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:              March 31, 1998
                            __________________________

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 April 30, 1998:  5,422,637.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

            Consolidated Balance Sheets as of 
            March 31, 1998 (unadudited) and December 31, 1997       2

            Consolidated Statements of Operations for the Three 
            Months ended March 31, 19987 and 1997 (unaudited)       3

            Consolidated Statement of Changes in Stockholders'
            Equity for the Three Months ended 
            March 31, 1998 (unaudited)                              4

            Consolidated Statements of Cash Flows for the
            Three Months ended March 31, 1998 and 1997 (unaudited)  5 - 6

            Notes to Consolidated Financial Statements              7 - 8

            Average Balances and Yield / Costs                      9
 
 Item 2.    Management's Discussion and Analysis of Financial

            Condition and Results of Operations                     10 - 15
 

 Item 3.    Quantitative and Qualitative Disclosures About
            Market Risk                                             16 - 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)

                                                   March 31,   December 31,
                                                     1998          1997
                                                  -----------  --------------
Assets                                            (Unaudited)
------------
Cash and cash equivalents                            $ 27,301   $  24,690
Investment securities available for sale
  (amortized cost of $51,758 and $31,554 at
  March 31, 1998 and December 31, 1997
  respectively)                                        51,752      31,767
Investment securities held to maturity (fair
  value of $14,013 and $20,630 at March 31, 1998
  and December 31, 1997, respectively)                 13,987      20,630
Mortgage-backed securities available for sale
  (amortized cost of $17,214 and $19,007 at
  March 31, 1998 and December 31, 1997, 
  respectively)                                        17,256      19,125
Mortgage-backed securities held to maturity (fair
  value of $37,127 and $38,903 at March 31, 1998 
  and December 31, 1997, respectively)                 36,548      38,350
Mortgage loans held for sale                           32,762       9,817
Loans, net of allowance for loan losses of $7,140
  and $6,600 at March 31, 1998 and December 31, 
  1997, respectively                                  813,590     791,728
Accrued interest receivable                             5,297       5,163
Stock in FHLB of Boston and Federal Reserve Bank       16,613      16,613
Premises and equipment                                  6,688       6,842
Real estate owned                                         195         195
Other assets                                            9,610       9,760
                                                     --------    --------
            Total assets                           $1,031,599    $974,680
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $651,032    $619,821
 Federal Home Loan Bank advances                      284,500     256,500
 Securities sold under agreements to repurchase         3,500       7,140
 Advance payments by borrowers for taxes
  and insurance                                         3,491       3,133
 Other liabilities                                      7,837       6,475
                                                      -------     -------
            Total liabilities                         950,360     893,069
                                                      -------     -------
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 (5,422,637 and 
  5,520,437 shares outstanding, respectively)              66          66
 Additional paid-in capital                            65,497      65,282
 Retained earnings                                     40,147      38,645
 Accumulated other comprehensive income                    38         242
  Less Treasury Stock, (1,166,980 shares and 
   1,069,180 shares, respectively), at cost           (20,228)    (18,146)
  Less unallocated ESOP shares                         (3,174)     (3,174)
  Less unearned Stock-Based Incentive Plan             (1,107)     (1,304)
                                                      --------    -------- 
            Total stockholders' equity                 81,239      81,611
                                                      --------    --------
Total liabilities and stockholders' equity         $1,031,599    $974,680
                                                      ========    ========

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        
                                 ------------------       
                                 3/31/98    3/31/97       
                                 ------------------          
                              
                                    (Unaudited)
                          
Interest income:
 Loans                          $ 15,849  $  13,786      
 Mortgage-backed securities          941      1,131         
 Investment securities             1,411      1,080         
                                 -------    -------       
   Total interest income          18,201     15,997        
                                 -------    -------       
Interest expense:
 Deposit accounts                  5,694      4,172        
 Borrowed funds                    4,303      4,685        
                                 -------    -------       
   Total interest expense          9,997      8,857        
                                 -------    -------       
Net interest income                8,204      7,140        
Provision for loan losses            403        425         
                                 -------    -------       
 Net interest 
   income after provision          7,801      6,715        
Non-interest income:
 Loan processing and servicing 
   fees                              144        299           
 Gain on sale of loans               655        130           
 Deposit service fees                409        381         
 Other                               196        185           
                                 -------    -------       
Total non-interest income          1,404        995         
                                 -------    -------       
Non-interest expense:
 Compensation and benefits         3,410      3,240        
 Occupancy and equipment             774        696         
 Federal deposit insurance
  premiums                            79         71           
 Real estate operations              (14)      (891)       
 Other                             1,731      1,349         
                                 -------    -------       
  Total non-interest expense       5,980      4,465        
                                 -------    -------       
Income before income taxes         3,225      3,245        
Income tax expense                 1,336      1,331        
                                 -------    -------       
Net income                      $  1,889   $  1,914        
                                 =======    =======          
                                                              
Basic earnings per share           $0.37      $0.33        
Diluted earnings 
  per share                        $0.35      $0.33        
Basic weighted average shares
  outstanding                  5,166,072  5,737,482     
Common stock equivalents
  due to dilutive effect
  of stock options               261,588    123,851       
Diluted total weighted average
  shares outstanding           5,427,660  5,861,333     

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)
                              Three Months Ended March 31, 1998
                                          (Unaudited)
<CAPTION>
                                                                               
                                                                                                    Unearned
                                                                         Accumulated                 Stock-       
                                        Additional                          other     Unallocated    Based      Total            
                                Common    paid-in   Retained  Treasury  Comprehensive   ESOP       Incentive  stockholders'
                                stock     capital   earnings    Stock       income     shares         Plan       equity
                                ------   --------  ---------   --------   ----------   -----------  ----------  ------------    
<S>                             <C>       <C>        <C>       <C>            <C>         <C>          <C>          <C>
Balance at December 31, 1997    $ 66      65,282     38,645    (18,146)       242         (3,174)      (1,304)      81,611
                                                                       
Net income                       - -         - -      1,889       - -          - -           - -        - -          1,889

Change in net unrealized loss on
 investments available for sale
 (net of tax benefit of $89)     - -         - -        - -       - -         (204)          - -        - -           (204)   
                                                                                                                    --------
Total comprehensive income       - -         - -        - -       - -          - -           - -        - -          1,685
                               
Cash dividends declared and
 paid ($0.07 per share)          - -         - -       (387)      - -          - -           - -        - -           (387)
                                                                  
Common Stock repurchased         
 (98,200 shares at an average
  price of $21.27 per share)     - -         - -        - -     (2,089)        - -           - -        - -         (2,089)         
Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         197           197

Options exercised                - -          (2)       - -         7          - -           - -        - -              5

Appreciation in fair value of
  shares charged to expense for
  compensation plans             - -         217        - -       - -          - -           - -        - -            217
                               -------    -------   --------   ---------    ---------      --------   ---------    --------
                                                                  
Balance at March 31, 1998       $ 66      65,497     40,147    (20,228)         38         (3,174)     (1,107)      81,239
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         
                                                                 
                                    
</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 Three Months Ended
                                                         March 31,            
                                                    1998          1997
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    1,889    $    1,914
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and                              
       accretion, net                                  326           261
      Earned SIP shares                                197           351  
      Appreciation in fair value of shares      
       charged to expense for compensation plans       217           207
      Provision for loan losses                        403           425
      Loans originated for sale                   (103,031)      (24,185)
      Proceeds from sale of loans                   81,241        18,717
      Provision for valuation allowance 
       for real estate owned                             -            57
      Gain on sale of real estate held
       for development                                   -          (898) 
      Gain on sale of real estate          
       acquired through foreclosure                    (16)         (154)
      Gain on sale of loans                           (655)         (130)
      Increase in accrued interest receivable         (134)         (295)
      Decrease in prepaid expenses 
       and other assets, net                            96         1,831
      Increase in accrued expenses and
       other liabilities, net                        1,448             5
                                                   --------       -------
          Net cash used in                      
           operating activities                    (18,019)       (1,894)
                                                   -------       -------
                                                              
Cash flows from investing activities:                         
  Net cash of acquired institution                       -        11,908
  Proceeds from maturities of investment
   securities held to maturity                       6,150         3,100    
  Proceeds from maturities of investment              
   securities available for sale                         -         1,000
  Purchase of investment securities               
   available for sale                              (20,187)          (16)
  Purchase of investment securities       
   held to maturity                                      -        (2,000) 
  Principal payments on mortgage-backed             
   securities available for sale                     1,776             -
  Principal payments on mortgage-           
   backed securities held to maturity                1,799         1,839
  Increase in loans, net                           (22,265)       (4,132)
  Purchases of premises and equipment                 (117)         (117)
  Proceeds from sale of real estate owned               16         1,025
  Additional investment in real estate owned             -            (2)       
  Proceeds from sale of real estate held for                                    
   development                                           -         2,102 
                                                    -------       -------
       Net cash provided by (used in) 
         investing activities                      (32,828)       14,707
                                                    -------     ---------
                          -Continued on next page-  
                                      5
<PAGE>                          
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES                           
            Consolidated Statements of Cash Flows                             
                        (In Thousands)                                         
                                                                           
                                                  For the Three Months Ended
                                                         March 31,        
                                                    1998            1997
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:                         
    Increase (decrease) in deposit accounts         31,211        (9,008)
    Repayments of securities sold under
     agreement to repurchase                        (3,640)            -
    Proceeds from securities sold under 
     agreements to repurchase                            -        18,361 
    Repayments of Federal Home Loan            
     Bank advances                                (104,502)      (59,000)
    Proceeds from Federal Home Loan 
     Bank advances                                 132,502        45,000       
    Cash dividends paid                               (387)         (313) 
    Common stock repurchased                        (2,089)       (4,722)
    Options exercised                                    5             -
    Increase in advance payments by          
     borrowers for taxes and insurance                 358           272
                                                  --------       -------
                                                              
         Net cash provided by (used in) 
            financing activities                    53,458        (9,410)
                                                   -------       -------        
                        
         Net increase       
          in cash and cash equivalents               2,611         3,403
                                                              

Cash and cash equivalents at beginning of quarter   24,690        18,278
                                                   -------       ------- 
                                                              
Cash and cash equivalents at end of quarter     $   27,301    $   21,681
                                                   =======       =======
                                                              
Supplemental disclosure of cash flow                          
 information:
     Payments (refunds received) during 
      the quarter for:

       Interest                                 $    9,008     $   8,787
                                                   =======       ======= 
                                                              
       Taxes                                    $    1,390     $     478 
                                                   =======       =======
                                                              
Supplemental schedule of non-cash                             
 investing activities:
       Transfers of mortgage       
        loans to real estate owned             $         -     $      98
                                                   =======       =======
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 March 31, 1998 and December 31, 1997 and for the three- month
periods  ended March 31,  1998 and 1997,  and the  accounts of its  wholly-owned
subsidiary,  Broadway  National  Bank  ("BNB")  effective  at close of  business
February 7, 1997  through  March 31, 1998.  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-month periods ended
March 31, 1998 and 1997 are not  necessarily  indicative of the results that may
be expected for the entire fiscal year.


NOTE 2:  COMMITMENTS,  CONTINGENCIES AND CONTRACTS 

     At March  31,  1998,  the  Company  had  commitments  of $60.6  million  to
originate  mortgage loans and $4.9 million to purchase loans from  correspondent
lenders. Of these $65.5 million commitments,  $34.8 million were adjustable rate
mortgage  loans at rates  ranging  from 6.00% to 10.00% and $30.7  million  were
fixed rate mortgage loans with interest  rates ranging from 6.00% to 9.00%.  The
Company also had commitments to sell $53.8 million of mortgage loans.

     At March 31,  1998,  the  Company was  servicing  first  mortgage  loans of
approximately  $565.9  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 will 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, 1997 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  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    
                                               3/31/97    
                                         ------------------    
                                         (In thousands except
                                           per share amounts)
Total interest and dividend 
 income and total 
 non-interest income                         $ 17,933
Net income                                   $  2,065
Basic Earnings per share                       $ 0.36
Diluted Earnings per share                     $ 0.35

                                       8

<PAGE>

<TABLE>
                                                BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                     Average Balances and Yields / Costs
                                                                    (Unaudited)
<CAPTION>
For the three months ended March 31:                             1998                                       1997        
                                               -------------------------------------       ------------------------------     
                                                                            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)                      $  91,998      $ 1,411      6.13%         $  72,430       $ 1,080       5.96%
 Loan, net and mortgage loans held for sale (2)   820,187       15,849      7.73%           722,983        13,786       7.63%
 Mortgage-backed securities (3)                    56,243          941      6.69%            65,883         1,131       6.87%
                                               ----------    ---------     ---------       ---------    ----------  ---------
   Total interest-earning assets                  968,428       18,201      7.52%           861,296        15,997       7.43%
                                                             ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       41,397                                    38,224              
                                               ----------                                  ---------   
   Total assets                               $ 1,009,825                                 $ 899,520              
                                               ==========                                  =========   

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                  $  63,640          470      2.95%         $  57,306           421       2.94%
 Savings accounts                                 117,551          730      2.48%           107,326           657       2.45%
 NOW accounts                                     102,993          296      1.15%            85,425           234       1.10%
 Certificate accounts                             290,692        4,198      5.78%           206,905         2,860       5.53%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total                                          574,876        5,694      3.96%           456,962         4,172       3.65%
 Borrowed Funds (4)                               290,327        4,303      5.93%           319,013         4,685       5.87%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total interest-bearing liabilities             865,203        9,997      4.62%           775,975         8,857       4.57%
                                                              ---------    ---------                    ----------  ---------  
 Non-interest-bearing liabilities                  60,662                                    35,936           
                                                ----------                                 ---------      
   Total liabilities                              925,865                                   811,911               
                                                ----------                                 ---------  
 Stockholders' equity                              83,960                                    87,609               
                                                ----------                                 ---------
   Total liabilities and                        
    stockholders' equity                      $ 1,009,825                                 $ 899,520
                                                ==========                                 ========= 
 Net interest rate spread (5)                                  $ 8,204      2.90%                         $ 7,140       2.86%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    3.39%                                       3.32%
                                                                           =========                                ========= 
Ratio of interest-earning assets to 
 interest-bearing liabilities                     111.93%                                   111.00%                
                                                 =========                                 =========        
<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 5.91% and 5.87% for the three months ended March 31, 1998 and 
    March 31, 1997, 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>

                       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. Substantially all of the Company's business is coordinated through its
subsidiary  banks  and  references  herein  to  "Company"  include  the banks as
approprate.  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 of BNB was consummated at
the close of  business  on February 7, 1997,  the  financial  statements  of the
Company and the following discussion regarding the Company's financial condition
at March 31, 1998 and December 31, 1997,  and the results of operations  for the
three-months ended March 31, 1998 and 1997 includes  information and data of BNB
from February 8, 1997 through March 31, 1998.

     Included in other  non-interest  expenses for the quarters  ended March 31,
1998 and 1997 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
Company has completed its assessment of Year 2000 issues,  developed a plan, and
arranged  for the  required  resources  to complete  the  necessary  remediation
efforts.

     The Company is utilizing both internal and external resources to reprogram,
or replace and test  hardware  and  software  for Year 2000  modifications.  The
Company plans to complete  changes and testing for mission  critical  systems by
December 31, 1998, a date prior to any impact on its operating systems.  Testing
of non-critical applications will continue into 1999 and will be completed prior
to any impact on operating  systems.  The total cost of the Year 2000 project is
estimated at $300,000 to $500,000.  Through March 31, 1998 the Company  expensed
approximately  $60,000 to date toward the assessment and remediation  efforts of
the Year 2000 project.  The Company will incur costs through the Year 2000,  but
does not  anticipate  that  material  incremental  costs will be incurred in any
single period.

     A significant  portion of the costs  associated  with the Year 2000 project
are not  expected  to be  incremental  to the  Company,  but rather  represent a
reprioritization of existing internal systems technology resources.

     The Company has initiated formal communications with all of its significant
vendors and service  providers to  determine  the extent to which the Company is
vulnerable  to any failure of those third  parties to remedy their own Year 2000
issues.  The Company's  total Year 2000 project costs and estimates  include the
estimated  costs and time  associated  with the impact of third-party  Year 2000
issues,  based on  information  currently  available.  However,  there can be no
guarantee  that the systems of other  companies on which the  Company's  systems
rely will be  remediated  in a timely  manner or that  there  will be no adverse
effect on the  Company's  systems.  Therefore,  the  Company  could  possibly be
negatively  impacted to the extent that other entities not  affiliated  with the
Company are unsuccessful in properly addressing this issue.

     The  costs  of the  project  and the  date on which  the  Company  plans to
complete the Year 2000 modifications are based upon management's best estimates,
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.
                                      10

<PAGE>




B. FINANCIAL CONDITION


     Total  assets at March 31,  1998 were  $1.03  billion,  compared  to $974.7
million at December 31, 1997,  an increase of $56.9  million or 5.8%.  The major
components of asset growth included  investment  securities  available for sale,
mortgage  loans  held for sale and  loans,  net of  allowance  for loan  losses.
Investment securities available for sale increased to $51.8 million at March 31,
1998 from $31.8  million at December 31, 1997 due to an investment in two mutual
funds  that invest primarily in government  agency  mortgage-backed  securities.
Mortgage loans held for sale increased from $9.8 million at December 31, 1997 to
$32.8 million at March 31, 1998 due to the  increased  activity in the secondary
market  resulting from heavy volume of fixed-rate  loan  originations  for sale.
Loans,  net of allowance for loan losses, increased by $21.9  million,  or 2.8%,
from a balance of $791.7 million at December 31, 1997 to $813.6 million at March
31, 1998,  primarily  due to growth in BFS's loan  portfolio.  Deposit  accounts
increased by $31.2 million from a balance of $619.8 million at December 31, 1997
to a balance  of  $651.0  million  at March 31,  1998.  The  increase  is mainly
attributable to the successful  roll-out of a new 15-month retail certificate of
deposit  acquisition  program initiated by BFS. BNB's deposits also grew by $3.4
million during the quarter ended March 31, 1998. Federal Home Loan Bank advances
increased  by $28.0  million,  to a balance of $284.5  million at March 31, 1998
from a balance of $256.5 million at December 31, 1997.  These advances were used
to fund the increase in  investments  available for sale and mortgage loans held
for sale. Other borrowed money  (repurchase  agreements), which amounted to $7.1
million at December 31, 1997,  were reduced to $3.5 million at March 31, 1998. 






                                      11
<PAGE>





C.  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 March 31, 1998 and December 31,
1997  BFS's  liquidity  ratio  was 6.8% and 5.7%  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 since the acquisition date.

     The Company's  most liquid assets are cash,  overnight  federal funds sold,
short-term  investments and loans and investments available for sale. The levels
of these assets are dependent on the Company's operating, financing, lending and
investing  activities  during any given  period.  At March 31, 1998,  BFS' cash,
short-term  investments  and loans and  investments  available  for sale totaled
$51.3  million  or 5.8% of  BFS's  total  assets.  Additional  investments  were
available which qualified for BFS's regulatory liquidity requirements. 

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including FHLB  advances.  At March 31, 1998, BFS had $284.5 million in
advances  outstanding from the FHLB.  The Company has also borrowed $3.5 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 March 31,  1998,  the Company had  commitments  to  originate  loans and
unused  outstanding  lines of  credit  totaling  $131.0  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 March 31, 1998, totaled $123.3 million.

     At March 31, 1998, the  consolidated  stockholders'  equity to total assets
ratio was 7.9%. As of March 31, 1998,  the Company,  BFS and BNB exceeded all of
their regulatory capital requirements.  BFS's tier 1, total risk-based, and tier
1  risk-based  capital  ratios were 5.5%,  11.2% and 9.9%,  respectively.  BNB's
respective capital ratios were 7.8%, 16.2% and 15.1%.
 
                                       12

<PAGE>
D.  COMPARISON OF THREE-MONTHS ENDED MARCH 31, 1998 AND 1997

   General

     Earnings for the quarter  ended March 31, 1998 were $1.9  million,  or $.37
basic  earnings  per  share,  $.35 per share on a  diluted  basis,  compared  to
earnings of $1.9 million,  or $.33 basic and diluted  earnings per share for the
first quarter of 1997.  The first quarter of 1997  included  increased  earnings
from real estate operations, totaling $891,000 (before income taxes),  resulting
primarily from the sale of a land sub-division owned by a subsidiary of BFS. The
current  quarter  was   positively  impacted  by  increased  gain on the sale of
loans of $655,000  (before  income  taxes)  compared  to last year's  comparable
quarter  gain  on sale of loans  totaling  $130,000  (before  income  tax).  The
Company's annualized return on average assets was .75% and the annualized return
on average  stockholders'  equity was 9.00%  during the quarter  ended March 31,
1998, compared to .85% and 8.74%, respectively,  for the quarter ended March 31,
1997 (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
March 31, 1998 increased by $2.2 million,  or 13.8%, to $18.2 million,  compared
to the  quarter  ended March 31,  1997.  The  increase  in  interest  income was
primarily attributable to a $107.1 million increase in average  interest-earning
assets and a nine basis point increase in the average  yield.  The average yield
on  interest-earning  assets increased to 7.52% for the three months ended March
31, 1998 from 7.43% for the three months ended March 31, 1997.

     Interest  income  on loans,  net,  for the  quarter  ended  March 31,  1998
increased by $2.1 million,  or 15.2%, to $15.8 million compared to $13.8 million
for the same quarter in 1997.  This  increase was primarily  attributable  to an
increase in average balances of $97.2 million.  Additionally,  the average yield
on loans,  net  increased by ten basis points to 7.73% during the quarter  ended
March 31,  1998,  compared  to 7.63%  during the quarter  ended March 31,  1997.
Interest on  mortgage-backed  securities  for the  quarter  ended March 31, 1998
decreased by $190,000 to $941,000, compared to $1.1 million for the same quarter
in 1997.  This  decrease in income was due  primarily to the $9.6 million  lower
average balance during the quarter ended March 31, 1998, compared to the quarter
ended  March 31,  1997.  Additionally,  the average  yield  declined by 18 basis
points to an average of 6.69% during the quarter ended March 31, 1998,  compared
to the same quarter last year.  Interest income from  investment  securities was
$1.4 million during the first quarter of 1998,  compared to $1.1 million for the
comparable quarter in 1997. The average yield on investment securities increased
by 17 basis  points  due to the high  yields  received  by BFS on the two mutual
funds it  invested  in during the  quarter  ended  March 31,  1998.  The average
balance  increased by $19.6  million to an average of $92.0  million  during the
quarter  ended March 31, 1998,  compared to an average  balance of $72.4 million
for the quarter ended March 31, 1997.  The increase in the average  balance also
is primarily due to BFS's investment in these mutual funds.

                                      13
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended  March 31,  1998  increased  by $1.1  million or 12.4%,  to $10.0  million
compared to the quarter ended March 31, 1997.  The increase in interest  expense
for the quarter  ended March 31, 1998 was due  primarily to an increase of $89.2
million in the average balance of  interest-bearing  liabilities  which averaged
$865.2 million  during the current  quarter,  compared to an average  balance of
$776.0  million  during the  quarter  ended March 31,  1997.  A five basis point
increase in the average cost of interest-bearing liabilities also contributed to
the  increase  in  interest  expense.   The  average  cost  of  interest-bearing
liabilities increased to 4.62% during the quarter ended March 31, 1998, compared
to 4.57% for last year's comparable quarter.

     Interest expense on deposit accounts was $5.7 million for the quarter ended
March 31,  1998,  an  increase  of $1.5  million  from the $4.2  million for the
quarter  ended  March 31,  1997.  The  increase in the expense was due to higher
average deposit account balances of $117.9 million and a 31 basis point increase
in the average cost of funds during the quarter  ended March 31, 1998,  compared
to the quarter  ended March 31, 1997.  The average  balance of deposit  accounts
increased  from  $457.0  million  for the  quarter  ending  March 31, 1997 to an
average balance of $574.9 million for the quarter ending March 31, 1998,  mostly
due to the successful  roll-out of a new 15 month retail  certificate of deposit
acquisition  program initiated by BFS during the first quarter of 1998. Interest
expense on borrowed  funds  decreased  from $4.7  million for the quarter  ended
March 31,  1997 to $4.3  million for the current  quarter.  The average  cost of
borrowed  funds  increased from 5.87% during the quarter ended March 31, 1997 to
an average of 5.93% during the current quarter.  The average balances  decreased
from $319.0  million  during the first quarter of 1997 to an average  balance of
$290.3 million during the first quarter of 1998.

Net Interest Income

     Net interest  income  increased by $1.1 million during the first quarter of
1998,  compared to the same quarter last year, due primarily to asset growth and
an improvement in the net interest rate spread.  The net interest rate spread of
2.90% for the quarter ended March 31, 1998 was four basis points higher than the
2.86%  for  the  comparable  quarter  last  year.  The  primary  reason  for the
improvement  in the net interest rate spread is the inclusion of  BNB for a full
quarter during the current  quarter,  whereas BNB is only included from February
8, 1997  forward  during the quarter  ended  March 31,  1997.  Commercial  banks
typically earn  wider spreads.  The  net interest margin was similarly  impacted
and  improved  from 3.32% for the quarter  ended March 31, 1997 to 3.39% for the
first quarter of 1998.

Provision for Loan Losses

     The  Company's  provision  for loan losses  amounted  to  $403,000  for the
quarter ended March 31, 1998,  compared to the $425,000 loan loss  provision for
the comparable  quarter last year. The allowance for loan losses  increased from
$6.6  million at December  31, 1997 to $7.1 million at March 31, 1998 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  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 March 31, 1998, the Company  classified  $6.0 million of
loans ($4.5 million of BFS and $1.5 million of BNB) as sub-standard  compared to
$5.8 million ($4.3 million of BFS and $1.5 million of BNB) at December 31, 1997.
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 March 31, 1998 was sufficient to provide for  anticipated  losses
inherent in the loan portfolio.

                                      14
<PAGE>

     The Company's allowance for loan losses at March 31, 1998 was $7.1 million,
which  represented  546.7%  of  non-performing  loans  or .84% of  total  loans,
compared to $6.6 million at December 31, 1997, or 469.8% of non-performing loans
and .82% of total loans.

     Non-performing  loans at March 31, 1998 amounted to $1.3 million or .15% of
total loans,  compared to $1.4 million,  or .17% of total loans, at December 31,
1997.

     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 $50,000 and $46,000 for the  three-month  periods ended March 31, 1998 and
1997,  respectively.  The amount of interest  income that was  recorded on these
loans was $7,000 and $1,000 for the  three-month  periods ended March 31, 1998
and 1997, respectively.

     At March 31, 1998,  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 $2.1 million.  All of the impaired loans
have been measured  using the fair value of the  collateral  method.  During the
three-months  ended March 31, 1998, the average recorded value of impaired loans
was $2.0  million,  $46,000  interest  income was  recognized  and  $74,000 of
interest income would have been recognized under the loans' original terms.

     At March 31, 1998 and at December  31,  1997,  the Company had  $195,000 in
real estate owned.  Further, at March 31, 1998 the Company also had restructured
real estate loans  amounting to $368,000 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.

Non-Interest Income

     Total  non-interest  income  in the  first  quarter  of 1998  increased  by
$409,000,  or 41.1%,  to $1.4 million  from  $995,000 for the three months ended
March 31,  1997.  The  increase is mainly due to a $525,000  increase in gain on
sale of loans  resulting  from favorable  secondary  market  conditions,  offset
somewhat by lower loan  processing  and  servicing  fees due to an adjustment to
reduce the valuation of originated  mortgage  servicing  rights of $136,000 that
was necessitated by faster loan prepayment speeds during the current quarter.

Non-Interest Expense

     Total non-interest expense was $6.0 million for the quarter ended March 31,
1998 compared to $4.5 million for the comparable  quarter in 1997.  Compensation
and benefits  increased by $170,000,  or 5.2%, from $3.2 million for the quarter
ended March 31, 1997 to $3.4 million for the quarter  ended March 31, 1998.  The
major  reasons  for this  increase  were due to  inclusion  of $547,000 of BNB's
compensation  and  benefits  expense  for the  current  quarter,  whereas  BNB's
compensation and benefits of $343,000 for the comparable  quarter last year were
only for the period of February 8, 1997 through  March 31,  1997.  Additionally,
normal year-end salary  increases  became  effective during the current quarter,
higher  incentive pay was incurred for loan originators and the ESOP expense was
also higher due to the increase in the Company's  stock price.  These  increases
were  partially  offset by a $261,000  decrease  in the cost of the  stock-based
incentive  plan.  Increases  in the  market  value of ESOP  shares,  charged  to
compensation  expense,  are credited to Additional Paid in Capital in accordance
with generally accepted accounting  principles.  Real estate operations provided
income of $14,000  during the  quarter  ended March 31, 1998 due to gains on the
sale of real estate owned  properties.  Income of $891,000 was recognized during
the prior year's comparable  quarter due primarily to the sale of a sub-division
owned by a subsidiary  of BFS.  Other  non-interest  expenses  increased to $1.7
million  during the quarter  ended March 31, 1998 from $1.3  million  during the
comparable quarter last year. The major reasons for the increase were consulting
and legal costs incurred to assist in the implementation of certain tax planning
strategies,  and the  inclusion  of a full  quarter  of BNB's  expenses  for the
current quarter.

Income Tax Expense

     Income tax expense for the quarters  ended March 31, 1998 and 1997 amounted
to $1.3 million each quarter.  The effective  income tax rates were 41% for both
quarters.
                                      15

<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
deposits and utilizing  FHLB advances to replace rate  sensitive  deposits.  The
volatile and generally  rising rate  environment  of 1996 allowed the Company to
originate   record  loan  volume,   the  majority  of  loans   originated   were
adjustable-rate  loans, which were primarily retained for BFS's portfolio.  Many
of these loans,  however,  do not reprice until the third or fifth year of their
term. As interest  rates  generally  fell during the second half of 1997 and the
first quarter of 1998,  customer  preference  shifted  to longer-term fixed rate
mortgages,  many of which were sold in the  secondary  market.  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 March 31, 1998,  the Company's one year gap was a positive 6.2% of total
assets, compared to a positive 10.2% of total assets at December 31, 1997.

     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.

                                      16

<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, 1997 for a
detail of the GAP and NPV tables.





                         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
  (SEC No. 33-94860) originally filed on July 21, 1995
 

                                      18

<PAGE>

                                  SIGNATURES



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

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

undersigned thereunto duly authorized.


                                           BOSTONFED BANCORP, INC.
                                                  (Registrant)


Date:  May 14, 1998                            By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  May 14, 1998                             By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Executive Vice President,
                                                 Chief Financial Officer
                                                  and Corporate Secretary

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