FORM 10-Q

                                  UNITED STATES
                       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:               September 30, 1999
                            __________________________

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)

                                  (781) 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 October 31, 1999:  5,009,891.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

            Consolidated Balance Sheets as of
            September 30, 1999 (unaudited) and December 31, 1998               2

            Consolidated Statements of Operations for the Three
            and Nine Months ended September 30, 1999 and 1998 (unaudited)      3

            Consolidated Statement of Changes in Stockholders'
            Equity for the Nine Months ended
            September 30, 1999 (unaudited)                                     4

            Consolidated Statements of Cash Flows for the
            Nine Months ended September 30, 1999 and 1998 (unaudited)      5 - 6

            Notes to Consolidated Financial Statements                     7 - 9

 Item 2     Average Balances and Yield / Costs                           10 - 11

            Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          12 - 18


 Item 3.    Quantitative and Qualitative Disclosures About
            Market Risk                                                  19 - 20





PART II _ OTHER INFORMATION
___________________________

 Item 1.    Legal Proceedings                                                 21

 Item 2.    Changes in Securities and Use of Proceeds                         21

 Item 3.    Defaults Upon Senior Securities                                   21

 Item 4.    Submission of Matters to a Vote of Security Holders               21

 Item 5.    Other Information                                                 21

 Item 6.    Exhibits and Reports on Form 8-K                                  21

 Signature Page                                                               22


                                       1

<PAGE>
                    BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                          ---------------------------
                                (In Thousands)

                                                 September 30,   December 31,
                                                      1999          1998
                                                  -----------  --------------
Assets                                           (Unaudited)
------------
Cash and cash equivalents                            $ 50,115   $  37,201
Investment securities available for sale
  (amortized cost of $59,017 and $48,837 at
  September 30, 1999 and December 31, 1998,
  respectively)                                        59,985      49,137
Investment securities held to maturity (fair
  value of $ 1,992 and $7,371 at September 30,
  1999 and December 31, 1998)                           2,304       7,302
Mortgage-backed securities available for sale
  (amortized cost of $17,728 and $20,935 at
  September 30, 1999 and December 31, 1998)            17,479      21,029
Mortgage-backed securities held to maturity (fair
  value of $15,063 and $23,333 at September 30,
  1999 and December 31, 1998)                          14,559      22,913
Mortgage loans held for sale                           16,414      17,008
Loans, net of allowance for loan losses of $10,081
  and $8,500 at September 30, 1999 and December 31,   997,508     943,662
  1998)
Accrued interest receivable                             6,243       5,549
Stock in FHLB of Boston and Federal Reserve Bank       20,311      17,802
Premises and equipment                                  6,715       6,614
Real estate owned                                         233          47
Other assets                                           32,511      10,859
                                                     --------    --------
            Total assets                           $1,224,377  $1,139,123
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $735,968    $707,144
 Federal Home Loan Bank advances                      390,500     337,500
 Advance payments by borrowers for taxes
  and insurance                                         3,643       3,405
 Other liabilities                                     10,291       9,280
                                                      -------     -------
            Total liabilities                       1,140,402   1,057,329
                                                     -------     -------
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 (5,020,726 and
  5,112,441 shares outstanding at September 30, 1999
   and December 31, 1998, respectively)                    66          66
 Additional paid-in capital                            66,860      66,417
 Retained earnings                                     48,827      44,256
 Accumulated other comprehensive income (loss)         (1,107)        312
  Less Treasury Stock, (1,568,891 shares and
   1,477,176 shares at September 30, 1999
    and December 31, 1998, respectively), at cost     (27,822)    (26,128)
  Less unallocated ESOP shares                         (2,418)     (2,418)
  Less unearned Stock-Based Incentive Plan               (431)       (711)
                                                      --------    --------
            Total stockholders' equity                 83,975      81,794
                                                      --------    --------
Total liabilities and stockholders' equity         $1,224,377  $1,139,123
                                                      ========    ========

See accompanying condensed notes to consolidated financial statements.
                                       2
<PAGE>
                    BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                     Consolidated Statements of Operations
               (Dollars In Thousands, except per share amount)

                                 Three Months Ended        Nine Months Ended
                                 ------------------        ------------------
                                 9/30/99    9/30/98        9/30/99    9/30/98
                                 ------------------        ------------------

                                     (Unaudited)               (Unaudited)

Interest income:
 Loans                          $ 18,543  $  16,876       $ 54,152  $  48,772
 Mortgage-backed securities          499        781          1,682      2,578
 Investment securities             1,393      1,397          3,964      4,198
                                 -------    -------        -------    -------
   Total interest income          20,435     19,054         59,798     55,548
                                 -------    -------        -------    -------
Interest expense:
 Deposit accounts                  6,490      6,170         19,046     17,786
 Borrowed funds                    5,474      4,887         15,776     13,670
                                 -------    -------        -------    -------
   Total interest expense         11,964     11,057         34,822     31,456
                                 -------    -------        -------    -------
Net interest income                8,471      7,997         24,976     24,092
Provision for loan losses            390        442          1,250      1,187
                                 -------    -------        -------    -------
 Net interest
   income after provision          8,081      7,555         23,726     22,905
Non-interest income:
 Loan processing and servicing
 fees                                158        191            437        531
 Gain on sale of loans               541        704          2,237      2,130
 Deposit service fees                445        419          1,293      1,242
 Other                               548        192          1,002        593
                                 -------    -------        -------    -------
Total non-interest income          1,692      1,506          4,969      4,496
                                 -------    -------        -------    -------
Non-interest expense:
 Compensation and benefits         3,759      3,404         11,060     10,312
 Occupancy and equipment             831        808          2,432      2,392
 Federal deposit insurance
  premiums                            94         86            277        245
 Other                             1,573      1,564          4,826      4,986
                                 -------    -------        -------    -------
  Total non-interest expense       6,257      5,862         18,595     17,935
                                 -------    -------        -------    -------
Income before income taxes         3,516      3,199         10,100      9,466
Income tax expense                 1,254      1,281          3,807      3,856
                                 -------    -------        -------    -------
Net income                      $  2,262   $  1,918       $  6,293   $  5,610
                                 =======    =======        =======    =======

Basic earnings per share           $0.47      $0.38          $1.30      $1.09
Diluted earnings
  per share                        $0.45      $0.36          $1.25      $1.04
Basic weighted average shares
  outstanding                  4,820,252  5,099,921      4,827,927  5,124,218
Common stock equivalents
  due to dilutive effect
  of stock options               166,023    227,953        180,357    272,122
Diluted total weighted average
  shares outstanding           4,986,275  5,327,874      5,008,284  5,396,340

See accompanying condensed notes to consolidated financial statements.
                                       3
<PAGE>
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                Nine Months Ended September 30, 1999
                                         (In Thousands)
                                          (Unaudited)
                                                                          Accumulated                 Unearned
                                                                            other                     Stock-
                                        Additional                      Comprehensive  Unallocated    Based        Total
                                Common    paid-in   Retained  Treasury      income        ESOP      Incentive   stockholders'
                                stock     capital   earnings    Stock       (loss)       shares        Plan        equity
                                ------   --------  ---------   --------   ----------   -----------  ----------  ------------
<S>                             <C>       <C>        <C>       <C>            <C>         <C>          <C>          <C>
Balance at December 31, 1998    $ 66      66,417     44,256    (26,128)       312         (2,418)      (711)        81,794

Net income                       - -         - -      6,293       - -          - -           - -        - -          6,293

Change in net unrealized gain/(loss)
 on investments available for sale
 (net of tax benefit of $235)    - -         - -        - -       - -        (1,419)         - -        - -         (1,419)
                                                                                                                    --------
Total comprehensive income       - -         - -        - -       - -          - -           - -        - -          4,874

Cash dividends declared and
 paid                            - -         - -     (1,722)      - -          - -           - -        - -         (1,722)

Common Stock repurchased
 (63,570 shares at an average
  price of $18.47 per share)     - -         - -        - -     (1,694)        - -           - -        - -         (1,694)

Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         280           280

Appreciation in fair value of
  shares charged to expense for
  compensation plans             - -         443        - -       - -          - -           - -        - -            443

                               -------    -------   --------   ---------    ---------      --------   ---------    --------
Balance at September 30, 1999   $ 66       66,860     48,827    (27,822)      (1,107)       (2,418)     (431)        83,975
                               -------    -------   --------   ---------    ---------      --------   ---------    --------

See accompanying condensed notes to consolidated financial statements.
                                       4
</TABLE>
<PAGE>


           BOSTONFED BANCORP, INC. AND SUBSIDIARIES
            Consolidated Statements of Cash Flows
                        (In Thousands)

                                                 For the Nine Months Ended
                                                       September 30,
                                                    1999          1998
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    6,293    $    5,610
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and
       accretion, net                                  966         1,010
      Earned SIP shares                                280           468
      Appreciation in fair value of shares
       charged to expense for compensation plans       443           670
      Provision for loan losses                      1,250         1,187
      Loans originated for sale                   (270,698)     (258,979)
      Proceeds from sale of loans                  273,529       243,514
      Gain on sale of real estate
       acquired through foreclosure                      -           (35)
      Gain on sale of loans                         (2,237)       (2,130)
      Increase in accrued interest receivable         (694)         (822)
      Increase in prepaid expenses
       and other assets, net                        (1,811)         (343)
      Increase in accrued expenses and
       other liabilities, net                        1,609         2,299
                                                   --------       -------
          Net cash provided by
           operating activities                      8,930        (7,551)
                                                   --------       -------

Cash flows from investing activities:
  Proceeds from maturities of investment
   securities held to maturity                       5,000        12,350
  Proceeds from maturities of investment
   securities available for sale                    13,000         5,000
  Purchase of investment securities
   available for sale                              (26,063)      (24,993)
  Purchase of investment securities
   held to maturity                                      -        (1,000)
  Purchase of bank owned life insurance            (20,000)            -
  Principal payments on investment securities
   available for sale                                  506             -
  Purchase of mortgage-backed securities
   available for sale                                (2,001)           -
  Purchase of mortgage-backed securities
   held to maturity                                      -        (7,392)
  Purchase of FHLB and Federal Reserve Stock        (2,509)       (1,189)
  Principal payments on mortgage-backed
   securities available for sale                     5,167         6,067
  Principal payments on mortgage-
   backed securities held to maturity                8,378        10,906
  Increase in loans, net                           (55,329)     (100,557)
  Purchases of premises and equipment                 (858)         (748)
  Proceeds from sale of real estate owned               47           172
                                                    -------       -------
       Net cash used in
         investing activities                      (74,662)     (101,384)
                                                    -------     ---------
                          -Continued on next page-
                                       5

<PAGE>
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES
            Consolidated Statements of Cash Flows
                        (In Thousands)

                                                 For the Nine Months Ended
                                                          September 30,
                                                    1999            1998
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:
    Increase in deposit accounts                    28,824        56,415
    Repayments of securities sold under
     agreement to repurchase                             -        (7,140)
    Repayments of Federal Home Loan
     Bank advances                                (115,291)     (348,948)
    Proceeds from Federal Home Loan
     Bank advances                                 168,291       415,916
    Cash dividends paid                             (1,723)       (1,466)
    Common stock repurchased                        (1,693)       (3,307)
    Options exercised                                    -            15
    Decrease in advance payments by
     borrowers for taxes and insurance                 238           371
                                                  --------       -------

         Net cash provided by
            financing activities                    78,646       111,856
                                                   -------       -------

         Net increase
          in cash and cash equivalents              12,914         2,921


Cash and cash equivalents at January 1              37,201        24,690
                                                   -------       -------

Cash and cash equivalents at September 30       $   50,115    $   27,611
                                                   =======       =======

Supplemental disclosure of cash flow
 information:
     Payments during
      the quarter for:

       Interest                                 $   33,509     $  30,204
                                                   =======       =======

       Taxes                                    $    4,054     $   3,276
                                                   =======       =======


Supplemental schedule of non-cash
 investing activities:
     Transfer of mortgage
      loans to real estate owned:               $      233             -
                                                   =======       =======

See accompanying condensed notes to consolidated financial statements.
                                       6


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


NOTE 1:  BASIS OF PRESENTATION

     The unaudited  consolidated  financial  statements as of September 30, 1999
and December 31, 1998 and for the three- and nine-month  periods ended September
30, 1999 and 1998 of BostonFed Bancorp, Inc., ("BostonFed" or the "Company") and
its  wholly-owned  subsidiaries,  Boston Federal Savings Bank ("BFS"),  Broadway
National Bank ("BNB") and BF Funding  Corporation,  presented herein,  should be
read in conjunction with the consolidated financial statements of the Company as
of and for the year ended December 31, 1998. In the opinion of  management,  the
unaudited   consolidated  financial  statements  presented  herein  reflect  all
adjustments  (consisting only of normal recurring  adjustments)  necessary for a
fair presentation.  Interim results are not necessarily indicative of results to
be expected for the entire year.

     The  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 nine-month periods ended
September 30, 1999 and 1998 are not  necessarily  indicative of the results that
may be expected for the entire fiscal year.

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 133,  "Accounting for
Derivative  Instruments  and Hedging  Activities."  This  statement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
"derivatives") and for hedging activities.  It requires that an entity recognize
all derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. Under this statement,  an entity that elects to
apply hedge  accounting  is required to establish at the  inception of the hedge
the method it will use for assessing the effectiveness of the hedging derivative
and the  measurement  approach for  determining  the  ineffective  aspect of the
hedge.  In June 1999, the FASB issued SFAS No. 137,  "Accounting  for Derivative
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133",  which  delays  the  effective  date of SFAS  No. 133 to  fiscal  quarters
beginning  after  June 15, 2000.  The  adoption  of  these  statements  is  not
expected to have a material impact on the Company.


NOTE 2:  COMMITMENTS,  CONTINGENCIES AND CONTRACTS

     At September  30, 1999,  the Company had  commitments  of $79.3  million to
originate  mortgage loans and $15.4 million to purchase loans from correspondent
lenders. Of these $94.7 million commitments,  $82.6 million were adjustable rate
mortgage  loans  with  interest  rates  ranging  from  6.13% to 10.38% and $12.1
million were fixed rate mortgage loans with interest rates ranging from 6.13% to
9.00%. The Company also had commitments to sell $20.0 million of mortgage loans.

     At September 30, 1999,  the Company was servicing  first  mortgage loans of
approximately  $775.9  million,  which are either  partially or  wholly-owned by
others.


NOTE 3:  LEGISLATIVE MATTERS

     Federal  Financial  Modernization   legislation,   formally  known  as  the
"Gramm-Leach-Bliley Act" was recently enacted by Congress and signed into law by
the  President  on November  12,  1999,  eliminates  many  federal and state law
barriers to affiliations among banks and other financial services providers. The
legislation,   which  takes  effect  120  days  after  the  date  of  enactment,
establishes a statutory  framework pursuant to which full affiliations can occur
between banks and securities  firms,  insurance  companies,  and other financial
companies.  The  legislation  provides some degree of flexibility in structuring
these  new  affiliations,  although  certain  activities  may only be  conducted
through a holding company structure. The legislation,  preserves the role of the
Board of Governors of the Federal Reserve System as the umbrella  supervisor for
holding companies,  but incorporates a system of functional  regulation pursuant
to which the various  federal and state financial  supervisors  will continue to
regulate  the  activities   traditionally   within  their   jurisdictions.   The
legislation  specifies that banks may not  participate  in the new  affiliations
unless the banks are  well-capitalized and well-managed or if any bank affiliate
had  received  a less than  "satisfactory"  Community  Reinvestment  Act of 1977
rating as of its most recent examination.

                                       7
<PAGE>

NOTE 4:  Business Segments

     The Company's  wholly-owned  bank  subsidiaries,  BFS and BNB (collectively
"the  Banks"),   have  been  identified  as  reportable  operating  segments  in
accordance with the provisions of SFAS No. 131,  "Disclosures  About Segments of
an  Enterprise  and  Related  Information."  BF Funding  Corp.,  a  wholly-owned
subsidiary of the Company,  and various  subsidiaries  of the Banks did not meet
the  quantitative  thresholds for  determining  reportable  segments.  The Banks
provide general banking services to their customers, including deposit accounts,
residential,  commercial, consumer and business loans. Each Bank also invests in
mortgage-backed  securities and other financial instruments.  In addition to its
own operations, the Company provides managerial expertise and other professional
services.  The  results of the  Company  and BF  Funding  comprise  the  "other"
category.

     The Company  evaluates  performance  and allocates  resources  based on the
Banks' net income,  net interest margin,  return on average assets and return on
average equity.  The Banks follow generally  accepted  accounting  principles as
described in the summary of  significant  accounting  policies.  The Company and
Banks  have  inter-company   expense  and  tax  allocation   agreements.   These
inter-company expenditures are allocated at cost. Inter-company asset sales were
accounted  for at  current  market  prices at the time of sale and  approximated
cost.

     Each Bank is managed separately. BNB is managed by a President and CEO, who
reports  directly to BNB's Board of  Directors.  BFS is managed by a CEO, who is
also the Company's CEO, and reports  directly to BFS'and the Company's  Board of
Directors,  as applicable.  The following  table sets forth certain  information
about and the  reconciliation  of reported net income for each of the reportable
segments.
                                       8
<PAGE>
<TABLE>

<CAPTION>                                             (Dollars In Thousands)
                                                                TOTAL
                                                              REPORTABLE                                      CONSOLIDATED
                                      BFS         BNB          SEGMENTS         OTHER      ELIMINATIONS          TOTALS
                                   --------     --------     ------------      -------    --------------      ------------
<S>                             <C>             <C>          <C>              <C>           <C>                <C>
At or for the three-months
ended September 30, 1999:
     Interest income            $   18,111        2,202         20,313           215           ( 93)              20,435
     Interest expense               11,502          555         12,057                         ( 93)              11,964
     Provision for loan losses         360           30            390                                               390
     Non-interest income             1,420          262          1,682            10                               1,692
     Non-interest expense            4,992        1,161          6,153           104                               6,257
     Income tax expense                953          251          1,204            50                               1,254
     Net income                      1,725          466          2,191            71                               2,262
     Total assets                1,074,872      139,871      1,214,743        87,290        (77,656)           1,224,377
Net interest margin                  2.62%        5.44%           n.m.          n.m.            n.m.               2.97%
Return on average assets              .65%        1.36%           n.m.          n.m.            n.m.                .75%
Return on average equity            11.62%       15.46%           n.m.          n.m.            n.m.              10.55%

At or for the three-months
ended September 30, 1998:
     Interest income            $   16,714        2,123         18,837           359           (142)              19,054
     Interest expense               10,727          472         11,199                         (142)              11,057
     Provision for loan losses         417           25            442                                               442
     Non-interest income             1,329          177          1,506                                             1,506
     Non-interest expense            4,664        1,100          5,764            98                               5,862
     Income tax expense                897          286          1,183            98                               1,281
     Net income                      1,340          417          1,757           161                               1,918
     Total assets                  955,419      127,246      1,082,665        87,594        (73,818)           1,096,441
Net interest margin                  2.65%        5.79%           n.m.          n.m.            n.m.               3.10%
Return on average assets              .57%        1.33%           n.m.          n.m.            n.m.                .71%
Return on average equity            10.29%       13.48%           n.m.          n.m.            n.m.               8.99%

n.m. = not meaningful
                                                       (Dollars in Thousands)
                                                                TOTAL
                                                              REPORTABLE                                      CONSOLIDATED
                                      BFS         BNB          SEGMENTS         OTHER      ELIMINATIONS          TOTALS
                                   --------     --------     ------------      -------    --------------      ------------
<S>                             <C>             <C>          <C>              <C>           <C>                <C>
At or for the nine-months
ended September 30, 1999:
     Interest income            $   52,877        6,519         59,396           752           (350)              59,798
     Interest expense               33,553        1,619         35,172                         (350)              34,822
     Provision for loan losses       1,160           90          1,250                                             1,250
     Non-interest income             4,311          648          4,959            10                               4,969
     Non-interest expense           14,898        3,324         18,222           373                              18,595
     Income tax expense              2,854          796          3,650           157                               3,807
     Net income                      4,723        1,338          6,061           232                               6,293
     Total assets                1,074,872      139,871      1,214,743        87,290        (77,656)           1,224,377
Net interest margin                  2.60%        5.33%           n.m.          n.m.            n.m.               2.96%
Return on average assets              .61%        1.31%           n.m.          n.m.            n.m.                .71%
Return on average equity            11.14%       14.57%           n.m.          n.m.            n.m.               9.86%

At or for the nine-months
ended September 30, 1998:
     Interest income            $   48,519        6,269         54,788         1,157           (397)              55,548
     Interest expense               30,358        1,402         31,760            93           (397)              31,456
     Provision for loan losses       1,112           75          1,187                                             1,187
     Non-interest income             3,958          528          4,486            10                               4,496
     Non-interest expense           14,353        3,237         17,590           345                              17,935
     Income tax expense              2,727          856          3,583           273                               3,856
     Net income                      3,928        1,227          5,155           455                               5,610
     Total assets                  955,419      127,246      1,082,665        87,594        (73,818)           1,096,441
Net interest margin                  2.79%        5.73%           n.m.          n.m.            n.m.               3.22%
Return on average assets              .58%        1.31%           n.m.          n.m.            n.m.                .72%
Return on average equity            10.15%       13.27%           n.m.          n.m.            n.m.               8.88%

n.m. = not meaningful


                                       9
</TABLE>

<PAGE>
<TABLE>
                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the quarter ended September 30:                              1999                                      1998
                                                -------------------------------------       ------------------------------
                                                                             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)                     $    96,802      $ 1,393      5.76%        $   91,293       $ 1,397       6.12%
 Loan, net and mortgage loans held for sale (2)  1,010,217       18,543      7.34%           894,643        16,876       7.55%
 Mortgage-backed securities (3)                     31,969          499      6.24%            47,100           781       6.63%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,138,988       20,435      7.18%         1,033,036        19,054       7.38%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                        63,145                                    41,524
                                                ----------                                  ---------
   Total assets                                $ 1,202,133                                $1,074,560
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   59,625          431      2.89%        $   62,844           461       2.93%
 Savings accounts                                 149,188          954      2.56%           121,499           782       2.57%
 NOW accounts                                     111,308          207      0.74%           103,625           280       1.08%
 Certificate accounts                             356,169        4,898      5.50%           320,809         4,647       5.79%
                                                ----------    ---------                    ---------    ----------
   Total                                          676,290        6,490      3.84%           608,777         6,170       4.05%
 Borrowed Funds (4)                               374,830        5,474      5.84%           318,976         4,887       6.13%
                                                ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,051,120       11,964      4.55%           927,753        11,057       4.77%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  65,261                                    61,450
                                                ----------                                 ---------
   Total liabilities                            1,116,381                                   989,203
                                                ----------                                 ---------
 Stockholders' equity                              85,752                                    85,357
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,202,133                                $1,074,560
                                                ==========                                 =========
 Net interest rate spread (5)                                  $ 8,471      2.63%                         $ 7,997       2.61%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.97%                                       3.10%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     108.36%                                   111.35%
                                                 =========                                 =========
<FN>
(1) Includes investment securities available for sale and held to maturity,
    short-term investments, stock in FHLB-Boston and daily federal funds sold,
    net of mark to market adjustments as required by SFAS No. 115.
(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 5.82% and 6.01% for the three months ended September 30, 1999 and
    September 30, 1998, 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.

                                      10
</FN>
</TABLE>

<PAGE>
<TABLE>

                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the nine months ended September 30:                          1999                                      1998
                                                -------------------------------------       ---------------------------------
                                                                            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)                     $    91,691      $ 3,964      5.76         $   90,626       $ 4,198       6.17%
 Loan, net and mortgage loans held for sale (2)    995,428       54,152      7.25%           856,036        48,772       7.59%
 Mortgage-backed securities (3)                     35,772        1,682      6.27%            51,497         2,578       6.67%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,122,891       59,798      7.10%           998,159        55,548       7.42%
                                                              ---------     ---------       ---------    ----------  ---------
 Non-interest-earning assets                        51,669                                    41,628
                                                ----------                                  ---------
   Total assets                                $ 1,174,560                                 $1,039,787
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   59,345        1,276      2.87%        $   63,235         1,398       2.95%
 Savings accounts                                 140,915        2,615      2.47%           118,420         2,230       2.51%
 NOW accounts                                     110,208          680      0.82%           103,983           876       1.12%
 Certificate accounts                             348,142       14,475      5.54%           305,190        13,282       5.80%
                                                ----------    ---------                    ---------    ----------
   Total                                          658,610       19,046      3.85%           590,828        17,786       4.01%
 Borrowed Funds (4)                               365,495       15,776      5.75%           303,122        13,670       6.01%
                                                ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,024,105       34,822      4.53%           893,950        31,456       4.69%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  65,383                                    61,609
                                                ----------                                 ---------
   Total liabilities                            1,089,488                                   955,559
                                                ----------                                 ---------
 Stockholders' equity                              85,072                                    84,228
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,174,560                                $1,039,787
                                                ==========                                 =========
 Net interest rate spread (5)                                 $ 24,976      2.57%                         $24,092       2.73%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.96%                                       3.22%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     109.65%                                   111.66%
                                                 =========                                 =========
<FN>
(1) Includes investment securities available for sale and held to maturity,
    short-term investments, stock in FHLB-Boston and daily federal funds sold,
    net of mark to market adjustments as required by SFAS No. 115.
(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 5.72% and 5.96% for the nine months ended September 30, 1999 and
    September 30, 1998, 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>

                                       11
<PAGE>

          MANAGEMENTS'S DISCUSSTION AND ANALYSIS OF FINACNCIAL CONDITION
                           AND RESULTS OF OPERATIONS

A.  GENERAL

     The Company is the holding  company  for two banking  subsidiaries,  Boston
Federal Savings Bank, a federally chartered  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. Substantially all of the Company's business is coordinated through its
subsidiary  banks  and  references  herein  to  "Company"  include  the banks as
appropriate.  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  mortgages,
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  investments  and
mortgage-backed  securities,  fees,  gains on sale of loans  and loan  servicing
income.  The Company's  primary sources of funds are retail deposits,  wholesale
brokered deposits,  principal and interest payments on loans and mortgage-backed
securities, FHLB advances, and proceeds from the sale of loans.



B. YEAR 2000 ISSUE

     The  statements  in the  following  section  include  "Year 2000  readiness
disclosure"  within  the  meaning  of the Year 2000  Information  and  Readiness
Disclosure Act. The following "Year 2000"  discussion  contains  forward-looking
statements  which  represent the  Company's  beliefs or  expectations  regarding
future  events.  When used in the Year 2000  discussion,  the words  "believes,"
"expects,"  "estimates,"  and  similar  expressions  are  intended  to  identify
forward-looking   statements.   Forward-looking   statements  include,   without
limitation, the Company's expectations as to when it will complete the phases of
the Plan,  its estimated  costs,  and its belief that its  statements  involve a
number of risks and uncertainties  that could cause the actual results to differ
materially from the projected results.  Factors that may cause these differences
include,  but are not limited to, the  availability  of qualified  personnel and
other information  technology  resources,  the ability to identify and remediate
all date  sensitive  lines of computer  code,  and the  actions of  governmental
agencies or other third parties with respect to Year 2000 problems.

     Included  in other  non-interest  expenses  for the three-  and  nine-month
periods  ended  September 30, 1999 are charges  incurred in connection  with the
modification  or  replacement of software or hardware in order for the Company's
computer and related  systems to properly  recognize  dates beyond  December 31,
1999.

     The impact of computer  systems  ability to process dates beyond 1999,  the
Year 2000 issue,  creates a significant  business challenge for the Company. The
Company is addressing this issue as it affects all of its software, hardware and
other  systems to insure the  Company is Year 2000  compliant.  The  Company has
developed  a  plan  that  is  based  upon  the  Federal  Financial  Institutions
Examination  Council ("FFIEC")  recommended  phases and time frames for insuring
Year 2000 compliance.  These phases include awareness,  assessment,  renovation,
validation and implementation.

     The Company has completed the awareness phase through development of a Year
2000  committee and  reporting  structure  including  quarterly  project  status
reports to the Company's  Board.  The assessment phase has been completed with a
review of all software, hardware and business systems including an evaluation of
the critical nature and year 2000 business risk that each application  presents.
The Company  primarily  utilizes  third-party  vendors for the processing of its
critical data  processing  applications.  The Company worked closely with  these
critical vendors in monitoring renovation and validation  efforts to insure that
the time frames set out in the Company's plan were met.  Based  upon  review  of
vendor-provided  Year  2000  disclosure  statements,  review  of the  applicable
testing process and verification of test results,  the Company believes that all
critical  applications  were  renovated at September 30, 1999.  The Company will
continue to work with critical  application vendors to monitor ongoing status in
maintaining Year 2000 compliance.. The Company has created an internal Year 2000
testing  environment  and  has  developed  test  scripts  incorporating  typical
transactions  in order to validate the modified  systems.  Testing with critical
application  vendors was substantially  completed in the fourth quarter of 1998.
Additional  testing  including  follow-up and interface testing was completed by
June 30,  1999,  prior to any  anticipated  impact  on  operating  systems.  The
implementation  phase is ongoing and incorporates review of replaced or modified
and tested  systems,  as well as,  contingency  planning and customer  awareness
programs.

                                       12
<PAGE>

     In the event that the Company's  third-party  vendors are unable to provide
services due to Year 2000 issues,  the Company's  operations  could be adversely
effected.  The Company has developed  contingency plans in the event that one or
all of these significant vendors fails to meet Year 2000 operating requirements.
Plans for various  failure  scenarios  are developed on an ongoing basis as such
risks are identified and incorporate  the Company's  business  resumption  plan.
Contingency  plans for unexpected Year 2000 related business  interruption  were
complete by September  30,  1999.  Further,  the Company  will seek  alternative
vendors should one of the critical  vendors fail to maintain  satisfactory  Year
2000 compliance.  In the event the Company's current third party data processing
vendors  were  not  Year  2000  compliant  and  the  Company  could  not  engage
alternative  vendors  in a timely  manner,  the  Company's  operations  would be
adversely impacted.

     Through September 30, 1999 the Company has expensed  approximately $150,000
year to date and $400,000 total,  toward the Year 2000 remediation  effort.  The
Company believes that this represents substantially all of the costs required to
achieve the Year 2000  remediation  efforts  outlined in the Company's Year 2000
Plan. A significant  portion of the costs  associated with the Year 2000 project
are not incremental to the Company,  but rather represent a reprioritization  of
existing internal systems technology resources.

     Based on the  remediation,  testing  and  monitoring  efforts to date,  the
Company  expects  that most of its critical  systems  will operate  successfully
through the century date change.  Therefore,  the Company believes that internal
system failures are not likely to adversely  affect the Company's  operations or
financial  condition.  The Company  has  successfully  tested with its  critical
application  vendors and will  continue to monitor and  validate  the efforts of
other  service   providers,   including  the  Company's   electrical  power  and
telecommunications  providers in 1999.  At this time,  the Company  believes the
most  likely  "worst  case" Year 2000  scenarios  are  temporary  and  localized
disruptions  in  infrastructure  services which could disrupt the ability of the
Company to provide  services  to its  customers  and/or the  ability of external
Service providers to provide services to the Company.

     The  Company's  evaluation  of  the  Year  2000  readiness  is  based  upon
management's best estimates and projections which are derived utilizing numerous
assumptions of future events,  including the continued  availability  of certain
resources,  third-party modification plans and other factors. However, there can
be no guarantee  that these  estimates will be achieved and actual results could
differ materially from those anticipated. Specific factors that might cause such
material  differences include, but are not limited to, the availability and cost
of  personnel  trained in this area,  the  ability  to locate  and  correct  all
relevant computer codes, and similar uncertainties.

C. ACQUISITION

     On August 4, 1999,  the Company  entered  into an  agreement  to purchase a
privately-held  mortgage  company,  Diversified  Ventures,  Inc.,  d/b/a Forward
Financial  Company and Ellsmere  Insurance Agency,  Inc., both  headquartered in
Northborough,  Massachusetts. The tax deductible transaction premium will result
in  approximately  $20  million  of  goodwill  to be  amortized  over 15  years.
Applications  were filed with various federal and state regulators and approvals
have been received  from the federal  regulators  and most of the states.  It is
expected that  consummation of the transaction will occur shortly after required
approvals are received. See Item 5 "Other Information" for further details.


D. FINANCIAL CONDITION


     Total assets at September 30, 1999 were $1.224 billion,  compared to $1.139
billion at December  31,  1998,  an  increase of $85 million or 7.5%.  The major
components  of asset  growth  included  cash and  cash  equivalents,  investment
securities available for sale, loans, net of allowance for loan losses and other
assets.  Cash and cash equivalents  increased from a balance of $37.2 million at
December 31, 1998 to $50.1  million at  September  30,  1999.  This  increase in
liquidity  was in  anticipation  for the  funding  of called  advances  from the
Federal Home Loan Bank of Boston early in the fourth quarter of 1999. Investment
securities  available for sale  increased to $60.0 million at September 30, 1999
from  $49.1  million at  December  31,  1998 as  securities  purchases  exceeded
maturities. Loans, net of allowance for loan losses, increased by $53.8 million,
or 5.7%, from a balance of $943.7 million at December 31, 1998 to $997.5 million
at  September  30,  1999  as  origination   of  loans  for  portfolio   exceeded
amortization  and  prepayments.  Other assets  increased from a balance of $10.9
million  at  December  31,  1998 to $32.5  million  at  September  30,  1999 due
primarily to the purchase of $20 million of Bank Owned Life Insurance  ("BOLI").
The BOLI  purchase is expected to partially  offset  employee  benefit costs and
provide the Company with  increased  earnings  resulting from the tax advantaged
status of BOLI income.  The Company  expects to benefit  from the BOLI contracts
as a  result of the tax-free  growth in cash surrender value and death benefits,
which are expected to be generated over time.  The  Company  mitigated  interest
rate risk and credit risk  by  electing to have its cash  surrender value of the
policy  placed  in a  separate, redemption  value  protected  account  with  the
insurance carrier.  These asset increases were partially  offset by decreases in
investment securities held to maturity, mortgage-backed securities available for
sale and mortgage-backed  securities held to maturity amounting to $5.0 million,
$3.6  million  and $8.4  million,  respectively,  compared  to the  balances  at
December 31, 1998.
                                      13
<PAGE>

    Deposit accounts increased by $28.8 million from a balance of $707.1 million
at  December 31, 1998  to a  balance of $736.0 million  at September 30, 1999.
Approximately $23.9 million of the deposit account balance  increase  was due to
the  Company's  acquisition  of wholesale  brokered  certificates  of deposit.
Federal  Home Loan Bank  advances increased  by $53.0  million,  to a balance of
$390.5  million  at  September 30, 1999  from a  balance  of $337.5  million  at
December 31, 1998.  These advances were used primarily to fund the  increase  in
loans, net.

E.  LIQUIDITY AND CAPITAL RESOURCES

     The Company's  primary sources of funds are deposits,  (including  brokered
deposits),    principal   and   interest   payments   on   loans,   investments,
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.  The
Company has maintained in excess of the required minimum levels of liquid assets
at BFS as defined by 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 4%. At September 30, 1999 and December
31, 1998 BFS's  liquidity ratio was 5.4% and 6.9%  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 OCC does not have
specific  guidance  for  liquidity  ratios for BNB,  but does  require  banks to
maintain  reasonable  and prudent  liquidity  levels.  Management  believes such
levels have been maintained.

     The Company's  most liquid assets are cash,  overnight  federal funds sold,
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 September 30, 1999, BFS' cash, loans and
investments  available  for sale  totaled  $53.6  million or 5.0% of BFS's total
assets.  While not all of these  liquid  assets  qualify  for  BFS's  regulatory
liquidity  requirements,  other assets in the held to maturity  category qualify
for regulatory liquidity requirements.

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including FHLB advances.  At September 30, 1999, the Company had $390.5
million in advances  outstanding  from the FHLB. The Company  generally does not
pay the highest deposit rates in its market and accordingly utilizes alternative
sources  of  funds  such as  FHLB  advances,  wholesale  brokered  deposits  and
repurchase agreements to supplement cash flow needs.

     At September 30, 1999, the Company had  commitments to originate  loans and
unused  outstanding  lines  of  credit  totaling  $197.1 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 September 30, 1999, totaled $190.7 million.

     At  September  30, 1999,  the  consolidated  stockholders'  equity to total
assets ratio was 6.9%.  As of  September  30,  1999,  the  Company,  BFS and BNB
exceeded  all  of  their   regulatory   capital   requirements.   The  Company's
consolidated  tier 1 capital,  total  capital  and Tier 1 leverage  ratios  were
11.3%,  12.6% and 6.8%,  respectively.  BFS's tier 1, total  risk-based,  tier 1
risk-based and tangible equity capital ratios were 5.4%,  10.1%,  8.9% and 5.4%,
respectively.  BNB's total  risk-based,  tier 1  risk-based  and tier 1 leverage
capital ratios were 15.3%, 14.3%, and 7.1%, respectively.

                                       14

<PAGE>
F.  COMPARISON OF THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

   General

     Earnings for the quarter ended  September  30, 1999 were $2.3  million,  or
$.47 basic earnings per share,  $.45 per share on a diluted  basis,  compared to
earnings of $1.9 million,  or $.38 basic and $.36 diluted earnings per share for
the third  quarter of 1998.  The  current  quarter's  earnings  amount to a  24%
increase in basic earnings per share and a 25% increase in diluted  earnings per
share compared to last year's third quarter.  Earnings for the nine-months ended
September 30, 1999  amounted to $6.3  million,  or $1.30 basic and $1.25 diluted
earnings per share,  compared to $5.6 million,  or $1.09 basic and $1.04 diluted
earnings per share for the  comparable  1998 period.  The  Company's  annualized
return  on  average  assets  was  .71%  and the  annualized  return  on  average
stockholders'  equity was 9.86% during the nine-months ended September 30, 1999,
compared to .72% and 8.88%,  respectively,  for the nine-months  ended September
30, 1998  (annualized).  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
September  30,  1999  increased  by $1.4  million,  or 7.2%,  to $20.4  million,
compared to the quarter  ended  September  30,  1998.  The  increase in interest
income  was  primarily  attributable  to a $106.0  million  increase  in average
interest-earning  assets,  offset by a 20 basis  point  decrease  in the average
yield. The average yield on  interest-earning  assets decreased to 7.18% for the
three  months  ended  September  30, 1999 from 7.38% for the three  months ended
September 30, 1998. For the nine-months ended September 30, 1999, total interest
income was $59.8 million, compared to $55.5 million for the comparable period in
1998. The major reason for the increase was also the increased  average balances
of  interest-earning  assets,  which were $1.123 billion during the  nine-months
ended  September  30, 1999,  compared to $998.2  million  during the  comparable
period in 1998.  Partially offsetting the benefits of higher average balances in
interest-earning  assets was a decline in average yields, which declined from an
average of 7.42% during the  nine-months  ended September 30, 1998 to an average
of 7.10% during the nine-months ended September 30, 1999.

     Interest  income on loans,  net, for the quarter  ended  September 30, 1999
increased by $1.7 million,  or 9.9%, to $18.5 million  compared to $16.9 million
for the comparable quarter in 1998. On a year to date basis,  interest income on
loans,  net,  increased  $5.4 million to $54.2  million  from the $48.8  million
earned during the nine-months ended September 30, 1998. The increase in interest
income from loans, net, for the three- and nine-months ended September 30, 1999,
compared to the same periods last year, was primarily  attributable to increases
in average  balances of $115.6  million and $139.4  million,  respectively.  The
earnings  impact of higher  balances  of loans,  net was  partially  offset by a
decline in the average yield on loans,  net, which  decreased by 21 basis points
to 7.34% during the quarter ended  September 30, 1999,  compared to 7.55% during
the quarter  ended  September  30, 1998.  On a year to date basis,  the yield on
loans, net, decreased from 7.59% for the nine-months ended September 30, 1998 to
7.25% during the current year period.

     Interest on mortgage-backed  securities for the quarter ended September 30,
1999  decreased  by $282,000  to  $499,000,  compared  to $781,000  for the same
quarter in 1998.  This decrease in income was due primarily to the $15.1 million
lower average balance during the quarter ended  September 30, 1999,  compared to
the quarter ended September 30, 1998.  Additionally,  the average yield declined
by 39 basis points to an average of 6.24% during the September 30, 1999 quarter,
compared to the same  quarter  last year.  On a year to date basis,  interest on
mortgage-backed  securities was $1.7 million, compared to last year's comparable
period total of $2.6  million.  The decrease was also due to declines in average
balances and yields. The average balance of mortgage-backed  securities declined
by $15.7  million to an average  balance of $35.8  million  for the  nine-months
ended  September 30, 1999 compared to the prior year period  average  balance of
$51.5  million.  Average  yields  declined by 40 basis points during the current
period.

     Income from  investment  securities was $1.4 million for the quarters ended
September  30, 1999 and 1998.  On a year to date basis,  income from  investment
securities was $4.0 million and $4.2 million,  respectively, for the nine-months
ended  September 30, 1999 and 1998.  The average yield on investment  securities
decreased by 36 basis points and 41 basis points,  respectively,  in the current
three- and  nine-month  periods,  compared to last year's periods due to overall
declines in market interest rates. The average balance increased by $5.5 million
to an average of $96.8  million  during the quarter  ended  September  30, 1999,
compared to an average  balance of $91.3 million for the quarter ended September
30, 1998. On a year to date basis, the average balance of investment  securities
increased  by $1.1  million to an average  balance of $91.7  million  during the
nine-months  ended  September 30, 1999,  compared to an average balance of $90.6
million for the comparable prior year period.

                                       15
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended  September  30,  1999  increased  by $907,000  or 8.2%,  to $12.0  million
compared to the quarter  ended  September  30,  1998.  The  increase in interest
expense  for the  quarter  ended  September  30,  1999 was due  primarily  to an
increase  of  $123.4  million  in  the  average   balance  of   interest-bearing
liabilities,  which averaged $1.051 billion during the current quarter, compared
to an average  balance of $927.8 million during the quarter ended  September 30,
1998. The increase in interest  expense was partially offset by a decrease of 22
basis  points in the average  cost of  interest-bearing  liabilities  during the
quarter  ended  September  30,  1999.  The  average  cost  of   interest-bearing
liabilities  decreased to 4.55%  during the quarter  ended  September  30, 1999,
compared to 4.77% for last year's  comparable  quarter.  The decrease was due to
generally  lower  market  rates.  On a year to date basis,  interest  expense on
interest-bearing  liabilities totaled $34.8 million,  compared to last year's to
date total of $31.5 million,  an increase of 10.7%. The increase is attributable
to the higher average balance of  interest-bearing  liabilities,  which averaged
$1.024 billion during the nine-months  ended September 30, 1999,  compared to an
average  balance of $894.0 million during the  nine-months  ended  September 30,
1998. Partially offsetting the impact of higher average balances, was a 16 basis
point decline in the cost of interest-bearing liabilities during the nine-months
ended September 30, 1999.

     Interest expense on deposit accounts was $6.5 million for the quarter ended
September  30,  1999,  an  increase of  $320,000  from the $6.2  million for the
quarter  ended  September  30,  1998.  The increase in the expense was due to an
increase in the deposit account balances of $67.5 million, partially offset by a
21 basis point  decrease in the average cost of funds  during the quarter  ended
September 30, 1999,  compared to the quarter ended  September 30, 1998. The cost
of funds declined due to lower rates paid on most types of deposit accounts. The
average  balance of deposit  accounts  increased  from  $608.8  million  for the
quarter ending  September 30, 1998, to an average  balance of $676.3 million for
the current  quarter.  Most of the  increase is  attributable  to the  odd-month
retail certificate of deposit  acquisition  program and a special "money market"
savings  account  initiated  by BFS  during  1998.  For  the  nine-months  ended
September  30, 1999,  interest  expense on deposit  accounts was $19.0  million,
compared  to $17.8  million  for the prior  year  period,  an  increase  of $1.2
million,  or 7.1%. The increase was due to the effects of higher average deposit
account  balances,  which averaged $658.6 million during the  nine-months  ended
September  30,  1999,  compared  to $590.8  million  in the prior  year  period,
partially  offset by the effects of a decrease  of 16 basis  points in the total
cost of deposit accounts during the current period.

     Interest  expense on borrowed  funds  increased  from $4.9  million for the
quarter ended  September 30, 1998 to $5.5 million for the current  quarter.  The
average cost of borrowed  funds  decreased  from 6.13% during the quarter  ended
September  30,  1998 to an average  of 5.84%  during the  current  quarter.  The
average balance increased from $319.0 million during the quarter ended September
30, 1998 to an average balance of $374.8 million during the current quarter. For
the nine-months  ended September 30, 1999 interest expense on borrowed funds was
$15.8 million, compared to $13.7 million for the nine-months ended September 30,
1998.  The increase in interest  expense on borrowed funds was caused by a $62.4
million increase in the average balances from $303.1 million for the nine-months
ended  September  30,  1998 to $365.5  million  during the current  period.  The
increase was  partially  offset by a reduction of 26 basis points in the cost of
borrowed money during the nine-months ended September 30, 1999.

Net Interest Income

     Net  interest  income  during the third  quarters of 1999 and 1998 was $8.5
million and $8.0 million,  respectively,  as industry-wide  margin shrinkage was
offset by net interest income earned from asset growth. The net interest margin,
at 2.97% for the quarter ended September 30, 1999 was 13 basis points lower than
last year's comparable quarter. On a year to date basis, net interest income was
$25.0  million,  compared to $24.1  million for the prior year to date.  The net
interest margin was 2.96% for the nine-months ended September 30, 1999, compared
to 3.22% for the prior  year  comparable  period.  The net  interest  margin was
compressed  due to the  continuing  effects of a relatively  flat  interest rate
yield curve.
                                       16
<PAGE>

Provision for Loan Losses

     The  Company's  provision  for loan losses  amounted  to  $390,000  for the
quarter ended  September 30, 1999,  compared to the $442,000 loan loss provision
for the comparable  quarter last year. For the  nine-months  ended September 30,
1999 and 1998,  the provision  was $1.3 million and $1.2 million,  respectively.
The allowance for loan losses  increased  from $8.5 million at December 31, 1998
to $10.1 million at September 30, 1999 due to the year to date provision and net
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 size and type of loans and  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.  In
addition, various regulatory agencies,  as an integral part of their examination
process,  periodically  review the  Company's  allowance  for loan losses.  Such
agencies may require the Company to make  additional  provisions  for  estimated
loan losses based upon  judgements  different  from those of  management.  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 September 30, 1999, the Company
classified  $3.8  million of loans ($2.9  million at BFS and $877,000 at BNB) as
sub-standard  compared to $4.2 million ($3.4 million of BFS and $770,000 of BNB)
at December 31, 1998. 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, cash flow values and state of
the real estate economy.  Utilizing these procedures,  management  believes that
the allowance  for loan losses at September  30, 1999 was  sufficient to provide
for anticipated losses inherent in the loan portfolio.

     The  Company's  allowance  for loan losses at September  30, 1999 was $10.1
million,  which  represented  1,273%  of  non-performing  loans or .98% of total
loans,   compared  to  $8.5  million  at  December   31,  1998,   or  1,029%  of
non-performing loans and .88% of total loans.  Management believes this coverage
ratio  is  prudent  due  to  the  balance  increase  in the  combined  total  of
construction  and land,  commercial real estate,  multi-family,  home equity and
improvement,   consumer  and  business  loans.  These  combined  total  balances
increased  from $153.8 at December 31, 1998 to $197.2  million at September  30,
1999.

     Non-performing  loans at September 30, 1999 amounted to $792,000 or .08% of
total loans, compared to $826,000, or .09% of total loans, at December 31, 1998.

     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 $52,000 and $69,000 for the nine-month  periods ended September 30, 1999 and
1998,  respectively.  The amount of interest  income that was  recorded on these
loans was $37,000 and $33,000 for the  nine-month  periods  ended  September 30,
1999 and 1998, respectively.

     At September 30, 1999, loans  characterized  as impaired,  pursuant to SFAS
No. 114,  "Accounting by Creditors for Impairment of a Loan",  and SFAS No. 118,
"Accounting  by Creditors  for  Impairment  of a  Loan--Income  Recognition  and
Disclosure", totaled $25,000. All of the impaired loans have been measured using
the fair value of the collateral method.  During the nine-months ended September
30, 1999, the average recorded value of impaired loans was $310,000, no interest
income was recognized and $2,000 of interest  income would have been  recognized
under the loans' original terms.

     At September  30, 1999 and at December  31, 1998,  the Company had $233,000
and $47,000 in real estate owned, respectively.  Further, at September 30, 1999,
the Company also had  restructured  real estate loans  amounting to $235,000 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.

                                       17
<PAGE>

Non-Interest Income

     Total  non-interest  income  in the  third  quarter  of 1999  increased  by
$186,000, or 12.4%, to $1.7 million from $1.5 million for the three months ended
September  30,  1998.  The largest  component of  non-interest  income was other
non-interest income, which increased to $548,000 for the quarter ended September
30, 1999 from  $192,000 for the quarter ended  September  30, 1998.  The primary
reason for this increase was due to the Company's purchase of a $20 million BOLI
policy  at the  beginning  of the  current  quarter.  The  increase  in the cash
surrender  value  of  the  policy  is  recorded  as  non-interest  income.  On a
year-to-date  basis, other non-interest  income increased to $1.0 million,  also
due  primarily to the BOLI  purchase,  from $600,000 for the  nine-months  ended
September  30,  1998.  Gain on sale of loans  declined  to  $541,000  during the
quarter ended September 30, 1999, from $704,000 for the comparable  quarter last
year,  despite an  increase in the volume of loans  sold,  as market  conditions
reduced  profit  margins on loans sold.  The Company sold $86.7 million of loans
during the quarter ended  September  30, 1999  compared to $78.0 million  during
last year's comparable  quarter.  On a year to date basis, gain on sale of loans
amounted to $2.2  million,  compared to $2.1 million for the  comparable  period
last year,  also due to increased  volume of loans sold.  The Company  sells the
vast majority of fixed-rate  loans it originates.  The  continuation of a strong
housing market and economy has contributed to increased  volume for financing of
home purchases.

Non-Interest Expense

     Total non-interest expense was $6.3 million and $5.9 million, respectively,
for the quarters  ended  September  30, 1999 and 1998.  On a year to date basis,
total  non-interest  expense  increased  from $17.9 million for the  nine-months
ended  September 30, 1998 to $18.6 million for the  nine-months  ended September
30, 1999.  Compensation and benefits  increased by $355,000 and $748,000 for the
three- and nine-months ended September 30, 1999,  respectively,  compared to the
prior year totals.  The increases  were due to additional  staff hired to expand
the  Company's  corporate  lending  department  and normal year over year salary
increases.  On a year to date basis, other non-interest expense declined to $4.8
million for the nine-months  ended September 30, 1999,  compared to $5.0 million
for the  nine-months  ended  September  30,  1998,  as the prior  year's  period
included  consulting  and legal  costs  incurred to assist in  establishing  the
Company's tax saving strategies. These strategies included the formation of real
estate investment trusts and securities subsidiaries in early 1998.

Income Tax Expense

     Income tax expense for the quarters  ended  September 30, 1999 and 1998 was
$1.3  million.  The  effective  income  tax rate was 35.7%  during  the  current
quarter,  compared to 40.0% for the quarter ended  September 30, 1998. On a year
to date basis,  the current  period income tax expense was $3.8 million,  for an
effective  rate of 37.7%,  compared to $3.9  million,  for an effective  rate of
40.7% for the  nine-months  ended  September 30, 1998. The lower  effective rate
during the current periods is due to the full  implementation  of the tax saving
strategies.

                                      18

<PAGE>
Item 3. MARKET RISK AND MANAGEMENT OF INTEREST RATE RISK

     The principal  market risk affecting the Company is interest rate risk. The
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' 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 a management  Asset/Liability  Committee that 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 extent 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) generally  selling in
the secondary market substantially all fixed-rate mortgage loans originated with
terms  greater than 15 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
retail and wholesale deposits and utilizing longer-term 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. These differences are
a primary  component of the risk to net  interest  income.  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 September 30, 1999,  the Company's one year gap was a negative  2.19% of
total assets, compared to a positive 6.6% of total assets at December 31, 1998.

     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.

                                       19

<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.  See the Company's Form 10-K for the year ended December 31, 1998 for a
detail of the GAP and NPV tables. There have been no material changes in the net
portfolio value since December 31, 1998.

     In  addition  to  historical   information,   this  10-Q  includes  certain
forward-looking statements based on current management expectations.  Generally,
verbs in the future  tense and the  words,  "believe",  "expect",  "anticipate",
"intends",   "opinion",    "potential",   and   similar   expressions   identify
forward-looking statements.  Examples of this forward-looking information can be
found in, but are not limited to, the allowance for losses discussion, Year 2000
issues,  subsequent events and any quantitative and qualitative disclosure about
market risk.  The Company's  actual results could differ  materially  from those
management  expectations.  Factors that could cause future  results to vary from
current  management  expectations  include,  but are  not  limited  to,  general
economic  conditions,  legislative and regulatory  changes,  monetary and fiscal
policies  of  the  federal  government,  changes  in  tax  policies,  rates  and
regulations  of federal,  state and local tax  authorities,  changes in interest
rates,  deposit flows, the cost of funds,  demand for loan products,  demand for
financial  services,  competition,  changes in the quality or composition of the
Company'  loan and  investment  portfolios,  changes in  accounting  principles,
policies  or  guidelines,  and other  economic,  competitive,  governmental  and
technological  factors  (including  Year 2000 problems)  affecting the Company's
operations,   markets,   products,   services   and  prices.   These  risks  and
uncertainties should be considered in evaluating  forward-looking statements and
undue  reliance  should not be placed on such  statements.  Further  information
concerning the Company and its business, including additional factors that could
materially affect the Company's  financial results, is included in the Company's
filings with the Securities and Exchange Commission.

     The Company does not undertake,  and specifically disclaims any obligation,
to  publicly  release  the  result  of any  revisions,  which may be made to any
forward-looking statements, to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.


                                        20
<PAGE>

                         PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

     Except as  described  below,  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.  Broadway National Bank, a national bank subsidiary of
the Company,  was named a defendant in the  Superior  Court for Suffolk  County,
Massachusetts,  civil  action No.  SUCV  99-018F  served on April 12,  1999 in a
matter  captioned  "Glyptal,  Inc. v. John  Hetherton,  Jr.,  Fleet Bank, NA and
Broadway  National  Bank of  Chelsea."  The suit  alleges that an officer of the
Plaintiff,  Glyptal,  embezzled  funds from  Plaintiff,  by making  unauthorized
transfers from Plaintiff's corporate accounts and subsequently  deposited checks
drawn on such  account  into an account at  Broadway  National  Bank.  Plaintiff
alleges  that  Broadway  National  Bank knew or should have known of the alleged
fraudulent actions of Plaintiff's  Officer, and that Broadway National Bank owed
a duty to Plaintiff to investigate the transactions  and protect  Plaintiff from
the alleged fraudulent actions. The Plaintiff is seeking damages for the alleged
breach of duty by the  defendants.  Broadway  National  Bank intends to deny the
allegations  that it owed or breached any duty to Plaintiff or that it is liable
for any  losses  incurred  by  Plaintiff.  Broadway  National  Bank  intends  to
vigorously  defend the action and believes the action is not likely to result in
any material loss or adverse effect on the financial condition of the Company.


Item 2.  Changes in Securities and Use of Proceeds

       Not applicable

Item 3.  Defaults Upon Senior Securities

       Not applicable

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

        None

Item 5.  Other Information

     On August 4, 1999, the Company entered into a definitive  purchase and Sale
Agreement ("Purchase Agreement") with Diversified Ventures, Inc., d/b/a/ Forward
Financial  Company  ("Forward  Financial"),   Ellsmere  Insurance  Agency,  Inc.
("Ellsmere"),  and Gene J.  DeFeudis.  Pursuant to the Purchase  Agreement,  the
Company will purchase all of the outstanding  capital stock of Forward Financial
and  Ellsmere  in a cash  transaction.  Consummation  of the sale is  subject to
various conditions,  including regulatory approval,  and the Company anticipates
the transaction will close in the fourth quarter of 1999. In connection with the
transaction, the Company filed a Current Report of Form 8-K on August 6, 1999.

Item 6.  Exhibits and Reports on Form 8-K

    (a) Exhibits
          3.1  Certificate of Incorporation*
          3.2  Bylaws*
          27   Financial Data Schedule

* Incorporated herein to the Company's Registration Statement on Form S-1,
as amended, (SEC No. 33-94860) originally filed on July 21, 1995

     (b) Form 8-K filed on August 6, 1999 regarding the anticipated  acquisition
of Diversified  Ventures,  Inc.,  Ellsmere  Insurance  Agency,  Inc. and Gene J.
DeFeudis.

                                       21

<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:  November 15, 1999                         By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  November 15, 1999                         By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Executive Vice President,
                                                  Chief Financial Officer
                                                  and Corporate Secretary

                                       22