Lincoln Bancorp Announces Year End 2007 Results

PLAINFIELD, Ind., Jan. 22, 2008 (PRIME NEWSWIRE) -- Lincoln Bancorp,
(Nasdaq:LNCB) (the "Company"), the holding company of Lincoln Bank (the "Bank"),
announced today that net income for the fourth quarter ended December 31, 2007
was $700,000, or $.14 for both basic and diluted earnings per share. This
compared to net income for the fourth quarter in 2006 of $495,000, or $.10 for
both basic and diluted earnings per share.

Net income for the year ended December 31, 2007 was $1,599,000 or $.32 for basic
and $.31 for diluted earnings per share. As disclosed as part of our financial
results for the quarter ended March 31, 2007 the Bank began a balance sheet
restructuring in late March 2007. This restructuring continued the
transformation of the Bank from a traditional thrift to a full service
commercial bank. This transformation was initiated in 2004 with the acquisition
of First Shares Bancorp followed by our charter conversion to a commercial bank
in late 2006. Losses recognized in the first quarter associated with marking the
assets to market when they were identified as held for sale totaled $1.07
million after tax. Some of these assets recovered a portion of their value after
March 31, 2007, resulting in a smaller actual loss incurred in the second
quarter when these assets were sold. This resulted in a positive after-tax
effect on our second quarter, ended June 30, 2007 of $164,000 or $.03 for both
basic and diluted earnings per share. 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.

Assets totaled $889.0 million at December 31, 2007, an increase from December
31, 2006 of $5.5 million. The increase in assets occurred in net loans, up $6.8
million. Loan growth was experienced in commercial loans, up $60.1 million while
residential real estate mortgages declined $49.6 million from a combination of
the balance sheet restructuring in the first quarter 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 as did a portion of our cash and cash equivalents,
down $5.3 million. Cash flow from securities will be used to fund future
commercial loan growth. Other major categories of loans declined from year end
balances with the exception of home equity lines which were up $3.8 million from
year end 2006. Our fixed assets increased $3.8 million as we added two new full
service branches in prime locations in growth areas of Greenwood and Mooresville
to replace branches in less effective locations. Additionally, we purchased land
for future development on the northwest and south sides of Indianapolis.

Total deposits were $656.4 million at December 31, 2007, a slight increase of
$.7 million since December 31, 2006. The primary changes in deposit growth
occurred in interest-bearing demand deposits up $7.7 million and money market
deposits up $30.6 million. A portion of this growth occurred as customers
shifted funds into our higher competitively priced interest checking and money
market accounts. This resulted in reduced balances in noninterest-bearing demand
deposits, down $5.1 million and savings deposits, down $14.9 million. Total
certificates of deposit declined by $17.5 million from December 31, 2006 to
$329.6 million at December 31, 2007. As larger banks have experienced liquidity
issues, rates offered for public fund certificates of deposit have not declined
as much as other wholesale borrowing opportunities. As a result, we have elected
to allow many of these certificates to mature and to the extent necessary,
replaced them with lower wholesale funding. The decline in the public fund
certificates of deposit category totaled $19.7 million. Borrowings, including
securities sold under repurchase agreements, increased $5.5 million from year
end 2006 to $125.9 million at December 31, 2007 primarily from Federal Home Loan
Bank advances.

Net interest income for the fourth quarter of 2007 was $5,588,000 compared to
$5,361,000 for the same period in 2006. Net interest margin was 2.74% for the
three-month period ended December 31, 2007 compared to 2.60% for the same period
in 2006. The average yield on earning assets increased 11 basis points in the
fourth quarter 2007 compared to the same period in 2006 while the average cost
of interest-bearing liabilities decreased 6 basis points for the same period.
This increased the interest rate spread from 2.13% for the period ended December
31, 2006 to 2.30% for the same period in 2007 or 17 basis points.

Net interest income for the year ended December 31, 2007 was $21,786,000
compared to $22,211,000 for 2006. The reduction in net interest income has been
the result of lower spreads between the interest earned on interest-earning
assets and the interest paid on interest-bearing liabilities as competition
continues for deposits and loans. Maturing low-rate longer term certificates of
deposit shifted to shorter terms with higher rates as a result of the relatively
flat interest rate curve for most of 2007. Also, the mix of our deposits into
higher cost money market deposits reduced our base savings and noninterest
bearing deposits. This shift caused a considerable increase in the average cost
of deposits. The interest spread for 2007, declined to 2.19% compared to 2.28%
for 2006. Net interest margin was 2.65% for the year 2007 compared to 2.73% in
2006.

The Bank's provision for loan losses for the fourth quarter of 2007 was $500,000
compared to $262,000 for the same period in 2006. Nonperforming loans to total
loans at December 31, 2007 increased to 1.22% from .38% at December 31, 2006.
Nonperforming assets to total assets were .95% at December 31, 2007 and .31% at
the end of 2006. The allowance for loan losses as a percent of loans was 1.02%
at year end 2007 and .96% at December 31, 2006 reflecting the change in risk in
the loan portfolio. During the fourth quarter of 2007, the Bank recognized
$200,000 in net charged-off loans compared to $267,000 of net charge-offs in the
same quarter of 2006. Year-to-date net charge-offs for 2007 totaled $504,000
compared to $598,000 for the same period in 2006.

Other income for the three months ended December 31, 2007 was $1,742,000
compared to $1,500,000 for the same quarter of 2006. Service charges on deposit
accounts were up 15% to $667,000 and point of sale income was up 38% to $256,000
as we continue our efforts to increase our market penetration in checking
accounts. Our premium checking account program has nearly doubled our new
account openings compared to 2006.

Other income for the year ended December 31, 2007 was $5,023,000 compared to
$5,429,000 for the same period in 2006. During the first quarter of 2007, the
Bank announced a planned restructuring of its balance sheet and recorded a
$1,327,000 loss on the mark to market of the loans identified as held for sale
in the restructuring and a loss of $419,000 on the mark to market of the
securities transferred to trading securities. Including the second quarter
portion of the restructuring discussed above, the total charge to other income
for the restructuring was $1,478,000. Excluding the items related to the
restructuring, other income for the twelve months ended December 31, 2007 would
have been $6,501,000 compared to $5,429,000 for the same period in 2006, an
increase of 20%. We are seeing the effects from our consumer checking account
campaign as service charges on deposit accounts have increased from $2,180,000
to $2,474,000 or $294,000 during 2007 compared to 2006. These new accounts also
added point of sale income from debit card usage with an increase from $718,000
in 2006 to $922,000 in 2007 or $204,000. An increase of $160,000 was recognized
in cash value of life insurance from 2006 to 2007 as a result of additional
insurance being purchased in the fourth quarter of 2006 as well as increased
yields on the variable rate policies.

Other expenses were $6,029,000 for the three months ended December 31, 2007
compared to $6,024,000 for the same three months of 2006. The largest increases
were in net occupancy expenses and data processing expenses totaling $599,000
and $666,000, respectively, for the fourth quarter of 2007 compared to $506,000
and $597,000, respectively, during the same quarter of 2006, an increase of
$93,000 and $69,000, respectively. The primary reasons for the increase in
occupancy expenses were due to a $55,000 increase in real estate taxes due to
large rate increases; depreciation expense on new facilities; and additional
rental expense as the result of leased land for our new branch on Emerson Avenue
added during the second quarter of 2007. The increase in data processing costs
was the result of added services, an increase in the number of new deposit
accounts and increased activity in the use of our debit and ATM cards.

Other expenses for the year ended December 31, 2007 were $24,492,000, an
increase of $1,449,000 over the same period in 2006. Most of the increase was in
salaries and employee benefit costs, up $632,000; net occupancy expenses, up
$344,000; data processing expenses, up $236,000; and advertising and business
development, up $182,000. Expansion of a loan production office on the north
side of Indianapolis, expanded utilization of incentive compensation for loan
production throughout the Bank and normal incremental salary increases were the
primary reasons for the increase in salaries and employee benefit costs. The
loan production office, new branches on the south side of Indianapolis and in
Mooresville plus increased real estate taxes were primary reasons for net
occupancy cost increases. Increased utilization of third-party services and the
increase in numbers of new deposit accounts resulted in higher data processing
costs. Advertising and business development cost increases were directly the
result of our efforts to expand marketing for our new checking products and our
efforts to increase core deposit relationships through direct marketing.

The book value of Lincoln Bancorp common stock was $18.58 per share at December
31, 2007 compared to $18.63 at December 31, 2006. Book value dropped slightly as
a result of the losses taken for the restructuring of the balance sheet in the
first and second quarters of 2007.

Lincoln Bancorp and Lincoln Bank are headquartered in Plainfield, Indiana with
additional offices in Avon, Bargersville, Brownsburg, Crawfordsville, Frankfort,
Franklin, Greenwood, Mooresville, Morgantown, Nashville and Trafalgar. The Bank
also has 2 loan production offices located in Carmel and Greenwood, Indiana.

Statements contained in this press release that are not historical facts may
constitute forward-looking statements (within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended) which involve significant risks and
uncertainties. The Companies intend such forward-looking statements to be
covered in the Private Securities Litigation Reform Act of 1995, and are
including this statement for purposes of invoking these safe harbor provisions.
The Companies' ability to predict results or the actual effect of future plans
or strategies is inherently uncertain and involves a number of risks and
uncertainties, some of which have been set forth in the Companies' most recent
annual reports on Form 10-K, which disclosures are incorporated by reference
herein. The fact that there are various risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements.

LINCOLN BANCORP
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)

December 31 December 31
2007 2006
---------- ----------
Balance Sheet Data:
Total assets $ 889,039 $ 883,543
Loans, net (including loans held for sale) 639,791 632,996
Cash and cash equivalents 13,115 18,409
Investment securities available for sale 150,406 151,237
Deposits 656,405 655,664
Securities sold under repurchase agreements 16,767 16,864
Borrowings 109,177 103,608
Stockholders' equity 98,711 99,300

Book value per common share $ 18.58 $ 18.63
Shares outstanding 5,312,981 5,329,687
Equity to assets 11.10% 11.24%
Non-performing assets to total assets 0.95% 0.31%
Non-performing loans to total loans 1.22% 0.38%
Allowance for loan losses to total loans 1.02% 0.96%

Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
-------- -------- -------- --------
Operating Data:
Interest Income:
Loans $ 11,167 $ 11,020 $ 44,219 $ 41,955
Investment securities 2,098 2,004 8,691 8,193
Deposits with
financial
institutions
and federal funds
sold 18 181 381 582
Dividend income 101 119 403 488
-------- -------- -------- --------
Total interest income 13,384 13,324 53,694 51,218
-------- -------- -------- --------
Interest Expense:
Deposits 6,573 6,650 27,039 23,638
Borrowings 1,223 1,313 4,869 5,369
-------- -------- -------- --------
Total interest
expense 7,796 7,963 31,908 29,007
-------- -------- -------- --------
Net Interest Income 5,588 5,361 21,786 22,211
Provision for loan
losses 500 262 957 884
-------- -------- -------- --------
Net Interest Income
After Provision for
Loan Losses 5,088 5,099 20,829 21,327
-------- -------- -------- --------
Other Income:
Service charges on
deposit accounts 667 580 2,474 2,180
Net gains(losses) on
sales of loans
including unrealized
gains (losses) 263 217 (693) 518
Net realized and
unrealized gains
(losses) on sale of
available for sale
and trading
securities 14 10 (25) 14
Point of sale income 256 185 922 718
Loan servicing fees 96 79 346 336
Increase in cash value
of life insurance 213 194 849 689
Other 233 235 1,150 974
-------- -------- -------- --------
Total other income 1,742 1,500 5,023 5,429
-------- -------- -------- --------
Other Expenses:
Salaries and employee
benefits 3,121 3,070 12,295 11,663
Net occupancy expenses 599 506 2,368 2,024
Equipment expenses 393 424 1,658 1,549
Data processing
expense 666 597 2,570 2,334
Professional fees 95 169 745 873
Advertising and
business development 243 344 1,122 940
Core deposit
intangible
amortization 121 137 521 607
Other 791 777 3,213 3,053
-------- -------- -------- --------
Total other expenses 6,029 6,024 24,492 23,043
-------- -------- -------- --------
Income before income
taxes 801 575 1,360 3,713
Income taxes 101 80 (239) 813
-------- -------- -------- --------
Net income $ 700 $ 495 $ 1,599 $ 2,900
======== ======== ======== ========

Basic earnings per
share $ 0.14 $ 0.10 $ 0.32 $ 0.58
======== ======== ======== ========
Diluted earnings per
share $ 0.14 $ 0.10 $ 0.31 $ 0.56
======== ======== ======== ========

Other Data:
Interest rate spread 2.30% 2.13% 2.19% 2.28%
Net interest margin 2.74% 2.60% 2.65% 2.73%
Return on average
assets 0.32% 0.22% 0.18% 0.33%
Return on average
equity 2.83% 1.97% 1.61% 2.89%
-0-
CONTACT: Lincoln Bancorp
Jerry R. Engle, President / CEO
317-839-6539