FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934



For Quarter Ended:               June 30, 1997
                            __________________________

Commission File Number               1-13936
                            __________________________


                               BOSTONFED BANCORP INC.
________________________________________________________________________________
             (Exact name of registrant as specified in its charter)

            Delaware                                            52-1940834
________________________________________________________________________________
  (State or other jurisdiction of                           (I.R.S. Employer
  incorporation or organization)                           Identification No.)

17 New England Executive Park, Burlington, Massachusetts  01803
________________________________________________________________________________
  (Address of principal executive offices)              (Zip Code)

                                  (617) 273-0300
________________________________________________________________________________
              (Registrant's telephone number, including area code)

                                  Not Applicable
________________________________________________________________________________
              (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.

                                 Yes  (X)                No   (    )

Number of shares of common stock, par value $.01 per share,
outstanding as of June 30, 1997:  5,947,302.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

            Consolidated Statements of Financial Condition as
            of June 30, 1997 and December 31, 1996                  2

            Consolidated Statements of Income for the Three and six
            Months ended June 30, 1997 and 1996                     3

            Consolidated Statement of Changes in Stockholders'
            Equity for the Six Months ended June 30, 1997           4

            Consolidated Statements of Cash Flows for the
            Six Months ended June 30, 1997 and 1996                 5 - 6

            Notes to Consolidated Financial Statements              7 - 8

            Average Balances and Yield / Costs                      9 - 10

 Item 2.    Management's Discussion and Analysis of Financial

            Condition and Results of Operations                     11 - 16



PART II _ OTHER INFORMATION
___________________________

 Item 1.    Legal Proceedings                                      17

 Item 2.    Changes in Securities                                  17

 Item 3.    Defaults Upon Senior Securities                        17

 Item 4.    Submission of Matters to a Vote of Security Holders    17

 Item 5.    Other Information                                      18

 Item 6.    Exhibits and Reports on Form 8-K                       18

 Signature Page                                                    19


                                       1

<PAGE>
                    BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                          ---------------------------
                  (Dollars in Thousands, Except Per Share Data)

                                                   June 30,    December 31,
                                                     1997          1996
                                                  -----------  --------------
Assets                                            (Unaudited)
------------
Cash and cash equivalents                            $ 30,359   $  18,278
Investment securities available for sale
  (amortized cost of $46,515 and $1,085 at
  June 30, 1997 and December 31, 1996
  respectively)                                        46,479       1,085
Investment securities held to maturity (fair
  value of $23,717 and $19,045 at June 30, 1997
  and December 31, 1996, respectively)                 23,870      19,170
Mortgage-backed securities available for sale
  (amortized cost of $21,282 and $23,915 at
  June 30, 1997 and December 31, 1996, 
  respectively)                                        21,323      23,593
Mortgage-backed securities held to maturity (fair
  value of $40,866 and $43,033 at June 30, 1997 and
  December 31, 1996, respectively)                     40,712      43,019
Mortgage loans held for sale                           15,204       3,970
Loans, net of allowance for loan losses of $5,750
  and $4,400 at June 30, 1997 and December 31, 1996,
  respectively                                        758,476     676,670
Accrued interest receivable                             5,678       4,067
Stock in FHLB of Boston and Federal Reserve Bank       16,364      16,295
Premises and equipment                                  6,934       4,979
Real estate held for sale or development                    0         874
Real estate owned                                         909       2,668
Other assets                                            9,614       5,899
                                                     --------    --------
            Total assets                             $975,922    $820,567
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $581,752    $428,818
 Federal Home Loan Bank advances                      292,750     296,500
 Securities sold under agreements to repurchase         8,637       3,500
 Advance payments by borrowers for taxes
  and insurance                                         2,407       2,100
 Other Liabilities                                      4,633       3,294
                                                      -------     -------
            Total liabilities                         890,179     734,212
                                                      -------     -------
Commitments and contingencies
Stockholders' equity;                               
 Preferred stock, $.01 par value, 1,000,000 shares
  authorized; none issued                               -- --       -- --
 Common stock, $0.01 par value; 17,000,000 shares
  authorized; 6,589,617 shares issued                      66          66
 Additional paid-in capital                            64,968      64,461
 Retained earnings                                     36,020      33,131
 Unrealized gain (loss) on investment securities 
 available for sale, net                                   19        (322)
  Less Treasury Stock, at cost                         (9,691)     (4,739)
  Less unallocated ESOP shares                         (3,929)     (3,929)
  Less unearned Stock-Based Incentive Plan             (1,710)     (2,313)
                                                      --------    -------- 
            Total stockholders' equity                 85,743      86,355
                                                      --------    --------
Total liabilities and stockholders' equity           $975,922    $820,567
                                                     ========    ========

                                      2 
<PAGE>
                    BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                     Consolidated Statements of Operations
                    (In Thousands, except per share amount)

                                 Three Months Ended        Six Months Ended
                                 ------------------       ------------------
                                 6/30/97    6/30/96       6/30/97    6/30/96
                                 ------------------       ------------------    
                              
                                                  (Unaudited)
                          
Interest and dividend income:
 Loans                          $ 14,686  $  10,709      $ 28,472  $  20,612
 Mortgage-backed securities        1,073      1,425         2,204      2,458
 Investment securities             1,311        493         2,391        942
                                 -------    -------       -------    -------
   Total interest and
      dividend income             17,070     12,627        33,067     24,012
                                 -------    -------       -------    -------
Interest expense:
 Deposit accounts                  4,762      3,955         8,934      7,958
 Borrowed funds                    4,420      2,799         9,105      4,663
                                 -------    -------       -------    -------
   Total interest expense          9,182      6,754        18,039     12,621
                                 -------    -------       -------    -------
Net interest and divided income    7,888      5,873        15,028     11,391
Provision for loan losses            455        298           880        736
                                 -------    -------       -------    -------
 Net interest and dividend  
   income after provision          7,433      5,575        14,148     10,655
Non-interest income:
 Loan processing and servicing 
   fees                              298        330           597        671
 Gain on sale of loans               252        120           382        374
 Other                               631        406         1,197        780
                                 -------    -------       -------    -------
Total non-interest income          1,181        856         2,176      1,825
                                 -------    -------       -------    -------
Non-interest expense:
 Compensation and benefits         3,368      2,441         6,608      4,636
 Occupancy and equipment             846        635         1,542      1,255
 Federal deposit insurance
  premiums                            71        239           142        478
 Real estate operations             (219)       (30)       (1,110)        (6)
 Other                             1,430      1,248         2,779      2,486
                                 -------    -------       -------    -------
  Total non-interest expense       5,496      4,533         9,961      8,849
                                 -------    -------       -------    -------
Income before income taxes         3,118      1,898         6,363      3,631
Income tax expense                 1,413        774         2,744      1,484
                                 -------    -------       -------    -------
Net income                      $  1,705   $  1,124         3,619      2,147
                                 =======    =======       =======    =======    
                                                              
Primary earnings per share         $0.30      $0.18         $0.63      $0.35
Fully diluted earnings per share   $0.30      $0.18         $0.62      $0.35
Weighted average shares
  outstanding                  5,579,032  6,115,104     5,658,257  6,115,104
Common stock equivalents
  due to dilutive effect
  of stock options               176,867          0       176,867          0
Total weighted average
  shares outstanding           5,755,899  6,115,104     5,835,124  6,115,104 

                                      3
<PAGE>
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                        (In Thousands)
                                Six Months Ended June 30, 1997
                                          (Unaudited)
<CAPTION>
                                                                            Net
                                                                          unrealized                  Unearned
                                                                         (loss) on                     Stock-       
                                        Additional                        investments  Unallocated     Based      Total            
                                Common    paid-in   Retained  Treasury    available      ESOP       Incentive  stockholders'
                                stock     capital   earnings    Stock      for sale     shares         Plan       equity
                                ------   --------  ---------   --------   ----------   -----------  ----------  ------------    
<S>                             <C>       <C>        <C>        <C>           <C>         <C>          <C>          <C>
Balance at December 31, 1996    $ 66      64,461     33,131     (4,739)       (322)       (3,929)      (2,313)      86,355
                                                                       
Net income                       - -         - -      1,914       - -          - -           - -        - -          1,914
                                                                  
Cash dividends declared and
 paid ($0.05 per share)          - -         - -       (313)      - -          - -           - -        - -           (313)
                                                                  
Common Stock repurchased         
 (297,815 shares at an average
  price of $15.86 per share)     - -         - -        - -     (4,722)        - -           - -        - -         (4,722)         
Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         351           351
                                                                  
Change in net unrealized loss on
  investments available for sale - -         - -        - -       - -          (37)          - -         - -           (37)
Appreciation in fair value of
  SIP shares charged to expense  - -         110        - -       - -          - -           - -         - -           110 
Appreciation in fair value of
  committed to be released ESOP 
  shares charged to expense      - -          97        - -       - -          - -           - -        - -             97
                               -------    -------   --------   ---------    ---------      --------   ---------    --------
                                                                  
Balance at March 31, 1997       $ 66      64,668     34,732     (9,461)       (359)        (3,929)     (1,962)      83,755
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         
                                      
Net income                       - -         - -      1,705       - -          - -           - -        - -          1,705
                                                                  
Cash dividends declared and
 paid ($0.07 per share)          - -         - -       (417)      - -          - -           - -        - -           (417)
                                                                  
Common Stock repurchased         
 (15,200 shares at an average
  price of $15.18 per share)     - -         - -        - -      (230)         - -           - -        - -           (230)         
Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         252           252
                                                                  
Change in net unrealized loss on
  investments available for sale - -         - -        - -       - -          378           - -         - -           378
Appreciation in fair value of
  SIP shares charged to expense  - -         107        - -       - -          - -           - -         - -           107 
Appreciation in fair value of
  committed to be released ESOP 
  shares charged to expense      - -         193        - -       - -          - -           - -        - -            193
                               -------    -------   --------   ---------    ---------      --------   ---------    --------
                                                                  
Balance at June 30, 1997        $ 66      64,968     36,020     (9,691)         19         (3,929)     (1,710)      85,743
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         
                                      
                                      
</TABLE>
                                      4
<PAGE>
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES                           
            Consolidated Statements of Cash Flows                             
                        (In Thousands)                                         
                                                                           
                                                  For the Six Months Ended
                                                         June 30,               
                                                    1997          1996
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    3,619    $    2,147
    Adjustments to reconcile net income to
     net cash provided by
     operating activities:
      Depreciation, amortization and                              
       accretion, net                                  564           431
      Earned SIP shares                                603           250
      Appreciation in fair value of ESOP shares        290            76 
      Appreciation in fair value of SIP shares         217             -
      Provision for loan losses                        880           736
      Loans originated for sale                    (54,708)      (78,419)
      Proceeds from sale of loans                   43,856        80,122
      Provision for valuation allowance 
       for real estate owned                            57             -
      Gain on sale of real estate held
       for development                                (898)            -
      Gain on sale of real estate          
       acquired through foreclosure                   (433)          (36)
      Gain on sale of loans                           (382)         (374)
      Increase in accrued interest receivable         (755)         (432)
      Decrease (increase) in prepaid expenses 
       and other assets, net                         2,389          (784)
      Increase (decrease) in accrued expenses 
       and other liabilities, net                     (700)         1,207
                                                   --------       -------
          Net cash provided by (used in)                      
           operating activities                     (5,401)        4,924
                                                   -------       -------
                                                              
Cash flows from investing activities:                         
  Net cash of acquired institution                  11,908             -
  Proceeds from sale of mortgage-backed
   securities available for sale                     1,084             -
  Proceeds from maturities of investment
   securities held to maturity                       3,850         4,544    
  Proceeds from maturities of investment              
   securities available for sale                     2,000             -
  Purchase of investment securities               
   available for sale                              (12,019)          (30)
  Purchase of mortgage-backed             
   securities available for sale                         -       (14,157)
  Purchase of investment securities       
   held to maturity                                 (3,900)      (24,529) 
  Principal payments on mortgage-backed             
   securities available for sale                     1,548         1,700
  Principal payments on investment         
   securities held to maturity                           -            59
  Principal payments on mortgage-           
   backed securities held to maturity                2,287         3,367
  Increase in loans, net                           (16,816)     (112,955)
  Purchases of Premises and equipment                 (494)         (326)
  Proceeds from sale of real estate owned            2,360           237
  Additional investment in real estate owned            (2)          (26)       
  Proceeds from sale of real estate held for                                    
   development                                       2,102             -
  Purchase of FHLB stock                                 -        (4,032)
                                                    -------       -------
       Net cash used in 
         investing activities                       (6,092)     (146,148)
                                                    -------     ---------
                          -Continued on next page-  
                                      5
<PAGE>                          
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES                           
            Consolidated Statements of Cash Flows                             
                        (In Thousands)                                         
                                                                           
                                                  For the Six Months Ended
                                                          June 30,              
                                                    1997            1996
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:                         
    Increase in deposit accounts                    27,912        13,101
    Repayments of securities sold under 
     agreements to repurchase                      (23,548)            -
    Proceeds from securities sold under            
     agreement to repurchase                        28,685         3,016
    Repayments of Federal Home Loan         
     Bank advances                                (144,250)     (223,827)
    Proceeds from Federal Home Loan 
     Bank advances                                 140,500       345,617 
    Cash dividends paid                               (731)         (330) 
    Common stock repurchased                        (4,952)            -
    Increase in advance payments by          
     borrowers for taxes and insurance                 (42)         (115)
    Purchase of stock for Stock-Based
     Incentive Plan                                      -        (3,230)
                                                   --------       -------
                                                              
         Net cash provided by  
            financing activities                    23,574       134,232
                                                   -------       -------        
                        
         Net increase (decrease)      
          in cash and cash equivalents              12,081        (6,992)
                                                              

Cash and cash equivalents at January 1              18,278        21,225
                                                   -------       ------- 
                                                              
Cash and cash equivalents at June 30            $   30,359    $   14,233
                                                   =======       =======
                                                              
Supplemental disclosure of cash flow                          
 information:
     Payments during 
      the quarter for:

       Interest                                 $   17,798     $  12,051
                                                   =======       ======= 
                                                              
       Taxes                                    $      928     $   1,085 
                                                   =======       =======
                                                              
Supplemental schedule of non-cash                             
 investing activities:
       Transfers of mortgage       
        loans to real estate owned             $       223     $   2,631
                                                   =======       =======
                                      6                            


<PAGE>
                         BOSTONFED BANCORP INC. AND SUBSIDIARIES
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)


NOTE 1:  BASIS OF PRESENTATION

     The accompanying  unaudited  consolidated  financial statements include the
accounts of BostonFed  Bancorp,  Inc.,  ("BostonFed"  or the  "Company") and its
wholly-owned  subsidiaries,  Boston Federal  Savings Bank ("BFS") and BF Funding
Corporation  as of June 30,  1997 and  December  31, 1996 and for the three- and
six-month  periods  ended  June  30,  1997 and  1996,  and the  accounts  of its
wholly-owned  subsidiary,  Broadway  National Bank ("BNB") effective at close of
business February 7, 1997 through June 30, 1997.  Broadway Capital  Corporation,
the former holding company of Broadway  National Bank, was merged into BostonFed
effective May 28, 1997.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  In the opinion of management all necessary  adjustments,
consisting only of normal recurring  accruals necessary for a fair presentation,
have been  included.  The  results of  operations  for the three- and  six-month
periods  ended  June 30,  1997 and 1996 are not  necessarily  indicative  of the
results that may be expected for the entire fiscal year.

     In June 1996, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and  Extinguishment  of Liabilities"  ("SFAS 125"). SFAS 125
establishes, among other things, new criteria for determining whether a transfer
of  financial  assets  in  exchange  for cash or other  consideration  should be
accounted  for as a sale or as a pledge of  collateral  in a secured  borrowing.
SFAS 125 also establishes new accounting  requirements  for pledged  collateral.
SFAS 125 is effective for most  transactions  occurring  after December 31, 1996
and must be applied prospectively. However, SFAS 127, "Deferral of the Effective
Date of Certain Provisions of SFAS 125", requires the deferral of implementation
as it relates to repurchase  agreements,  dollar-rolls,  securities  lending and
similar  transactions  until the years  beginning  after  December 31, 1997. The
adoption of SFAS 125 has not had a material impact on its consolidated financial
statements.

     In  February  1997,  the FASB  issued  Statement  of  Financial  Accounting
Standards No. 128, "Earnings Per Share" ("SFAS 128"). The Statement is effective
for periods ending after December 15, 1997, and will require  restatement of all
prior-period   earnings  per  share  ("EPS")  data   presented.   The  Statement
establishes  standards  for  computing  and  presenting  EPS, and requires  dual
presentation of basic and diluted EPS on the face of the income statement. Basic
EPS is computed by  dividing  income  available  to common  stockholders  by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects  the  potential  dilution  that  could  occur  if  securities  or other
contracts to issue common stock were  exercised or converted  into common stock.
Based on its review of the Statement,  management  believes the adoption of SFAS
128 will have no material effect on diluted earnings per share of the Company.

NOTE 2:  COMMITMENTS, CONTINGENCIES AND CONTRACTS

     At June 30, 1997, the Company had commitments of $42.1 million to originate
mortgage loans and $5.4 million to purchase loans from correspondent lenders. Of
these $47.5 million  commitments,  $38.4 million were  adjustable  rate mortgage
loans at rates  ranging  from 5.625% to 10.50% and $9.1  million were fixed rate
mortgage  loans with interest  rates  ranging from 7.125% to 9.50%.  The Company
also had commitments to sell $17.7 million of mortgage loans.

     At June 30,  1997,  the  Company  was  servicing  first  mortgage  loans of
approximately  $548.5  million,  which are either  partially or  wholly-owned by
others.

                                      7
<PAGE>
NOTE 3:  LEGISLATIVE MATTERS

     The  proposed  legislation  regarding  elimination  of the  federal  thrift
charter and related  issues  remains  pending  before  Congress.  The Company is
unable to predict whether such legislation would be enacted, the extent to which
the legislation  would restrict or disrupt its operations or whether the BIF and
SAIF  funds  will  eventually  merge.  See Form 10-K for the  fiscal  year ended
December 31, 1996 for a discussion of the proposed legislation.


NOTE 4:  ACQUISITIONS (Unaudited)

     On February 7, 1997 the Company  acquired  BNB,  headquartered  in Chelsea,
Massachusetts.  The purchase  price was $22 million and was  accounted for using
the purchase method of accounting.  The results of operations include the effect
of the purchase for the 143 day period beginning February 8, 1997. In connection
with the acquisition,  the fair value of assets acquired and liabilities assumed
were as follows:

                                                 February 7, 1997
                                                 ----------------
                                                  (in thousands)
Assets acquired:
      Cash and cash equivalents                    $   5,758      
      Fed Funds                                       28,150
      Investments available for sale                  35,352     
      Investment securities                            4,646
      Loans, net                                      66,093
      Premises and equipment                           1,972
      Other assets                                     4,192
                                                   ---------
        Total assets acquired                        146,163

Liabilities assumed:
      Deposits                                       125,022
      Borrowed funds                                       -
      Other liabilities                                2,058
                                                    --------
        Total liabilities assumed                    127,080
                                                    --------
        Assets in excess of liabilities               19,083

        Cash paid to Broadway shareholders            22,000
                                                    --------
        Goodwill                                    $  2,917
                                                    ========


The  following  condensed  consolidated  pro-forma  results of the Company  were
prepared as if the  acquisition  had taken place on January 1 of the  respective
year. The pro-forma results are not necessarily indicative of the actual results
of operations had the Company's  acquisition of BNB actually occurred on January
1 of the respective year.

                                    Three Months Ended        Six Months Ended
                                    ------------------       ------------------
                                    6/30/97    6/30/96       6/30/97    6/30/96
                                    ------------------       ------------------
                                      (In thousands except per share amounts)
Total interest and dividend 
 income and total 
 non-interest income             $ 18,251     $ 15,778      $ 36,184   $ 30,385
Net income                       $  1,705     $  1,608      $  3,770   $  3,024
Net income per share               $ 0.30       $ 0.26        $ 0.65     $ 0.49

                                       8

<PAGE>
<TABLE>
                                                BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                     Average Balances and Yields / Costs
                                                                    (Unaudited)
<CAPTION>
For the quarter ended June 30:                                 1997                                       1996        
                                               -------------------------------------       ------------------------------     
                                                                            Average                                  Average
                                                 Average                     Yield/         Average                   Yield/
                                                 Balance       Interest       Cost          Balance      Interest      Cost
                                               ----------     ----------   ---------       ---------    ----------  ---------
                                                                            (Dollars in thousands)
Assets:                                                             
<S>                                             <C>            <C>          <C>           <C>             <C>           <C>
Interest-earning assets:                                                             
 Investment securities (1)                      $  87,776      $ 1,311      5.97%         $  32,664       $   493       6.04%
 Loan, net and mortgage loans held for sale (2)   757,134       14,686      7.76%           573,697        10,709       7.47%
 Mortgage-backed securities (3)                    63,400        1,073      6.77%            82,969         1,425       6.87%
                                               ----------    ---------     ---------       ---------    ----------  ---------
   Total interest-earning assets                  908,310       17,070      7.52%           689,330        12,627       7.33%
                                                             ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       41,125                                    28,326              
                                               ----------                                  ---------   
   Total assets                                 $ 949,435                                 $ 717,656              
                                               ==========                                  =========   

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                  $  63,696          470      2.95%         $  47,116           354       3.01%
 Savings accounts                                 121,141          752      2.48%            91,738           574       2.50%
 NOW accounts                                      99,670          277      1.11%            66,313           217       1.31%
 Certificate accounts                             232,641        3,263      5.61%           201,525         2,810       5.58%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total                                          517,148        4,762      3.68%           406,692         3,955       3.89%
 Borrowed Funds (4)                               297,514        4,420      5.94%           197,246         2,799       5.68%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total interest-bearing liabilities             814,662        9,182      4.51%           603,938         6,754       4.47%
                                                              ---------    ---------                    ----------  ---------  
 Non-interest-bearing liabilities                  48,437                                    21,261           
                                                ----------                                 ---------      
   Total liabilities                              863,099                                   625,199               
                                                ----------                                 ---------  
 Stockholders' equity                              86,336                                    92,457               
                                                ----------                                 ---------
   Total liabilities and                        
    stockholders' equity                        $ 949,435                                 $ 717,656
                                                ==========                                 ========= 
 Net interest rate spread (5)                                  $ 7,888      3.01%                         $ 5,873       2.86%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    3.47%                                       3.41%
                                                                           =========                                ========= 
Ratio of interest-earning assets to 
 interest-bearing liabilities                     111.50%                                   114.14%                
                                                 =========                                 =========        
<FN>
(1) Includes investment securities available for sale and held to maturity, 
    short-term investments, stock in FHLB-Boston and daily federal funds sold.
(2) Amount is net of deferred loan origination costs, construction loans in 
    process, net unearned discount on loans purchased and allowance for loan 
    losses and includes non-performing loans.
(3) Includes mortgage-backed securities available for sale and held to maturity.
(4) Interest paid on borrowed funds for the periods presented includes 
    interest expense on FNMA deposits held in escrow accounts with the 
    Company related to the Company's FNMA servicing, which, if such interest 
    expense was excluded, would result in an average cost of borrowed funds 
    of 5.93% and 5.63% for the three months ended June 30, 1997 and 
    June 30, 1996, respectively.
(5) Net interest rate spread represents the difference between the weighted 
    average yield on interest-earning assets and the weighted average cost of 
    interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of 
    average interest-earning assets.
</FN>
</TABLE>
                                       9

<PAGE>
<TABLE>
                                                BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                     Average Balances and Yields / Costs
                                                                    (Unaudited)
<CAPTION>
For the six months ended June 30:                              1997                                       1996        
                                               -------------------------------------       ------------------------------     
                                                                            Average                                  Average
                                                 Average                     Yield/         Average                   Yield/
                                                 Balance       Interest       Cost          Balance      Interest      Cost
                                               ----------     ----------   ---------       ---------    ----------  ---------
                                                                            (Dollars in thousands)
Assets:                                                             
<S>                                             <C>            <C>          <C>           <C>             <C>           <C>
Interest-earning assets:                                                             
 Investment securities (1)                      $  80,104      $ 2,391      5.97%         $  31,758       $   942       5.93%
 Loan, net and mortgage loans held for sale (2)   740,057       28,472      7.69%           548,508        20,612       7.52%
 Mortgage-backed securities (3)                    64,642        2,204      6.82%            72,089         2,458       6.82%
                                               ----------    ---------     ---------       ---------    ----------  ---------
   Total interest-earning assets                  884,803       33,067      7.47%           652,355        24,012       7.36%
                                                             ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       39,674                                    26,924              
                                               ----------                                  ---------   
   Total assets                                 $ 924,477                                 $ 679,279              
                                               ==========                                  =========   

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                  $  60,501          892      2.95%         $  47,430           712       3.00%
 Savings accounts                                 114,234        1,414      2.48%            91,678         1,144       2.50%
 NOW accounts                                      92,561          518      1.12%            64,871           458       1.41%
 Certificate accounts                             219,773        6,110      5.56%           200,851         5,644       5.62%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total                                          487,069        8,934      3.67%           404,830         7,958       3.93%
 Borrowed Funds (4)                               308,263        9,105      5.91%           161,674         4,663       5.77%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total interest-bearing liabilities             795,332       18,039      4.54%           566,504        12,621       4.46%
                                                              ---------    ---------                    ----------  ---------  
 Non-interest-bearing liabilities                  42,173                                    20,287           
                                                ----------                                 ---------      
   Total liabilities                              837,505                                   586,791               
                                                ----------                                 ---------  
 Stockholders' equity                              86,972                                    92,488               
                                                ----------                                 ---------
   Total liabilities and                        
    stockholders' equity                        $ 924,477                                 $ 679,279
                                                ==========                                 ========= 
 Net interest rate spread (5)                                  $15,028      2.93%                         $11,391       2.90%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    3.40%                                       3.49%
                                                                           =========                                ========= 
Ratio of interest-earning assets to 
 interest-bearing liabilities                     111.25%                                   115.15%                
                                                 =========                                 =========        
<FN>
(1) Includes investment securities available for sale and held to maturity, 
    short-term investments, stock in FHLB-Boston and daily federal funds sold.
(2) Amount is net of deferred loan origination costs, construction loans in 
    process, net unearned discount on loans purchased and allowance for loan 
    losses and includes non-performing loans.
(3) Includes mortgage-backed securities available for sale and held to maturity.
(4) Interest paid on borrowed funds for the periods presented includes 
    interest expense on FNMA deposits held in escrow accounts with the 
    Company related to the Company's FNMA servicing, which, if such interest 
    expense was excluded, would result in an average cost of borrowed funds 
    of 5.90% and 5.70% for the three months ended June 30, 1997 and 
    June 30, 1996, respectively.
(5) Net interest rate spread represents the difference between the weighted 
    average yield on interest-earning assets and the weighted average cost of 
    interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of 
    average interest-earning assets.
</FN>
</TABLE>

                                       10
<PAGE>

                       BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                            MANAGEMENT'S DISCUSSION AND
                           ANALYSIS OF FINANCIAL POSITION
                              AND RESULTS OF OPERATIONS


A.  GENERAL

     The Company is the holding  company  for two banking  subsidiaries,  Boston
Federal Savings Bank, a federally  chartered community savings bank and Broadway
National Bank, a nationally  chartered commercial bank. On February 7, 1997, the
Company  acquired BNB and as a result of the  acquisition,  the Company became a
bank holding  company subject to regulation by the Federal Reserve Bank ("FRB").
Boston Federal Savings Bank is regulated by the Office of Thrift Supervision and
Broadway  National  Bank is  regulated by the Office of the  Comptroller  of the
Currency.  The  Company's  principal  business  has  been  and  continues  to be
attracting  retail deposits from the general public in the areas surrounding its
branch offices and investing those deposits,  together with funds generated from
operations and borrowings, primarily in one- to four-family residential mortgage
loans.  To a lesser  extent,  the  Company  invests  in  multi-family  mortgage,
commercial real estate,  construction and land, consumer loans,  business loans,
and investment securities. The Company originates loans for investment and loans
for sale in the secondary market,  generally  retaining the servicing rights for
loans  sold.  Loan  sales are made from loans  held in the  Company's  portfolio
designated as being held for sale or originated for sale during the period.  The
Company's revenues are derived  principally from interest on its mortgage loans,
and  to  a  lesser  extent,   interest  and  dividends  on  its  investment  and
mortgage-backed  securities,  fees  and loan  servicing  income.  The  Company's
primary sources of funds are deposits,  principal and interest payments on loans
and  mortgage-backed  securities,  FHLB  advances,   repurchase  agreements  and
proceeds from the sale of loans.  Since the acquisition  was consummated  during
the first  quarter,  the  financial  statements of the Company and the following
discussion  regarding the Company's financial condition at June 30, 1997 and the
results of operations for the three- and six-months ended June 30, 1997 includes
information  and data of BNB from  February 8, 1997 through  June 30, 1997.  The
financial  statements  of the  Company at  December  31, 1996 and the results of
operations  for the three- and  six-months  ended June 30,  1996 do not  include
information and data related to BNB.


B.  FINANCIAL POSITION

     Total  assets at June 30,  1997 were  $975.9  million,  compared  to $820.6
million at December  31,  1996,  an increase of $155.3  million or 18.9%.  Asset
growth was primarily  attributable  to the acquisition of BNB which was recorded
using the purchase  method of accounting.  The major  components of asset growth
included  investment  securities  available  for sale which  increased  to $46.5
million at June 30, 1997 from $1.1 million at December 31, 1996 due primarily to
the addition of BNB's  investment  portfolio.  Loans,  net of allowance for loan
losses increased by $81.8 million, or 12.1%, from a balance of $676.7 million at
December 31, 1996 to $758.5 million at June 30, 1997,  also primarily due to the
acquisition  of  BNB's  portfolio.  Excluding  BNB's  portfolio,  loans,  net of
allowance  for  loan  losses   increased  by  $15.7,  due  mostly  to  increased
originations  of  adjustable-rate  mortgages.   Mortgage  loans  held  for  sale
increased  from $4.0 million at year-end  1996 to $15.2 million at June 30, 1997
due to increased accumulation of mortgage loans held for sale during the current
quarter.  Deposit accounts  increased by $152.9 million from a balance of $428.8
million at December 31, 1996 to a balance of $581.8 million at June 30, 1997. Of
the increase, $104.5 million is attributable to the acquisition of BNB while the
balance  represents growth in BFS' deposit balances,  $35.0 million of which was
obtained from wholesale CD markets. Federal Home Loan Bank advances were reduced
by $3.7 million,  to a balance of $292.8 million at June 30, 1997 from a balance
of $296.5  million at December 31, 1996.  This reduction was more than offset by
an increase in other borrowed money  (repurchase  agreements)  which amounted to
$8.6 million at June 30, 1997, compared to $3.5 million at December 31, 1996.

C.  ASSET/LIABILITY MANAGEMENT

     The  principal  objective of the Company's  interest  rate risk  management
function is to evaluate the interest rate risk included in certain balance sheet
accounts,  determine the level of risk appropriate given the Company's  business
strategy,   operating  environment,   capital  and  liquidity  requirements  and
performance objectives, and manage the risk consistent with Board of Directors'

                                      11

<PAGE>

approved  guidelines.  Through such management,  the Company seeks to reduce the
vulnerability  of its  operations  to changes in  interest  rates.  The  Company
monitors  its  interest  rate  risk  as  such  risk  relates  to  its  operating
strategies.  The Company's Board of Directors has established an Asset/Liability
Committee of Management  which is responsible for reviewing the Company's asset/
liability policies and interest rate risk position. The Committee reports trends
and interest rate risk position to the Board of Directors on a quarterly  basis.
The Board has established certain risk tolerance levels within which the Company
can operate.  The extent and  direction of the movement of interest  rates is an
uncertainty that could have a negative impact on the earnings of the Company.

     In recent  years,  the Company has utilized  the  following  strategies  to
manage  interest rate risk: (1)  emphasizing  the  origination  and retention of
adjustable-rate,  one-  to  four-family  mortgage  loans;  (2)  selling  in  the
secondary  market  substantially  all fixed-rate  mortgage loans originated with
terms  greater than 10 years while  generally  retaining  the  servicing  rights
thereof;  (3) primarily  investing in investment  securities or mortgage- backed
securities  with  adjustable  interest  rates;  and (4) attempting to reduce the
overall  interest rate  sensitivity of  liabilities  by emphasizing  longer-term
deposits and utilizing FHLB advances to replace rate sensitive deposits.

     The matching of assets and  liabilities  may be analyzed by  examining  the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring the Company's  interest rate sensitivity "gap." An asset or liability
is said to be interest rate  sensitive  within a specific time period if it will
mature or reprice within that time period.  The interest rate sensitivity gap is
defined as the difference between the amount of interest-earning assets maturing
or repricing  within a specific  time period and the amount of  interest-bearing
liabilities  maturing or repricing  within that time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of
interest  rate  sensitive  liabilities.  A gap is  considered  negative when the
amount of interest  rate  sensitive  liabilities  exceeds the amount of interest
rate sensitive assets. Accordingly, during a period of rising interest rates, an
institution with a positive gap position would be in a better position to invest
in higher  yielding assets which,  consequently,  may result in the yield on its
assets  increasing  at a pace more closely  matching the increase in the cost of
its interest-bearing  liabilities than if it had a negative gap. During a period
of falling interest rates, an institution with a positive gap would tend to have
its  assets  repricing  at a faster  rate than one with a  negative  gap  which,
consequently, may tend to restrain the growth of its net interest income.

     Certain  shortcomings are inherent in gap analysis.  For example,  although
certain  assets  and  liabilities  may have  similar  maturities  or  periods to
repricing,  they may react in  different  degrees to changes in market  interest
rates.  Also, the interest rates on certain types of assets and  liabilities may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
assets,  such as adjustable-rate  loans, have features which restrict changes in
interest  rates  both on a short-  term  basis  and over the life of the  asset.
Further,  in the  event of  change  in  interest  rates,  prepayment  and  early
withdrawal  levels  would likely  deviate  significantly  from those  assumed in
calculating the table.  Finally,  the ability of many borrowers to service their
adjustable-rate loans may decrease in the event of an interest rate increase.

     At June 30, 1997,  the  Company's one year gap was a positive 9.0% of total
assets,  compared to a positive  5.3% of total assets at December 31, 1996.  The
change in the gap was caused by the addition of BNB which,  like most commercial
banks, has a larger portion of its assets, compared to liabilities, repricing in
the one year horizon.

     The Company's  interest rate  sensitivity  is also  monitored by management
through the use of a model which internally generates estimates of the change in
net portfolio value (NPV") over a range of interest rate change  scenarios.  NPV
is the  present  value of  expected  cash flows from  assets,  liabilities,  and
off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is
defined as the NPV in that scenario divided by the market value of assets in the
same scenario.

                                      12
<PAGE>


     As in the case with the gap analysis,  certain shortcomings are inherent in
the  methodology  used in the above  interest rate risk  measurements.  Modeling
changes in NPV  require the making of certain  assumptions  which may or may not
reflect the manner in which actual yields and costs respond to changes in market
interest rates. In this regard,  the NPV model used assumes that the composition
of the  Company's  interest  sensitive  assets and  liabilities  existing at the
beginning of a period  remains  constant over the period being measured and also
assumes that a particular change in interest rates is reflected uniformly across
the yield curve  regardless of the duration to maturity or repricing of specific
assets and  liabilities.  Accordingly,  although  the NPV  measurements  and net
interest income models provide an indication of the Company's interest rate risk
exposure at a particular  point in time, such  measurements  are not intended to
and do not  provide a  precise  forecast  of the  effect  of  changes  in market
interest rates on the Company's net interest  income and will differ from actual
results.


D.  LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary sources of funds are deposits, principal and interest
payments on loans,  mortgage-backed  and related securities and loan sales, FHLB
advances and repurchase agreements.  While maturities and scheduled amortization
of  loans  are  predictable  sources  of  funds,   deposit  flows  and  mortgage
prepayments  are  greatly   influenced  by  general  interest  rates,   economic
conditions  and  competition.  However,  BFS has  maintained  in  excess  of the
required minimum levels of liquid assets as defined by the OTS regulations. This
requirement,  which may be varied at the  direction  of the OTS  depending  upon
economic  conditions and deposit flows,  is based upon a percentage of the BFS's
deposits and short-term  borrowings.  BFS's current required  liquidity ratio is
5%. At June 30, 1997 and  December 31, 1996 BFS's  liquidity  ratio was 6.0% and
8.0% respectively.  Management has maintained  liquidity as close as possible to
the minimum  requirement  so that it may invest any excess  liquidity  in higher
yielding  interest-earning  assets or use such funds to repay  higher  cost FHLB
advances.

     The  Company's  most  liquid  assets are cash,  daily  federal  funds sold,
Federal Home Loan Bank overnight deposits,  short-term investments and loans and
investments  available for sale. The levels of these assets are dependent on the
Company's  operating,  financing,  lending and investing  activities  during any
given period. At June 30, 1997, BFS' cash, short-term  investments and loans and
investment  securities available for sale totaled $36.5 million or 4.4% of BFS's
total assets.  Additional  investments  were available which qualified for BFS's
regulatory  liquidity  requirements.  Under OCC  regulations,  BNB does not have
specific  liquidity  requirements,  but must  maintain a reasonable  and prudent
level in order to operate in a safe and sound manner.

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including  FHLB  advances.  At June 30, 1997, BFS had $292.8 million in
advances  outstanding  from the FHLB.  The Company  also  borrowed  $8.6 million
through  repurchase  agreements.  The Company generally does not pay the highest
deposit  rates in its market and  accordingly  utilizes  alternative  sources of
funds such as FHLB advances and  repurchase  agreements to supplement  cash flow
needs.

     At June 30, 1997, the Company had commitments to originate loans and unused
outstanding  lines of credit  totalling $96.8 million.  The Company  anticipates
that  it  will  have  sufficient  funds  available  to  meet  its  current  loan
origination  commitments.  Certificate accounts which are scheduled to mature in
less than one year from June 30, 1997, totalled $139.0 million.

     At June 30, 1997,  the  consolidated  stockholders'  equity to total assets
ratio was 8.8%.  As of June 30, 1997,  the Company,  BFS and BNB exceeded all of
their  regulatory  capital  requirements.  BFS's  tangible,  core and risk-based
capital ratios were 5.7%,  5.7% and 11.6%,  respectively.  BNB's tier 1 leverage
and  risk-based  capital  ratios  were  14.4%  and  31.79%  respectively,  total
risk-based capital was 32.9%.  Additionally,  BFS' retained earnings at June 30,
1997 includes  approximately $13.2 million of tax bad debt reserves for which no
federal income tax liability has been  recognized.  Under the Small Business Job
Protection   Act  of  1996  (the   "1996   Act")  if  BFS  makes   "non-dividend
distributions"  to the Company,  such  distributions  will be considered to have
been  made  from  BFS's   unrecaptured  tax  bad  debt  reserves.   Non-dividend
distributions  include  distributions  in excess of BFS' current and accumulated
earnings  and  profits,   as  calculated   for  federal   income  tax  purposes,
distributions in redemption of stock,  and  distributions in partial or complete
liquidation.  Dividends  paid out of BFS's current or  accumulated  earnings and
profits are not included in BFS's income.
 
                                       13

<PAGE>
E.  COMPARISON OF THREE- AND SIX-MONTHS ENDED JUNE 30, 1997 AND 1996

   General

     Earnings for the quarter ended June 30, 1997 were $1.7 million, or $.30 per
share, compared to $1.1 million, or $.18 per share for the comparable quarter of
1996. Earnings for the six-months ended June 30, 1997 were $3.6 million compared
to  $2.1  million  for  the  six-months  ended  June  30,  1996.  A  significant
contribution  to the increased  earnings for the six-months  ended June 30, 1997
was due to the real estate  operations  income of $1.1  million  (before  income
taxes), compared to income of $6,000 (before income taxes) during the comparable
period last year. The real estate operations income resulted  primarily from the
sale of a land sub-division  owned by a subsidiary of BFS. The improved earnings
increased the return on average assets to .78% during the six-months  ended June
30,  1997  compared  to a return on  average  assets of .63% for the  comparable
period last year. The return on average  stockholders' equity increased to 8.32%
during the six-months ended June 30, 1997,  compared to 4.64% for the six-months
ended  June 30,  1996.  Comments  regarding  the  components  of net  income are
detailed in the following paragraphs.


   Interest Income

     Total interest income on interest-earning assets for the quarter ended June
30, 1997 increased by $4.4 million, or 34.9%, to $17.1 million,  compared to the
quarter  ended June 30,  1996.  The  increase in interest  income was  primarily
attributable to a $219.0 million increase in average interest-earning assets and
a  19  basis  point  increase  in  the  average  yield.  The  average  yield  on
interest-earning  assets  increased to 7.52% for the three months ended June 30,
1997 from 7.33% for the three months ended June 30, 1996.  For the first half of
1997,  total interest income was $33.1  million,  compared  to $24.0 million for
the  same  period  in 1996.  The  major  reason  for the  increase  was also the
increased average balances which were $884.8 million during the six months ended
June 30, 1997,  compared to $652.4 million during the comparable period in 1996.
Average  yields also increased by 11 basis points during the first half of 1997,
compared to the first half of 1996.

     Interest  income  on  loans,  net,  for the  quarter  ended  June 30,  1997
increased by $4.0 million,  or 37.4%, to $14.7 million compared to $10.7 million
for the same quarter in 1996. On a year to date basis, interest income on loans,
net,  increased  $7.9  million to $28.5  million from the $20.6  million  earned
during the first half of 1996. The increase in interest income from loans,  net,
for the quarter and six months ended June 30, 1997, compared to the same periods
last year, was primarily attributable to increases in average balances of $183.4
million and $191.5  million,  respectively.  Additionally,  the average yield on
loans,  net  increased by 29 basis points to 7.76% during the quarter ended June
30, 1997, compared to 7.47% during the quarter ended June 30, 1996. On a year to
date basis,  the yield on loans,  net,  increased  from 7.52% for the six months
ended June 30, 1996, compared to 7.69% during the current year period.  Interest
on  mortgage-backed  securities for the quarter ended June 30, 1997 decreased by
$352,000 to $1.1 million, compared to $1.4 million for the same quarter in 1996.
This  decrease in income was due  primarily to the $19.6  million  lower average
balance  during the quarter  ended June 30, 1997,  compared to the quarter ended
June 30, 1996.  Additionally,  the average yield declined by ten basis points to
an average of 6.77% during the quarter ended June 30, 1997, compared to the same
quarter  last  year.  On a year  to  date  basis,  interest  on  mortgage-backed
securities was $2.2 million,  compared to last year's comparable period total of
$2.5 million.  Average yields did not change.  Interest  income from  investment
securities  was $1.3  million  during the second  quarter of 1997,  compared  to
$493,000 for the  comparable  quarter in 1996.  The average  yield on investment
securities  declined  by seven  basis  points  due to BNB's  portfolio  which is
comprised mostly of lower yielding U.S. Treasury securities. The average balance
increased  by  $55.1  million  to  an  average  of  $87.8  million   during  the
three-months ending June 30, 1997. On a year to date basis, interest income from
investment securities was $2.4 million,  compared to $942,000 for the six months
ended June 30, 1996.  The average  balance of  investment  securities  was $80.1
million for the six months  ended June 30, 1997,  compared to $31.8  million for
the  comparable  period  last  year.  A majority  of the  balance  increases  in
interest-earning  assets was the  result of the  Company's  acquisition  of BNB,
effective the close of business on February 7, 1997.

                                      14
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended June 30, 1997 increased by $2.4 million or 35.3%, to $9.2 million compared
to the quarter  ended June 30, 1996.  The  increase in interest  expense for the
quarter ended June 30, 1997 was due  primarily to an increase of $210.7  million
in the average  balance of  interest-bearing  liabilities  which averaged $814.7
million  during the quarter,  compared to an average  balance of $603.9  million
during the quarter ended June 30, 1996. A 4 basis point  increase in the average
cost  of  interest-bearing  liabilities  also  contributed  to the  increase  in
interest  expense  during the second  quarter of 1997,  compared  to the quarter
ended June 30, 1996. The average cost of interest-bearing  liabilities increased
to 4.51%  during the  quarter  ended June 30,  1997,  compared to 4.47% for last
year's  comparable  quarter.  On a year  to  date  basis,  interest  expense  on
interest-bearing  liabilities totaled $18.0 million,  compared to last year's to
date total of $12.6 million,  a 42.9%  increase.  The increase was caused by the
combined  effects of an eight basis point  increase in the average cost of funds
as a result of borrowing  funds for longer average terms and higher costs and an
increase of $228.8 million in average  balances during the six months ended June
30, 1997, compared to the prior year period.

     Interest expense on deposit accounts was $4.8 million for the quarter ended
June 30, 1997,  an increase of $.8 million from the $4.0 million for the quarter
ended June 30,  1996.  The  increase in the  expense  was due to higher  average
deposit  account  balances of $110.5  million,  offset by a decrease of 21 basis
points in the  average  cost of funds  during the quarter  ended June 30,  1997,
compared  to the quarter  ended June 30,  1996.  The average  balance of deposit
accounts  increased  from $406.7 million for the quarter ending June 30, 1996 to
an average  balance of $517.1  million  for the quarter  ending  June 30,  1997,
mostly  due to the  acquisition  of BNB and the  acquisition  of $35  million of
wholesale  brokered  certificates of deposit for terms of three years.  Interest
expense on borrowed funds increased from $2.8 million for the quarter ended June
30, 1996 to $4.4 million for the current  quarter.  The average cost of borrowed
funds  increased from 5.68% during the quarter ended June 30, 1996 to an average
of 5.94% during the current quarter.  The average balances increased from $197.2
million  during  the  second  quarter  of 1996 to an  average  balance of $297.5
million during the second quarter of 1997.

Net Interest Income

     Net interest income  increased by $2.0 million during the second quarter of
1997,  compared to the same quarter last year,  due primarily to asset growth by
BFS and the  acquisition  of BNB. The net interest  rate spread of 3.01% for the
quarter  ended June 30, 1997 was 15 basis  points  higher than the 2.86% for the
comparable  period last year. The primary reasons for the improvement in the net
interest rate spread are the addition of BNB, as most commercial banks typically
earn a wider spread and an improvement in BFS' net interest rate spread. The net
interest  margin was similarly  impacted and improved from 3.41% for the quarter
ended June 30, 1996 to 3.47% for the second  quarter of 1997.  On a year to date
basis the net interest rate spread improved by three basis points.  However, the
net interest  margin  declined from 3.49% for the six months ended June 30, 1996
to 3.40% for the six months ended June 30, 1997 due primarily to the utilization
of capital to repurchase the Company's stock.

Provision for Loan Losses

     The  Company's  provision  for loan losses  amounted  to  $455,000  for the
quarter ended June 30, 1997,  compared to the $298,000  loan loss  provision for
the comparable quarter last year. On a year to date basis through June 30, 1997,
the provision for loan losses amounted to $880,000, compared to $736,000 for the
comparable  period last year. The allowance for loan losses  increased from $4.4
million  at  December  31,  1996  to  $5.8  million  at  June  30,  1997,  after
consolidation  of BNB's  allowance  for loan  losses of  $605,000 at the time of
acquisition and the year to date provision, net of charge-offs and recoveries.

     The Company  establishes  provisions for loan losses,  which are charged to
operations,  in order to maintain the allowance for loan losses at a level which
is deemed to be  appropriate  based  upon  management's  assessment  of the risk
inherent in its loan portfolio in light of current economic  conditions,  actual
loss  experience,  industry  trends and other  factors which may affect the real
estate  values in the  Company's  market  area.  While  management  believes the
current allowance for loan losses is adequate,  actual losses are dependent upon
future events,  and as such, future provisions for loan losses may be necessary.
As part of the Company's determination of the adequacy of the allowance for loan
losses, the Company monitors its loan portfolio through its Asset Classification
Committee.   The  Committee   classifies   loans   depending  on  risk  of  loss
characteristics.  The most severe classification before a charge-off is required
is  "sub-standard."  At June 30, 1997,  the Company  classified  $4.9 million of
loans ($4.1 million of BFS and $.8 million of BNB) as  sub-standard  compared to
$3.8  million  (BFS  only)  at  December  31,  1996.  The  Asset  Classification
Committee,  which meets quarterly,  determines the adequacy of the allowance for
loan  losses  through  ongoing  analysis  of  historical  loss  experience,  the
composition of the loan portfolios,  delinquency levels,  underlying  collateral
values and cash flow values.  Utilizing these  procedures,  management  believes
that the  allowance  for loan losses at June 30, 1997 was  sufficient to provide
for anticipated losses inherent in the loan portfolio.

     The Company's  allowance for loan losses at June 30, 1997 was $5.8 million,
which  represented  385.9%  of  non-performing  loans  or .74% of  total  loans,
compared to $4.4 million at December 31, 1996, or 293.0% of non-performing loans
and .64% of total loans.

                                      15

<PAGE>

     Non-performing  loans at June 30, 1997 amounted to $1.5 million or .19% of
total loans,  compared to $1.5 million,  or .22% of total loans, at December 31,
1996.

     The amount of interest income on non-performing  loans that would have been
recorded had these loans been current in accordance  with their original  terms,
was $91,000 and $118,000 for the six-month periods ended June 30, 1997 and 1996,
respectively. The amount of interest income that was recorded on these loans was
$17,000  and  $18,000 for the  six-month  periods  ended June 30, 1997 and 1996,
respectively.

     At June 30,  1997,  loans  characterized  as impaired,  (which  include all
non-performing  loans and some sub-standard  assets),  pursuant to SFAS No. 114,
"Accounting  by Creditors for  Impairment of a Loan",  ("SFAS 114") and SFAS No.
118,  "Accounting by Creditors for Impairment of a Loan--Income  Recognition and
Disclosure",  ("SFAS 118") totaled $4.5 million.  All of the impaired loans have
been  measured  using  the  fair  value of the  collateral  method.  During  the
six-months ended June 30, 1997, the average recorded value of impaired loans was
$4.5 million,  $150,000  interest income was recognized and $241,000 of interest
income would have been recognized under the loans' original terms.

     At June 30, 1997, the Company had $909,000 in real estate owned compared to
$2.7 million at December 31,  1996.  Further,  at June 30, 1997 the Company also
had restructured  real estate loans amounting to $2.6 million for which interest
is being recorded in accordance with the loans'  restructured  terms. The amount
of the interest income lost on these  restructured  loans is not material to the
Company's financial statements.


Non-Interest Income

     Total  non-interest  income in the  second  quarter  of 1997  increased  by
$325,000,  or 38.0%,  to $1.2 million  from  $856,000 for the three months ended
June 30, 1996 due to a $225,000 increase in other non-interest income (primarily
transaction  account fees) and a $132,000 increase in gains on the sale of loans
resulting from favorable  market  conditions,  partially  offset by a decline of
$32,000 in loan processing fees.

Non-Interest Expense

     Total non-interest  expense was $5.5 million for the quarter ended June 30,
1997 compared to $4.5 million for the comparable  quarter in 1996.  Compensation
and benefits  increased by $927,000 from $2.4 million for the quarter ended June
30, 1996 to $3.4 million for the quarter ended June 30, 1997.  The major reasons
for this  increase were due to the addition of BNB's  compensation  and benefits
expense  amounting  to $518,000,  increased  expenses  for the  Company's  ESOP,
Stock-Based  Incentive  Plan  ("SIP"), and Short Term  Incentive  Plan ("STIP"),
which increased by $161,000, $109,000 and 113,000,  respectively.  The increased
expenses  for the ESOP and SIP were due to  increases in the market value of the
Company's  stock.  Such increases are credited to Additional  Paid in Capital in
accordance  with generally  accepted  accounting  principles.  On a year to date
basis,  total non-interest  expense was $10.0 million,  compared to last year to
date total of $8.8 million.  Compensation and benefits increased to $6.6 million
for the six  months  ended  June 30,  1997,  compared  to $4.6  million  for the
comparable  period last year. As with the current quarter,  the year to date was
similarly  impacted by the inclusion of $861,000 of compensation and benefits of
BNB since  February 8, 1997 and increased  expenses for the ESOP,  SIP and STIP.
Federal deposit  insurance  premiums  declined by $336,000 during the six months
ended June 30, 1997, compared to the six months ended June 30, 1996 due to lower
insurance  premiums  as a  result  of the  Savings  Association  Insurance  Fund
recapitalization  in the third quarter of 1996. Real estate operations  provided
$1.1  million of income  during the  current  year to date  period,  compared to
income of $6,000  during the  comparable  period last year.  The current year to
date real estate  operations  income resulted  primarily from the sale of a land
sub-division  owned by a subsidiary  of BFS as well as recoveries on the sale of
real estate owned. Occupancy and equipment and other expenses were higher during
the current  year to date,  compared to the prior year to date due  primarily to
the  inclusion of such  expenses from BNB from February 8, 1997 through June 30,
1997.

Income Tax Expense

     Income tax expense  nearly  doubled in the  quarter  ended June 30, 1997 to
$1.4  million  compared to the income tax  expense of  $774,000  for the quarter
ended June 30, 1996.  The increase was due almost  entirely to increased  income
before  tax.  The  effective  income tax rate was 45% for the  current  quarter,
compared to 41% for last year's  second  quarter.  The increase in the effective
rate is primarily due to the  non-deductibility  of the appreciated value of the
allocated  ESOP  shares.  On a year to date  basis,  income tax expense was $2.7
million, for an effective rate of 43%, compared to $1.5 million for an effective
rate of 41% for six months ended June 30, 1996. As with the current quarter, the
reasons for the  increased  tax expense  and  effective  tax rate during the six
months ending June 30, 1997 were  primarily  higher income before income tax and
the effect of the allocated ESOP share primarily.

                                      16

<PAGE>

                         PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

     The Company is not involved in any pending material legal proceedings other
than routine  legal  proceedings  occurring in the ordinary  course of business.
Such routine legal proceedings,  in the aggregate, are believed by management to
be immaterial to the Company's financial condition or results of operations.


Item 2.  Changes in Securities


       Not applicable


Item 3.  Defaults Upon Senior Securities


       Not applicable


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

(A)  The Annual Meeting of Stockholders of the Corporation was held on 
      April 28, 1997.

(B) Directors elected at Annual Meeting:

(1) Election of Directors

      Nominee                     Total Votes For     Total Votes Withheld

      Edward P. Callahan          4,856,469                51,288
      Richard J. Dennis, Sr.      4,858,735                49,022
      Charles R. Kent             4,858,884                48,873

(2) Continuing Directors          Year Term Expires

      David P. Conley                  1999
      David F. Holland                 1998
      W. Robert Mill                   1999
      Irwin W. Sizer                   1998

(C) Other Matters submitted to a vote of the Stockholders of the Corporation:

(1) Proposal to approve the establishment of the 1997 Stock Option Plan

Votes For            Votes Against            Abstentions
4,680,341            206,881                  21,522

(2) Selection of Independent Auditors

Votes For            Votes Against            Abstentions
4,875,375            17,401                   14,981

                                      17

<PAGE>

Item 5.  Other Information

       Not applicable


Item 6.  Exhibits and Reports on Form 8-K
    
    (a) Exhibits
          3.1  Certificate of Incorporation*
          3.2  Bylaws*
          27   Financial Data Schedule

    (b) On April 18, 1997, a Form 8-K/A dated February 7, 1997 was filed which 
        included financial statements of business acquired and pro forma
        financial information.

* Incorporated herein to the Company's Registration Statement on form S-1
  originally filed on July 21, 1995
 
                                      18

<PAGE>

                                  SIGNATURES



     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the

registrant  has duly  caused  this  report  to be  signed  on its  behalf by the

undersigned thereunto duly authorized.


                                           BOSTONFED BANCORP, INC.
                                                  (Registrant)


Date:  August 13, 1997                             By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  August 13, 1997                             By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Senior Vice President,
                                                 Chief Financial Officer,
                                                     Treasurer and
                                                  Corporate Secretary

                                      19