<PAGE>   1

                                    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:               June 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 July 31, 2001:  4,528,303.

<PAGE>   2

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

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

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

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

            Consolidated Statements of Cash Flows for the
            Six Months ended June 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>   3
                    BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets
                          ---------------------------
                                (In Thousands)

                                                   June 30,     December 31,
                                                     2001          2000
                                                  -----------  --------------
Assets                                            (Unaudited)
------------
Cash and cash equivalents                            $ 36,659   $  50,675
Investment securities available for sale
  (amortized cost of $61,840 at June 30, 2001
   and $63,361 at December 31, 2000)                   61,983      63,421
Investment securities held to maturity (fair
  value of $840 at June 30, 2001 and $2,328
  at December 31, 2000)                                   804       2,304
Mortgage-backed securities available for sale
  (amortized cost of $88,034 at June 30, 2001
   and $15,488 at December 31, 2000)                   87,888      15,372
Mortgage-backed securities held to maturity (fair
  value of $49,680 at June 30, 2001 and $54,970
  at December 31, 2000)                                49,174      55,283
Loans held for sale                                    31,164      12,816
Loans, net of allowance for loan losses of $11,674
  and $11,381 at June 30, 2001 and December 31,
  2000                                              1,064,359   1,036,435
Accrued interest receivable                             7,397       7,375
Stock in FHLB of Boston and Federal Reserve Bank       22,356      20,649
Premises and equipment                                 10,355      10,647
Real estate owned                                           0         145
Goodwill, net of amortization                          18,456      19,195
Other assets                                           35,172      33,465
                                                   ----------  ----------
            Total assets                           $1,425,767  $1,327,782
                                                   ==========  ==========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $865,796    $849,647
 Federal Home Loan Bank advances and other
  Borrowed Money                                      427,405     344,334
 Corporation-obligated mandatorily redeemable
  capital securities                                   32,000      32,000
 Advance payments by borrowers for taxes
  and insurance                                         2,590       2,864
 Other liabilities                                      8,365       9,024
                                                   ----------  ----------
            Total liabilities                       1,336,156   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 (4,556,803
  and 4,648,481 shares outstanding at June 30, 2001
  and December 31, 2000, respectively)                     66          66
 Additional paid-in capital                            67,726      67,538
 Retained earnings                                     60,927      57,696
 Accumulated other comprehensive income                   (2)          88
  Less: Treasury stock, at cost (2,032,814 shares
         and 1,941,136 shares at June 30, 2001 and
         December 31, 2000, respectively at cost)     (37,966)    (34,281)
  Less: Unallocated ESOP shares                        (1,058)     (1,058)
  Less: Unearned Stock-Based Incentive Plan               (82)       (136)
                                                   ----------  ----------
            Total stockholders' equity                 89,611      89,913
                                                   ----------  ----------
Total liabilities and stockholders' equity         $1,425,767  $1,327,782
                                                   ==========  ===========

See accompanying condensed notes to consolidated financial statements.


                                       2
<PAGE>   4

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

                                 Three Months Ended        Six Months Ended
                                 ------------------       ------------------
                                 6/30/01    6/30/00       6/30/01    6/30/00
                                 ------------------       ------------------

                                     (Unaudited)             (Unaudited)

Interest income:
 Loans                          $ 20,570   $ 19,766        $ 41,460  $ 39,427
 Mortgage-backed securities        1,754      1,271           3,040     1,969
 Investment securities             1,623      1,645           3,313     3,032
                                 -------    -------         -------   -------
   Total interest income          23,947     22,682          47,813    44,428
                                 -------    -------         -------   -------
Interest expense:
 Deposit accounts                  7,883      7,773          16,107    14,953
 Borrowed funds                    5,868      5,932          11,282    11,648
 Corporation obligated mandatorily
  redeemable capital securities
  distributions                      881          0           1,761         0
                                 -------    -------         -------   -------
   Total interest expense         14,632     13,705          29,150    26,601
                                 -------    -------         -------   -------
Net interest income                9,315      8,977          18,663    17,827
Provision for loan losses            208        249             420       500
                                 -------    -------         -------   -------
 Net interest
   income after provision          9,107      8,728          18,243    17,327
Non-interest income:
 Deposit service fees                608        473           1,182       933
 Loan processing and servicing
   fees                              (16)       165             114       340
 Gain on sale of loans             3,112      2,869           4,731     4,777
 Income from bank owned life
   insurance                         315        320             621       635
 Gain on sale of investments           0          5             215         5
 Other                               480        373             836       681
                                 -------    -------         -------   -------
   Total non-interest income       4,499      4,205           7,699     7,371
                                 -------    -------         -------   -------
Non-interest expense:
 Compensation and benefits         5,200      5,114          10,652    10,248
 Occupancy and equipment           1,224      1,066           2,316     2,070
 Data processing                     402        366             841       721
 Advertising expense                 282        293             502       537
 Federal deposit insurance
  premiums                            41         41              85        80
 Real estate operations                4         13               7      (274)
 Amortization of goodwill            355        354             709       697
 Other                             2,112      1,881           3,734     3,276
                                 -------    -------         -------   -------
  Total non-interest expense       9,620      9,128          18,846    17,355
                                 -------    -------         -------   -------
Income before income taxes         3,986      3,805           7,096     7,343
Income tax expense                 1,477      1,318           2,577     2,574
                                 -------    -------         -------   -------
Net income                      $  2,509   $  2,487        $  4,519  $  4,769
                                 =======    =======         =======   =======

Basic earnings per share           $0.56      $0.52           $1.01     $1.00
Diluted earnings
  per share                        $0.54      $0.52           $0.96     $0.99
Basic weighted average shares
  outstanding                  4,423,879  4,763,082       4,460,856  4,755,787
Common stock equivalents
  due to dilutive effect
  of stock options               251,724     28,329         240,923     41,844
Diluted total weighted average
  shares outstanding           4,675,603  4,791,411       4,701,779  4,797,631

See accompanying condensed notes to consolidated financial statements.
                                       3
<PAGE>   5
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                Three Months Ended June 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>

See accompanying condensed notes to consolidated financial statements.

                                       4
<PAGE>   6
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES
            Consolidated Statements of Cash Flows
                        (In Thousands)

                                                 For the Six Months Ended
                                                         June 30,
                                                    2001          2000
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    4,519    $    4,769
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and
       accretion, net                                1,259         1,308
      Earned SIP shares                                 54           131
      Appreciation in fair value of shares
       charged to expense for compensation plans       327           136
      Income from bank owned life insurance           (621)         (635)
      Provision for loan losses                        420           500
      Provision for valuation allowance for
        real estate owned                                -             6
      Loans originated for sale                   (246,923)      (99,579)
      Proceeds from sale of loans                  233,306        96,664
      Gain on sale of loans                         (4,731)       (4,777)
      Gain on sale of real estate
        acquired through foreclosure                     -            (4)
      Gain on sale of investment securities           (215)            -
      Gain on sale of premises                        (217)            -
      Increase in accrued interest receivable          (22)         (957)
      Increase in prepaid expenses
       and other assets, net                        (1,056)         (758)
      Increase in accrued expenses and
       other liabilities, net                         (803)         (254)
                                                   --------       -------
          Net cash used in
           operating activities                    (14,703)       (3,450)
                                                   ========       =======

Cash flows from investing activities:
  Net cash paid for Forward Financial                    -          (994)
  Proceeds from sale of investment
   securities available for sale                     3,113            41
  Proceeds from maturities of investment
   securities held to maturity                       1,500             -
  Proceeds from maturities of investment
   securities available for sale                    24,400         2,000
  Purchase of investment securities
   available for sale                              (25,981)      (14,519)
  Purchase of mortgage-backed securities
   available for sale                              (77,453)       (1,986)
  Purchase of FHLB and Federal Reserve Stock        (1,707)         (338)
  Principal payments on mortgage-backed
   securities available for sale                     4,883         1,171
  Principal payments on mortgage-
   backed securities held to maturity                6,099         3,635
  Principal payments on investment
   securities available for sale                       339           295
  Increase in loans, net                           (28,344)      (33,197)
  Purchases of premises and equipment                 (931)       (1,978)
  Proceeds from sale of real estate owned              147           175
  Proceeds from sale of premises                       790             -
  Additional investment in real estate owned            (2)          (33)
                                                    -------       -------
       Net cash used in
         investing activities                      (93,147)      (45,728)
                                                   ========      ========
                          -Continued on next page-
                                       5
<PAGE>   7
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES
            Consolidated Statements of Cash Flows
                        (In Thousands)

                                                 For the Six Months Ended
                                                          June 30,
                                                    2001            2000
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:
    Increase in deposit accounts                    16,149        69,050
    Repayments of Federal Home Loan
     Bank advances                                (259,977)     (209,810)
    Proceeds from Federal Home Loan
     Bank advances                                 343,048       196,915
    Proceeds from other borrowings                      -          1,945
    Cash dividends paid                             (1,288)       (1,225)
    Common stock repurchased                        (4,188)       (1,125)
    Options exercised, net of taxes                    364            39
    Decrease in advance payments
     by borrowers for taxes and insurance             (274)         (628)
                                                  --------       -------

         Net cash provided by
            financing activities                    93,834        55,161
                                                   -------       -------

         Net (decrease)increase
          in cash and cash equivalents             (14,016)        5,983


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

Cash and cash equivalents at end of period      $   36,659    $   40,679
                                                   =======       =======

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

       Interest                                 $   28,987     $  27,166
                                                   =======       =======

       Taxes                                    $    2,376    $    2,301
                                                   =======       =======



See accompanying condensed notes to consolidated financial statements.
                                       6


<PAGE>   8
                         BOSTONFED BANCORP INC. AND SUBSIDIARIES
                 CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)

NOTE 1:  BASIS OF PRESENTATION

The  unaudited  consolidated  financial statements as of June 30, 2001  and
for  the three- and six-month periods ended June 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 six-month periods  ended
June 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 no 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
June  30,  2001, the Company had $18.5 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,  based
on outstanding weighted average share data at June 30, 2001.

NOTE 2:  COMMITMENTS, CONTINGENCIES AND CONTRACTS

     At  June  30,  2001,  the  Company  had  commitments  of $143.0 million  to
originate  mortgage loans and $6.6 million to purchase loans from  correspondent
lenders.  Of  these  $149.6 million commitments, $110.7 million were  adjustable
rate  mortgage  loans with interest rates ranging from 5.00% to 9.50% and  $38.9
million were fixed rate mortgage loans with interest rates ranging from 6.25% to
9.63%. The Company also had commitments to sell $63.4 million of mortgage loans.

     At  June  30,  2001,  the  Company  was  servicing first mortgage loans  of
approximately  $908.4  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'
Board of Directors.

                                        7

<PAGE>   9
     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 June 30, 2001:
     Interest income            $   21,449        2,417         23,866         1,218         (1,137)              23,947
     Interest expense               13,293          688         13,981         1,788         (1,137)              14,632
     Provision for loan losses         170           38            208                                               208
     Non-interest income             4,156          297          4,453             1             45                4,499
     Non-interest expense            8,056        1,189          9,245           330             45                9,620
     Income tax expense              1,489          284          1,773          (296)                              1,477
     Net income                      2,597          515          3,112          (603)                              2,509
     Total assets                1,262,138      156,491      1,418,629       158,909       (151,771)           1,425,767
Net interest margin                  2.86%        5.04%           n.m.          n.m.            n.m.               2.90%
Return on average assets              .85%        1.32%           n.m.          n.m.            n.m.                .72%
Return on average equity            11.47%       16.19%           n.m.          n.m.            n.m.              10.88%

At or for the three-months
ended June 30, 2000:
     Interest income            $   20,421        2,239         22,660            66            (44)              22,682
     Interest expense               13,023          600         13,623           126            (44)              13,705
     Provision for loan losses         159           90            249                                               249
     Non-interest income             3,942          308          4,250             5            (50)               4,205
     Non-interest expense            7,766        1,245          9,011           167            (50)               9,128
     Income tax expense              1,182          210          1,392           (74)                              1,318
     Net income                      2,233          402          2,635          (148)                              2,487
     Total assets                1,165,070      147,167      1,312,237        95,643        (93,797)           1,314,083
Net interest margin                  2.76%        5.28%           n.m.          n.m.            n.m.               2.99%
Return on average assets              .77%        1.12%           n.m.          n.m.            n.m.                .77%
Return on average equity            11.01%       13.52%           n.m.          n.m.            n.m.              11.03%

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 six-months
ended June 30, 2001:
     Interest income            $   42,938        4,779         47,717         2,457         (2,361)              47,813
     Interest expense               26,589        1,345         27,934         3,577         (2,361)              29,150
     Provision for loan losses         345           75            420                                               420
     Non-interest income             6,911          573          7,484           215                               7,699
     Non-interest expense           15,982        2,355         18,337           509                              18,846
     Income tax expense              2,494          549          3,043          (466)                              2,577
     Net income                      4,439        1,028          5,467          (948)                              4,519
     Total assets                1,262,138      156,491      1,418,629       158,909       (151,771)           1,425,767
Net interest margin                  2.92%        5.15%           n.m.          n.m.            n.m.               2.97%
Return on average assets              .74%        1.34%           n.m.          n.m.            n.m.                .67%
Return on average equity             9.92%       16.07%           n.m.          n.m.            n.m.               9.79%

At or for the six-months
ended June 30, 2000:
     Interest income            $   39,978        4,424         44,402           113            (87)              44,428
     Interest expense               25,266        1,192         26,458           230            (87)              26,601
     Provision for loan losses         380          120            500                                               500
     Non-interest income             6,879          584          7,463             5            (97)               7,371
     Non-interest expense           14,675        2,453         17,128           324            (97)              17,355
     Income tax expense              2,286          430          2,716          (142)                              2,574
     Net income                      4,250          813          5,063          (294)                              4,769
     Total assets                1,165,070      147,167      1,312,237        95,643        (93,797)           1,314,083
Net interest margin                  2.78%        5.25%           n.m.          n.m.            n.m.               3.01%
Return on average assets              .75%        1.15%           n.m.          n.m.            n.m.                .75%
Return on average equity            10.66%       13.74%           n.m.          n.m.            n.m.              10.72%

n.m. = not meaningful


</TABLE>

                                        8
<PAGE>   10


<TABLE>
                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the quarter ended June 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)                     $   100,737      $ 1,623      6.44%        $   96,902       $ 1,645       6.79%
 Loan, net and loans held for sale (2)           1,075,850       20,570      7.65%         1,026,354        19,766       7.70%
 Mortgage-backed securities (3)                    108,016        1,754      6.50%            79,185         1,271       6.42%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,284,603       23,947      7.46%         1,202,441        22,682       7.55%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       102,283                                    95,924
                                                ----------                                  ---------
   Total assets                                $ 1,386,886                                $1,298,365
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   54,159          372      2.75%        $   54,636           389       2.85%
 Savings accounts                                 171,712        1,005      2.34%           161,897         1,111       2.74%
 NOW accounts                                     128,441          199      0.62%           119,869           225       0.75%
 Certificate accounts                             412,011        6,307      6.12%           419,349         6,048       5.77%
                                                ----------    ---------                    ---------    ----------
   Total                                          766,323        7,883      4.11%           755,751         7,773       4.11%
 Borrowed Funds (4)                               403,950        5,868      5.81%           382,259         5,932       6.21%
 Corporation-obligated mandatorily
  redeemable capital securities                    32,000          881     11.00%                 0             0       0.00%
                                               ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,202,273       14,632      4.87%         1,138,010        13,705       4.82%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  92,401                                    70,162
                                                ----------                                 ---------
   Total liabilities                            1,294,674                                 1,208,172
                                                ----------                                 ---------
 Stockholders' equity                              92,212                                    90,193
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,386,886                                $1,298,365
                                                ==========                                 =========
 Net interest rate spread (5)                                  $ 9,315      2.59%                         $ 8,977       2.73%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.90%                                       2.99%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     106.85%                                   105.66%
                                                 =========                                 =========
<FN>
(1) Includes investment securities available for sale and held to maturity,
    short-term investments, stock in FHLB-Boston and daily federal funds sold.
(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 5.80% and 6.20% for the three months ended June 30, 2001 and
    June 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>   11
<TABLE>
                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the six months ended June 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)                     $   100,114      $ 3,313      6.62%        $   92,103       $ 3,032       6.58%
 Loan, net and loans held for sale (2)           1,063,634       41,460      7.80%         1,032,899        39,427       7.63%
 Mortgage-backed securities (3)                     93,254        3,040      6.52%            61,209         1,969       6.43%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,257,002       47,813      7.61%         1,186,211        44,428       7.49%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                       100,102                                    92,258
                                                ----------                                  ---------
   Total assets                                $ 1,357,104                                $1,278,469
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   54,554          760      2.79%        $   55,421           787       2.84%
 Savings accounts                                 170,321        2,278      2.67%           155,948         2,091       2.68%
 NOW accounts                                     126,302          434      0.69%           116,388           441       0.76%
 Certificate accounts                             414,035       12,635      6.10%           409,301        11,634       5.68%
                                                ----------    ---------                    ---------    ----------
   Total                                          765,211       16,107      4.21%           737,058        14,953       4.06%
 Borrowed Funds (4)                               380,067       11,282      5.94%           384,663        11,648       6.06%
 Corporation-obligated mandatorily
  redeemable capital securities                    32,000        1,761     11.00%                 0             0       0.00%
                                               ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,177,278       29,150      4.95%         1,121,721        26,601       4.74%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  87,501                                    67,799
                                                ----------                                 ---------
   Total liabilities                            1,264,779                                 1,189,520
                                                ----------                                 ---------
 Stockholders' equity                              92,325                                    88,949
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,357,104                                $1,278,469
                                                ==========                                 =========
 Net interest rate spread (5)                                  $18,663      2.66%                         $17,827       2.75%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.97%                                       3.01%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     106.77%                                   105.75%
                                                 =========                                 =========
<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 5.92% and 6.05% for the three months ended June 30, 2001 and
    June 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>   12

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  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  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>   13

B. FINANCIAL CONDITION

     Total  assets at June 30,  2001 were  $1.426  billion,  compared  to $1.328
billion at December 31, 2000, an increase of $98.0 million or 7.4%. Asset growth
was  primarily  attributable  to a $72.5  million  increase  in  mortgage-backed
securities  available for sale, an $18.3 million increase in loans held for sale
and a $27.9 million increase in loans, net. Mortgage-backed securities available
for sale  increased  from $15.4 million at December 31, 2000 to $87.9 million at
June 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  $31.2  million  at  June 30, 2001 and loans,  net,
increased from $1.036 billion at December 31, 2000 to $1.064 billion at June 30,
2001 as a result  of  recent  high lending  volumes of loans for both  portfolio
and for sale.  Deposit  accounts  increased by $16.1 million,  from a balance of
$849.6  million at December 31, 2000 to a balance of $865.8  million at June 30,
2001.  The  increase in deposits is net of $8.8  million  reduction in wholesale
brokered certificates of deposit.  Thus, retail deposit growth was $24.9 million
during the six-months  ended June 30, 2001.  Federal Home Loan Bank advances and
other borrowings  increased by $83.1 million,  to a balance of $427.4 million at
June 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 June 30, 2001,  the  Company's cash and
loans  held  for  sale,  investment securities available for sale  and mortgage-
backed  securities available for sale  totaled $217.7  million, or 15.3% of  the
Company's total assets.

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including  FHLB  advances.  At June 30,  2001,  the Company had $427.4
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 June 30,  2001,  the Company had  commitments  to  originate  loans and
unused  outstanding  lines  of  credit  totaling  $265.9  million.  The  Company
anticipates  that it will have  sufficient  funds  available to meet its current
loan origination commitments. Certificate accounts which are scheduled to mature
in less than one year from June 30, 2001, totaled $287.9 million.

     At June 30, 2001, the  consolidated  stockholders'  equity to total assets
ratio was 6.3%. As of June 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 12.0%,  13.5% and 7.6%,
respectively.  BFS's tier 1, total  risk-based,  tier 1 risk-based  and tangible
equity capital ratios were 6.0%, 11.1%, 9.9% and 6.0%, respectively. BNB's total
risk-based,  tier 1 risk-based  and tier 1 leverage  capital  ratios were 13.8%,
12.8%, and 6.3%, respectively.

                                       12


<PAGE>   14
D. COMPARISON OF THREE- AND SIX-MONTHS ENDED JUNE 30, 2001 AND 2000

GENERAL

     Earnings  for the quarter  ended June 30, 2001 were $2.5  million,  or $.56
basic and $.54 diluted earnings per share, compared to earnings of $2.5 million,
or $.52 basic and  diluted  earnings  per share for the second  quarter of 2000.
Earnings for the  six-months  ended June 30, 2001 amounted to $4.5  million,  or
$1.01 basic and $.96 diluted  earnings per share,  compared to $4.8 million,  or
$1.00 basic and $.99 diluted  earnings per share for the  six-months  ended June
30, 2000.  The Company's  annualized  return on average  assets was .67% and the
annualized  return  on  average   stockholders'  equity  was  9.79%  during  the
six-months ended June 30, 2001, compared to .75% and 10.72%,  respectively,  for
the  six-months  ended  June  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 June
30, 2001 increased by $1.3 million,  or 5.6%, to $23.9 million,  compared to the
quarter  ended June 30,  2000.  The  increase in interest  income was due to the
increase of $82.2 million in average  interest-earning  assets, partially offset
by a decrease of 9 basis  points in the  average  yield.  The  average  yield on
interest-earning  assets  decreased to 7.46% for the three months ended June 30,
2001 from 7.55% for the three months ended June 30, 2000.  Total interest income
for the six-months ended June 30, 2001 amounted to $47.8 million, an increase of
$3.4 million, or 7.6%, compared  to the  $44.4 million  interest  earned for the
six-months ended June 30, 2000.  The  increase  was due to the combined  effects
of a $70.8 million increase in the average balance of  interest  earning  assets
and an increase in the average  yield of 12 basis points  during the  six-months
ended June 30, 2001 compared to the prior year period.

     Interest  income  on  loans,  net,  for the  quarter  ended  June 30,  2001
increased by $804,000,  or 4.1%, to $20.6 million  compared to $19.8 million for
the comparable quarter in 2000. For the six-months ended June 30, 2001, interest
income on loans, net, increased $2.1 million to $41.5 million from $39.4 million
for the  six-months  ended June 30, 2000.  The increase in interest  income from
loans,  net, for the current six-month period was due to the combined effects of
an increase in yield of 17 basis  points and an increase in the average  balance
of $30.7 million.  The average yield on loans, net for the six-months ended June
30,  2001 was 7.80%,  compared to an average  yield of 7.63% for the  six-months
ended June 30, 2000.

     Interest on mortgage-backed  securities for the quarter ended June 30, 2001
increased  by $483,000 to $1.8  million,  compared to $1.3  million for the same
quarter in 2000.  This increase in income was primarily due to the $28.8 million
higher average  balance during the quarter ended June 30, 2001,  compared to the
quarter ended June 30, 2000. An eight basis point  increase in the average yield
during the current  quarter,  compared to the quarter ended June 30, 2000,  also
contributed  to the  increased  income.  The  average  yield  during the current
quarter was 6.50%,  compared to 6.42% for the quarter  ended June 30, 2000.  For
the six-months ended June 30, 2001,  interest on mortgage-backed  securities was
$3.0 million,  compared to last year's  comparable period total of $2.0 million.
This  increased   income  is  primarily  due  to  higher   average   balance  of
mortgage-backed  securities,  which  increased  by $32.0  million  to an average
balance of $93.3 million for the six-months ended June 30, 2001, compared to the
prior year period average balance of $61.2 million.  This increase was primarily
attributable to the acquisition of 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. A nine basis point improvement in
the  average  yield in the  current  period also  contributed  to the  increased
interest  income.  The  average  yield  on  mortgage-backed  securities  for the
six-months  ended June 30, 2001 was 6.52%,  compared to 6.43% for the prior year
comparable period.

     Income from investment securities was $1.6 million for each of the quarters
ended  June 30,  2001 and 2000.  Although  the  average  balance  of  investment
securities  increased  by $3.8  million  in the  quarter  ended  June 30,  2001,
compared to the quarter ended June 30, 2000, the interest income was essentially
the same. This was due to a decrease of 35 basis points in the current quarter's
average yield of 6.44%,  compared to the second quarter of 2000 average yield of
6.79%. For the six-months  ended June 30, 2001,  interest income from investment
securities  increased by $281,000 to $3.3 million,  compared to $3.0 million for
last year's  comparable  period.  The increase in interest  income on investment
securities  in the six-  months  ending  June 30,  2001 is  primarily  due to an
increase in the average balances,  which increased by an average of $8.0 million
to $100.1 million for the current six-months,  compared to an average balance of
$92.1 for the six- months ended June 30, 2000. Also contributing to the increase
in interest income on investment  securities was a four basis point  improvement
in the yield, which averaged 6.62% in the six-months ending June 30, 2001.

                                         13
<PAGE>   15
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended June 30, 2001 increased by $927,000 or 6.8%, to $14.6 million  compared to
$13.7  million for the quarter  ended June 30,  2000.  The  increase in interest
expense  for the  quarter  ended June 30, 2001 was due in part to an increase of
$64.3  million in the average  balance of  interest-bearing  liabilities,  which
averaged  $1.202  billion  during the  current  quarter,  compared to an average
balance of $1.138 billion during the quarter ended June 30, 2000. An increase of
five basis points in the average cost of interest-bearing liabilities during the
current quarter  contributed to the remaining increase in interest expense.  The
average  cost of  interest-bearing  liabilities  increased  to 4.87%  during the
quarter  ended  June 30,  2001,  compared  to 4.82% for last  year's  comparable
quarter. The increase was due to the inclusion of the of the $32.0 million trust
preferred  securities,  which  bear an  average  cost  of  11.0%.  If the  trust
preferred  securities were not included in the net interest margin  calculation,
the cost of interest  bearing  liabilities  would have been 4.70% in the current
quarter,  or 12 basis  points  lower than last year's  comparable  quarter.  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 six-months  ended June 30, 2001,  interest  expense on
interest-bearing  liabilities totaled $29.1 million,  compared to last year's to
date total of $26.6 million,  an increase of $2.5 million or 9.6%. This increase
is primarily  attributable  to a 21 basis point  increase in the average cost of
interest-bearing  liabilities.  The average cost of interest-bearing liabilities
for the  six-months  ending June 30,  2001 was 4.95%,  compared to 4.74% for the
prior year period.  As  explained  above,  the current year period  average cost
included  the  impact  of the  trust  preferred  securities,  which  effectively
increased the average cost of interest  bearing  liabilities by approximately 17
basis points.  Also  contributing to the higher interest expense was an increase
in the average balance of  interest-bearing  liabilities,  which averaged $1.177
billion  during the  six-months  ended  June 30,  2001,  compared  to an average
balance of $1.122 billion during the six-months ended June 30, 2000.

     Interest expense on deposit accounts was $7.9 million for the quarter ended
June 30,  2001,  an increase of $110,000  from the $7.8  million for the quarter
ended June 30,  2000.  The  increase  in  interest  expense on deposit  accounts
resulted  from an  increase in the average  deposit  account  balances of $766.3
million for the  three-months  ended June 30, 2001,  compared to average deposit
account balances of $755.8 million, an increase of $10.5 million compared to the
quarter  ended June 30, 2000.  The cost of funds for deposit  accounts was 4.11%
for the quarters ended June 30, 2001 and 2000. For the six-months ended June 30,
2001, interest expense on deposit accounts was $16.1 million,  compared to $15.0
million for the prior year period,  and increase of $1.1  million.  The increase
was due  primarily to the effects of an increase of 15 basis points in the total
cost of deposit accounts during the current period.  The average cost of deposit
accounts  for the  six-months  ended June 30, 2001 and 2000 was 4.21% and 4.06%,
respectively.

     Interest  expense on borrowed  funds was $5.9 million for the  three-months
ended June 30, 2001 and 2000. The stable 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 $404.0 million
in the current quarter,  an increase of $21.7 million compared to $382.3 million
for the quarter  ended June 30,  2000.  The average  cost of borrowed  funds was
5.81% for the  three-months  ended June 30,  2001,  a decline of 40 basis points
compared to the 6.21% cost of borrowed funds for the three-months ended June 30,
2000. For the six-months ended June 30, 2001, interest expense on borrowed funds
was $11.3 million,  compared to $11.6 million for the six-months  ended June 30,
2000. The decrease in interest expense on borrowed funds was caused primarily by
the effect of a 12 basis points  decline in the average cost of borrowed  funds.
The average cost of borrowed funds  declined to 5.94% for the  six-months  ended
June 30,  2001,  compared to an average  cost of 6.06% for the six  months-ended
June 30, 2000.


Net Interest Income

     Net interest  income  during the second  quarters of 2001 and 2000 was $9.3
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 2.73% for the quarter ended June 30, 2000, to 2.59% for the
current quarter. The net interest margin for the quarter ended June 30, 2001 was
2.90%,  compared to 2.99% for the prior year's first 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.  On a year to date basis,  net interest income was $18.7
million,  compared to $17.8 million for the prior year to date. The net interest
margin was 2.97% for the six-months  ended June 30, 2001,  compared to 3.01% 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>   16

Provision for Loan Losses

     The Company's  provision for loan losses was $208,000 for the quarter ended
June 30, 2001,  compared to $249,000 for the  comparable  quarter last year. The
allowance for loan losses  increased  from $11.4 million at December 31, 2000 to
$11.7  million  at  June  30,  2001  due to  this  quarter's  provision,  net of
charge-offs/recoveries.  The provision decreased for the three-months ended June
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 June 30,  2001,  the Company  classified  $2.9
million of loans  ($2.1  million  at BFS and  $825,000  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 June 30,  2001 was  sufficient  to  provide  for
anticipated losses inherent in the loan portfolio.

     The  Company's  allowance  for loan  losses  at June  30,  2001 was  $11.7
million,  which  represented  1,633% of  non-performing  loans or 1.05% 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 $305.6 million at June 30, 2001.

     Non-performing  assets at June 30,  2001  amounted  to  $946,000 or .07% 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 $45,000 and $35,000  for the  three-month  periods  ended June 30, 2001 and
2000,  respectively.  The amount of interest  income that was  recorded on these
loans was $22,000 and $26,000 for the six-month periods ended June 30, 2001 and
2000, respectively.

     At June 30, 2001, loans  characterized as impaired totaled $19,000.  During
the six-months ended June 30, 2001, the average recorded value of impaired loans
was  $134,000,  $7,000  interest  income was  recognized  and $7,000 of interest
income would have been recognized under the loans' original terms.

     At June 30, 2001 and at December  31,  2000,  the Company had  $231,000 and
$145,000 in real estate owned and other reposessed assets, respectively. Further
at June 30, 2001, the Company also had restructured  real estate loans amounting
to $205,000 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>   17

Non-Interest Income

     Total  non-interest  income  improved to $4.5 million for the quarter ended
June 30, 2001,  compared to $4.2 million for the quarter ended June 30, 2000 due
primarily  to  increased  gains  on the  sale of  loans.  Deposit  service  fees
increased  from  $473,000 in the quarter ended June 30, 2000, to $608,000 in the
current  quarter.  This  increase was  primarily due to higher levels of deposit
account services activity.  On a year to date basis,  total non-interest  income
was $7.7  million  for the  six-months  ended June 30,  2001,  compared  to $7.4
million for the prior year comparable  period.  Deposit service fees improved to
$1.2 million for the  six-months  ended June 30, 2001,  compared to $933,000 for
the  six-months  ended June 30, 2000 for the same reason  previously  mentioned.
Loan  processing and servicing  fees declined to $114,000  during the six-months
ended June 30,  2001,  compared to $340,000  for the  six-months  ended June 30,
2000.  The decline in the current  period is due to  adjustments  in the current
quarter to the originated mortgage servicing rights,  necessitated by more rapid
serviced loan  prepayments  than expected.  Gain on sale of investments  totaled
$215,000 in the current year-to-date period as the Company sold a portion of its
equity securities portfolio during the first quarter of 2001. Other non-interest
income  increased  to $836,000  during the  six-months  ended June 30, 2001 from
$681,000  during  the  six-months  ending  June 30,  2000  primarily  due to the
$157,000 gain on the sale of BFS' previous  Billerica Office location during the
second quarter of 2001.
Non-Interest Expense

     Total non-interest expenses increased to $9.6 million for the quarter ended
June 30, 2001 from $9.1  million  for the  quarter  ended June 30, 2000 and from
$17.4  million for the  six-months  ended June 30, 2000 to $18.8 million for the
current  six-month  period.
Compensation  and benefits  increased  less than 4%, but occupancy and equipment
and data processing increased by 11.9% and 16.6%,  respectively,  due in part to
expenses  incurred  by the  addition of the new Woburn  Office  opened in May of
2000. Also, the prior year's non-interest expenses for the six-months ended June
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 $3.3 million for
the six-months ended June 30, 2000 to $3.7 million for the six-months ended June
30, 2001 due in part to higher outside professional services expense.

Income Tax Expense

     Income tax expense for the six-months ended June 30, 2001 and 2000 was $2.6
million. The effective income tax rate was 36.3% during the current year-to-date
period, compared to 35.1% for the prior year period.

                                        16
<PAGE>   18
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 June 30, 2001, the Company's one year gap was a positive .57%
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>   19

                         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

(A) The Annual Meeting of Stockholders of the Corporation
was held on April 30, 2001.
(B) Directors elected at Annual Meeting and Continuing in Office:

(1) Election of Directors to a three-year term

        Nominee         Total Votes For       Total Votes Withheld

    Gene J. DeFeudis        3,871,751                 343,968
    David F. Holland        3,948,143                 267,577

(2) Continuing Directors         Year Term Expires

      David P. Conley                  2002
      Richard J. Fahey                 2002
      Patricia M. Flynn                2003
      W. Robert Mill                   2002

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

Selection of Independent Auditors:

Votes For       Votes Against      Abstentions
4,195,283          17,811             2,625

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

Previously  reported  on Form 10-k for the period ending December 31, 2000.

                                      18

<PAGE>   20

                                  SIGNATURES



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

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

undersigned thereunto duly authorized.


                                           BOSTONFED BANCORP, INC.
                                                  (Registrant)


Date:  August 14, 2001                         By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


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

                                       19