<PAGE>

                                    FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


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



For Quarter Ended:               September 30, 2001
                            __________________________

Commission File Number               1-13936
                            __________________________


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

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

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

                                  (781) 273-0300
________________________________________________________________________________
              (Registrant's telephone number, including area code)

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


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

                                 Yes  (X)                No   (    )

Number of shares of common stock, par value $.01 per share,
outstanding as of October 31, 2001:  4,474,203.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

            Consolidated Balance Sheets as of
            September 30, 2001 (unaudited) and December 31, 2000              2

            Consolidated Statements of Operations for the Three
            and Nine Months ended September 30, 2001 and 2000 (unaudited)     3

            Consolidated Statement of Changes in Stockholders'
            Equity for the Three Months ended March 31, 2001,
            June 30, 2001 and September 30, 2001 (unaudited)                  4

            Consolidated Statements of Cash Flows for the
            Nine Months ended September 30, 2001 and 2000 (unaudited)     5 - 6

            Notes to Consolidated Financial Statements                    7 - 8

            Average Balances and Yield / Costs                           9 - 10

 Item 2     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                         11 - 16


 Item 3.    Quantitative and Qualitative Disclosures About
            Market Risk                                                      17





PART II _ OTHER INFORMATION
___________________________

 Item 1.    Legal Proceedings                                                18

 Item 2.    Changes in Securities and Use of Proceeds                        18

 Item 3.    Defaults Upon Senior Securities                                  18

 Item 4.    Submission of Matters to a Vote of Security Holders              18

 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
                          ---------------------------
                                (In Thousands)

                                                 September 30,  December 31,
                                                     2001          2000
                                                  -----------  --------------
Assets                                            (Unaudited)
------------
Cash and cash equivalents                            $ 63,072   $  50,675
Investment securities available for sale
  (amortized cost of $65,093 at September 30,
   2001 and $63,361 at December 31, 2000)              65,950      63,421
Investment securities held to maturity (fair
  value of $852 at September 30, 2001 and $2,328
  at December 31, 2000)                                   804       2,304
Mortgage-backed securities available for sale
  (amortized cost of $91,941 at September 30, 2001
   and $15,488 at December 31, 2000)                   93,142      15,372
Mortgage-backed securities held to maturity (fair
  value of $45,701 at September 30, 2001 and $54,970
  at December 31, 2000)                                44,570      55,283
Loans held for sale                                    34,329      12,816
Loans, net of allowance for loan losses of $11,974
  and $11,381 at September 30, 2001 and December 31,
  2000                                              1,077,612   1,036,435
Accrued interest receivable                             7,918       7,375
Stock in FHLB of Boston and Federal Reserve Bank       24,208      20,649
Premises and equipment                                 10,513      10,647
Real estate owned                                           0         145
Goodwill, net of amortization                          18,101      19,195
Other assets                                           35,697      33,465
                                                     --------    --------
            Total assets                           $1,475,916  $1,327,782
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $871,152    $849,647
 Federal Home Loan Bank advances and other
  Borrowed Money                                      467,000     344,334
 Corporation-obligated mandatorily redeemable
  capital securities                                   32,000      32,000
 Advance payments by borrowers for taxes
  and insurance                                         2,985       2,864
 Other liabilities                                     10,174       9,024
                                                      -------     -------
            Total liabilities                       1,383,311   1,237,869
                                                     -------     -------

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 (4,492,403
  and 4,648,481 shares outstanding at September 30,
  2001 and December 31, 2000, respectively)                66          66
 Additional paid-in capital                            67,737      67,538
 Retained earnings                                     62,870      57,696
 Accumulated other comprehensive income                 1,255          88
  Less: Treasury stock, at cost (2,097,214 shares
         and 1,941,136 shares at September 30, 2001
         and December 31, 2000, respectively at cost) (38,195)    (34,281)
  Less: Unallocated ESOP shares                        (1,058)     (1,058)
  Less: Unearned Stock-Based Incentive Plan               (70)       (136)
                                                      --------    --------
            Total stockholders' equity                 92,605      89,913
                                                      --------    --------
Total liabilities and stockholders' equity         $1,475,916  $1,327,782
                                                    =========   =========

See accompanying condensed notes to consolidated financial statements.


                                       2
<PAGE>

                    BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                     Consolidated Statements of Operations
               (Dollars In Thousands, except per share amount)

                                 Three Months Ended        Nine Months Ended
                                 ------------------       ------------------
                                 9/30/01    9/30/00       9/30/01    9/30/00
                                 ------------------       ------------------

                                     (Unaudited)             (Unaudited)

Interest income:
 Loans                          $ 20,638   $ 20,335        $ 62,098  $ 59,762
 Mortgage-backed securities        2,151      1,239           5,191     3,208
 Investment securities             1,335      1,737           4,648     4,769
                                 -------    -------         -------   -------
   Total interest income          24,124     23,311          71,937    67,739
                                 -------    -------         -------   -------
Interest expense:
 Deposit accounts                  7,453      8,350          23,560    23,303
 Borrowed funds                    6,392      5,687          17,674    17,335
 Corporation obligated mandatorily
  redeemable capital securities
  distributions                      880        257           2,641       257
                                 -------    -------         -------   -------
   Total interest expense         14,725     14,294          43,875    40,895
                                 -------    -------         -------   -------
Net interest income                9,399      9,017          28,062    26,844
Provision for loan losses            200        250             620       750
                                 -------    -------         -------   -------
 Net interest
   income after provision          9,199      8,767          27,442    26,094
Non-interest income:
 Deposit service fees                620        499           1,802     1,432
 Loan processing and servicing
   fees                             (134)       148             (20)      488
 Gain on sale of loans             2,807      2,804           7,538     7,581
 Income from bank owned life
   insurance                         314        317             935       952
 Gain on sale of investments          15          0             230         5
 Other                               598        375           1,434     1,056
                                 -------    -------         -------   -------
   Total non-interest income       4,220      4,143          11,919    11,514
                                 -------    -------         -------   -------
Non-interest expense:
 Compensation and benefits         5,316      5,163          15,968    15,411
 Occupancy and equipment           1,203      1,090           3,519     3,160
 Data processing                     389        394           1,230     1,115
 Advertising expense                 249        233             751       770
 Federal deposit insurance
  premiums                            48         41             133       121
 Real estate operations                0         10               7      (264)
 Amortization of goodwill            355        355           1,064     1,052
 Other                             1,854      1,559           5,588     4,835
                                 -------    -------         -------   -------
  Total non-interest expense       9,414      8,845          28,260    26,200
                                 -------    -------         -------   -------
Income before income taxes         4,005      4,065          11,101    11,408
Income tax expense                 1,377      1,443           3,954     4,017
                                 -------    -------         -------   -------
Net income                      $  2,628   $  2,622        $  7,147  $  7,391
                                 =======    =======         =======   =======

Basic earnings per share           $0.59      $0.56           $1.60     $1.56
Diluted earnings
  per share                        $0.56      $0.54           $1.51     $1.53
Basic weighted average shares
  outstanding                  4,451,460  4,725,990       4,457,724  4,745,855
Common stock equivalents
  due to dilutive effect
  of stock options               269,712    157,068         264,492     82,251
Diluted total weighted average
  shares outstanding           4,721,172  4,883,058       4,722,216  4,828,106

See accompanying condensed notes to consolidated financial statements.
                                       3
<PAGE>
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                Three Months Ended September 30, 2001
                       (Dollars In Thousands, Except Per Share Amounts)
                                          (Unaudited)
<CAPTION>

                                                                         Accumulated                 Unearned
                                                                            other                     Stock-
                                        Additional                      Comprehensive  Unallocated    Based        Total
                                Common    paid-in   Retained  Treasury      income        ESOP      Incentive   stockholders'
                                stock     capital   earnings    Stock       (loss)       shares        Plan        equity
                                ------   --------  ---------   --------   ----------   -----------  ----------  ------------
<S>                             <C>       <C>        <C>       <C>            <C>         <C>          <C>          <C>
Balance at December 31, 2000    $ 66      67,538     57,696    (34,281)          88      (1,058)      (136)         89,913

Net income                       - -         - -      2,010       - -           - -          - -        - -          2,010

Change in net unrealized gain/(loss)
 on investments available for sale
 (net of tax of $25)             - -         - -        - -       - -            44          - -        - -             44
                                                                                                                    --------
Total comprehensive income       - -         - -        - -       - -           - -          - -        - -          2,054

Cash dividends declared and
 paid ($0.13 per share)          - -         - -       (604)      - -           - -          - -        - -           (604)

Common Stock repurchased
 (96,000 shares at an average
  price of $23.15 per share)     - -         - -        - -     (2,211)         - -          - -        - -         (2,211)

Stock options exercised          - -          (3)       - -         44          - -          - -        - -             41

Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -           - -          - -         37             37

Appreciation in fair value of
  shares charged to expense for
  compensation plans             - -         171        - -       - -           - -          - -        - -            171
                               -------    -------   --------   ---------    ---------     --------   ---------    --------

Balance at March 31, 2001       $ 66      67,706      59,102   (36,448)         132       (1,058)       (99)        89,401
                               -------    -------   --------   ---------    ---------     --------   ---------    --------

Net income                       - -         - -       2,509       - -          - -          - -        - -          2,509

Change in net unrealized gain/(loss)
 on investments available for sale
 (net of tax benefit of $85)    - -         - -        - -        - -          (134)        - -        - -           (134)
                                                                                                                    --------
Total comprehensive income       - -         - -        - -        - -          - -          - -        - -          2,375

Cash dividends declared and
 paid ($0.15 per share)          - -         - -       (684)       - -          - -          - -        - -           (684)

Common Stock repurchased
 (92,000 shares at an average
  price of $21.60 per share)     - -         - -        - -     (1,977)         - -          - -        - -         (1,977)

Stock options exercised          - -        (136)       - -        459          - -          - -        - -            323

Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -        - -          - -          - -         17             17

Appreciation in fair value of
  shares charged to expense for
  compensation plans             - -         156        - -        - -          - -          - -        - -            156
                               -------    -------   --------   ---------    ---------     --------   ---------    --------

Balance at June 30, 2001       $ 66       67,726     60,927    (37,966)          (2)       (1,058)       (82)       89,611
                               -------    -------   --------   ---------    ---------     --------   ---------    --------
</TABLE>
<PAGE>
<TABLE>
<S>                             <C>          <C>      <C>         <C>          <C>          <C>         <C>          <C>
Net income                       - -         - -      2,628        - -          - -          - -        - -          2,628

Change in net unrealized gain/(loss)
 on investments available for sale
 (net of tax $804)               - -         - -        - -        - -        1,257          - -        - -          1,257
                                                                                                                    --------
Total comprehensive income       - -         - -        - -        - -          - -          - -        - -          3,885

Cash dividends declared and
 paid ($0.15 per share)          - -         - -       (685)       - -          - -          - -        - -           (685)

Common Stock repurchased
 (73,000 shares at an average
  price of $22.53 per share)     - -         - -        - -     (1,655)         - -          - -        - -         (1,655)

Stock options exercised          - -        (165)       - -      1,426          - -          - -        - -          1,261

Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -        - -          - -          - -         12             12

Appreciation in fair value of
  shares charged to expense for
  compensation plans             - -         176        - -        - -          - -          - -        - -            176
                               -------    -------   --------   ---------    ---------     --------   ---------    --------

Balance at September 30, 2001  $ 66       67,737     62,870    (38,195)       1,255        (1,058)      (70)         92,605
                               -------    -------   --------   ---------    ---------     --------   ---------    --------

</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,
                                                    2001          2000
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    7,147    $    7,391
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and
       accretion, net                                2,028         2,013
      Earned SIP shares                                 66           188
      Appreciation in fair value of shares
       charged to expense for compensation plans       503           265
      Income from bank owned life insurance           (934)         (952)
      Provision for loan losses                        620           750
      Provision for valuation allowance for
        real estate owned                                -             6
      Loans originated for sale                   (384,727)     (145,981)
      Proceeds from sale of loans                  370,752       151,905
      Gain on sale of loans                         (7,538)       (7,581)
      Gain on sale of real estate
        acquired through foreclosure                     -            (4)
      Gain on sale of investment securities           (230)            -
      Gain on sale of premises                        (217)            -
      Increase in accrued interest receivable         (543)       (1,402)
      Increase in prepaid expenses
       and other assets, net                        (1,268)       (1,331)
      Increase in accrued expenses and
       other liabilities, net                          210         2,127
                                                   --------       -------
          Net cash (used in)provided by
           operating activities                    (14,131)        7,394
                                                   --------       -------

Cash flows from investing activities:
  Net cash paid for Forward Financial                    -          (994)
  Proceeds from sale of investment
   securities available for sale                     3,628            41
  Proceeds from maturities of investment
   securities held to maturity                       1,500             -
  Proceeds from maturities of investment
   securities available for sale                    24,400         5,000
  Purchase of investment securities
   available for sale                              (30,053)      (14,769)
  Purchase of mortgage-backed securities
   available for sale                              (87,415)       (1,986)
  Purchase of FHLB and Federal Reserve Stock        (3,559)         (338)
  Principal payments on mortgage-backed
   securities available for sale                    10,929         1,790
  Principal payments on mortgage-
   backed securities held to maturity               10,697         6,904
  Principal payments on investment
   securities available for sale                       661           451
  Increase in loans, net                           (41,797)      (41,069)
  Purchases of premises and equipment               (1,499)       (3,064)
  Proceeds from sale of real estate owned              147           175
  Proceeds from sale of premises                       790             -
  Additional investment in real estate owned            (2)          (64)
                                                    -------       -------
       Net cash used in
         investing activities                     (111,573)      (47,923)
                                                    -------     ---------
                          -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,
                                                    2001            2000
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:
    Increase in deposit accounts                    21,505        91,214
    Repayments of Federal Home Loan
     Bank advances                                (361,984)     (351,263)
    Proceeds from Federal Home Loan
     Bank advances                                 484,650       292,794
    Proceeds from other borrowings                      -          1,945
    Repayments of other borrowings                      -         (5,000)
    Proceeds from Corporation-obligated
     mandatorily redeemable
     capital securities                                 -         32,000
    Cash dividends paid                             (1,973)       (1,862)
    Common stock repurchased                        (5,843)       (3,815)
    Options exercised, net of taxes                  1,625            39
    Increase (decrease) in advance payments
     by borrowers for taxes and insurance             121            (46)
                                                  --------       -------

         Net cash provided by
            financing activities                   138,101        56,006
                                                   -------       -------

         Net increase
          in cash and cash equivalents              12,397        15,477


Cash and cash equivalents at beginning of period    50,675        34,696
                                                   -------       -------

Cash and cash equivalents at end of period      $   63,072    $   50,173
                                                   =======       =======

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

       Interest                                 $   43,733     $  41,638
                                                   =======       =======

       Taxes                                    $    3,393    $    2,377
                                                   =======       =======



See accompanying condensed notes to consolidated financial statements.
                                       6


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


NOTE 1:  BASIS OF PRESENTATION
     The unaudited  consolidated  financial  statements as of September 30, 2001
and for the three- and nine-month  periods ended  September 30, 2001 and 2000 of
BostonFed  Bancorp,  Inc.,  ("BostonFed" or the "Company") and its  wholly-owned
subsidiaries,  Boston  Federal  Savings Bank  ("BFS"),  Broadway  National  Bank
("BNB"),  BF Funding  Corp.,  BFD  Preferred  Capital  Trust I and BFD Preferred
Capital  Trust II  presented  herein,  should  be read in  conjunction  with the
audited consolidated  financial statements of the Company as of and for the year
ended December 31, 2000.

     The  unaudited  consolidated  financial  statements  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements. In the opinion of management, all necessary adjustments,  consisting
only of normal recurring accruals  necessary for a fair presentation,  have been
included.  The results of operations for the three- and nine-month periods ended
September 30, 2001 and 2000 are not  necessarily  indicative of the results that
may be expected for the entire fiscal year.

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 133,  "Accounting for
Derivative  Instruments and Certain Hedging  Activities." In June 2000, the FASB
issued SFAS No. 138, "Accounting for Certain Derivative  Instruments and Certain
Hedging  Activities,  an  Amendment  of SFAS 133." SFAS No. 133 and SFAS No. 138
require  that all  derivative  instruments  be recorded on the Balance  sheet at
their respective fair values.  The Company adopted SFAS No. 133 and SFAS No. 138
on January 1, 2001. The impact of adoption was not material to the Company.

     In June 2001,  the FASB issued  SFAS 142,  "Goodwill  and Other  Intangible
Assets." SFAS 142 requires that upon the adoption of the Statement, any goodwill
recorded on an entity's  balance sheet would no longer be amortized.  This would
include  existing  goodwill (i.e.,  recorded  goodwill at the date the financial
statement is issued),  as well as goodwill  arising  subsequent to the effective
date of the  Statement. Goodwill  will not be amortized but will be reviewed for
impairment  periodically or upon occurrence of certain triggering  events.  This
statement is effective for fiscal years  beginning  after  December 15, 2001. At
September  30,  2001,  the Company had $18.1  million of goodwill on its balance
sheet that was being amortized at a rate of approximately $1.4 million annually.
The adoption of this  Statement is expected to increase basic earnings per share
by  approximately  $.21 and diluted  earnings per share by  approximately  $.20,
assuming no impairment expense, based on outstanding weighted average share data
at September 30, 2001.


NOTE 2:  COMMITMENTS,  CONTINGENCIES AND CONTRACTS

At  September  30,  2001,  the  Company  had  commitments  of $119.6  million to
originate  mortgage loans and $6.3 million to purchase loans from  correspondent
lenders. Of these $125.9 million commitments, $97.7 million were adjustable rate
mortgage loans with interest rates ranging from 5.00% to 9.25% and $28.2 million
were fixed rate mortgage  loans with interest rates ranging from 5.75% to 9.63%.
The Company also had commitments to sell $73.6 million of mortgage loans.

At  September  30,  2001,  the Company was  servicing  first  mortgage  loans of
approximately  $947.0  million,  which are either  partially or  wholly-owned by
others.

NOTE 3:  BUSINESS SEGMENTS

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

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

     Each Bank is managed separately. BNB is managed by a President and CEO, who
reports  directly  to the  Company's  CEO and BNB's Board of  Directors.  BFS is
managed by a CEO, who is also the  Company's  CEO, and reports  directly to BFS'
and the Company's Board of Directors.
                                        7
<PAGE>
     The  following  table  sets  forth  certain   information   about  and  the
reconciliation of reported net income for each of the reportable segments.

<TABLE>

<CAPTION>                                             (Dollars In Thousands)
                                                                TOTAL
                                                              REPORTABLE                                      CONSOLIDATED
                                      BFS         BNB          SEGMENTS         OTHER      ELIMINATIONS          TOTALS
                                   --------     --------     ------------      -------    --------------      ------------
<S>                             <C>             <C>          <C>              <C>           <C>                <C>
At or for the three-months
ended September 30, 2001:
     Interest income            $   21,718        2,322         24,040         1,198         (1,114)              24,124
     Interest expense               13,393          658         14,051         1,788         (1,114)              14,725
     Provision for loan losses         163           37            200                                               200
     Non-interest income             3,915          290          4,205            15                               4,220
     Non-interest expense            8,110        1,157          9,267           147                               9,414
     Income tax expense              1,371          244          1,615          (238)                              1,377
     Net income                      2,596          516          3,112          (484)                              2,628
     Total assets                1,305,274      163,985      1,469,259       162,898       (156,241)           1,475,916
Net interest margin                  2.79%        4.75%           n.m.          n.m.            n.m.               2.80%
Return on average assets              .81%        1.29%           n.m.          n.m.            n.m.                .73%
Return on average equity            11.05%       16.22%           n.m.          n.m.            n.m.              11.21%

At or for the three-months
ended September 30, 2000:
     Interest income            $   20,988        2,320         23,308           385           (382)              23,311
     Interest expense               13,472          645         14,117           302           (382)              14,037
     Provision for loan losses         200           50            250                                               250
     Non-interest income             3,883          310          4,193                          (50)               4,143
     Non-interest expense            7,687        1,101          8,788           364            (50)               9,102
     Income tax expense              1,248          289          1,537           (94)                              1,443
     Net income                      2,290          520          2,810          (188)                              2,622
     Total assets                1,167,254      149,916      1,317,170       157,951       (154,535)           1,320,586
Net interest margin                  2.78%        5.23%           n.m.          n.m.            n.m.               3.06%
Return on average assets              .79%        1.41%           n.m.          n.m.            n.m.                .80%
Return on average equity            11.01%       17.01%           n.m.          n.m.            n.m.              11.46%

n.m. = not meaningful

</TABLE>
<TABLE>

<CAPTION>                                              (Dollars in Thousands)
                                                                TOTAL
                                                              REPORTABLE                                      CONSOLIDATED
                                      BFS         BNB          SEGMENTS         OTHER      ELIMINATIONS          TOTALS
                                   --------     --------     ------------      -------    --------------      ------------
<S>                             <C>             <C>          <C>              <C>           <C>                <C>
At or for the nine-months
ended September 30, 2001:
     Interest income            $   64,656        7,101         71,757         3,655         (3,475)              71,937
     Interest expense               39,982        2,003         41,985         5,365         (3,475)              43,875
     Provision for loan losses         508          112            620                                               620
     Non-interest income            10,826          863         11,689           230                              11,919
     Non-interest expense           24,092        3,512         27,604           656                              28,260
     Income tax expense              3,865          793          4,658          (704)                              3,954
     Net income                      7,035        1,544          8,579        (1,432)                              7,147
     Total assets                1,305,274      163,985      1,469,259       162,898       (156,241)           1,475,916
Net interest margin                  2.87%        5.01%           n.m.          n.m.            n.m.               2.91%
Return on average assets              .77%        1.33%           n.m.          n.m.            n.m.                .69%
Return on average equity            10.31%       16.12%           n.m.          n.m.            n.m.              10.27%

At or for the nine-months
ended September 30, 2000:
     Interest income            $   60,966        6,744         67,710           498           (469)              67,739
     Interest expense               38,738        1,837         40,575           532           (469)              40,638
     Provision for loan losses         580          170            750                                               750
     Non-interest income            10,762          894         11,656             5           (147)              11,514
     Non-interest expense           22,362        3,554         25,916           688           (147)              26,457
     Income tax expense              3,534          719          4,253          (236)                              4,017
     Net income                      6,540        1,333          7,873          (482)                              7,391
     Total assets                1,167,254      149,916      1,317,170       157,951       (154,535)           1,320,586
Net interest margin                  2.77%        5.24%           n.m.          n.m.            n.m.               3.02%
Return on average assets              .76%        1.24%           n.m.          n.m.            n.m.                .76%
Return on average equity            10.78%       14.86%           n.m.          n.m.            n.m.              10.97%

n.m. = not meaningful


</TABLE>

                                                        8
<PAGE>


<TABLE>
                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the quarter ended September 30:                             2001                                      2000
                                                -------------------------------------       ------------------------------
                                                                             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)                     $   100,200      $ 1,335      5.33%        $  101,167       $ 1,737       6.87%
 Loan, net and loans held for sale (2)           1,103,395       20,638      7.48%         1,034,550        20,335       7.86%
 Mortgage-backed securities (3)                    136,925        2,151      6.28%            75,941         1,239       6.53%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,340,520       24,124      7.20%         1,211,658        23,311       7.70%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       106,101                                    99,050
                                                ----------                                  ---------
   Total assets                                $ 1,446,621                                $1,310,708
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   54,015          349      2.58%        $   57,230           414       2.89%
 Savings accounts                                 176,605        1,026      2.32%           163,349         1,173       2.87%
 NOW accounts                                     127,355          170      0.53%           119,795           226       0.75%
 Certificate accounts                             410,269        5,908      5.76%           435,395         6,537       6.01%
                                                ----------    ---------                    ---------    ---------
   Total                                          768,244        7,453      3.88%           775,769         8,350       4.31%
 Borrowed Funds (4)                               459,424        6,392      5.57%           357,258         5,687       6.37%
 Corporation-obligated mandatorily
  redeemable capital securities                    32,000          880     11.00%             9,512           257      10.81%
                                               ----------    ---------                    ---------     ---------
   Total interest-bearing liabilities           1,259,668       14,725      4.68%         1,142,539        14,294       5.00%
                                                ---------    ---------                    ----------    ---------
 Non-interest-bearing liabilities                  93,211                                    76,629
                                                ----------                                 ---------
   Total liabilities                            1,352,879                                 1,219,168
                                                ----------                                 ---------
 Stockholders' equity                              93,742                                    91,540
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,446,621                                $1,310,708
                                                ==========                                 =========
 Net interest rate spread (5)                                  $ 9,399      2.52%                         $ 9,017       2.70%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.80%                                       2.98%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     106.42%                                   106.05%
                                                 =========                                 =========
<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 5.55% and 6.36% for the three months ended September 30, 2001 and
    September 30, 2000, 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:                          2001                                      2000
                                                -------------------------------------       ------------------------------
                                                                             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)                     $   100,142      $ 4,648      6.19%        $   95,124       $ 4,769       6.68%
 Loan, net and loans held for sale (2)           1,076,888       62,098      7.69%         1,033,449        59,762       7.71%
 Mortgage-backed securities (3)                    107,811        5,191      6.42%            66,120         3,208       6.47%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,284,841       71,937      7.46%         1,194,693        67,739       7.56%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       102,102                                    94,522
                                                ----------                                  ---------
   Total assets                                $ 1,386,943                                $1,289,215
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   54,374        1,111      2.72%        $   56,024         1,201       2.86%
 Savings accounts                                 172,416        3,304      2.55%           158,415         3,264       2.75%
 NOW accounts                                     126,653          603      0.63%           117,524           667       0.76%
 Certificate accounts                             412,780       18,542      5.99%           417,999        18,171       5.79%
                                                ----------    ---------                    ---------    ----------
   Total                                          766,223       23,560      4.10%           749,962        23,303       4.14%
 Borrowed Funds (4)                               406,519       17,674      5.80%           375,528        17,335       6.15%
 Corporation-obligated mandatorily
  redeemable capital securities                    32,000        2,641     11.00%             3,171           257      10.80%
                                               ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,204,742       43,875      4.85%         1,128,661        40,895       4.83%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  89,404                                    70,741
                                                ----------                                 ---------
   Total liabilities                            1,294,146                                 1,199,402
                                                ----------                                 ---------
 Stockholders' equity                              92,797                                    89,813
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,386,943                                $1,289,215
                                                ==========                                 =========
 Net interest rate spread (5)                                  $28,062      2.61%                         $26,844       2.73%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.91%                                       3.00%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     106.65%                                   105.85%
                                                 =========                                 =========
<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 5.78% and 6.15% for the three months ended September 30, 2001 and
    September 30, 2000, 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>



Item 2.  MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS

A.  GENERAL

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

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

     The Company, headquartered in Burlington,  Massachusetts,  was organized in
1995 under Delaware law as the holding  company for BFS, in connection  with the
conversion of BFS from a mutual to a stock form of ownership.  The Company later
acquired  BNB,  a  nationally-chartered  commercial  bank,  as its  wholly-owned
subsidiary in February 1997. In December 1999, the Company acquired  Diversified
Ventures,  Inc.,  d/b/a Forward  Financial  Company  ("Forward  Financial")  and
Ellsmere Insurance Agency,  Inc.  ("Ellsmere").  Forward Financial operates as a
subsidiary of BFS and Ellsmere has limited operations as a subsidiary of BNB.

     The  Company's   business  has  been   conducted   primarily   through  its
wholly-owned  subsidiaries  of BFS  and BNB  (collectively,  the  "Banks").  BFS
operates  its   administrative/bank   branch  office   located  in   Burlington,
Massachusetts  and its eight other bank  branch  offices  located in  Arlington,
Bedford,  Billerica,  Boston, Lexington,  Peabody,  Wellesley and Woburn, all of
which are located in the greater  Boston  metropolitan  area.  BFS'  subsidiary,
Forward Financial, maintains its headquarters in Northborough, Massachusetts and
operates in  approximately  26 states  across the U.S.  BNB operates two banking
offices in Chelsea  and  Revere,  both of which are also in the  greater  Boston
metropolitan  area.  Through  its  subsidiaries,  the  Company  attracts  retail
deposits from the general  public and invests those  deposits and other borrowed
funds in loans,  mortgage-backed  securities, U.S. Government and federal agency
securities and other securities.  The Company originates  mortgage loans for its
investment  portfolio and for sale and generally retains the servicing rights of
loans it sells.  Additionally,  the Company  originates  chattel mortgage loans,
substantially all of which are sold in the secondary market, servicing released.
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 loans,  and to a lesser
extent, interest and dividends on its investment and mortgage-backed securities,
gains on sale of loans,  fees and loan servicing  income.  The Company's primary
sources  of funds  are  deposits,  principal  and  interest  payments  on loans,
investments,  mortgage-backed  securities,  Federal  Home  Loan  Bank of  Boston
("FHLB") advances and proceeds from the sale of loans.

     The Company's results of operations are primarily dependent on net interest
income,  which is the  difference  between  the  income  earned  on its loan and
investment portfolios and its cost of funds,  consisting of the interest paid on
deposits  and  borrowings.  Results  of  operations  are  also  affected  by the
Company's provision for loan losses, real estate operations expense,  investment
and loan sale activities and loan servicing.  The Company's non-interest expense
principally  consists of  compensation  and  benefits,  occupancy  and equipment
expense, advertising, data processing expense, goodwill amortization,  and other
expenses.  Results of operations of the Company are also significantly  affected
by general economic and competitive conditions, particularly changes in interest
rates, government policies and actions of regulatory authorities.

     Each of the Banks is  considered a business  segment and  accordingly,  the
Company has complied with the segment  reporting  requirement  in Note 3 of this
document and in discussion herein as appropriate. As a result of the acquisition
of BNB, the Company became a bank holding  company  subject to regulation by the
Federal  Reserve  Bank  ("FRB").  BFS is  regulated  by  the  Office  of  Thrift
Supervision ("OTS") and BNB is regulated by the Office of the Comptroller of the
Currency ("OCC").
                                        11

<PAGE>

B. FINANCIAL CONDITION

     Total assets at September 30, 2001 were $1.476 billion,  compared to $1.328
billion at December 31, 2000, an increase of $148 million or 11.1%. Asset growth
was  primarily  attributable  to a $77.8  million  increase  in  mortgage-backed
securities  available for sale, a $21.5 million  increase in loans held for sale
and a $41.2 million increase in loans, net. Mortgage-backed securities available
for sale  increased  from $15.4 million at December 31, 2000 to $93.1 million at
September  30, 2001 due  primarily  to the  purchase  of various  collateralized
mortgage obligations ("CMO's"). Loans held for sale increased from $12.8 million
at December  31, 2000 to $34.3  million at  September  30, 2001 and loans,  net,
increased  from  $1.036  billion  at  December  31,  2000 to $1.078  billion  at
September 30, 2001 as a result of recent high lending  volumes of loans for both
portfolio and for sale.  Deposit  accounts  increased by $21.6  million,  from a
balance of $849.6 million at December 31, 2000 to a balance of $871.2 million at
September 30, 2001.  The increase in deposits is net of $21.6 million  reduction
in wholesale brokered  certificates of deposit.  Thus, retail deposit growth was
$43.2 million during the nine-months ended September 30, 2001. Federal Home Loan
Bank advances and other borrowings  increased by $122.7 million, to a balance of
$467.0  million  at  September  30,  2001 from a balance  of $344.3  million  at
December 31, 2000.

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 reasonable and prudent levels of liquid assets at BFS and
BNB in accordance with OTS and OCC regulations, respectively.

     The Company's  most liquid assets are cash,  overnight  federal funds sold,
and loans and  investments  available  for sale.  The levels of these assets are
dependent  on  the  Company's  operating,   financing,   lending  and  investing
activities  during any given period.  At September 30, 2001,  the Company's cash
and loans held for sale,  investment securities available for sale and mortgage-
backed  securities  available for sale totaled $256.5  million,  or 17.4% of the
Company's total assets.

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including FHLB advances.  At September 30, 2001, the Company had $467.0
million in advances  outstanding  from the FHLB. The Company  generally does not
pay the highest deposit rates in its market and accordingly utilizes alternative
sources  of  funds  such as  FHLB  advances,  wholesale  brokered  deposits  and
repurchase agreements to supplement cash flow needs.

     At September 30, 2001, the Company had commitments to originate loans and
unused outstanding  lines of credit totaling $244.10 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, 2001, totaled
$278.3 million.

     At  September  30, 2001,  the  consolidated  stockholders'  equity to total
assets ratio was 6.3%.  As of  September  30,  2001,  the  Company,  BFS and BNB
exceeded  all  of  their   regulatory   capital   requirements.   The  Company's
consolidated tier 1 capital, total capital and tier 1 leverage ratios were 11.7,
13.1 and 7.3,  respectively.  BFS's tier 1, total risk-based,  tier 1 risk-based
and tangible equity capital ratios were 6.0%, 11.0, 9.8 and 6.0%,  respectively.
BNB's tier 1, total  risk-based,  tangible  equity  capital  and tier 1 leverage
capital ratios were 11.8%, 12.9%, 11.8% and 6.2%, respectively.

                                       12


<PAGE>
D. COMPARISON OF THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

GENERAL

     Earnings for the quarter ended  September  30, 2001 were $2.6  million,  or
$.59 basic and $.56  diluted  earnings  per share,  compared to earnings of $2.6
million, or $.56 basic and $.54 diluted earnings per share for the third quarter
of 2000.  Earnings for the nine-months ended September 30, 2001 amounted to $7.1
million,  or $1.60 basic and $1.51 diluted earnings per share,  compared to $7.4
million, or $1.56 basic and $1.53 diluted earnings per share for the nine-months
ended September 30, 2000. The Company's  annualized return on average assets was
 .69% and the annualized return on average stockholders' equity was 10.27% during
the  nine-months  ended  September  30,  2001,  compared  to  .76%  and  10.97%,
respectively,  for  the  nine-months  ended  September  30,  2000  (annualized).
Comments  regarding  the  components of net income are detailed in the following
paragraphs.

   Interest Income

     Total  interest  income on  interest-earning  assets for the quarter  ended
September 30, 2001 increased by $813,000, or 3.5%, to $24.1 million, compared to
the quarter ended September 30, 2000. The increase in interest income was due to
the increase of $128.9  million in average  interest-earning  assets,  partially
offset by a decrease of 50 basis points in the average yield.  The average yield
on  interest-earning  assets  decreased  to  7.20%  for the  three-months  ended
September  30, 2001 from 7.70% for the  three-months  ended  September 30, 2000.
Total interest income for the  nine-months  ended September 30, 2001 amounted to
$71.9  million,  an increase  of $4.2  million,  or 6.2%,  compared to the $67.7
million  interest  earned for the  nine-months  ended  September  30, 2000.  The
increase was  attributable to the $90.1 million  increase in the average balance
of interest earning assets, partially offset by a decrease of 10 basis points in
the average yield during the  nine-months  ended  September 30, 2001 compared to
the prior year period.

     Interest  income on loans,  net, for the quarter  ended  September 30, 2001
increased by $303,000,  or 1.5%, to $20.6 million  compared to $20.3 million for
the comparable  quarter in 2000. For the  nine-months  ended September 30, 2001,
interest  income on loans,  net,  increased  $2.3 million to $62.1  million from
$59.8 million for the  nine-months  ended  September  30, 2000.  The increase in
interest income from loans,  net, for the current  nine-month  period was due to
the $2.3 million increase in the average balance of loans,  net, offset somewhat
by the two basis point decline in the average yield. The average yield on loans,
net for the  nine-months  ended  September  30,  2001 was 7.69%,  compared to an
average yield of 7.71% for the nine-months ended September 30, 2000.

     Interest on mortgage-backed  securities for the quarter ended September 30,
2001  increased  by $912,000 to $2.2  million,  compared to $1.2 million for the
same quarter in 2000.  This  increase in income was  primarily  due to the $61.0
million  higher  average  balance  during the quarter ended  September 30, 2001,
compared to the quarter ended September 30, 2000, partially offset by a 25 basis
point decrease in the average yield during the current quarter,  compared to the
quarter ended  September 30, 2000. The average yield during the current  quarter
was 6.28%,  compared to 6.53% for the quarter ended  September 30, 2000. For the
nine-months ended September 30, 2001, interest on mortgage-backed securities was
$5.2 million,  compared to last year's  comparable period total of $3.2 million.
The   increased   income  is  primarily  due  to  higher   average   balance  of
mortgage-backed  securities,  which  increased  by $41.7  million  to an average
balance of $107.8 million for the nine-months ended September 30, 2001, compared
to the prior year  period  average  balance of $66.1  million.  The  increase in
mortgage-backed  securities  income was  partially  offset by a five basis point
reduction  in the average  yield in the  current  period.  The average  yield on
mortgage-backed  securities  for the  nine-months  ended  September 30, 2001 was
6.42%,  compared to 6.47% for the prior year comparable  period. The increase in
average balances was primarily attributable to the acquisition of collateralized
mortgage obligations ("CMO's").  These investments were purchased as part of the
Company's effort to leverage the  corporation-obligated  mandatorily  redeemable
capital  securities  ("trust-preferred  securities"),  which are  classified  as
capital for regulatory purposes.

     Income from  investment  securities  was $1.3 million for the  three-months
ended  September 30, 2001,  compared to $1.7 million for the prior year quarter.
The average balance of investment  securities was essentially the same at $100.2
million  for the  three-months  ended  September  30,  2001,  compared to $101.2
million  for the prior  year  quarter.  The  decline  in income  was caused by a
reduction in the average yield,  which declined from 6.87% for the  three-months
ended  September  30, 2000 to 5.33% for the current  quarter.  The  reduction in
yields  is  reflective  of the  declines  in  market  interest  rates.  For  the
nine-months ended September 30, 2001, interest income from investment securities
declined by $121,000 to $4.6  million,  compared to $4.8 million for last year's
comparable period.  Although average balances of investment securities increased
by $5.0 million in the current nine-month period,  interest income on investment
securities  declined in the  nine-months  ending  September 30, 2001 due to a 49
basis point  reduction in the average  yield.  The average  yield  declined from
6.68% for the  nine-months  ended  September  30,  2000 to 6.19% for the current
period. Average balances of investment securities increased to $100.1 million in
the  current  period,  compared to $95.1  million for the prior year  nine-month
period.

                                         13
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended  September  30,  2001  increased  by $431,000  or 3.0%,  to $14.7  million
compared to $14.3 million for the quarter ended September 30, 2000. The increase
in  interest  expense  for the quarter  ended  September  30, 2001 was due to an
increase  of  $117.1  million  in  the  average   balance  of   interest-bearing
liabilities,  which averaged $1.260 billion during the current quarter, compared
to an average  balance of $1.143 billion during the quarter ended  September 30,
2000.  A decrease  of 32 basis  points in the average  cost of  interest-bearing
liabilities  during the  current  quarter  offset a portion of the  increase  in
interest  expense  resulting from higher average  balances.  The average cost of
interest-bearing  liabilities  decreased  to  4.68%  during  the  quarter  ended
September 30, 2001,  compared to 5.00% for last year's comparable  quarter.  The
decrease in the average cost was due to the decline in overall  market  interest
rates.  The Company's cost of interest  bearing  liabilities has declined slower
than overall market  interest rates as  approximately  one-half of the Company's
deposits are core deposits.  These deposits  already bear low interest rates and
such rates and market conditions  preclude further  substantial  declines in the
interest paid on these accounts.  For the nine-months  ended September 30, 2001,
interest expense on interest-bearing liabilities totaled $43.9 million, compared
to last year's  period  total of $40.9  million,  an increase of $3.0 million or
7.3%. This increase is primarily attributable to a $76.1 million increase in the
average  balance  of  interest-bearing   liabilities.  The  average  balance  of
interest-bearing  liabilities for the nine-months  ending September 30, 2001 was
$1.205  billion,  compared  to $1.129  billion  for the prior year  period.  The
current  year  period  average  balance  includes  the  $32.0  million  of trust
preferred  securities,  which effectively increased the average cost of interest
bearing liabilities by approximately 16 basis points, compared to an increase of
two basis  points for the prior year period.  Excluding  the impact of the trust
preferred securities,  the average cost of interest bearing liabilities declined
by 14 basis points in the nine-months ended September 30, 2001,  compared to the
prior year period.  Including the cost of the trust  preferred  securities,  the
average cost of interest bearing liabilities was 4.85% for the nine-months ended
September 30, 2001,  compared to 4.83% for the  nine-months  ended September 30,
2000.

     Interest expense on deposit accounts was $7.5 million for the quarter ended
September 30, 2001, a decrease of $897,000 from the $8.4 million for the quarter
ended September 30, 2000. The decrease in interest  expense on deposit  accounts
resulted  primarily  from a 43  basis  point  decrease  in the  average  cost of
deposits.  For the  three-months  ended  September 30, 2001, the average cost of
deposits was 3.88%,  compared to 4.31% for the three-months  ended September 30,
2000. Also  contributing to the decline in interest  expense on deposit accounts
was a $7.5 million reduction in average balances during the current quarter. The
average balance of deposit accounts was $768.2 million in the three-months ended
September  30,  2001,  compared  to $775.8  million for the  three-months  ended
September 30, 2000.  For the  nine-months  ended  September  30, 2001,  interest
expense on deposit accounts was $23.6 million, compared to $23.3 million for the
prior year  period,  and  increase of  $257,000.  The increase was due to higher
average balances of deposit accounts of $766.2 million for the nine-months ended
September  30,  2001,  compared to average  balances  of $750.0  million for the
nine-months  ended  September 30, 2000,  partially  offset by a four basis point
reduction  in the average  cost during the current  period.  The average cost of
deposit accounts for the nine-months ended September 30, 2001 and 2000 was 4.10%
and 4.14%, respectively.

     Interest  expense on borrowed  funds was $6.4 million for the  three-months
ended September 30, 2001,  compared to $5.7 million for the  three-months  ended
September 30, 2000.  The increase in interest  expense on borrowed funds was due
to the  effects of higher  average  balances  offset by a decline in the average
cost of borrowed funds. The average balance of borrowed funds was $459.4 million
in the current  quarter,  an increase of $102.1  million  compared to an average
balance of $357.3 million for the quarter ended  September 30, 2000. The average
cost of borrowed funds was 5.57% for the three-months  ended September 30, 2001,
a decline of 80 basis  points  compared to the 6.37% cost of borrowed  funds for
the three-months  ended September 30, 2000. For the nine-months  ended September
30, 2001,  interest  expense on borrowed  funds was $17.7  million,  compared to
$17.3 million for the  nine-months  ended  September  30, 2000.  The increase in
interest  expense on borrowed funds was caused by the higher average  balance of
$406.5 million for the nine-months ended September 30, 2001, compared to average
balances  of $375.5  million  for the  nine-months  ended  September  30,  2000,
partially  offset by the effect of a 35 basis points decline in the average cost
of borrowed funds.  The average cost of borrowed funds declined to 5.80% for the
nine-months  ended September 30, 2001,  compared to an average cost of 6.15% for
the nine-months ended September 30, 2000.

Net Interest Income

     Net  interest  income  during the third  quarters of 2001 and 2000 was $9.4
million and $9.0 million,  respectively, as increases in interest-earning assets
contributed  to the  improvement in net interest  income.  The net interest rate
spread  declined from 2.70% for the quarter  ended  September 30, 2000, to 2.52%
for the current quarter. The net interest margin for the quarter ended September
30, 2001 was 2.80%,  compared to 2.98% for the prior year's third  quarter.  The
primary  reason  for  the  decline  in the  net  interest  margin  is due to the
inclusion of the trust preferred  securities expense at an average cost of 11.0%
in the current quarter's  calculation whereas last year's third quarter included
less  than a third of the  average  balance  in the  quarter.  On a year to date
basis, net interest income was $28.1 million,  compared to $26.8 million for the
prior year to date. The net interest margin was 2.91% for the nine-months  ended
September 30, 2001,  compared to 3.00% for the prior year comparable  period. As
in the current  quarter,  the current year to date, net interest margin was also
impacted by the inclusion of the cost of the trust preferred securities.

                                       14
<PAGE>

Provision for Loan Losses

     The Company's  provision for loan losses was $200,000 for the quarter ended
September 30, 2001,  compared to $250,000 for the comparable  quarter last year.
The allowance for loan losses  increased from $11.4 million at December 31, 2000
to $12.0 million at September 30, 2001 due to this quarter's  provision,  net of
charge-offs/recoveries.  The  provision  decreased  for the  three-months  ended
September 30, 2001,  compared to the same period last year, due to the Company's
belief that the allowance for loan losses is at a reasonable  level based on its
current  evaluation.  The Company  maintains  an  allowance  for losses that are
inherent in the  Company's  loan  portfolio.  The  allowance  for loan losses is
established  through a provision  for loan losses  charged to  operations.  Loan
losses are charged  against the allowance when  management  determines  that the
collectibility of the loan principal is unlikely. Recoveries on loans previously
charged off are credited to the allowance.

     Management  believes  the  allowance  is adequate to absorb  probable  loan
losses.  Management's  methodology  to estimate  loss  exposure  inherent in the
portfolio  includes an  analysis  of  individual  loans  deemed to be  impaired,
reserve  allocations  for  various  loan types  based on payment  status or loss
experience and an unallocated allowance that is maintained based on management's
assessment  of  many  factors   including  trends  in  loan   delinquencies  and
charge-offs,  current economic conditions and their effect on borrowers' ability
to pay,  underwriting  standards by loan type, mix and balance of the portfolio,
and the  performance  of  individual  loans in relation to  contract  terms.  In
addition,  various regulatory agencies, as an integral part of their examination
process,  periodically  review the Company's  allowance based on their judgments
about information available to them at the time of their examination.

     While  management uses available  information to recognize losses on loans,
future  additions to the allowance may be necessary based on changes in economic
conditions. Accordingly, the ultimate collectibility of a substantial portion of
the Company's loan portfolio is affected by changes in market conditions.

     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, 2001, the Company classified $2.8
million of loans  ($2.0  million  at BFS and  $757,000  at BNB) as  sub-standard
compared to $3.1 million  ($2.5  million of BFS and $563,000 of BNB) at December
31, 2000. 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, 2001 was  sufficient to provide for
anticipated losses inherent in the loan portfolio.


     The  Company's  allowance  for loan losses at September  30, 2001 was $12.0
million,  which  represented  1,453% of  non-performing  loans or 1.07% of total
loans,   compared  to  $11.4   million  at  December  31,  2000,  or  1,190%  of
non-performing loans and 1.07% of total loans. Management believes this coverage
ratio  is  prudent  due  to  the  balance  increase  in the  combined  total  of
construction  and land,  commercial real estate,  multi-family,  home equity and
improvement,   consumer  and  business  loans.  These  combined  total  balances
increased   from   approximately   $286.5   million  at  December  31,  2000  to
approximately $314.5 million at September 30, 2001.

     Non-performing assets at September 30, 2001 amounted to $824,000 or .06% of
total assets, compared to $1.1 million, or .08% of total assets, at December 31,
2000.

     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 $61,000 and $62,000 for the nine-month  periods ended September 30, 2001 and
2000,  respectively.  The amount of interest  income that was  recorded on these
loans was $29,000 and $38,000 for the  nine-month  periods  ended  September 30,
2001 and 2000, respectively.

     At  September  30,  2001,  there were no loans  characterized  as impaired.
During the nine-months  ended September 30, 2001, the average  recorded value of
impaired loans was $204,000, $4,000 interest income was recognized and $4,000 of
interest income would have been recognized under the loans' original terms.

     At September 30, 2001 and at December 31, 2000, the Company had $31,000 and
$145,000  in real  estate  owned and  other  repossessed  assets,  respectively.
Further at September  30, 2001,  the Company also had  restructured  real estate
loans  amounting to $204,000 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.

                                    15
<PAGE>

Non-Interest Income

     Total  non-interest  income  improved to $4.2 million for the quarter ended
September 30, 2001, compared to $4.1 million for the quarter ended September 30,
2000 due primarily to increases in deposit  service fees and other  non-interest
income,  partially  offset by declines in loan  processing  and servicing  fees.
Deposit  service fees increased from $499,000 in the quarter ended September 30,
2000,  to  $620,000  in the  current  quarter  and  from  $1.4  million  for the
nine-months  ended September 30, 2000 to $1.8 million for the nine-months  ended
September  30, 2001.  These  increases  were  primarily  due to higher levels of
deposit  account  services  activity.  Loan processing and servicing fees were a
negative  $134,000 in the quarter ended September 30, 2001 compared to income of
$148,000 for the quarter  ended  September 30, 2000 due to  adjustments  for the
impairment of originated mortgage servicing rights ("OMSR").  Adjustments to the
OMSR were necessary due to the higher than expected levels of prepayments during
the current  quarter of loans serviced by the Company. For the nine-months ended
September 30, 2001 loan processing and servicing  income was a negative  $20,000
compared to income of $488,000 for the comparable  period last year, also due to
adjustments to the OMSR during the current  period.  Gain on sale of investments
totaled $230,000 in the current year-to-date period primarily due to the sale of
a portion of the Company's equity securities  portfolio during the first quarter
of 2001.  Other  non-interest  income  totaling  $598,000 in the current quarter
exceeded  the  $375,000  earned in the  quarter  ended  September  30,  2000 due
primarily to the recognition of $273,000 gain from the Company's interest in the
sale of the  NYCE  bank  automated  teller  machine  clearing  network.  For the
nine-months ended September 30, 2001, other non-interest income amounted to $1.4
million  compared to $1.1 million for the nine-months  ended September 30, 2000.
The increase is due in part to the item mentioned above and the $157,000 gain on
the sale of BFS' former  Billerica  Office location during the second quarter of
2001.

Non-Interest Expense

     Total non-interest expenses increased to $9.4 million
for the quarter  ended  September  30, 2001 from $8.8  million,  or 6.4% for the
quarter  ended  September  30, 2000 and from $26.2  million for the  nine-months
ended  September 30, 2000 to $28.3 million,  or 7.9% for the current  nine-month
period due primarily to increased  expenses in occupancy and equipment and other
non interest expense.  Occupancy and equipment expense increased by $113,000 and
$359,000 in the three- and nine-months  ended September 30, 2001,  respectively,
compared to the three- and nine-months  ended September 30, 2000, due in part to
expenses incurred by the addition of the new Woburn Office opened in May of 2000
and higher depreciation  expenses associated with office renovations and various
repairs and maintenance.  Also, the prior year's  non-interest  expenses for the
nine-months  ended  September  30, 2000 were  lowered by the  inclusion  of real
estate  operations  income  recognized  in  the  dissolution  of a  real  estate
subsidiary  of  BFS.  On a  year-to  -date  basis,  other  non-interest  expense
increased from $4.8 million for the nine-months ended September 30, 2000 to $5.6
million  for the  nine-months  ended  September  30,  2001 due in part to higher
outside professional services expense.

     Income tax expense for the  nine-months  ended  September 30, 2001 and 2000
was $4.0  million.  The  effective  income tax rate was 35.6% during the current
year-to-date period, compared to 35.2% for the prior year period.

                                        16
<PAGE>
Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

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

     At September 30, 2001, the Company's one year gap was a positive 2.68%
of total  assets,  compared to a positive  8.4% of total  assets at December 31,
2000.

     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.

     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, 2000 for a
detail of the GAP and NPV tables. There have been no material changes in the net
portfolio value since December 31, 2000.

                                        17

<PAGE>

                         PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

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


Item 2.  Changes in Securities and Use of Proceeds

       Not applicable

Item 3.  Defaults Upon Senior Securities

       Not applicable

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

        None

Item 5.  Other Information

       None

Item 6.  Exhibits and Reports on Form 8-K

    (a) Exhibits
          3.1  Restated Certificate of Incorporation*
3.2 Amended and Restated Bylaws as of February 23, 2000**
4.0  Stock Certificate of BostonFed Bancorp, Inc.*

     * Incorporated herein by reference into this document from Exhibits 3.1 and
4.0 to the  Form  S-1,  Registration  Statement,  and  any  amendments  thereto,
originally  filed on July  21,  1995,  as  amended  and  declared  effective  on
September 11, 1995. Registration No. 333-94860

     ** Incorporated  herein by reference into this document from Exhibit 3.2 to
the Annual Report on Form 10-K filed on March 30, 2001.

(b) Reports on Form 8-k

     None
                                           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, 2001                         By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  November 14, 2001                         By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Executive Vice President,
                                                  Chief Financial Officer
                                                  and Corporate Secretary

                                       19