37,297,938
            
            
            
            --



















See
      notes to consolidated condensed
      financial statements.


9


**LINCOLNBANCORP 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 state chartered commercial 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, 2006 Annual Report
      to Shareholders. All significant intercompany accounts and transactions have
      been eliminated in consolidation.




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




The
      interim consolidated financial
      statements at June 30, 2007 and for the three months and six months ended June
      30, 2007 and 2006, have not been audited by independent accountants, but
      reflect, in the opinion of management, all adjustments (which include only
      normal recurring adjustments) necessary to present fairly the financial
      position, results of operations and cash flows for such periods. The results
      of
      operations for the three-month and six-month period endedJune 30, 2007,
      are not necessarily indicative of the
      results that may be expected for the entire year. The consolidated condensed
      balance sheet of the Company as ofDecember 31, 2006has been derived from the audited
      consolidated balance sheet of the Company as of that date.




Reclassifications
      of certain amounts in
      the 2006 consolidated financial statements have been made to conform to the
      2007
      presentation.




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****June
                30,
                2007**
            
            
            **Three
                Months Ended****June
                30 ,
                2006****Income**
            
            
            **Weighted
                Average
                Shares**
            
            
            **Per
                Share
                Amount**
            
            
            **Income**
            
            
            **Weighted
                Average
                Shares**
            
            
            **Per
                Share
                Amount**Basic
                earnings per
                shareIncome
                available to common
                shareholders
            
            $
            803,227
            
            
            
            5,052,854
            
            
            $
            .
                16
            
            
            $
            786,261
            
            
            
            5,049,004
            
            
            $
            .
                16Effect
                of dilutive RRP awards and
                stock options
            
            
            
            
            
            
            134,614
            
            
            
            
            
            
            
            
            
            
            
            125,518Diluted
                earnings  per
                shareIncome
                available to common
                shareholders and assumed conversions
            
            $
            803,227
            
            
            
            5,187,468
            
            
            $
            .
                15
            
            
            $
            786,261
            
            
            
            5,174,522
            
            
            $
            .
                15









10







**Six
                Months Ended****June
                30,
                2007**
            
            
            **Six
                Months Ended****June
                30,
                2006****Income**
            
            
            **Weighted
                Average
                Shares**
            
            
            **Per
                Share
                Amount**
            
            
            **Income**
            
            
            **Weighted
                Average
                Shares**
            
            
            **Per
                Share
                Amount**Basic
                earnings per
                shareIncome
                available to common
                shareholders
            
            $
            378,103
            
            
            
            5,042,808
            
            
            $
            .07
            
            
            $
            1,564,878
            
            
            
            5,044,723
            
            
            $
            .
                31Effect
                of dilutive RRP awards and
                stock options
            
            
            
            
            
            
            140,286
            
            
            
            
            
            
            
            
            
            
            
            121,471Diluted
                earnings per
                shareIncome
                available to common
                shareholders and assumed conversions
            
            $
            378,103
            
            
            
            5,183,094
            
            
            $
            .07
            
            
            $
            1,564,878
            
            
            
            5,166,194
            
            
            $
            .
                30









Options
      to purchase 8,500 shares of
      common stock at exercise prices of $17.69and$19.15 per share were outstanding atJune 30, 2007,
      but were not included in the
      computation of diluted earnings per share because the options were
      anti-dilutive.




Option
      to purchase
      120,000 shares of common stock at exercise prices of $18.50 to $18.75 per share
      were outstanding atJune
      30,
      2006, but
      were not included in the computation of diluted earnings per share because
      the
      options were anti-dilutive.






Note
      3: Recent Accounting
      Pronouncements




In
      March 2006, the Financial Accounting
      Standards Board (FASB) issued Statement No. 156, Accounting for Servicing of
      Financial Assets-an amendment of FASB Statement No. 140. This Statement provides
      the following: 1) revised guidance on when a servicing asset and servicing
      liability should be recognized; 2) requires all separately recognized servicing
      assets and servicing liabilities to be initially measured at fair value, if
      practicable; 3) permits an entity to elect to measure servicing assets and
      servicing liabilities at fair value each reporting date and report changes
      in
      fair value in earnings in the period in which the changes occur; 4) upon initial
      adoption, permits a one-time reclassification of available-for-sale securities
      to trading securities for securities which are identified as offsetting the
      entity's exposure to changes in the fair value of servicing assets or
      liabilities that a servicer elects to subsequently measure at fair value; and
      5)
      requires separate presentation of servicing assets and servicing liabilities
      subsequently measured at fair value in the statement of financial position
      and
      additional footnote disclosures. This standard is effective as of the beginning
      of an entity's first fiscal year that begins afterSeptember 15, 2006with the effects of initial adoption
      being reported as a cumulative-effect adjustment to retained earnings.
      Management did not elect to carry servicing rights at fair value but instead
      is
      amortizing those servicing rights over the period of estimated net servicing
      income and assessing the servicing assets for impairment.




The
      Company or one of its subsidiaries
      files income tax returns in theU.S.federal andIndianajurisdictions. With few exceptions, the
      Company is no longer subject toU.S.federal, state and local examinations
      by tax authorities for years before 2003.




The
      Company adopted the provisions of
      the Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN
      48),*Accounting for
      Uncertainty in Income Taxes - an interpretation of FASB Statement No.
      109*, onJanuary
      1, 2007. FIN 48 prescribes a
      recognition
      threshold and measurement attribute for the financial statement recognition
      and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on derecognition, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. As a result
      of the implementation of FIN 48, the Company did not identify any uncertain
      tax
      positions that it believes should be recognized in the financial
      statements.








11






In
      September 2006, the FASB issued
      Statement No. 157,*Fair
      Value Measurements*.
      This Statement defines fair value, establishes a framework for measuring fair
      value and expands disclosures about fair value measurements. This Statement
      establishes a fair value hierarchy about the assumptions used to measure fair
      value and clarifies assumptions about risk and the effect of a restriction
      on
      the sale or use of an asset. The standard is effective for fiscal years
      beginning afterNovember
      15, 2007. The Company is
      currently evaluating and has not yet determined the impact the new standard
      is
      expected to have on its financial position and results of
      operations.




In
      September 2006, the FASB Emerging
      Issues Task Force (EITF) finalized Issue No. 06−5,*Accounting for Purchases
      of Life
      Insurance - Determining the Amount That Could Be Realized in Accordance with
      FASB Technical Bulletin No. 85−4*(Accounting for
      Purchases of Life
      Insurance). This issue requires that a policyholder consider contractual terms
      of a life insurance policy in determining the amount that could be realized
      under the insurance contract. It also requires that if the contract provides
      for
      a greater surrender value if all individual policies in a group are surrendered
      at the same time, that the surrender value be determined based on the assumption
      that policies will be surrendered on an individual basis. Lastly, the issue
      discusses whether the cash surrender value should be discounted when the
      policyholder is contractually limited in its ability to surrender a policy.
      This
      issue is effective for fiscal years beginning afterDecember 15, 2006.
      The adoptionofEITF
      No. 06-5did nothave
      a material impact on financial
      condition orresults of
      operations.




On
      February 15, 2007, the FASB issued
      its Statement No. 159,*The Fair Value Option
      for Financial
      Assets and Financial Liabilities—Including an Amendment of FASB Statement No.
      115*. FAS 159 permits
      entities to elect to report most financial assets and liabilities at their
      fair
      value with changes in fair value included in net income. The fair value option
      may be applied on an instrument-by-instrument or instrument class-by-class
      basis. The option is not available for deposits withdrawable on demand, pension
      plan assets and obligations, leases, instruments classified as stockholders’
equity, investments in consolidated subsidiaries and variable interest entities
      and certain insurance policies. The new standard is effective at the beginning
      of the Company’s fiscal year beginningJanuary 1, 2008,
      and early application may be elected
      in certain circumstances. The Company expects to first apply the new standard
      at
      the beginning of its 2008 fiscal year. The Company is currently evaluating
      and
      has not yet determined the impact the new standard is expected to have on its
      financial position and results of operations.






**Item
      2: Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations**




**General**




The
      Company was organized in September
      1998. OnDecember 30,
      1998, it acquired the
      common stock ofLincolnupon the conversion ofLincolnfrom a federal mutual savings bank to a
      federal stock savings bank. The Bank converted from a federal thrift charter
      to
      a state commercial bank charter onNovember 1, 2006.




Lincoln
      Bank was originally organized in
      1884 as Ladoga Federal Savings and Loan Association, located inLadoga,Indiana.
      In 1979 Ladoga Federal merged with
      Plainfield First Federal Savings and Loan Association, a federal savings and
      loan association located inPlainfield,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. OnSeptember 1,
      2003, the Bank adopted the
      name Lincoln Bank. OnAugust 2, 2004,
      the Company acquired First Shares
      Bancorp, Inc., the holding company of First Bank, anIndianacommercial Bank. First Shares was
      merged with and into the Company and immediately thereafter, First Bank was
      merged into Lincoln Bank. As noted above, the Bank converted from a federal
      thrift charter to a state commercial bank charter onNovember 1, 2006,
      and provides full banking services in
      a single significant business segment. As a state chartered bank, the Bank
      is
      subject to regulation by the Department of Financial Institutions, State ofIndianaand the Federal Deposit Insurance
      Corporation.






12




Lincolncurrently conducts its business from 17
      full-service offices located in Hendricks, Johnson, Morgan,Clinton,Montgomery,
      andBrown Counties,Indiana,
      with its main office located inPlainfield.
      The Bank also has 2 loan production
      offices located inCarmelandGreenwood,Indiana.Lincolnoffers 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 by commercial real
      estate, inventory, accounts receivable as well as first mortgage liens on one-
      to four-family residential real estate.Lincoln’s
      deposit accounts are insured up to
      applicable limits by the Deposit 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.




Lincolncurrently owns three subsidiaries.
      First, LF Service, whose assets consist of an investment in Bloomington Housing
      Associates, L.P. (“BHA”). BHA is anIndianalimited partnership that was organized
      to construct, own and operate a 130-unit apartment complex inBloomington,Indiana(the “BHA Project”). Development of the
      BHA Project was completed in 1993 and the project is performing as planned.
      Second, Citizens Loan and Service Corporation (“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, FDIC
      regulations prohibitLincolnfrom 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 inNevada,
      holds and manages a significant
      portion ofLincoln’s
      investment portfolio. As noted above,
      effectiveNovember 1,
      2006, the Bank changed its
      charter from a federal savings bank charter to anIndianacommercial bank charter. Unlike federal
      savings banks, commercial banks are not permitted to participate in real estate
      development joint ventures. Under terms of the approval granted by the Federal
      Reserve Bank of Chicago the Company agreed to cause Lincoln Bank to conform
      the
      existing direct and indirect nonbanking activities and investments conducted
      by
      CLSC, including by divestiture if necessary, to the requirements of the Bank
      Holding Company Act within two years of the consummation of the charter
      conversion.




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. We have experienced a decline in our net
      interest margin and net interest spread as discussed more fully below in our
      comparison of operating results. The “flat”, to at some points, “inverted”
interest rate yield curve has put stress on our net interest margin as shorter
      term interest bearing deposits have generally repriced at a faster pace than
      our
      interest earning assets. Although we do not expect this stress to abate in
      the
      near term, we are working to grow our higher yielding loan portfolio and, as
      funding needs demand, use proceeds from lower yielding securities maturities
      and
      repayments. We are also reemphasizing our focus on the entire customer
      relationship, which we anticipate will include a component of lower cost demand
      deposits. Results of operations also depend upon the level ofLincoln’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 32 and33
      of the Annual Report to Shareholders
      for the year ended December 31, 2006, which was filed on Form 10-K with the
      Securities and Exchange Commission on March 16, 2007. 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.






13




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 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
      three components. The Company estimates probable losses from individual reviews
      of specific loans and probable losses from historical loss rates. Also, factors
      affecting probable losses resulting from economic or environmental factors
      that
      may not be captured 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. Loss
      rates are based on the average net charge-off estimated by loan category.
      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 centralIndiana.
      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. See Note 3 for a discussion of (SFAS) No. 156,
      Accounting for Transfers and Servicing of Financial Assets.






14




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 $899.0 million atJune 30, 2007,
      an increase fromDecember 31, 2006of $15.4 million.  The
      increase in assets occurred in cash and cash equivalents, up $11.0 million
      and
      investment securities available for sale, up $26.0
      million.Net of
      the allowance for loan losses, loans decreased $23.2 million.Loan growth was experienced
      in
      commercial loans, up $32.0 million while all other major categories of loans
      declined from year end balances.  Residential real estate mortgages
      declined $52.0 million from a combination of the balance sheet restructuring
      and
      the continued sale of the majority of our residential mortgage loan production
      in the secondary market.   As part of the restructuring, we
      securitized $37.3 million of residential mortgages and sold the resulting
      securities.  The majority of this cash was used to purchase securities
      for our investment portfolio at yields greater than the loans in the
      restructuring.  A portion of the cash was used to fund commercial loan
      growth.  Cash flow from these securities will be used to fund future
      commercial loan growth.




Restructuring
      Strategy:Lincoln
      Bank is continuing its transformation from a traditional savings and loan to
      a
      commercial bank. As previously announced, the Bank converted its charter from
      a
      thrift to a state-chartered commercial bankNovember 1, 2006.
      In late March, 2007, management
      approved a strategic restructuring of a portion of the Bank’s balance sheet
      effective March 31, 2007 including the sale of certain securities as well as
      a
      portion of the Bank’s fixed rate mortgage loan portfolio. The restructuring was
      completed during the second quarter.




Repositioning
      the Balance
      Sheet:The sale of
      mortgage loans continued the process of transforming the balance sheet from
      a
      traditional thrift asset and liability mix to a commercial bank structure.
      In
      addition, the reinvestment into securities allowed the Bank to structure
      expected cash flows that will support its planned increase in commercial and
      commercial real estate lending. Both the mortgages and the securities sold
      were
      generally those of lower yield in our portfolio of assets. The Company expects
      to realize immediate benefit in current earnings as a result of reinvesting
      in
      the new securities and additional benefit as cash flows from the new securities
      are received over the next several years, providing funding for our expected
      commercial growth. Lastly, the sale of mortgages and the reinvestment into
      securities should have a risk based capital benefit, helping offset some of
      the
      capital pressures caused by our current commercial growth.




Restructuring
      Securities:As a part
      of the planned restructuring, the Bank transferred securities with a market
      value atMarch 31,
      2007of $29.7 million from
      available for sale securities into trading securities and recognized a pretax
      loss of $419,000. As a result of movements in interest rates the actual loss
      incurred when these securities were sold totaled only $356,000. The average
      yield for this group of securities was approximately 4.64%. The reinvestment
      of
      the proceeds yielded 5.48% for investments purchased and approximately 7.50%
      for
      proceeds used to fund commercial loan originations. Approximately $22.7 million
      of the sale proceeds were reinvested in securities and the remainder was used
      to
      fund current commercial growth. The transaction is expected to improve net
      interest margin through redeployment of the proceeds into higher yielding
      assets.




Restructuring
      Loans:The securitization
      and sale of
      approximately $44.2 million of residential mortgage loans with an average yield
      of approximately 5.01% was also approved as part of the restructuring. The
      loans
      were transferred from our held for investment portion of our loan portfolio
      to
      held for sale at the lower of cost or market. We recognized a pretax loss of
      $1,327,000 in the quarter endingMarch 31, 2007when we marked the loans to market
      value. An additional market value loss of $753,000 was recognized in the quarter
      endingJune 30,
      2007. Ultimately, held for
      sale loans totaling $3.65 million were transferred back into loans held for
      investment at their fair market value of $3.50 million.  The
      securitized loans had an original maturity of 10 and 15 years and were seasoned
      an average of nearly 3 years. Total proceeds from the sale of the securitized
      loans were approximately $37.3 million.  Of these proceeds,
      approximately $33.8 million was reinvested into available-for-sale securities
      with a weighted average yield of approximately 5.60%.The
      remainder of the proceeds were used
      to fund commercial loan growth. A gain on sale totaling $303,000, net of costs,
      was recognized when the securitized loans were sold.






15




Estimated
      EPS Increase from
      Restructuring:We
      continue to believe that the result of this restructuring will positively impact
      annual earnings per share in the range of $.06 to $.09.




Interest
      bearing demand deposits in
      other banks increased by $11.8 million fromDecember 31, 2006.  Increased
      levels of public
      funds deposits at quarter end caused this increase.




Interest
      rate increases in the external
      market following ourMarch
      31, 2007valuation affected
      the sales price of the assets sold in the restructuring.  Generally,
      this market movement would have resulted in a greater restructuring loss overall
      than the loss that was recognized atMarch 31, 2007.  However,
      as a part of the
      restructuring, management entered into a forward sale contract early in the
      second quarter to deliver certain securities at a certain interest
      rate.  The intent of this transaction was to partially protect against
      interest rate movements during the time it took to complete the securitization
      of the mortgage loans and the ultimate sale of the resulting securities. In
      addition, the Bank retained the servicing rights on the mortgages securitized
      and sold which resulted in the creation of mortgage servicing
      rights.  The gain on these servicing rights totaled $296,000 and is
      also included as part of the restructuring transaction.




The
      following table summarizes by
      quarter the final results of the restructuring transaction and the financial
      statement income line affected.




**Restructuring
                  item**
            **Included
                  in income****statement
                  line**
            
            **Quarter
                  endingJune30,
                  2007**
            
            
            **Quarter
                  ending March31,
                  2007**
            
            
            **Year-to-dateJune30,
                  2007**Loans–
loss
                on mark-to market and
                reclassification to securities
            Net
                gains (losses) on loans held
                for sale
            
            $
            (752,776
            )
            
            $
            (1,327,359
            )
            
            $
            (2,080,135
            )Loans
                securitized and sold –
                establish mortgage servicing right
            Net
                gains (losses) on loans held
                for sale
            
            
            296,352
            
            
            
            -0-
            
            
            
            296,352**Subtotal**
            Net
                gains (losses)
                on  loans held for sale
            
            
            (456,424
            )
            
            
            (1,327,359
            )
            
            
            (1,783,783
            )Saleof securitized mortgage loan
                security
            Net
                realized gains (losses) on
                sales of securities
            
            
            303,100
            
            
            
            -0-
            
            
            
            303,100Gains
                (losses) on trading
                securities
            Net
                realized gains (losses) on
                sales of securities
            
            
            62,670
            
            
            
            (418,723
            )
            
            
            (356,053
            )Income
                related to forward sale
                contract termination
            Gain
                on termination of forward
                commitment
            
            
            358,750
            
            
            
            -0-
            
            
            
            358,750Subtotal
                of restructuring effect
                on pre-tax net income
            
            
            
            268,096
            
            
            
            (1,746,082
            )
            
            
            (1,477,986
            )Tax
                effect on above
                transactions
            
            
            
            103,276
            
            
            
            (671,944
            )
            
            
            (568,668
            )Net
                income effect of
                restructuring
            
            
            $
            164,820
            
            
            $
            (1,074,138
            )
            
            $
            (909,318
            )




Total
      deposits were $699.5 million atJune 30, 2007,
      an increase of $43.8 million sinceDecember 31,
      2006.  Growth
      occurred in nearly every category of deposits with noninterest-bearing deposits
      up $7.3 million, interest-bearing demand deposits up $3.2 million, money market
      deposits up $13.7 million and certificates of deposit, up $27.9
      million.  The growth occurred as customers shifted funds into our
      higher competitively priced money market accounts and shorter term certificate
      of deposit specials. Thisshiftresulted in an $8.1
      million decline in savings deposits.We introduced new deposit
      accounts
      during the latter portion of the first quarter of 2007. We have been very
      successful in attracting new accounts, but much of the growth has been at the
      cost of adding higher interest rate accounts and offering premiums to customers.
      Securities sold under agreement to repurchase were $15.7 million and borrowings
      were $77.1 million atJune
      30, 2007. Both declined by
      $1.2 million and $26.6 million, respectively, from year end 2006. The decline
      in
      borrowings was the result of repayment of short-term Federal Home Loan Bank
      advances from cash as a result of increased deposit
      balances.






16




Shareholders’
equity
      declined slightly
      from $99.3 million atDecember 31, 2006to $98.1 million atJune 30, 2007.
      The majority of the decline was the
      result of  a decline in accumulated other comprehensive income
      resulting from an increase in unrealized losses on securities of $822,000 and
      dividends paid out in excess of earnings resulting from the restructuring losses
      absorbed in the first quarter. Management’s review of available-for-sale
      securities in a loss position determined that the impairments were not
      other-than-temporary impairment because the fluctuation in values was primarily
      the result of changes in interest rates.  As ofJune 30, 2007management has both the ability and the
      intent to hold these securities until recovery.  Management does classify
      these securities as “available-for-sale” under the definition of Statement of
      Financial Accounting Standards No. 115,*Accounting for Certain
      Investments
      in Debt and Equity Securities*so certain circumstances,
      such as
      changes in market interest rates and related changes in the security's
      prepayment risk, needs for liquidity (for example, due to the withdrawal of
      deposits, increased demand for loans), changes in the availability of and the
      yield on alternative investments or changes in funding sources and terms could
      change management’s assessment of its ability and intent to hold these
      securities. As noted above the Company began a major restructuring of its
      balance sheet during the first quarter of 2007. As a part of this process
      management identified certain securities for which its intent to hold until
      maturity has changed. As a result of this change in intent these securities
      were
      immediately moved to the Company’s trading portfolio and appropriate losses were
      recognized through the income statement as ofMarch 31, 2007.
      Also as noted above management sold
      these securities during the second quarter of 2007 and reinvested the proceeds.
      Subsequent changes in value and/or additional gains or losses were recognized
      through the income statement at that time.




**Comparison
      of Operating Results for the
      Three Months EndedJune 30,
      2007and
      2006**




Net
      income for the quarter endedJune 30, 2007was $803,000, or $.16
      for  basic and $.15 for diluted earnings per share. This compared to
      net income for the comparable period in 2006 of $786,000, or $.16 for basic
      and
      $.15 for diluted earnings per share.




Net
      interest income for the second
      quarter of 2007 was $5,336,000 compared to $5,726,000 for the same period in
      2006. Net interest margin fell to 2.57% for the three-month period endedJune 30, 2007compared to 2.81% for the same period
      in 2006. The average yield on earning assets increased 21 basis points for
      the
      second quarter of 2007 compared to the same period in 2006 while the average
      cost of interest-bearing liabilities increased 48 basis points in 2007 compared
      to 2006. This decreased interest rate spread from 2.37% for the 2006 period
      to
      2.10% for the 2007 period, or 27 basis points. Competitive pressures in the
      current flat yield curve environment combined with the customers’ perceived lack
      of benefit in longer maturity certificates of deposit over the last year has
      resulted in a more liability sensitive position for the Bank. Consequently
      our
      shorter-term liabilities are repricing at a faster rate than our earning assets
      in a rising interest rate environment.  The restructuring described
      above is intended to improve our net interest margin going
      forward.




The
      Bank’s provision for loan losses for
      the second quarter of 2007 was $100,000 compared to $266,000 for the same period
      in 2006. Non-performing loans to total loans at June 30, 2007 were .44% compared
      to .38% at December 31, 2006, while non-performing assets to total assets were
      .33% at June 30, 2007 compared to .31% at December 31, 2006. The allowance
      for
      loan losses as a percent of loans was 1.02% atJune 30, 2007and .96% atDecember 31, 2006.
      During the second quarter of 2007, the
      Bank incurred $83,000 in net charged off loans compared to net charged off
      loans
      in the same quarter of 2006 totaling $91,000.




Other
      income for the three months endedJune 30, 2007was $1,884,000 compared to income of
      $1,305,000 for the same quarter of 2006.Other income for the
      quarterendedJune
      30,2007included
      a net $268,000 of income
      related to the balance sheet restructuring discussed above.  This is
      reflected in the following categories:  $(456,000) in net realized and
      unrealized gains(losses)
      on loans held for sale; $366,000 in
      net realized gains(losses)
      onsale ofsecurities;
      and, $358,000 of gain onterminationof a forward
      commitment.Management may elect
      to use this
      strategy from time to time, however, the use of derivatives requires specific
      approval by the board of directors and is not often used by the
      Company.The
      table presented in the Financial Condition section, summarizes the effects
      of
      the restructuring on the second quarter of 2007.  Service charges on
      deposit accounts and point of sale income,up
      $91,000 and $51,000 respectively,continue to increase
      as a
      result of increased numbers of checking accounts.  Our premium
      checking account program has nearly doubled our new account
      openings.The
      increase of $46,000 in cash value of life insurance income is the result of
      additional insurance being purchased in the fourth quarter of 2006 as well
      as
      increased yields on the variable rate policies.






17




Other
      expenses were $6,194,000for the three months endedJune 30, 2007,
      a $485,000increase compared to $5,709,000 for the
      same three months of 2006. The largest increase of $235,000was in salaries and employee benefits
      totaling $3,069,000 for the second quarter of 2007 compared to $2,834,000 during
      the same quarter of 2006. The primary reason for the increase was an increase
      in
      higher compensated commissioned sales staff.  We have been able to
      realign some staffing positions and have reduced full-time equivalent employees
      from 235 at the end of the second quarter of 2006 to 229 atJune 30, 2007.  We
      incurred additional
      increases in other expenses during the second quarter of 2007 when compared
      to
      the same quarter in 2006 in the following categories.  Occupancy
      expenses were up $100,000
      to $592,000 primarily as a result
      of increased real estate taxes on all our facilities.  Also,
      additional costs were incurred from adding our loan production office on the
      north side ofIndianapolisduring the second quarter of 2006 and
      our newest branch location onEmerson AvenueinGreenwoodopened during the second quarter of
      this year.  Data processing expense increased $108,000 to $674,000 as
      a result of an increase in the number of new deposit accounts and increased
      activity in the use of our debit and ATM cards.  Advertising and
      business development increased $110,000 to $297,000 to support expanded
      marketing for our new checking products and our efforts to increase core deposit
      relationships through direct marketing.




Income
      tax expense for the three months
      endedJune 30,
      2007was $123,000 or 13.2%
      of income before income tax expense. This compares to $270,000 or 25.5% of
      income before income tax expense for the period endedJune 30, 2006.
      The difference between the actual rate
      recorded and the statutory rates was primarily due to permanent, non-taxable
      income recorded such as qualifying municipal interest and increases in cash
      value of life insurance and the benefit of a low income housing tax
      credit.




**Comparison
      of Operating Results for the
      Six Months EndedJune 30,
      2007and
      2006**




Net
      income for the six month period
      endedJune 30,
      2007was $378,000, or $.07
      for both basic diluted earnings per share. This compared to net income for
      the
      comparable period in 2006 of $1,565,000 or $.31 for basic and $.30 for diluted
      earnings per share.As noted above, during
      the first quarter
      of 2007, the Bank began a strategy to restructure its balance sheet and, as
      a
      result, incurred a first quarter after-tax loss.  The total
      year-to-date effect of the restructuring was a net loss of $909,000, or $.18
      for
      both basic and diluted earnings per share.




Net
      interest income year-to-date throughJune 30, 2007declined by $623,000 from $11.3 million
      year-to-date 2006 to $10.7 million year-to-date in 2007. The Bank continues
      to
      be challenged by a combination of factors including its liability sensitive
      balance sheet position as well as the relatively flat interest rate
      curve.  Over the last eighteen to twenty-four months the bank has
      experienced a substantial volume of lower rate, longer term certificates of
      deposit that have matured and then renewed into a substantially higher rate
      and
      generally shorter term maturity.  While the Bank did have new assets
      and assets re-pricing during this period there were not as many assets
      re-pricing nor was the increase in yield on those assets as great as the
      increase in rate on the certificates of deposit.   Net interest
      margin fell to 2.58% for the six-month period endedJune 30, 2007compared to 2.81% for the same period
      in 2006. The average yield on earning assets increased 30 basis points for
      the
      six month period endingJune 30, 2007compared to the same period in 2006
      while the average cost of interest-bearing liabilities increased 57 basis points
      in 2007 compared to 2006. This decreased interest rate spread from 2.39% for
      the
      2006 period to 2.12% for the 2007 period, or 27 basis
      points.




The
      Bank’s provision for loan losses
      year-to-date throughJune
      30, 2007was $307,000
      compared to $502,000 for the same period in 2006.






18




Other
      income year-to-date throughJune 30, 2007was $1,704,000 compared to income of
      $2,503,000 for the same quarter of 2006.Other income for theperiodendedJune
      30, 2007included
      a net $1,478,000ofexpenserelated to the balance sheet
      restructuring discussed above.  This isillustrated in the table
      presented in
      the Financial Condition section.   Excluding the balance sheet
      restructuring charges other income would have increased $679,000 to
      $3,182,000.  Much of this increase was due to selling substantially
      all of our mortgage loan production in 2007.  Through most of the
      first and second quarters of 2006 we retained a substantial portion of our
      mortgage loan production.  Excluding the restructuring charges, net
      gains on sales of loans would have increased $489,000 from year-to-dateJune 30, 2006.
      We have also started to see the
      benefit of the increased account openings resulting from our consumer checking
      account campaign. Service charges on deposit accounts have increased from
      $1,042,000 year-to-date throughJune 30, 2006to $1,186,000 year-to-date throughJune 30, 2007or $144,000.  Also, with the
      new accounts we added our point of sale income has also increased, from $350,000
      year-to-date throughJune
      30, 2006to $428,000
      year-to-date throughJune
      30, 2007.  Loan
      servicing fees did decline as mortgages were sold and normal payments and
      payoff’s reduced the average outstanding serviced loans balance.  The
      restructuring described above should reverse this trend since servicing was
      retained on the loans that were securitized.The
      increase of $96,000 in cash value of
      life insurance income is the result of additional insurance being purchased
      in
      the fourth quarter of 2006 as well as increased yields on the variable rate
      policies.




Other
      expenses for the six month period
      endedJune 30,
      2007were $12,132,000, an
      increase of $842,000 over the same period in 2006.  Most of the
      increase was in salaries
      and employee benefit costs, up $520,000and advertising and business
      development, up
      $240,000for essentially
      the same reasons mentioned for the quarter and described
      above.




Income
      tax benefit for the six months
      endedJune 30,
      2007was $416,000 on
      $38,000 of loss before income tax expense. This compares to income tax expense
      of $466,000 on $2,031,000 of income before income tax for the six month period
      endedJune 30,
      2006. The difference
      between the actual rate recorded and the statutory rates was primarily due
      to
      permanent, non-taxable income recorded such as qualifying municipal interest
      and
      increases in cash value of life insurance and the benefit of a low income
      housing tax credit..




**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 orLincoln’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.Lincolnhad $17.3 million and $7.4 million of
      loans classified as special mention as ofJune 30, 2007andDecember 31, 2006,
      respectively. The increase in special
      mention loans was primarily due to three unrelated credits. In addition,Lincolnhad $4.3 million and $5.6 million of
      loans classified as substandard atJune 30, 2007andDecember 31, 2006,
      respectively. Loans classified as
      doubtful totaled $.4 million atJune 30, 2007and $.4 million atDecember 31, 2006.
      AtJune 30, 2007andDecember 31, 2006there were no loans classified as loss.
      AtJune 30,
      2007, andDecember
      31, 2006, respectively, non-accrual
      loans were
      $2.7 million and $2.5 million. At June 30, 2007 and December 31, 2006,
      respectively, accruing loans delinquent 90 days or more totaled $-0- and $1,000.
      AtJune 30,
      2007andDecember
      31, 2006, the allowance for loan
      losses was $6.2
      million and $6.1 million, respectively or 1.02% of loans atJune 30, 2007and .96% atDecember 31, 2006.






19




**Liquidity
      and Capital
      Resources**




The
      Company’s primary sources of funds
      are deposits, borrowings and the proceeds from principal and interest payments
      on loans. In addition, securities maturities and amortization of mortgage-backed
      securities are structured to provide a source of liquidity. Sales of loans
      and
      available for sale securities can also provide liquidity should the need arise.
      While maturities and scheduled amortization of loans and mortgage-backed
      securities are a predictable source of funds, deposit flows and mortgage and
      mortgage-backed securities prepayments are greatly influenced by general
      interest rates, economic conditions and competition. Liquidity management is
      both a daily and long-term function of the Company’s management strategy. In the
      event that the Company should require funds beyond its ability to generate
      them
      internally, additional funds are available through the use of FHLB advances,
      brokered deposits and federal funds purchased.




Quantitative
      measures established by
      regulation to ensure capital adequacy require the Company and the subsidiary
      bank to maintain minimum amounts and ratios (set forth in the table below)
      of
      total and Tier I capital (as defined in the regulations) to risk-weighted assets
      (as defined), and of Tier I capital (as defined) to average assets (as
      defined).




Management
      believes, as ofJune 30, 2007,
      that the Company and the Bank meet all
      capital adequacy requirements to which they are subject. The Company and Bank’s
      actual capital amounts and ratios under the state charter arepresented in the following
      table.




**Actual**
            
            **For
                  Capital Adequacy
                  Purposes**
            
            **To
                  Be Well Capitalized Under
                  Prompt Corrective Action Provisions****Amount**
            
            
            **Ratio**
            
            **Amount**
            
            
            **Ratio**
            
            **Amount**
            
            
            **Ratio**As
                ofJune 30,
                2007Total
                Capital (to Risk-Weighted
                Assets)Consolidated
            
            $
            79,101
            
            
            
            11.6
            %
            
            $
            54,404
            
            
            
            8.0
            %
            
            
            
            
            N/ABank
            
            
            76,862
            
            
            
            11.3
            
            
            
            54,295
            
            
            
            8.0
            
            
            $
            67,868
            
            
            
            10.0
            %Tier
                I Capital (to Risk-Weighted
                Assets)Consolidated
            
            
            72,854
            
            
            
            10.7
            
            
            
            27,202
            
            
            
            4.0
            
            
            
            
            
            
            N/ABank
            
            
            70,616
            
            
            
            10.4
            
            
            
            27,147
            
            
            
            4.0
            
            
            
            40,721
            
            
            
            6.0Tier
                I Capital (to Average
                Assets)Consolidated
            
            
            72,854
            
            
            
            8.3
            
            
            
            35,016
            
            
            
            4.0
            
            
            
            
            
            
            N/ABank
            
            
            70,616
            
            
            
            8.1
            
            
            
            34,953
            
            
            
            4.0
            
            
            
            43,691
            
            
            
            5.0




**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**




An
      important component of Lincoln Bank’s
      asset/liability management policy includes examining the interest rate
      sensitivity of its assets and liabilities and monitoring the expected effects
      of
      interest rate changes on the economic value of its assets. An asset or liability
      is interest rate sensitive within a specific time period if it will mature
      or
      reprice within that time period. If Lincoln Bank’s assets mature or reprice more
      quickly or to a greater extent than its liabilities, economic value and net
      interest income would tend to increase during periods of rising interest rates,
      but decrease during periods of falling interest rates. Conversely, if Lincoln
      Bank’s assets mature or reprice more slowly or to a lesser extent than its
      liabilities, economic value and net interest income would tend to decrease
      during periods of rising interest rates but increase during periods of falling
      interest rates.






20




The
      Bank’s board of directors has
      delegated responsibility for the day-to-day management of interest rate risk
      to
      the Asset/Liability (“ALCO”) Committee. The ALCO Committee meets monthly to
      manage and review Lincoln Bank’s assets and liabilities. The ALCO Committee
      reviews interest rates for deposits and loan product pricing. The committee
      considers the bank’s interest rate risk position, liquidity needs and
      competitive pricing.




Presented
      below, as ofJune 30, 2007is an analysis showing the present
      value impact of changes in interest rates, assuming a comprehensive
      mark-to-market environment. Noninterest sensitive assets and liabilities such
      as
      cash, accounts receivable, fixed assets, and other liabilities areexcluded from the
      analysis.







**Economic
                Value****Present
                Value atJune 30,
                2007**
              **Change
                in Interest Rates
                of:******
            **-2%**
            
            
            ****
            **-1%**
            
            
            **Current**
            
            
            ****
            **+1%**
            
            
            ****
            **+2%**(In
                Thousands)**Interest
                Sensitive
                Assets**Investments
            
            $
            192,442
            
            
            $
            190,538
            
            
            $
            185,809
            
            
            $
            178,988
            
            
            $
            171,635Loans
            
            
            622,733
            
            
            
            614,451
            
            
            
            606,078
            
            
            
            596,615
            
            
            
            587,626Total
                interest sensitive
                assets
            
            
            815,175
            
            
            
            804,989
            
            
            
            791,887
            
            
            
            775,603
            
            
            
            759,261**Interest
                Sensitive
                Liabilities**Deposits
            
            
            (691,910
            )
            
            
            (684,976
            )
            
            
            (677,056
            )
            
            
            (668,529
            )
            
            
            (660,759
            )Borrowings
                and repurchase
                agreements
            
            
            (95,315
            )
            
            
            (93,355
            )
            
            
            (91,956
            )
            
            
            (91,618
            )
            
            
            (90,990
            )Total
                interest sensitive
                liabilities
            
            
            (787,225
            )
            
            
            (778,331
            )
            
            
            (769,012
            )
            
            
            (760,147
            )
            
            
            (751,749
            )Net
                market value as ofJune 30,
                2007
            
            $
            27,941
            
            
            $
            22,658
            
            
            $
            22,875
            
            
            $
            15,456
            
            
            $
            7,512Change
                from
                current
            
            $
            5,066
            
            
            $
            (217
            )
            
            $
            ---
            
            
            $
            (7,419
            )
            
            $
            (15,363
            )






The
      same information as ofDecember 31, 2006is presented below.




**Economic
                Value****Present
                Value atDecember 31,
                2006**
              **Change
                in Interest Rates
                of:******
            **-2%**
            
            
            ****
            **-1%**
            
            
            **Current**
            
            
            ****
            **+1%**
            
            
            ****
            **+2%**(In
                Thousands)**Interest
                Sensitive
                Assets**Investments
            
            $
            164,398
            
            
            $
            162,623
            
            
            $
            160,045
            
            
            $
            154,521
            
            
            $
            148,496Loans
            
            
            645,847
            
            
            
            637,404
            
            
            
            624,753
            
            
            
            608,960
            
            
            
            592,438Total
                interest sensitive
                assets
            
            
            810,245
            
            
            
            800,027
            
            
            
            784,798
            
            
            
            763,481
            
            
            
            740,934**Interest
                Sensitive
                Liabilities**Deposits
            
            
            (640,002
            )
            
            
            (629,328
            )
            
            
            (619,314
            )
            
            
            (609,910
            )
            
            
            (601,070
            )Borrowings
                and repurchase
                agreements
            
            
            (127,439
            )
            
            
            (123,547
            )
            
            
            (120,660
            )
            
            
            (118,874
            )
            
            
            (118,014
            )Total
                interest sensitive
                liabilities
            
            
            (767,441
            )
            
            
            (752,875
            )
            
            
            (739,974
            )
            
            
            (728,784
            )
            
            
            (719,084
            )Net
                market value as ofDecember 31,
                2006
            
            $
            42,804
            
            
            $
            47,152
            
            
            $
            44,824
            
            
            $
            34,697
            
            
            $
            21,850Change
                from
                current
            
            $
            (2,020
            )
            
            $
            2,328
            
            
            $
            ---
            
            
            $
            (10,127
            )
            
            $
            (22,974
            )








21




**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 (the “Exchange Act”)) 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 are effective in ensuring that information
      required to be disclosed by the Company in reports that it files or submits
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in the Securities and Exchange Commission’s rules and
      forms and are designed to ensure that information required to be disclosed
      in
      those reports is accumulated and communicated to management as appropriate
      to
      allow timely decisions regarding required disclosure.




(b)           Changes
      in internal control over
      financial reporting.
      There were no 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 have materially affected, or are
      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
      1A.  Risk
      Factors**




There
      have been no material changes with
      respect to the risk factors disclosed in the Company’s Annual Report on Form
      10-K for the year endedDecember 31, 2006.




**Item
      2.                      Unregistered Sales of
      Equity Securities
      and Use of Proceeds**






**ISSUER
      PURCHASES OF EQUITYSECURITIES**


**Period**
            
            **Total
                  Number of Shares Purchased
                  (1)**
            
            
            **Average
                  Price Paid per
                  Share**
            
            
            **Total
                  Number of Shares Purchased
                  as Part of Publicly Announced Plan
                  (2)**
            
            
            **Maximum
                  Number of Shares Yet to Be
                  Purchased Under the Plan**April
                1-30,
                2007
            
            
            --
            
            
            
            --
            
            
            
            --
            
            
            
            44,433May
                1-31,
                2007
            
            
            --
            
            
            $
            --
            
            
            
            --
            
            
            
            44,433June
                1-30,
                2007
            
            
            7,000
            
            
            
            18.60
            
            
            
            --
            
            
            
            44,433Total
            
            
            7,000
            
            
            $
            18.60
            
            
            
            --
            
            
            
            44,433


_______________________


(1)
            The
                7,000 shares redeemed were not
                part of a publicly announced repurchase plan or
                program.


(2)
            The
                Company announced a stock
                repurchase program onApril 23, 2003,
                and up to 44,433 additional
                shares may still be repurchased under that program. The repurchase
                program
                does not have an expiration
                date.






**Item
      3.                      Defaults Upon Senior
      Securities.**




None






22




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







On
      April
      17, 2007, the Company held its Annual Meeting of Shareholders. Three directors
      were elected to serve three-year terms expiring in 2010 as follows:




Name
            
            Votes
                For
            
            Votes
                WithheldJerry
                R. Engle
            
            4,039,091
            
            173,536W.
                Thomas Harmon
            
            4,039,840
            
            172,787Jerry
                R. Holifield
            
            4,012,712
            
            199,915






**Item
      5.                      Other
      Information.**




None






**Item
      6.                      Exhibits**




10(1)
            AmendedLincolnBancorp Incentive
                Plan31(1)
            Certification
                required by 17
                C.F.R. § 240.13a-14(a)31(2)
            Certification
                required by 17
                C.F.R. § 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





23


**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.




**LINCOLNBANCORP**Date:August
                8,
                2007
            By:
            /s/
                Jerry R.
                EngleJerry
                R.
                EnglePresident
                and Chief Executive
                OfficerDate:August
                8,
                2007
            By:
            /s/
                John M.
                BaerJohn
                M.
                BaerSecretary
                and
                Treasurer





24







**EXHIBIT
      INDEX**




**No.**
            
            **Description**
            
            **Location**10(1)
            
            AmendedLincolnBancorp Incentive
                Plan
            
            Incorporated
                by reference to
                Exhibit 10(1) to the Registrant’s Form 10-Q for the quarter endedMarch 31,
                2007.31(1)
            
            CEO
                Certification required by 17
                C.F.R. Section 240.13a-14(a)
            
            Attached31(2)
            
            CFO
                Certification required by 17
                C.F.R. Section 240.13a-14(a)
            
            Attached32
            
            Certification
                pursuant to 18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002
            
            Attached










25