FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


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



For Quarter Ended:              September 30, 1997
                            __________________________

Commission File Number               1-13936
                            __________________________


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

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

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

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

                                  Not Applicable
________________________________________________________________________________
              (Former name, former address and former fiscal year,
                          if changed since last report)


    Indicate  by check mark  whether  the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes  (X)                No   (    )

Number of shares of common stock, par value $.01 per share,
outstanding as of September 30, 1997:  5,649,937.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

            Consolidated Balance Sheets as of 
            September 30, 1997 and December 31, 1996                     2

            Consolidated Statements of Operations for the Three and Nine
            Months ended September 30, 1997 and 1996                     3

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

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

            Notes to Consolidated Financial Statements                   7 - 8

            Average Balances and Yield / Costs                           9 - 10

 Item 2.    Management's Discussion and Analysis of Financial

            Condition and Results of Operations                         11 - 17



PART II _ OTHER INFORMATION
___________________________

 Item 1.    Legal Proceedings                                       17

 Item 2.    Changes in Securities                                   17

 Item 3.    Defaults Upon Senior Securities                         17

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

 Item 5.    Other Information                                       18

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

 Signature Page                                                     19


                                       1

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

                                                 September 30,  December 31,
                                                     1997          1996
                                                  -----------  --------------
Assets                                            (Unaudited)
------------
Cash and cash equivalents                            $ 24,375   $  18,278
Investment securities available for sale
  (amortized cost of $36,536 and $1,085 at
  September 30, 1997 and December 31, 1996
  respectively)                                        36,679       1,085
Investment securities held to maturity (fair
  value of $22,858 and $19,045 at September 30, 1997
  and December 31, 1996, respectively)                 22,875      19,170
Mortgage-backed securities available for sale
  (amortized cost of $20,268 and $23,915 at
  September 30, 1997 and December 31, 1996, 
  respectively)                                        20,255      23,593
Mortgage-backed securities held to maturity (fair
  value of $39,694 and $43,033 at September 30, 1997 
  and December 31, 1996, respectively)                 39,519      43,019
Mortgage loans held for sale                           16,999       3,970
Loans, net of allowance for loan losses of $6,000
  and $4,400 at September 30, 1997 and December 31, 
  1996, respectively                                  762,756     676,670
Accrued interest receivable                             5,248       4,067
Stock in FHLB of Boston and Federal Reserve Bank       16,364      16,295
Premises and equipment                                  6,842       4,979
Real estate held for sale or development                    -         874
Real estate owned                                         270       2,668
Other assets                                            8,522       5,899
                                                     --------    --------
            Total assets                             $960,704    $820,567
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $570,164    $428,818
 Federal Home Loan Bank advances                      291,500     296,500
 Securities sold under agreements to repurchase         8,466       3,500
 Advance payments by borrowers for taxes
  and insurance                                         3,256       2,100
 Other liabilities                                      5,512       3,294
                                                      -------     -------
            Total liabilities                         878,898     734,212
                                                      -------     -------
Commitments and contingencies

Stockholders' equity;                               
 Preferred stock, $.01 par value, 1,000,000 shares
  authorized; none issued                               -- --       -- --
 Common stock, $0.01 par value; 17,000,000 shares
  authorized; 6,589,617 shares issued (5,649,937 and 
  6,260,317 shares outstanding, respectively)              66          66
 Additional paid-in capital                            65,305      64,461
 Retained earnings                                     37,305      33,131
 Unrealized gain (loss) on investment securities 
 available for sale, net                                   71        (322)
  Less Treasury Stock, (939,680 shares and 
   329,300 shares, respectively), at cost             (15,505)     (4,739)
  Less unallocated ESOP shares                         (3,929)     (3,929)
  Less unearned Stock-Based Incentive Plan             (1,507)     (2,313)
                                                      --------    -------- 
            Total stockholders' equity                 81,806      86,355
                                                      --------    --------
Total liabilities and stockholders' equity           $960,704    $820,567
                                                     ========    ========

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

                                 Three Months Ended        Nine Months Ended
                                 ------------------       ------------------
                                 9/30/97    9/30/96       9/30/97    9/30/96
                                 ------------------       ------------------    
                              
                                                  (Unaudited)
                          
Interest and dividend income:
 Loans                          $ 15,111  $  12,159      $ 43,583  $  32,771
 Mortgage-backed securities        1,040      1,320         3,244      3,778
 Investment securities             1,391        604         3,782      1,546
                                 -------    -------       -------    -------
   Total interest and
      dividend income             17,542     14,083        50,609     38,095
                                 -------    -------       -------    -------
Interest expense:
 Deposit accounts                  4,970      3,896        13,904     11,854
 Borrowed funds                    4,630      4,041        13,735      8,704
                                 -------    -------       -------    -------
   Total interest expense          9,600      7,937        27,639     20,558
                                 -------    -------       -------    -------
Net interest and divided income    7,942      6,146        22,970     17,537
Provision for loan losses            395        390         1,275      1,126
                                 -------    -------       -------    -------
 Net interest and dividend  
   income after provision          7,547      5,756        21,695     16,411
Non-interest income:
 Loan processing and servicing 
   fees                              321        319           918        990
 Gain on sale of loans               341        137           723        511
 Deposit service fees                442        300         1,268        831
 Other                               199         83           570        332
                                 -------    -------       -------    -------
Total non-interest income          1,303        839         3,479      2,664
                                 -------    -------       -------    -------
Non-interest expense:
 Compensation and benefits         3,429      2,542        10,037      7,178
 Occupancy and equipment             769        599         2,311      1,854
 Federal deposit insurance
  premiums                            74        246           216        724
 SAIF Special Assessment               -      2,670             -      2,670
 Real estate operations              (76)       186        (1,186)       180
 Other                             1,441      1,107         4,220      3,593
                                 -------    -------       -------    -------
  Total non-interest expense       5,637      7,350        15,598     16,199
                                 -------    -------       -------    -------
Income (loss) before income taxes  3,213       (755)        9,576      2,876
Income tax expense (benefit)       1,512       (334)        4,256      1,150
                                 -------    -------       -------    -------
Net income (loss)               $  1,701   $   (421)        5,320      1,726
                                 =======    =======       =======    =======    
                                                              
Primary earnings (loss) per share  $0.31     ($0.07)        $0.95      $0.28
Fully diluted earnings 
  (loss) per share                 $0.30     ($0.07)        $0.91      $0.28
Weighted average shares
  outstanding                  5,436,453  6,160,446     5,584,322  6,145,332
Common stock equivalents
  due to dilutive effect
  of stock options               258,641          -       258,641          -
Total weighted average
  shares outstanding           5,695,094  6,160,446     5,842,963  6,145,332 

See accompanying condensed notes to consolidated financial statements.
                                      3
<PAGE>
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                        (In Thousands)
                              Nine Months Ended September 30, 1997
                                          (Unaudited)
<CAPTION>
                                                                            Net
                                                                          unrealized                  Unearned
                                                                         gain(loss) on                 Stock-       
                                        Additional                        investments  Unallocated     Based      Total            
                                Common    paid-in   Retained  Treasury    available      ESOP       Incentive  stockholders'
                                stock     capital   earnings    Stock      for sale     shares         Plan       equity
                                ------   --------  ---------   --------   ----------   -----------  ----------  ------------    
<S>                             <C>       <C>        <C>        <C>           <C>         <C>          <C>          <C>
Balance at December 31, 1996    $ 66      64,461     33,131     (4,739)       (322)       (3,929)      (2,313)      86,355
                                                                       
Net income                       - -         - -      1,914       - -          - -           - -        - -          1,914
                                                                  
Cash dividends declared and
 paid ($0.05 per share)          - -         - -       (313)      - -          - -           - -        - -           (313)
                                                                  
Common Stock repurchased         
 (297,815 shares at an average
  price of $15.86 per share)     - -         - -        - -     (4,722)        - -           - -        - -         (4,722)         
Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         351           351
                                                                  
Change in net unrealized loss on
  investments available for sale - -         - -        - -       - -          (37)          - -         - -           (37)
Appreciation in fair value of
  shares charged to expense
  for compensation plans         - -         207        - -       - -          - -           - -        - -            207
                               -------    -------   --------   ---------    ---------      --------   ---------    --------
                                                                  
Balance at March 31, 1997       $ 66      64,668     34,732     (9,461)       (359)        (3,929)     (1,962)      83,755
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         
                                      
Net income                       - -         - -      1,705       - -          - -           - -        - -          1,705
                                                                  
Cash dividends declared and
 paid ($0.07 per share)          - -         - -       (417)      - -          - -           - -        - -           (417)
                                                                  
Common Stock repurchased         
 (15,200 shares at an average
  price of $15.18 per share)     - -         - -        - -      (230)         - -           - -        - -           (230)         
Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         252           252
                                                                  
Change in net unrealized gain
 (loss) on investments available
 for sale                        - -         - -        - -       - -          378           - -         - -           378
Appreciation in fair value of
  shares charged to expense 
  for compensation plans         - -         300        - -       - -          - -           - -        - -            300
                               -------    -------   --------   ---------    ---------      --------   ---------    --------
                                                                  
Balance at June 30, 1997        $ 66      64,968     36,020     (9,691)         19         (3,929)     (1,710)      85,743
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         
          
Net income                       - -         - -      1,701       - -          - -           - -        - -          1,701
                                                                  
Cash dividends declared and
 paid ($0.07 per share)          - -         - -       (416)      - -          - -           - -        - -           (416)
                                                                  
Common Stock repurchased         
 (297,365 shares at an average
  price of $19.50 per share)     - -         - -        - -     (5,814)        - -           - -        - -         (5,814)         
Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         203           203
                                                                  
Change in net unrealized gain
  (loss)on investments available  
  for sale                       - -         - -        - -       - -           52           - -         - -            52

Appreciation in fair value of
  shares charged to expense 
  for compensation plans         - -         337        - -       - -          - -           - -         - -           337
                               -------    -------   --------   ---------    ---------      --------   ---------    --------
                                                                  
Balance at September 30, 1997   $ 66      65,305     37,305     (15,505)        71         (3,929)     (1,507)      81,806
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         
                                      
</TABLE>
See accompanying condensed notes to consolidated financial statements.
                                      4
<PAGE>
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES                           
            Consolidated Statements of Cash Flows                             
                        (In Thousands)                                         
                                                                           
                                                  For the Nine Months Ended
                                                       September 30,            
                                                    1997          1996
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    5,320    $    1,726
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and                              
       accretion, net                                  843           595
      Earned SIP shares                                806           625  
      Appreciation in fair value of shares 
        for compensation plans                         844           160 
      Provision for loan losses                      1,275         1,126
      Loans originated for sale                    (88,431)     (124,583)
      Proceeds from sale of loans                   76,125       129,072
      Provision for valuation allowance 
       for real estate owned                            57            72
      Gain on sale of real estate held
       for development                                (898)            -
      Gain on sale of real estate          
       acquired through foreclosure                   (539)          (52)
      Gain on sale of loans                           (723)         (511)
      Gain on sale of investment securities             (7)            -
      Increase in accrued interest receivable         (325)         (688)
      Decrease (increase) in prepaid expenses 
       and other assets, net                         3,692        (1,442)
      Increase (decrease) in accrued expenses 
       and other liabilities, net                     (140)        4,065
                                                   --------       -------
          Net cash provided by (used in)                      
           operating activities                     (2,101)       10,165
                                                   -------       -------
                                                              
Cash flows from investing activities:                         
  Net cash of acquired institution (note 4)         11,908             -
  Proceeds from sale of investment
   securities available for sale                     9,008             -
  Proceeds from sale of mortgage-backed
   securities available for sale                     1,084        11,282
  Proceeds from maturities of investment
   securities held to maturity                       5,850         5,742    
  Proceeds from maturities of investment              
   securities available for sale                     4,000             -
  Purchase of investment securities               
   available for sale                              (13,013)          (46)
  Purchase of mortgage-backed             
   securities available for sale                         -       (14,157)
  Purchase of investment securities       
   held to maturity                                 (4,900)      (24,529) 
  Principal payments on mortgage-backed             
   securities available for sale                     2,560         2,205
  Principal payments on investment         
   securities held to maturity                           -            59
  Principal payments on mortgage-           
   backed securities held to maturity                3,478         4,616
  Increase in loans, net                           (21,669)     (149,646)
  Purchases of Premises and equipment                 (676)         (472)
  Proceeds from sale of real estate owned            3,283         1,926
  Additional investment in real estate owned            (2)          (61)       
  Proceeds from sale of real estate held for                                    
   development                                       2,102             -
  Purchase of FHLB stock                                 -        (5,509)
                                                    -------       -------
       Net cash provided by (used in) 
         investing activities                        3,013      (168,590)
                                                    -------     ---------
                          -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,        
                                                    1997            1996
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:                         
    Increase (decrease) in deposit accounts         16,324        (1,511)
    Repayments of securities sold under 
     agreements to repurchase                      (33,685)            -
    Proceeds from securities sold under            
     agreement to repurchase                        38,651         2,973
    Repayments of Federal Home Loan         
     Bank advances                                (241,200)     (393,314)     
    Proceeds from Federal Home Loan 
     Bank advances                                 236,200       545,047       
    Cash dividends paid                             (1,146)         (659) 
    Common stock repurchased                       (10,766)            -
    Decrease in advance payments by          
     borrowers for taxes and insurance                 807           736
    Purchase of stock for Stock-Based
     Incentive Plan                                      -        (3,230)
                                                   --------       -------
                                                              
         Net cash provided by  
            financing activities                     5,185       150,042
                                                   -------       -------        
                        
         Net increase (decrease)      
          in cash and cash equivalents               6,097        (8,383)
                                                              

Cash and cash equivalents at January 1              18,278        21,225
                                                   -------       ------- 
                                                              
Cash and cash equivalents at September 30       $   24,375    $   12,842
                                                   =======       =======
                                                              
Supplemental disclosure of cash flow                          
 information:
     Payments during 
      the nine months for:

       Interest                                 $   27,144     $  19,825
                                                   =======       ======= 
                                                              
       Taxes                                    $    4,097     $   1,714 
                                                   =======       =======
                                                              
Supplemental schedule of non-cash                             
 investing activities:
       Transfers of mortgage       
        loans to real estate owned             $       401     $   3,806
                                                   =======       =======
See accompanying condensed notes to consolidated financial statements.
                                      6                            


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


NOTE 1:  BASIS OF PRESENTATION

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

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

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

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

     Also in  February,  1997,  the FASB  issued SFAS No.  129,  "Disclosure  of
Information about Capital Structure", which will be effective for 1997 financial
statements.  The corporation's  disclosures currently comply with the provisions
of this  statement.  In June 1997,  the FASB  issued  SFAS No.  130,  "Reporting
Comprehensive  Income."  SFAS No. 130  establishes  standards  for reporting and
displaying  comprehensive  income,  which is  defined  as all  changes to equity
except  investments  by and  distributions  to  shareholders.  Net  income  is a
component of comprehensive  income, with all other components referred to in the
aggregate as other  comprehensive  income.  This statement is effective for 1998
financial  statements.  Also in  June  1997,  the  FASB  issued  SFAS  No.  131,
"Disclosures  about  Segments of an Enterprise and Related  Information",  which
establishes  standards for reporting  information about operating  segments.  An
operating  segment is defined as a component  of a business  for which  separate
financial  information  is available  that is  evaluated  regularly by the chief
operating  decision  maker in deciding  how to allocate  resources  and evaluate
performance.  This  statement  requires a company to  disclose  certain  incom e
statement and balance sheet information by operating segment, as well as provide
a reconciliation of operating segment information to the company's  consolidated
balances. This statement is effective for 1998 annual financial statements. 

NOTE 2:  COMMITMENTS,  CONTINGENCIES AND CONTRACTS 

     At September  30, 1997,  the Company had  commitments  of $36.6  million to
originate  mortgage loans and $3.2 million to purchase loans from  correspondent
lenders. Of these $39.8 million commitments,  $28.9 million were adjustable rate
mortgage  loans at rates  ranging  from 6.00% to 10.00% and $10.9  million  were
fixed rate mortgage loans with interest  rates ranging from 6.50% to 9.50%.  The
Company also had commitments to sell $24.0 million of mortgage loans.

     At September 30, 1997,  the Company was servicing  first  mortgage loans of
approximately  $550.4  million,  which are either  partially or  wholly-owned by
others.

                                      7
<PAGE>
NOTE 3:  LEGISLATIVE MATTERS

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


NOTE 4:  ACQUISITIONS (Unaudited)

     On February 7, 1997 the Company  acquired  BNB,  headquartered  in Chelsea,
Massachusetts.  The purchase  price was $22 million and was  accounted for using
the purchase method of accounting.  The results of operations include the effect
of the purchase for the 235 day period beginning February 8, 1997. In connection
with the acquisition,  the fair value of assets acquired and liabilities assumed
were as follows:

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

Liabilities assumed:
      Deposits                                       125,022
      Borrowed funds                                       -
      Other liabilities                                2,318
                                                    --------
        Total liabilities assumed                    127,340
                                                    --------
        Assets in excess of liabilities               18,823

        Cash paid to Broadway shareholders            22,000
                                                    --------
        Goodwill                                    $  3,177
                                                    ========


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

                                    Three Months Ended       Nine Months Ended
                                    ------------------       ------------------
                                    9/30/97    9/30/96       9/30/97    9/30/96
                                    ------------------       ------------------
                                      (In thousands except per share amounts)
Total interest and dividend 
 income and total 
 non-interest income             $ 18,845     $ 17,171      $ 55,029   $ 47,556
Net income                       $  1,701     $    (94)     $  5,471   $  2,930
Net income per share               $ 0.30       $(0.02)       $ 0.94     $ 0.48

                                       8

<PAGE>
<TABLE>
                                                BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                     Average Balances and Yields / Costs
                                                                    (Unaudited)
<CAPTION>
For the quarter ended September 30:                              1997                                       1996        
                                               -------------------------------------       ------------------------------     
                                                                            Average                                  Average
                                                 Average                     Yield/         Average                   Yield/
                                                 Balance       Interest       Cost          Balance      Interest      Cost
                                               ----------     ----------   ---------       ---------    ----------  ---------
                                                                            (Dollars in thousands)
Assets:                                                             
<S>                                             <C>            <C>          <C>           <C>             <C>           <C>
Interest-earning assets:                                                             
 Investment securities (1)                      $  91,999      $ 1,391      6.05%         $  38,890       $   604       6.21%
 Loan, net and mortgage loans held for sale (2)   772,189       15,111      7.83%           646,869        12,159       7.52%
 Mortgage-backed securities (3)                    60,994        1,040      6.82%            77,097         1,320       6.85%
                                               ----------    ---------     ---------       ---------    ----------  ---------
   Total interest-earning assets                  925,182       17,542      7.58%           762,856        14,083       7.38%
                                                             ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       39,850                                    28,946              
                                               ----------                                  ---------   
   Total assets                                 $ 965,032                                 $ 791,802              
                                               ==========                                  =========   

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                  $  63,264          462      2.92%         $  45,919           292       2.54%
 Savings accounts                                 119,765          728      2.43%            90,893           559       2.46%
 NOW accounts                                      99,678          268      1.08%            67,098           210       1.25%
 Certificate accounts                             243,138        3,512      5.78%           199,246         2,835       5.69%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total                                          525,845        4,970      3.78%           403,156         3,896       3.87%
 Borrowed Funds (4)                               303,101        4,630      6.11%           276,603         4,041       5.84%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total interest-bearing liabilities             828,946        9,600      4.63%           679,759         7,937       4.67%
                                                              ---------    ---------                    ----------  ---------  
 Non-interest-bearing liabilities                  50,103                                    20,819           
                                                ----------                                 ---------      
   Total liabilities                              879,049                                   700,578               
                                                ----------                                 ---------  
 Stockholders' equity                              85,983                                    91,224               
                                                ----------                                 ---------
   Total liabilities and                        
    stockholders' equity                        $ 965,032                                 $ 791,802
                                                ==========                                 ========= 
 Net interest rate spread (5)                                  $ 7,942      2.95%                         $ 6,146       2.71%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    3.43%                                       3.22%
                                                                           =========                                ========= 
Ratio of interest-earning assets to 
 interest-bearing liabilities                     111.61%                                   112.22%                
                                                 =========                                 =========        
<FN>
(1) Includes investment securities available for sale and held to maturity, 
    short-term investments, stock in FHLB-Boston and daily federal funds sold.
(2) Amount is net of deferred loan origination costs, construction loans in 
    process, net unearned discount on loans purchased and allowance for loan 
    losses and includes non-performing loans.
(3) Includes mortgage-backed securities available for sale and held to maturity.
(4) Interest paid on borrowed funds for the periods presented includes 
    interest expense on FNMA deposits held in escrow accounts with the 
    Company related to the Company's FNMA servicing, which, if such interest 
    expense was excluded, would result in an average cost of borrowed funds 
    of 6.08% and 5.83% for the three months ended September 30, 1997 and 
    September 30, 1996, respectively.
(5) Net interest rate spread represents the difference between the weighted 
    average yield on interest-earning assets and the weighted average cost of 
    interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of 
    average interest-earning assets.
</FN>
</TABLE>
                                       9

<PAGE>
<TABLE>
                                                BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                     Average Balances and Yields / Costs
                                                                    (Unaudited)
<CAPTION>
For the nine months ended September 30:                          1997                                       1996        
                                               -------------------------------------       ------------------------------     
                                                                            Average                                  Average
                                                 Average                     Yield/         Average                   Yield/
                                                 Balance       Interest       Cost          Balance      Interest      Cost
                                               ----------     ----------   ---------       ---------    ----------  ---------
                                                                            (Dollars in thousands)
Assets:                                                             
<S>                                             <C>            <C>          <C>           <C>             <C>           <C>
Interest-earning assets:                                                             
 Investment securities (1)                      $  84,068      $ 3,782      6.00%         $  34,135       $ 1,546       6.04%
 Loan, net and mortgage loans held for sale (2)   750,769       43,583      7.74%           581,295        32,771       7.51%
 Mortgage-backed securities (3)                    63,426        3,244      6.82%            73,759         3,778       6.83%
                                               ----------    ---------     ---------       ---------    ----------  ---------
   Total interest-earning assets                  898,263       50,609      7.51%           689,189        38,095       7.37%
                                                             ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       39,733                                    27,598              
                                               ----------                                  ---------   
   Total assets                                 $ 937,996                                 $ 716,787              
                                               ==========                                  =========   

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                  $  61,422        1,354      2.94%         $  46,926         1,004       2.85%
 Savings accounts                                 116,078        2,142      2.46%            91,416         1,703       2.48%
 NOW accounts                                      94,933          786      1.10%            65,625           668       1.36%
 Certificate accounts                             227,561        9,622      5.64%           200,316         8,479       5.64%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total                                          499,994       13,904      3.71%           404,283        11,854       3.91%
 Borrowed Funds (4)                               306,543       13,735      5.97%           199,984         8,704       5.80%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total interest-bearing liabilities             806,537       27,639      4.57%           604,267        20,558       4.54%
                                                              ---------    ---------                    ----------  ---------  
 Non-interest-bearing liabilities                  44,816                                    20,453           
                                                ----------                                 ---------      
   Total liabilities                              851,353                                   624,720               
                                                ----------                                 ---------  
 Stockholders' equity                              86,643                                    92,067               
                                                ----------                                 ---------
   Total liabilities and                        
    stockholders' equity                        $ 937,996                                 $ 716,787
                                                ==========                                 ========= 
 Net interest rate spread (5)                                  $22,970      2.94%                         $17,537       2.83%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    3.41%                                       3.39%
                                                                           =========                                ========= 
Ratio of interest-earning assets to 
 interest-bearing liabilities                     111.37%                                   114.05%                
                                                 =========                                 =========        
<FN>
(1) Includes investment securities available for sale and held to maturity, 
    short-term investments, stock in FHLB-Boston and daily federal funds sold.
(2) Amount is net of deferred loan origination costs, construction loans in 
    process, net unearned discount on loans purchased and allowance for loan 
    losses and includes non-performing loans.
(3) Includes mortgage-backed securities available for sale and held to maturity.
(4) Interest paid on borrowed funds for the periods presented includes 
    interest expense on FNMA deposits held in escrow accounts with the 
    Company related to the Company's FNMA servicing, which, if such interest 
    expense was excluded, would result in an average cost of borrowed funds 
    of 5.96% and 5.76% for the three months ended September 30, 1997 and 
    September 30, 1996, respectively.
(5) Net interest rate spread represents the difference between the weighted 
    average yield on interest-earning assets and the weighted average cost of 
    interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of 
    average interest-earning assets.
</FN>
</TABLE>

                                       10
<PAGE>

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


A.  GENERAL

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

     The Company is aware of the issues  associated with the programming code in
existing  computer systems as the millennium (year 2000)  approaches.  The "year
2000" problem is pervasive  and complex as virtually  every  computer  operation
will be affected in some way by the  rollover of the two digit year value to 00.
The issue is whether  computer  systems will properly  recognize  date sensitive
information  when  the  year  changes  to  2000.  Systems  that do not  properly
recognize such  information  could generate erroneous data or cause a system to
fail. The Company is utilizing both internal and external resources to identify,
correct or reprogram,  and test the systems for the year 2000 compliance.  It is
anticipated  that all  reprogramming  efforts  will be complete by December  31,
1998,  allowing  adequate  time for testing.  To date,  confirmations  have been
received  from the  Company's  primary  processing  vendors that plans are being
developed to address  processing of  transactions  in the year 2000.  Management
believes  that the  expense  and  related  potential effect  on the  Company's
earnings of the year 2000 compliance will not be material.

B.  FINANCIAL POSITION

     Total assets at September 30, 1997 were $960.7 million,  compared to $820.6
million at December  31,  1996,  an increase of $140.1  million or 17.1%.  Asset
growth was primarily  attributable  to the acquisition of BNB which was recorded
using the purchase  method of accounting.  The major  components of asset growth
included  investment  securities  available  for sale which  increased  to $36.7
million at  September  30,  1997 from $1.1  million  at  December  31,  1996 due
primarily to the addition of BNB's investment portfolio. Loans, net of allowance
for loan losses increased by $86.1 million,  or 12.7%,  from a balance of $676.7
million at December  31, 1996 to $762.8  million at  September  30,  1997,  also
primarily  due to the  acquisition  of  BNB's  portfolio  and  growth  in  BFS's
adjustable-rate  loan portfolio.  Excluding BNB's portfolio acquired on February
7, 1997, loans, net of allowance for loan losses increased by $20.0 million, due
mostly to increased  originations of adjustable-rate  mortgages.  Mortgage loans
held for sale  increased  from $4.0 million at year-end 1996 to $17.0 million at
September 30, 1997 due to increased accumulation of mortgage loans held for sale
during the current quarter.  Deposit accounts increased by $141.4 million from a
balance of $428.8 million at December 31, 1996 to a balance of $570.2 million at
September 30, 1997.  Of the  increase,  $104.5  million is  attributable  to the
acquisition  of BNB  while the  balance  represents  growth  in BNB's  since the
acquisition,  and growth in BFS' deposit  balances,  $35.0  million of which was
obtained from  wholesale CD markets.  BFS obtained the brokered CDs for terms of
approximately three years.  Federal Home Loan Bank advances were reduced by $5.0
million,  to a balance of $291.5 million at September 30, 1997 from a balance of
$296.5 million at December 31, 1996. This reduction was offset by an increase in
other borrowed money  (repurchase  agreements) which amounted to $8.5 million at
September 30, 1997, compared to $3.5 million at December 31, 1996.

C.  ASSET/LIABILITY MANAGEMENT

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

                                      11

<PAGE>

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

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

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

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

     At September  30, 1997,  the  Company's one year gap was a positive 6.8% of
total assets,  compared to a positive 5.3% of total assets at December 31, 1996.
The  change  in the gap was  caused  by the  addition  of BNB  which,  like most
commercial  banks, has a larger portion of its assets,  compared to liabilities,
repricing in the one year horizon.

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

                                      12
<PAGE>


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


D.  LIQUIDITY AND CAPITAL RESOURCES

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

     The  Company's  most  liquid  assets are cash,  daily  federal  funds sold,
Federal Home Loan Bank overnight deposits,  short-term investments and loans and
investments  and  mortgage-backed  securities  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, 1997, BFS' cash,
short-term  investments and loans and investment  securities  available for sale
totaled $47.7 million or 5.8% of BFS's total assets. Additional investments were
available which qualified for BFS's regulatory liquidity requirements. Under OCC
regulations,  BNB  does  not  have  specific  liquidity  requirements,  but must
maintain a reasonable  and prudent level in order to operate in a safe and sound
manner.

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including FHLB advances.  At September 30, 1997, BFS had $291.5 million
in advances  outstanding  from the FHLB.  The Company also borrowed $8.5 million
through  repurchase  agreements.  The Company generally does not pay the highest
deposit  rates in its market and  accordingly  utilizes  alternative  sources of
funds such as FHLB advances and  repurchase  agreements to supplement  cash flow
needs.

     At September 30, 1997, the Company had  commitments to originate  loans and
unused  outstanding  lines  of  credit  totalling  $95.0  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, 1997, totalled $139.8 million.

     At  September  30, 1997,  the  consolidated  stockholders'  equity to total
assets ratio was 8.5%.  As of  September  30,  1997,  the  Company,  BFS and BNB
exceeded all of their regulatory capital requirements.  BFS's tangible, core and
risk-based capital ratios were 5.8%, 5.8% and 11.6%, respectively.  BNB's tier 1
leverage and risk-based capital ratios were 6.8% and 16.4% respectively, total
risk-based capital was 17.6%. Additionally,  BFS' retained earnings at September
30, 1997 includes approximately $13.2 million of tax bad debt reserves for which
no federal  income tax liability has been  recognized.  Under the Small Business
Job  Protection  Act  of  1996  (the  "1996  Act")  if BFS  makes  "non-dividend
distributions"  to the Company,  such  distributions  will be considered to have
been  made  from  BFS's   unrecaptured  tax  bad  debt  reserves.   Non-dividend
distributions  include  distributions  in excess of BFS' current and accumulated
earnings  and  profits,   as  calculated   for  federal   income  tax  purposes,
distributions in redemption of stock,  and  distributions in partial or complete
liquidation.  Dividends  paid out of BFS's current or  accumulated  earnings and
profits are not included in BFS's income.
 
                                       13

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

   General

     Earnings for the quarter ended  September  30, 1997 were $1.7  million,  or
$.31 per Share,on a primary basis and $.30 per share on a fully  diluted  basis,
compared to a loss of $421,000,  or $.07 per share for the comparable quarter of
1996.  The third  quarter of 1996 was  adversely  impacted  by the one time $2.7
million  (approximately  $1.6  million  after tax)  special  assessment  for the
recapitalization  of the SAIF.  For the  nine-months  ended  September 30, 1997,
earnings  amounted to $5.3 million,  or $.95 and $.91 per share on a primary and
fully diluted basis,  respectively,  compared to $1.7 million, or $.28 per share
with no earnings per share  dilution  for the  comparable  period in 1996.  Real
estate operations  income of $1.2 million (before income taxes),  contributed to
the increased earnings for the nine months ended September 30, 1997, compared to
an expense of $180,000  (before income taxes) during the comparable  period last
year. The real estate  operations  income resulted  primarily from the sale of a
land sub-division  owned by a subsidiary of BFS during the first quarter of 1997
and improved  prices received on the sale of real estate owned  properties.  The
improved  earnings  increased  the return on average  assets to .76%  during the
nine-months  ended  September 30, 1997 compared to a return on average assets of
 .32%  for the  comparable  period  last  year  which  was  impacted  by the SAIF
recapitalization.  The return on average stockholders' equity increased to 8.18%
during the  nine-months  ended  September  30,  1997,  compared to 2.50% for the
nine-months ended September 30, 1996.  Comments  regarding the components of net
income are  detailed  in the  following  paragraphs.  A majority  of the balance
increases in interest-earning assets was the result of the Company's acquisition
of BNB, effective the close of business on February 7, 1997.

   Interest Income

     Total  interest  income on  interest-earning  assets for the quarter  ended
September  30, 1997  increased  by $3.5  million,  or 24.8%,  to $17.5  million,
compared to the quarter  ended  September  30,  1996.  The  increase in interest
income  was  primarily  attributable  to a $162.3  million  increase  in average
interest-earning  assets and a 20 basis point increase in the average yield. The
average yield on interest-earning assets increased to 7.58% for the three months
ended  September  30, 1997 from 7.38% for the three months ended  September  30,
1996. For the nine months ended  September 30, 1997,  total interest  income was
$50.6 million,  compared to $38.1 million for the same period in 1996. The major
reason for the  increase  was also the  increased  average  balances  which were
$898.3  million  during the nine months ended  September  30, 1997,  compared to
$689.2  million  during  the  comparable  period in 1996.  Average  yields  also
increased by 14 basis points  during the nine months  ended  September  30, 1997
compared to the same period of 1996.

     Interest  income on loans,  net, for the quarter  ended  September 30, 1997
increased by $3.0 million,  or 24.6%, to $15.1 million compared to $12.2 million
for the same quarter in 1996. On a year to date basis, interest income on loans,
net,  increased  $10.8 million to $43.6  million from the $32.8  million  earned
during the year to date  period  ended  September  30,  1996.  The  increase  in
interest income from loans, net, for the quarter and nine months ended September
30, 1997, compared to the same periods last year, was primarily  attributable to
increases   in  average   balances  of  $125.3   million  and  $169.5   million,
respectively.  Additionally,  the average  yield on loans,  net  increased by 31
basis points to 7.83% during the quarter ended  September 30, 1997,  compared to
7.52% during the quarter ended September 30, 1996. On a year to date basis,  the
yield on loans,  net,  increased from 7.51% for the nine months ended  September
30, 1996, to 7.74% during the current year period.  Interest on  mortgage-backed
securities  for the quarter ended  September  30, 1997  decreased by $280,000 to
$1.0  million,  compared  to $1.3  million  for the same  quarter in 1996.  This
decrease in income was due primarily to the $16.1 million lower average  balance
during the quarter  ended  September  30,  1997,  compared to the quarter  ended
September  30, 1996.  Additionally,  the average  yield  declined by three basis
points to an average of 6.82%  during the  quarter  ended  September  30,  1997,
compared to the same  quarter  last year.  On a year to date basis,  interest on
mortgage-backed  securities was $3.2 million, compared to last year's comparable
period  total of $3.8  million.  Average  yields  declined  only one basis point
during the nine months ended  September  30,  1997,  compared to the same period
last year.  Interest income from  investment  securities was $1.4 million during
the third quarter of 1997,  compared to $604,000 for the  comparable  quarter in
1996. The average yield on investment securities declined by 16 basis points due
to BNB's  portfolio  which is comprised  mostly of lower yielding U.S.  Treasury
securities.  The average  balance  increased  by $53.1  million to an average of
$92.0 million during the  three-months  ending  September 30, 1997. On a year to
date  basis,  interest  income  from  investment  securities  was $3.8  million,
compared to $1.5  million for the nine months  ended  September  30,  1996.  The
average  balance of investment  securities was $84.1 million for the nine months
ended  September 30, 1997,  compared to $34.1 million for the comparable  period
last year. 

                                      14
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended  September  30, 1997  increased by $1.7 million or 21.5%,  to $9.6 million
compared to the quarter  ended  September  30,  1996.  The  increase in interest
expense  for the  quarter  ended  September  30,  1997 was due  primarily  to an
increase  of  $149.2  million  in  the  average   balance  of   interest-bearing
liabilities  which averaged  $828.9  million during the quarter,  compared to an
average balance of $679.8 million during the quarter ended September 30, 1996. A
4 basis  point  decrease  in the average  cost of  interest-bearing  liabilities
partially offset the increase in interest expense  resulting from higher average
balances  during  the third  quarter  of 1997,  compared  to the  quarter  ended
September 30, 1996. The average cost of interest-bearing  liabilities  decreased
to 4.63% during the quarter ended September 30, 1997, compared to 4.67% for last
year's  comparable  quarter.  On a year  to  date  basis,  interest  expense  on
interest-bearing  liabilities totaled $27.6 million,  compared to last year's to
date total of $20.6 million, a 30.0% increase. The increase was primarily caused
by the  effect of higher  average  balances  of $806.5  million  during the nine
months ended  September 30, 1997 compared to average  balances of $604.3 million
during the nine months ended  September 30, 1996. The three basis point increase
in the cost of  interest-bearing  liabilities  during the  current  year to date
period also contributed to the higher interest expense.

     Interest expense on deposit accounts was $5.0 million for the quarter ended
September  30, 1997,  an increase of $1.1 million from the $3.9 million for the
quarter ended  September 30, 1996. The increase in the expense was due to higher
average  deposit account  balances of $122.7 million,  offset by a decrease of 9
basis points in the average cost of funds during the quarter ended September 30,
1997,  compared to the quarter ended  September 30, 1996. The average balance of
deposit accounts  increased from $403.2 million for the quarter ending September
30,  1996 to an  average  balance  of  $525.8  million  for the  quarter  ending
September 30, 1997,  mostly due to the acquisition of BNB and the acquisition of
$35 million of  wholesale  brokered  certificates  of deposit for terms of three
years.  Interest  expense on borrowed funds  increased from $4.0 million for the
quarter ended  September 30, 1996 to $4.6 million for the current  quarter.  The
average cost of borrowed  funds  increased  from 5.84% during the quarter  ended
September  30,  1996 to an average  of 6.11%  during the  current  quarter.  The
average balances  increased from $276.6 million during the third quarter of 1996
to an average balance of $303.1 million during the third quarter of 1997.

Net Interest Income

     Net interest  income  increased by $1.8 million during the third quarter of
1997,  compared to the same quarter last year,  due primarily to asset growth by
BFS and the  acquisition  of BNB. The net interest  rate spread of 2.95% for the
quarter  ended  September 30, 1997 was 24 basis points higher than the 2.71% for
the comparable quarter last year. The primary reasons for the improvement in the
net  interest  rate spread are the  addition of BNB,  as most  commercial  banks
typically  earn a wider  spread and an  improvement  in BFS' net  interest  rate
spread.  The net interest margin was similarly  impacted and improved from 3.22%
for the quarter ended September 30, 1996 to 3.43% for the third quarter of 1997.
On a year to date  basis  the net  interest  rate  spread  improved  by 11 basis
points.  The net interest  margin  improved from 3.39% for the nine months ended
September  30, 1996 to 3.41% for the nine months  ended  September  30, 1997 due
primarily to the utilization of capital to repurchase the Company's stock.

Provision for Loan Losses

     The  Company's  provision  for loan losses  amounted  to  $395,000  for the
quarter ended  September 30, 1997,  compared to the $390,000 loan loss provision
for the comparable  quarter last year. On a year to date basis through September
30, 1997,  the provision for loan losses  amounted to $1.3 million,  compared to
$1.1 million for the comparable  period last year. The allowance for loan losses
has  increased  from $4.4  million  at  December  31,  1996 to $6.0  million  at
September 30, 1997,  after  consolidation  of BNB's allowance for loan losses of
$605,000  at the  time of  acquisition  and the year to date  provision,  net of
charge-offs and recoveries.

     The Company  establishes  provisions for loan losses,  which are charged to
operations,  in order to maintain the allowance for loan losses at a level which
is deemed to be  appropriate  based  upon  management's  assessment  of the risk
inherent in its loan portfolio in light of current economic  conditions,  actual
loss  experience,  industry  trends and other  factors which may affect the real
estate  values in the  Company's  market  area.  While  management  believes the
current allowance for loan losses is adequate,  actual losses are dependent upon
future events,  and as such, future provisions for loan losses may be necessary.
As part of the Company's determination of the adequacy of the allowance for loan
losses, the Company monitors its loan portfolio through its Asset Classification
Committee.   The  Committee   classifies   loans   depending  on  risk  of  loss
characteristics.  The most severe classification before a charge-off is required
is "sub-standard." At September 30, 1997, the Company classified $5.5 million of
loans ($4.2 million of BFS and $1.3 million of BNB) as sub-standard  compared to
$3.8  million  (BFS  only)  at  December  31,  1996.  The  Asset  Classification
Committee,  which meets quarterly,  determines the adequacy of the allowance for
loan  losses  through  ongoing  analysis  of  historical  loss  experience,  the
composition of the loan portfolios,  delinquency levels,  underlying  collateral
values,  cash flow values and state of the real estate economy.  Utilizing these
procedures,  management believes that the allowance for loan losses at September
30, 1997 was sufficient to provide for  anticipated  losses inherent in the loan
portfolio.

                                      15
<PAGE>

     The  Company's  allowance  for loan losses at  September  30, 1997 was $6.0
million,  which  represented  647.3%  of  non-performing  loans or .76% of total
loans,   compared  to  $4.4  million  at  December   31,  1996,   or  293.0%  of
non-performing loans and .64% of total loans.

     Non-performing  loans at September 30, 1997 amounted to $927,000 or .12% of
total loans,  compared to $1.5 million,  or .22% of total loans, at December 31,
1996.

     The amount of interest income on non-performing  loans that would have been
recorded had these loans been current in accordance  with their original  terms,
was $137,000 and $110,000 for the  nine-month  periods ended  September 30, 1997
and 1996, respectively. The amount of interest income that was recorded on these
loans was $36,000 and $41,000 for the  nine-month  periods  ended  September 30,
1997 and 1996, respectively.

     At September 30, 1997, loans characterized as impaired,  (which include all
non-performing loans and some other sub-standard  assets),  pursuant to SFAS No.
114,  "Accounting by Creditors for Impairment of a Loan",  ("SFAS 114") and SFAS
No. 118,  "Accounting by Creditors for Impairment of a Loan--Income  Recognition
and  Disclosure",  ("SFAS 118") totaled $3.7 million.  All of the impaired loans
have been measured  using the fair value of the  collateral  method.  During the
nine-months  ended  September 30, 1997,  the average  recorded value of impaired
loans was $4.3 million,  $214,000 interest income was recognized and $317,000 of
interest income would have been recognized under the loans' original terms.

     At  September  30,  1997,  the  Company had  $270,000 in real estate  owned
compared to $2.7 million at December 31, 1996.  Further,  at September  30, 1997
the Company also had  restructured  real estate loans  amounting to $2.3 million
for which interest is being recorded in accordance with the loans'  restructured
terms. The amount of the interest income lost on these restructured loans is not
material to the Company's financial statements.

Non-Interest Income

     Total  non-interest  income  in the  third  quarter  of 1997  increased  by
$464,000,  or 55.3%,  to $1.3 million  from  $839,000 for the three months ended
September  30,  1996 due to a $258,000  increase  in other  non-interest  income
(primarily  transaction  account  fees) and a $204,000  increase in gains on the
sale of loans resulting from favorable market conditions.

     On a year to date basis, total non-interest income amounted to $3.5 million
for the nine-months  ended September 30, 1997,  compared to $2.7 million for the
nine-months ended September 30, 1996. The increase in total non-interest  income
during the current period was also due to higher transaction account fees, which
include BNB's fees and improved gains on the sale of loans.

Non-Interest Expense

     Total non-interest expense was $5.6 million for the quarter ended September
30,  1997  compared  to  $7.4  million  for  the  comparable  quarter  in  1996.
Compensation  and  benefits  increased  by  $887,000  from $2.5  million for the
quarter ended September 30, 1996 to $3.4 million for the quarter ended September
30, 1997.  The major reasons for this increase were due to the addition of BNB's
compensation and benefits expense  amounting to $602,000 and increased  expenses
for the Company's ESOP and Short Term Incentive Plan ("STIP"),  which  increased
by $328,000 and 113,000,  respectively.  The increased expenses for the ESOP was
due to increases in the market value of the Company's stock.  Such increases are
credited to Additional  Paid in Capital in accordance  with  generally  accepted
accounting  principles.  Occupancy and equipment  expense  increased to $769,000
during the quarter ended  September 30, 1997,  compared to $599,000 in the prior
year's quarter due to the inclusion of BNB's expenses. Federal deposit insurance
declined  from $246,000  during the quarter ended  September 30, 1996 to $74,000
during the current quarter due to lower premiums on deposits  resulting from the
SAIF  Recapitalization.  On a year to date basis, total non-interest expense was
$15.6  million,   compared  to  last  year  to  date  total  of  $16.2  million.
Compensation  and benefits  increased to $10.0 million for the nine months ended
September  30,  1997,  compared to $7.2 million for the  comparable  period last
year. As with the current  quarter,  the year to date was similarly  impacted by
the inclusion of $1.5 million of compensation and benefits of BNB since February
8, 1997 and increased expenses for the ESOP, and STIP. Federal deposit insurance
premiums  declined by $508,000  during the nine months ended September 30, 1997,
compared to the nine months ended September 30, 1996 also due to lower insurance
premiums resulting from the SAIF  recapitalization in the third quarter of 1996.
Real estate  operations  provided $1.2 million of income during the current year
to date period, compared to and expense of $180,000 during the comparable period
last year.  The current  year to date real  estate  operations  income  resulted
primarily from the sale of a land  sub-division  owned by a subsidiary of BFS as
well as recoveries on the sale of real estate owned. Occupancy and equipment and
other  non-interest  expenses were higher during the current quarter and year to
date  periods,  compared  to the  prior  year's  periods  due  primarily  to the
inclusion of such expenses from BNB from February 8, 1997 through  September 30,
1997.

                                      16
<PAGE>

Income Tax Expense

     Income tax expense for the quarter  ended  September  30, 1997  amounted to
$1.5 million  compared to an income tax benefit of $334,000 for the same quarter
last year. The increase was due almost entirely to increased  income before tax.
The effective  income tax rate was 47% for the quarter ended September 30, 1997,
compared to an effective benefit rate of 44% for the quarter ended September 30,
1996. The primary reasons for the high effective rate during the current quarter
were the goodwill  amortization and a greater  appreciation in the market value
of shares contributed to the ESOP, neither of which were tax deductible. The tax
benefit for the quarter  ended  September  30, 1996 was the result of  operating
losses  caused by the  recapitalization  of the SAIF.  On a year to date  basis,
income tax expense was $4.3 million,  for an effective rate of 44%,  compared to
$1.2 million for an effective  rate of 40% for nine months ended  September  30,
1996. As with the current quarter, the reasons for the increased tax expense and
effective  tax rate  during  the nine  months  ending  September  30,  1997 were
primarily higher income before income tax and the  non-deductibility of both the
goodwill amortization and appreciation in the market value of shares contributed
to the ESOP.


                         PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

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


Item 2.  Changes in Securities


       Not applicable


Item 3.  Defaults Upon Senior Securities


       Not applicable


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

       None


                                      17

<PAGE>

Item 5.  Other Information

       Not applicable


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


* Incorporated herein to the Company's Registration Statement on form S-1
  originally filed on July 21, 1995
 
**This schedule contains summary financial information extracted from Form 10-Q
  and is qualified in its entirety by reference to such financial statements.


                                      18

<PAGE>

                                  SIGNATURES



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

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

undersigned thereunto duly authorized.


                                           BOSTONFED BANCORP, INC.
                                                  (Registrant)


Date:  November 14, 1997                            By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  November 14, 1997                             By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Executive Vice President,
                                                 Chief Financial Officer
                                                  and Corporate Secretary

                                      19