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, 1999
                            __________________________

Commission File Number               1-13936
                            __________________________


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

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

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

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

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


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

                                 Yes  (X)                No   (    )

Number of shares of common stock, par value $.01 per share,
outstanding as of July 31, 1999:  5,025,871.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

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

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

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

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

            Notes to Consolidated Financial Statements                    7 - 8

 Item 2     Average Balances and Yield / Costs                            9 - 10

            Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          11 - 17


 Item 3.    Quantitative and Qualitative Disclosures About
            Market Risk                                                  18 - 19





PART II _ OTHER INFORMATION
___________________________

 Item 1.    Legal Proceedings                                            20

 Item 2.    Changes in Securities and Use of Proceeds                    20

 Item 3.    Defaults Upon Senior Securities                              20

 Item 4.    Submission of Matters to a Vote of Security Holders          20

 Item 5.    Other Information                                            20

 Item 6.    Exhibits and Reports on Form 8-K                             20

 Signature Page                                                          21


                                       1

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

                                                   June 30,   December 31,
                                                      1999          1998
                                                  -----------  --------------
Assets                                           (Unaudited)
------------
Cash and cash equivalents                            $ 53,255   $  37,201
Investment securities available for sale
  (amortized cost of $62,442 and $48,837 at
  June 30, 1999 and December 31, 1998
  respectively)                                        61,594      49,137
Investment securities held to maturity (fair
  value of $ 2,299 and $7,371 at June 30,
  1999 and December 31, 1998                            2,304       7,302
Mortgage-backed securities available for sale
  (amortized cost of $16,857 and $20,935 at
  June 30, 1999 and December 31, 1998,                 16,626      21,029
Mortgage-backed securities held to maturity (fair
  value of $15,760 and $23,333 at June 30,
  1999 and December 31, 1998                           15,537      22,913
Mortgage loans held for sale                           21,280      17,008
Loans, net of allowance for loan losses of $9,552
  and $8,500 at June 30, 1999 and December 31, 1998   980,124     943,662
Accrued interest receivable                             6,329       5,549
Stock in FHLB of Boston and Federal Reserve Bank       19,461      17,802
Premises and equipment                                  6,666       6,614
Real estate owned                                           0          47
Other assets                                           11,694      10,859
                                                     --------    --------
            Total assets                           $1,194,870  $1,139,123
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $727,969    $707,144
 Federal Home Loan Bank advances                      373,500     337,500
 Advance payments by borrowers for taxes
  and insurance                                         2,854       3,405
 Other liabilities                                      7,877       9,280
                                                      -------     -------
            Total liabilities                       1,112,200   1,057,329
                                                     -------     -------
Commitments and contingencies

Stockholders' equity;
 Preferred stock, $.01 par value, 1,000,000 shares
  authorized; none issued                               -- --       -- --
 Common stock, $0.01 par value, 17,000,000 shares
  authorized; 6,589,617 shares issued (5,025,871 and
  5,112,441 shares outstanding at June 30, 1999
   and December 31, 1998, respectively                     66          66
 Additional paid-in capital                            66,727      66,417
 Retained earnings                                     47,171      44,256
 Accumulated other comprehensive income (loss)           (636)        312
  Less Treasury Stock, (1,563,746 shares and
   1,477,176 shares at June 30, 1999
    and December 31, 1998, respectively), at cost     (27,738)    (26,128)
  Less unallocated ESOP shares                         (2,418)     (2,418)
  Less unearned Stock-Based Incentive Plan               (502)       (711)
                                                      --------    --------
            Total stockholders' equity                 82,670      81,794
                                                      --------    --------
Total liabilities and stockholders' equity         $1,194,870  $1,139,123
                                                      ========    ========

See accompanying condensed notes to consolidated financial statements.
                                       2
<PAGE>

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

                                 Three Months Ended        Six Months Ended
                                 ------------------        ------------------
                                 6/30/99    6/30/98        6/30/99    6/30/98
                                 ------------------        ------------------

                                     (Unaudited)               (Unaudited)

Interest income:
 Loans                          $ 17,951  $  16,047       $ 35,609  $  31,896
 Mortgage-backed securities          567        856          1,183      1,797
 Investment securities             1,314      1,390          2,571      2,801
                                 -------    -------        -------    -------
   Total interest income          19,832     18,293         39,363     36,494
                                 -------    -------        -------    -------
Interest expense:
 Deposit accounts                  6,281      5,922         12,556     11,616
 Borrowed funds                    5,214      4,480         10,302      8,783
                                 -------    -------        -------    -------
   Total interest expense         11,495     10,402         22,858     20,399
                                 -------    -------        -------    -------
Net interest income                8,337      7,891         16,505     16,095
Provision for loan losses            430        342            860        745
                                 -------    -------        -------    -------
 Net interest
   income after provision          7,907      7,549         15,645     15,350
Non-interest income:
 Loan processing and servicing
   fees                              118        196            279        340
 Gain on sale of loans               932        771          1,696      1,426
 Deposit service fees                439        414            848        823
 Other                               241        205            454        401
                                 -------    -------        -------    -------
Total non-interest income          1,730      1,586          3,277      2,990
                                 -------    -------        -------    -------
Non-interest expense:
 Compensation and benefits         3,675      3,498          7,301      6,908
 Occupancy and equipment             804        810          1,601      1,584
 Federal deposit insurance
  premiums                            89         80            183        159
 Other                             1,727      1,705          3,253      3,422
                                 -------    -------        -------    -------
  Total non-interest expense       6,295      6,093         12,338     12,073
                                 -------    -------        -------    -------
Income before income taxes         3,342      3,042          6,584      6,267
Income tax expense                 1,315      1,239          2,553      2,575
                                 -------    -------        -------    -------
Net income                      $  2,027   $  1,803       $  4,031   $  3,692
                                 =======    =======        =======    =======

Basic earnings per share           $0.42      $0.35          $0.83      $0.72
Diluted earnings
  per share                        $0.40      $0.33          $0.80      $0.68
Basic weighted average shares
  outstanding                  4,809,697  5,106,663      4,831,764  5,136,368
Common stock equivalents
  due to dilutive effect
  of stock options               181,934    315,319        186,976    288,453
Diluted total weighted average
  shares outstanding           4,991,631  5,421,982      5,018,740  5,424,821

See accompanying condensed notes to consolidated financial statements.
                                       3
<PAGE>
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                Six Months Ended June 30, 1999
                                         (In Thousands)
                                          (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, 1998    $ 66      66,417     44,256    (26,128)       312         (2,418)      (711)        81,794

Net income                       - -         - -      2,004       - -          - -           - -        - -          2,004

Change in net unrealized gain/(loss)
 on investments available for sale
 (net of tax benefit of $235)    - -         - -        - -       - -         (398)          - -        - -           (398)
                                                                                                                    --------
Total comprehensive income       - -         - -        - -       - -          - -           - -        - -          1,606

Cash dividends declared and
 paid ($0.10 per share)          - -         - -       (511)      - -          - -           - -        - -           (511)

Common Stock repurchased
 (63,570 shares at an average
  price of $18.69 per share)     - -         - -        - -     (1,188)        - -           - -        - -         (1,188)

Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         121           121

Appreciation in fair value of
  shares charged to expense for
  compensation plans             - -         158        - -       - -          - -           - -        - -            158
                               -------    -------   --------   ---------    ---------      --------   ---------    --------

Balance at March 31, 1999       $ 66      66,575     45,749    (27,316)        (86)         (2,418)     (590)      81,980
                               -------    -------   --------   ---------    ---------      --------   ---------    --------


Net income                       - -         - -      2,027       - -          - -           - -        - -          2,027

Change in net unrealized gain/(loss)
 on investments available for sale
 (net of tax benefit of $382)    - -         - -        - -       - -         (550)          - -        - -           (550)
                                                                                                                    --------
Total comprehensive income       - -         - -        - -       - -          - -           - -        - -          1,477

Cash dividends declared and
 paid ($0.12 per share)          - -         - -       (605)      - -          - -           - -        - -           (605)

Common Stock repurchased
 (23,000 shares at an average
  price of $18.35 per share)     - -         - -        - -     (422)          - -           - -        - -           (422)

Allocation relating to earned
  portion of Stock-Based
  Incentive Plan                 - -         - -        - -       - -          - -           - -         88             88

Appreciation in fair value of

  shares charged to expense for
  compensation plans             - -         152        - -       - -          - -           - -        - -            152
                               -------    -------   --------   ---------    ---------      --------   ---------    --------

Balance at June 30, 1999       $ 66       66,727     47,171    (27,738)       (636)         (2,418)      (502)     82,670
                               -------    -------   --------   ---------    ---------      --------   ---------    --------



</TABLE>See accompanying condensed notes to consolidated financial statements.
                                       4
<PAGE>
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES
            Consolidated Statements of Cash Flows
                        (In Thousands)

                                                 For the Six Months Ended
                                                         June 30,
                                                    1999          1998
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    4,031    $    3,692
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and
       accretion, net                                  620           670
      Earned SIP shares                                209           345
      Appreciation in fair value of shares
       charged to expense for compensation plans       310           481
      Provision for loan losses                        860           745
      Loans originated for sale                   (179,686)     (182,855)
      Proceeds from sale of loans                  177,110       164,781
      Gain on sale of real estate
       acquired through foreclosure                      -           (32)
      Gain on sale of loans                         (1,696)       (1,426)
      Increase in accrued interest receivable         (780)         (309)
      Increase in prepaid expenses
       and other assets, net                          (941)          (81)
      Decrease in accrued expenses and
       other liabilities, net                         (704)          (34)
                                                   --------       -------
          Net cash used in
           operating activities                       (667)      (14,023)
                                                   --------       -------

Cash flows from investing activities:
  Proceeds from maturities of investment
   securities held to maturity                       5,000         8,650
  Proceeds from maturities of investment
   securities available for sale                    10,268         3,000
  Purchase of investment securities
   available for sale                              (23,892)      (23,489)
  Purchase of investment securities
   held to maturity                                      -        (1,000)
  Purchase of mortgage-backed securities
   held to maturity                                      -          (997)
  Purchase of FHLB and Federal Reserve Stock        (1,659)            -
  Principal payments on mortgage-backed
   securities available for sale                     3,877         4,190
  Principal payments on mortgage-
   backed securities held to maturity                7,404         6,532
  Increase in loans, net                           (37,322)      (64,511)
  Purchases of premises and equipment                 (550)         (472)
  Proceeds from sale of real estate owned               47           128
                                                    -------       -------
       Net cash used in
         investing activities                      (36,827)      (67,969)
                                                    -------     ---------
                          -Continued on next page-
                                       5
<PAGE>
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES
            Consolidated Statements of Cash Flows
                        (In Thousands)

                                                 For the Six Months Ended
                                                          June 30,
                                                    1999            1998
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:
    Increase in deposit accounts                    20,825        32,487
    Repayments of securities sold under
     agreement to repurchase                             -        (7,140)
    Repayments of Federal Home Loan
     Bank advances                                 (67,291)     (224,518)
    Proceeds from Federal Home Loan
     Bank advances                                 103,291       282,079
    Cash dividends paid                             (1,116)         (929)
    Common stock repurchased                        (1,610)       (2,810)
    Options exercised                                    -            15
    Decrease in advance payments by
     borrowers for taxes and insurance                (551)         (263)
                                                  --------       -------

         Net cash provided by
            financing activities                    53,548        78,921
                                                   -------       -------

         Net increase (decrease)
          in cash and cash equivalents              16,054        (3,071)


Cash and cash equivalents at beginning of quarter   37,201        24,690
                                                   -------       -------

Cash and cash equivalents at end of quarter     $   53,255    $   21,619
                                                   =======       =======

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

       Interest                                 $   22,676     $  20,062
                                                   =======       =======

       Taxes                                    $    3,536     $   2,590
                                                   =======       =======


See accompanying condensed notes to consolidated financial statements.
                                       6


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


NOTE 1:  BASIS OF PRESENTATION

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

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all necessary adjustments,
consisting only of normal recurring  accruals necessary for a fair presentation,
have been  included.  The  results of  operations  for the three- and  six-month
periods  ended  June 30,  1999 and 1998 are not  necessarily  indicative  of the
results that may be expected for the entire fiscal year.

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


NOTE 2:  COMMITMENTS,  CONTINGENCIES AND CONTRACTS

     At June 30, 1999, the Company had commitments of $90.2 million to originate
mortgage loans and $13.1 million to purchase loans from  correspondent  lenders.
Of these $103.3 million commitments, $76.2 million were adjustable rate mortgage
loans with  interest  rates  ranging from 5.00% to 9.75% and $13.1  million were
fixed rate mortgage loans with interest  rates ranging from 6.00% to 8.88%.  The
Company also had commitments to sell $52.5 million of mortgage loans.

     At June 30,  1999,  the  Company was  servicing  first  mortgage  loans of
approximately  $719.6  million,  which are either  partially or  wholly-owned by
others.


NOTE 3:  LEGISLATIVE MATTERS

     Currently,  legislation  is pending  that  may  change  the  activities  in
which banks and bank  holding  companies  may engage and could  restructure  the
regulation  of  financial  service  companies.  The Company is unable to predict
whether legislation will be enacted or the extent to which the legislation would
impact competition or restrict or disrupt its own operations.

                                       7
<PAGE>

NOTE 4:  Business Segments

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

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

     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, 1999:
     Interest income            $   17,526        2,165         19,691           253           (112)              19,832
     Interest expense               11,067          540         11,607                         (112)              11,495
     Provision for loan losses         400           30            430                                               430
     Non-interest income             1,525          205          1,730                                             1,730
     Non-interest expense            5,051        1,077          6,128           167                               6,295
     Income tax expense              1,008          272          1,280            35                               1,315
     Net income                      1,524          452          1,976            51                               2,027
     Total assets                1,046,968      137,348      1,184,316        86,035        (75,481)           1,194,870
Net interest margin                  2.61%        5.21%           n.m.          n.m.            n.m.               2.97%
Return on average assets              .59%        1.33%           n.m.          n.m.            n.m.                .69%
Return on average equity            10.90%       14.78%           n.m.          n.m.            n.m.               9.55%

At or for the three-months
ended June 30, 1998:
     Interest income            $   15,928        2,103         18,031           373           (111)              18,293
     Interest expense               10,032          468         10,500            13           (111)              10,402
     Provision for loan losses         317           25            342                                               342
     Non-interest income             1,402          174          1,576            10                               1,586
     Non-interest expense            4,854        1,130          5,984           109                               6,093
     Income tax expense                880          270          1,150            89                               1,239
     Net income                      1,247          383          1,630           173                               1,803
     Total assets                  918,463      124,761      1,043,224        85,564        (70,581)           1,058,207
Net interest margin                  2.73%        5.72%           n.m.          n.m.            n.m.               3.18%
Return on average assets              .56%        1.21%           n.m.          n.m.            n.m.                .70%
Return on average equity             9.72%       12.40%           n.m.          n.m.            n.m.               8.65%

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, 1999:
     Interest income            $   34,766        4,317         39,083           537           (257)              39,363
     Interest expense               22,051        1,064         23,115                         (257)              22,858
     Provision for loan losses         800           60            860                                               860
     Non-interest income             2,891          386          3,277                                             3,277
     Non-interest expense            9,906        2,163         12,069           269                              12,338
     Income tax expense              1,901          545          2,446           107                               2,553
     Net income                      2,998          872          3,870           161                               4,031
     Total assets                1,046,968      137,348      1,184,316        86,035        (75,481)           1,194,870
Net interest margin                  2.60%        5.27%           n.m.          n.m.            n.m.               2.96%
Return on average assets              .59%        1.29%           n.m.          n.m.            n.m.                .69%
Return on average equity            10.88%       14.14%           n.m.          n.m.            n.m.               9.51%

At or for the six-months
ended June 30, 1998:
     Interest income            $   31,805        4,146         35,951           798           (255)              36,494
     Interest expense               19,631          930         20,561            93           (255)              20,399
     Provision for loan losses         695           50            745                                               745
     Non-interest income             2,629          351          2,980            10                               2,990
     Non-interest expense            9,689        2,137         11,826           247                              12,073
     Income tax expense              1,830          570          2,400           175                               2,575
     Net income                      2,588          810          3,398           294                               3,692
     Total assets                  918,463      124,761      1,043,224        85,564        (70,581)           1,058,207
Net interest margin                  2.86%        5.71%           n.m.          n.m.            n.m.               3.28%
Return on average assets              .59%        1.30%           n.m.          n.m.            n.m.                .72%
Return on average equity            10.08%       13.17%           n.m.          n.m.            n.m.               8.83%

n.m. = not meaningful


</TABLE>

                                       8

<PAGE>


<TABLE>
                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the quarter ended June 30:                              1999                                      1998
                                                -------------------------------------       ------------------------------
                                                                             Average                                  Average
                                                  Average                     Yield/         Average                   Yield/
                                                  Balance       Interest       Cost          Balance      Interest      Cost
                                                ----------     ----------   ---------       ---------    ----------  ---------
                                                                             (Dollars in thousands)
Assets:
<S>                                            <C>              <C>          <C>          <C>             <C>           <C>
Interest-earning assets:
 Investment securities (1)                     $    91,191      $ 1,314      5.76%        $   88,588       $ 1,390       6.28%
 Loan, net and mortgage loans held for sale (2)    998,231       17,951      7.19%           853,276        16,047       7.52%
 Mortgage-backed securities (3)                     34,511          567      6.57%            51,148           856       6.69%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,123,933       19,832      7.06%           993,012        18,293       7.37%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                        46,573                                    41,963
                                                ----------                                  ---------
   Total assets                                $ 1,170,506                                $1,034,975
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   58,577          419      2.86%        $   63,220           467       2.95%
 Savings accounts                                 141,185          882      2.50%           116,211           718       2.47%
 NOW accounts                                     110,749          212      0.77%           105,331           300       1.14%
 Certificate accounts                             346,860        4,768      5.50%           304,069         4,437       5.84%
                                                ----------    ---------                    ---------    ----------
   Total                                          657,371        6,281      3.82%           588,831         5,922       4.02%
 Borrowed Funds (4)                               364,089        5,214      5.73%           300,064         4,480       5.97%
                                                ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,021,460       11,495      4.50%           888,895        10,402       4.68%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  64,153                                    62,715
                                                ----------                                 ---------
   Total liabilities                            1,085,613                                   951,610
                                                ----------                                 ---------
 Stockholders' equity                              84,893                                    83,365
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,170,506                                $1,034,975
                                                ==========                                 =========
 Net interest rate spread (5)                                  $ 8,337      2.56%                         $ 7,891       2.69%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.97%                                       3.18%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     110.03%                                   111.71%
                                                 =========                                 =========
<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 5.70% and 5.97% for the three months ended June 30, 1999 and
    June 30, 1998, respectively.
(5) Net interest rate spread represents the difference between the weighted
    average yield on interest-earning assets and the weighted average cost of
    interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of
    average interest-earning assets.
</FN>
</TABLE>
                                       9
<PAGE>
<TABLE>

                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the six months ended June 30:                              1999                                      1998
                                                -------------------------------------       ---------------------------------
                                                                            Average                                  Average
                                                  Average                     Yield/         Average                   Yield/
                                                  Balance       Interest       Cost          Balance      Interest      Cost
                                                ----------     ----------   ---------       ---------    ----------  ---------
                                                                             (Dollars in thousands)
Assets:
<S>                                            <C>              <C>          <C>          <C>             <C>           <C>
Interest-earning assets:
 Investment securities (1)                     $    89,135      $ 2,571      5.77%        $   90,293       $ 2,801       6.20%
 Loan, net and mortgage loans held for sale (2)    988,033       35,609      7.21%           836,732        31,896       7.62%
 Mortgage-backed securities (3)                     37,675        1,183      6.28%            53,695         1,797       6.69%
                                                ----------    ---------                     ---------    ----------
   Total interest-earning assets                 1,114,843       39,363      7.06%           980,720        36,494       7.44%
                                                              ---------     ---------       ---------    ----------  ---------
 Non-interest-earning assets                        45,932                                    41,680
                                                ----------                                  ---------
   Total assets                                $ 1,160,775                                $1,022,400
                                                ==========                                  =========

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   59,205          845      2.85%        $   63,430           937       2.95%
 Savings accounts                                 136,779        1,661      2.43%           116,881         1,448       2.48%
 NOW accounts                                     109,659          473      0.86%           104,162           596       1.14%
 Certificate accounts                             344,129        9,577      5.57%           297,380         8,635       5.81%
                                                ----------    ---------                    ---------    ----------
   Total                                          649,772      12,556       3.86%           581,853        11,616       3.99%
 Borrowed Funds (4)                               360,827       10,302      5.71%           295,195         8,783       5.95%
                                                ----------    ---------                    ---------    ----------
   Total interest-bearing liabilities           1,010,599       22,858      4.52%           877,048        20,399       4.65%
                                                              ---------    ---------                    ----------  ---------
 Non-interest-bearing liabilities                  65,444                                    61,689
                                                ----------                                 ---------
   Total liabilities                            1,076,043                                   938,737
                                                ----------                                 ---------
 Stockholders' equity                              84,732                                    83,663
                                                ----------                                 ---------
   Total liabilities and
    stockholders' equity                       $1,160,775                                $1,022,400
                                                ==========                                 =========
 Net interest rate spread (5)                                 $ 16,505      2.54%                         $16,095       2.79%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.96%                                       3.28%
                                                                           =========                                =========
Ratio of interest-earning assets to
 interest-bearing liabilities                     110.32%                                   111.82%
                                                 =========                                 =========
<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 5.67% and 5.94% for the six months ended June 30, 1999 and
    June 30, 1998, respectively.
(5) Net interest rate spread represents the difference between the weighted
    average yield on interest-earning assets and the weighted average cost of
    interest-bearing liabilities.
(6) Net interest margin represents net interest income as a percentage of
    average interest-earning assets.
</FN>
</TABLE>
                                       10
<PAGE>

A.  GENERAL

     The Company is the holding  company  for two banking  subsidiaries,  Boston
Federal Savings Bank, a federally chartered community savings bank, and Broadway
National Bank, a nationally  chartered commercial bank. On February 7, 1997, the
Company  acquired BNB and as a result of the  acquisition,  the Company became a
bank holding  company subject to regulation by the Federal Reserve Bank ("FRB").
Boston Federal Savings Bank is regulated by the Office of Thrift Supervision and
Broadway  National  Bank is  regulated by the Office of the  Comptroller  of the
Currency. Substantially all of the Company's business is coordinated through its
subsidiary  banks  and  references  herein  to  "Company"  include  the banks as
appropriate.  The  Company's  principal  business  has been and  continues to be
attracting  retail deposits from the general public in the areas surrounding its
branch offices and investing those deposits,  together with funds generated from
operations and borrowings, primarily in one- to four-family residential mortgage
loans.  To a lesser  extent,  the  Company  invests in  multi-family  mortgages,
commercial real estate,  construction and land, consumer loans,  business loans,
and investment securities. The Company originates loans for investment and loans
for sale in the secondary market,  generally  retaining the servicing rights for
loans  sold.  Loan  sales are made from loans  held in the  Company's  portfolio
designated as being held for sale or originated for sale during the period.  The
Company's revenues are derived  principally from interest on its mortgage loans,
and  to  a  lesser  extent,  interest  and  dividends  on  its  investments  and
mortgage-backed  securities,  fees,  gains on sale of loans  and loan  servicing
income.  The Company's  primary sources of funds are retail deposits,  wholesale
brokered deposits,  principal and interest payments on loans and mortgage-backed
securities, FHLB advances, and proceeds from the sale of loans.



B. YEAR 2000 ISSUE

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

     Included in other non-interest  expenses for the three-month  periods ended
June 30, 1999 and 1998 are charges incurred in connection with the modification
or replacement  of software or hardware in order for the Company's  computer and
related systems to properly recognize dates beyond December 31, 1999.

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

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

                                       11
<PAGE>

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

     The  total  cost of the Year 2000  project  is  estimated  at  $400,000  to
$500,000 which includes  estimated costs and time  associated  with  third-party
Year 2000 issues,  and an allocation of payroll costs for personnel  assigned to
the  Year  2000  project.  Through  June  30,  1999  the  Company  has  expensed
approximately  $100,000  year to date and  $350,000  total  toward the Year 2000
remediation  effort. A significant portion of the costs associated with the year
2000  project are not  expected to be  incremental  to the  Company,  but rather
represent a reprioritization of existing internal systems technology resources.

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

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



C. FINANCIAL CONDITION


     Total  assets at June 30,  1999 were  $1.195  billion,  compared  to $1.139
billion at December  31,  1998,  an  increase of $56 million or 4.9%.  The major
components  of asset  growth  included  cash and  cash  equivalents,  investment
securities  available for sale,  mortgage loans held for sale and loans,  net of
allowance for loan losses. Cash and cash equivalents increased from a balance of
$37.2  million at December  31,  1998 to $53.3  million at June 30,  1999.  This
increase in liquidity was in  anticipation  for the funding of a bank owned life
insurance  policy ("BOLI") early in the third quarter of 1999. The BOLI purchase
is expected to partially  offset employee  benefit costs and provide the Company
with increased earnings resulting from the tax advantaged status of BOLI income.
Investment  securities available for sale increased to $61.6 million at June 30,
1999 from $49.1  million at December 31, 1998 as securities  purchases  exceeded
maturities.  Mortgage  loans  held for sale  increased  from  $17.0  million  at
December 31, 1998 to $21.3  million at June 30, 1999 as large sales near the end
of last year reduced the available for sale inventory.  Loans,  net of allowance
for loan losses,  increased by $36.5 million,  or 3.9%, from a balance of $943.7
million at December 31, 1998 to $980.1  million at June 30, 1999 as  origination
of loans for portfolio  exceeded  amortization and prepayments.  These increases
were partially  offset by decreases in investment  securities  held to maturity,
mortgage-backed  securities  available for sale and  mortgage-backed  securities
held to maturity  amounting  to $5.0  million,  $4.4  million and $7.4  million,
respectively,  compared to the balances at December 31, 1998.  Deposit  accounts
increased by $20.8 million from a balance of $707.1 million at December 31, 1998
to a balance of $728.0 million at June 30, 1999.  Approximately  one-half of the
deposit  account  balance  increase was due to the Company's  acquisition of $10
million of wholesale  brokered  certificates of deposit.  Federal Home Loan Bank
advances increased by $36.0 million,  to a balance of $373.5 million at June 30,
1999 from a balance of $337.5 million at December 31, 1998.  These advances were
used primarily to fund the increase in loans, net.

                                       12
<PAGE>





D.  LIQUIDITY AND CAPITAL RESOURCES

     The Company's  primary sources of funds are deposits,  (including  brokered
deposits),    principal   and   interest   payments   on   loans,   investments,
mortgage-backed  and  related  securities  and loan  sales,  FHLB  advances  and
repurchase agreements.  While maturities and scheduled amortization of loans are
predictable sources of funds, deposit flows and mortgage prepayments are greatly
influenced by general interest rates,  economic conditions and competition.  The
Company has maintained in excess of the required minimum levels of liquid assets
at BFS as defined by OTS regulations.  This requirement,  which may be varied at
the direction of the OTS depending  upon economic  conditions and deposit flows,
is based upon a  percentage  of the BFS's  deposits and  short-term  borrowings.
BFS's current required  liquidity ratio is 4%. At June 30, 1999 and December 31,
1998  BFS's  liquidity  ratio  was 8.4% and 6.9%  respectively.  Management  has
maintained  liquidity as close as possible to the minimum requirement so that it
may invest any excess  liquidity in higher yielding  interest-earning  assets or
use such funds to repay higher cost FHLB advances. The liquidity ratio is higher
than usual at June 30, 1999 due to the anticipated purchase of BOLI as explained
in the above  paragraph.  The OCC does not have specific  guidance for liquidity
ratios for BNB,  but does  require  banks to  maintain  reasonable  and  prudent
liquidity levels. Management believes such levels have been maintained since the
acquisition date.

     The Company's  most liquid assets are cash,  overnight  federal funds sold,
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, 1999,  BFS' cash,  loans and
investments  available  for sale  totaled  $79.1  million or 7.6% of BFS's total
assets.  While not all of these  liquid  assets  qualify  for  BFS's  regulatory
liquidity  requirements,  other assets in the held to maturity  category qualify
for regulatory liquidity requirements.

     The Company has other sources of liquidity if a need for  additional  funds
arises,  including  FHLB  advances.  At June 30,  1999,  the  Company had $373.5
million in advances  outstanding  from the FHLB. The Company  generally does not
pay the highest deposit rates in its market and accordingly utilizes alternative
sources  of  funds  such as  FHLB  advances,  wholesale  brokered  deposits  and
repurchase agreements to supplement cash flow needs.

     At June 30,  1999,  the Company had  commitments  to  originate  loans and
unused  outstanding  lines of  credit  totaling  $171.97  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, 1999, totaled $188.2 million.

     At June 30, 1999, the  consolidated  stockholders'  equity to total assets
ratio was 6.9%. As of June 30, 1999,  the Company,  BFS and BNB exceeded all of
their  regulatory  capital  requirements.  The  Company's  consolidated  tier  1
capital,  total capital and Tier 1 leverage  ratios were 11.7%,  13.0% and 6.8%,
respectively.  BFS's tier 1, total  risk-based,  tier 1 risk-based  and tangible
equity capital ratios were 5.3%, 10.4%, 9.1% and 5.3%, respectively. BNB's total
risk-based,  tier 1 risk-based  and tier 1 leverage  capital  ratios were 15.1%,
14.1%, and 7.1%, respectively.

                                       13

<PAGE>
E.  COMPARISON OF THREE- AND SIX-MONTHS ENDED JUNE 30, 1999 AND 1998

   General

     Earnings  for the quarter  ended June 30, 1999 were $2.0  million,  or $.42
basic  earnings  per  share,  $.40 per share on a  diluted  basis,  compared  to
earnings of $1.8 million,  or $.35 basic and $.33 diluted earnings per share for
the second  quarter of 1998.  The current  quarter's  earnings  amount to an 20%
increase in basic earnings per share and a 21% increase in diluted  earnings per
share compared to last year's second quarter.  Earnings for the six-months ended
June 30, 1999 amounted to $4.0 million,  or $83 basic and $.80 diluted  earnings
per share, compared to $3.7 million, or $.72 basic and $.68 diluted earnings per
share for the comparable 1998 period. The Company's annualized return on average
assets was .69% and the annualized  return on average  stockholders'  equity was
9.51% during the  six-months  ended June 30,  1999,  compared to .72% and 8.83%,
respectively,  for the  six-months  ended June 30, 1998  (annualized).  Comments
regarding the components of net income are detailed in the following paragraphs.

   Interest Income

     Total interest income on interest-earning assets for the quarter ended June
30, 1999 increased by $1.5 million,  or 8.4%, to $19.8 million,  compared to the
quarter  ended June 30,  1998.  The  increase in interest  income was  primarily
attributable to a $130.9 million  increase in average  interest-earning  assets,
offset by a 31 basis point decrease in the average  yield.  The average yield on
interest-earning  assets  decreased to 7.06% for the three months ended June 30,
1999 from 7.37% for the three months ended June 30, 1998.  For the first half of
1999, total interest income was $39.4 million, compared to $36.5 million for the
comparable  period  in 1998.  The major  reason  for the  increase  was also the
increased average balances of interest-earning assets, which were $1.115 billion
during the six-months ended June 30, 1999, compared to $980.7 million during the
comparable period in 1998.  Partially  offsetting the benefits of higher average
balances  in  interest-earning  assets was a decline in  average  yields,  which
declined from an average of 7.44% during the  six-months  ended June 30, 1998 to
an average of 7.06% during the six-months ended June 30, 1999.

     Interest  income  on  loans,  net,  for the  quarter  ended  June 30,  1999
increased by $1.9 million,  or 11.9%, to $17.9 million compared to $16.0 million
for the same quarter in 1998. On a year to date basis, interest income on loans,
net,  increased  $3.7  million to $35.6  million from the $31.9  million  earned
during the first half of 1998. The increase in interest income from loans,  net,
for the three- and six-months ended June 30, 1999,  compared to the same periods
last year, was primarily attributable to increases in average balances of $145.0
million and $151.3 million, respectively. The earnings impact of higher balances
of loans,  net was partially  offset by a decline in the average yield on loans,
net,  which  decreased by 33 basis points to 7.19% during the quarter ended June
30, 1999, compared to 7.52% during the quarter ended June 30, 1998. On a year to
date basis,  the yield on loans,  net,  decreased  from 7.62% for the six-months
ended June 30, 1998 to 7.21% during the current year period.

     Interest on mortgage-backed  securities for the quarter ended June 30, 1999
decreased by $289,000 to $567,000,  compared to $856,000 for the same quarter in
1998.  This  decrease in income was due  primarily  to the $16.6  million  lower
average balance during the quarter ended June 30, 1999,  compared to the quarter
ended June 30, 1998. Additionally, the average yield declined by 12 basis points
to an average of 6.57%  during the June 30, 1999  quarter,  compared to the same
quarter  last  year.  On a year  to  date  basis,  interest  on  mortgage-backed
securities was $1.2 million,  compared to last year's comparable period total of
$1.8 million,  also due to declines in average balances and yields.  The average
balance of  mortgage-backed  securities  declined by $16.0 million to an average
balance of $37.8 million for the six-months  ended June 30, 1999 compared to the
prior year period average  balance of $53.7 million.  Average yields declined by
41 basis points during the current period.

     Income from  investment  securities  was $1.3 million for the quarter ended
June 30, 1999 compared to $1.4 million for the prior year quarter.  On a year to
date basis, income from investment securities was $2.6 million and $2.8 million,
respectively, for the six-months ended June 30, 1999 and 1998. The average yield
on  investment  securities  decreased  by 52 basis  points and 43 basis  points,
respectively,  in the current  three- and  six-month  periods,  compared to last
year's periods due to overall  declines in market  interest  rates.  The average
balance  increased  by $2.6  million to an average of $91.2  million  during the
quarter ended June 30, 1999, compared to an average balance of $88.6 million for
the quarter ended June 30, 1998. On a year to date basis, the average balance of
investment  securities  declined by $1.2 million to an average  balance of $89.1
million  during the  six-months  ended  June 30,  1999,  compared  to an average
balance of $90.3 million for the comparable prior year period.

                                       14
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended  June 30,  1999  increased  by $1.1  million  or 10.5%,  to $11.5  million
compared to the quarter  ended June 30, 1998.  The increase in interest  expense
for the quarter  ended June 30, 1999 was due  primarily to an increase of $132.6
million in the average balance of interest-bearing  liabilities,  which averaged
$1.021 billion  during the current  quarter,  compared to an average  balance of
$888.9  million during the quarter ended June 30, 1998. The increase in interest
expense was  partially  offset by a decrease  of 18 basis  points in the average
cost of interest-bearing liabilities during the quarter ended June 30, 1999. The
average  cost of  interest-bearing  liabilities  decreased  to 4.50%  during the
quarter  ended  June 30,  1999,  compared  to 4.68% for last  year's  comparable
quarter. The decrease was due to generally lower market rates. On a year to date
basis,  interest expense on interest-bearing  liabilities totaled $22.9 million,
compared  to last year's to date total of $20.4  million,  an increase of 12.1%.
The increase is attributable  to the higher average balance of  interest-bearing
liabilities,  which averaged $1.011 billion during the six-months ended June 30,
1999,  compared to an average  balance of $877.0  million  during the six-months
ended June 30, 1998. Partially offsetting the impact of higher average balances,
was a 13 basis point decline in the cost of interest-bearing  liabilities during
the six-months ended June 30, 1999.

     Interest expense on deposit accounts was $6.3 million for the quarter ended
June 30,  1999,  an increase of $359,000  from the $5.9  million for the quarter
ended June 30,  1998.  The  increase in the  expense  was due to higher  average
deposit account balances of $68.5 million,  partially offset by a 20 basis point
decrease in the average  cost of funds  during the quarter  ended June 30, 1999,
compared to the quarter ended June 30, 1998.  The cost of funds  declined due to
lower  rates  paid on all types of  deposit  accounts.  The  average  balance of
deposit  accounts  increased from $588.8 million for the quarter ending June 30,
1998, to an average balance of $657.4 million for the current  quarter.  Most of
the increase is  attributable  to the odd-month  retail  certificate  of deposit
acquisition  program and a special "money market" savings  account  initiated by
BFS during 1998. For the  six-months  ended June 30, 1999,  interest  expense on
deposit accounts was $12.6 million, compared to $11.6 million for the prior year
period,  an increase  of $1.0  million,  or 8.1%.  The  increase  was due to the
effects of higher  average  deposit  account  balances,  which  averaged  $649.8
million during the six-months ended June 30, 1999, compared to $581.9 million in
the prior year  period,  partially  offset by the  effects of a decrease of nine
basis points in the total cost of deposit accounts during the current period.

     Interest  expense on borrowed  funds  increased  from $4.5  million for the
quarter ended June 30, 1998 to $5.2 million for the current quarter. The average
cost of borrowed  funds  decreased  from 5.97% during the quarter ended June 30,
1998 to an average of 5.73%  during the current  quarter.  The  average  balance
increased  from $300.1  million  during the second quarter of 1998 to an average
balance of $364.1  million during the second quarter of 1999. For the six-months
ended  June 30, 1999  interest  expense  on  borrowed  funds was $10.3  million,
compared to $8.8 million for the six-months ended June 30, 1998. The increase in
interest expense on borrowed funds was caused by a $65.6 million increase in the
average  balances from $295.2 million for the six-months  ended June 30, 1998 to
$360.8 million during the current period. The increase was partially offset by a
reduction of 24 basis points in the cost of borrowed money during the six-months
ended June 30, 1999.

Net Interest Income

     Net interest  income  during the second  quarters of 1999 and 1998 was $8.3
million and $7.9 million,  respectively,  as industry-wide  margin shrinkage was
offset by net interest income earned from asset growth. The net interest margin,
at 2.97% for the quarter ended June 30, 1999 was 21 basis points lower than last
year's  comparable  quarter.  On a year to date basis,  net interest  income was
$16.5  million,  compared to $16.1  million for the prior year to date.  The net
interest  margin was 2.96% for the six-months  ended June 30, 1999,  compared to
3.28%  for the  prior  year  comparable  period.  The net  interest  margin  was
compressed  due to the  continuing  effects of a relatively  flat  interest rate
yield curve.
                                       15
<PAGE>

Provision for Loan Losses

     The  Company's  provision  for loan losses  amounted  to  $430,000  for the
quarter ended June 30, 1999,  compared to the $342,000  loan loss  provision for
the comparable  quarter last year.  For the  six-months  ended June 30, 1999 and
1998, the provision was $860,000 and $745,000,  respectively.  The allowance for
loan losses  increased from $8.5 million at December 31, 1998 to $9.6 million at
June 30, 1999 due to the year to date provision and net recoveries.


     The Company  establishes  provisions for loan losses,  which are charged to
operations,  in order to maintain the allowance for loan losses at a level which
is deemed to be appropriate  based upon size and type of loans and  management's
assessment  of the risk  inherent  in its  loan  portfolio  in light of  current
economic conditions,  actual loss experience,  industry trends and other factors
which may  affect  the real  estate  values in the  Company's  market  area.  In
addition various regulatory  agencies,  as an integral part of their examination
process,  periodically  review the  Company's  allowance  for loan losses.  Such
agencies may require the Company to make  additional  provisions  for  estimated
loan losses based upon  judgements  different  from those of  management.  While
management  believes the current  allowance for loan losses is adequate,  actual
losses are dependent upon future events, and as such, future provisions for loan
losses may be necessary.  As part of the Company's determination of the adequacy
of the  allowance  for loan  losses,  the Company  monitors  its loan  portfolio
through its Asset  Classification  Committee.  The  Committee  classifies  loans
depending on risk of loss characteristics. The most severe classification before
a  charge-off  is  required is  "sub-standard."  At June 30,  1999,  the Company
classified  $3.6  million of loans ($3.2  million at BFS and $403,000 at BNB) as
sub-standard  compared to $4.2 million ($3.4 million of BFS and $770,000 of BNB)
at December 31, 1998. The Asset Classification Committee, which meets quarterly,
determines  the  adequacy  of the  allowance  for loan  losses  through  ongoing
analysis of historical loss experience,  the composition of the loan portfolios,
delinquency levels,  underlying collateral values, cash flow values and state of
the real estate economy.  Utilizing these procedures,  management  believes that
the  allowance  for loan losses at June 30, 1999 was  sufficient  to provide for
anticipated losses inherent in the loan portfolio.

     The Company's  allowance for loan losses at June 30, 1999 was $9.6 million,
which  represented  744.5%  of  non-performing  loans  or .94% of  total  loans,
compared to $8.5  million at December 31,  1998,  or 1,029.1% of  non-performing
loans  and .88% of total  loans.  Management  believes  this  coverage  ratio is
prudent due to the balance  increase in the combined total of  construction  and
land,  commercial  real  estate,  multi-family,  home  equity  and  improvement,
consumer and business loans. These combined total balances increased from $153.8
at December 31, 1998 to $172.5 million at June 30, 1999.


     Non-performing  loans at June 30, 1999  amounted to $1.3 million or .11% of
total loans,  compared to $0.8 million,  or .09% of total loans, at December 31,
1998.


     The amount of interest income on non-performing  loans that would have been
recorded had these loans been current in accordance  with their original  terms,
was $55,000 and $78,000 for the six-month  periods ended June 30, 1999 and 1998,
respectively. The amount of interest income that was recorded on these loans was
$21,000  and  $30,000 for the  six-month  periods  ended June 30, 1999 and 1998,
respectively.


     At June 30, 1999,  loans  characterized  as impaired,  pursuant to SFAS No.
114,  "Accounting by Creditors for Impairment of a Loan", and SFAS
No. 118,  "Accounting by Creditors for Impairment of a Loan--Income  Recognition
and Disclosure", totaled $269,000.  All of the impaired loans have
been  measured  using  the  fair  value of the  collateral  method.  During  the
six-months ended June 30, 1999, the average recorded value of impaired loans was
$405,000,  $9,000  interest income was recognized and $11,000 of interest income
would have been recognized under the loans' original terms.

     At June 30, 1999 and at December 31,  1998,  the Company had $0 and $47,000
in real estate owned, respectively.  Further, at June 30, 1999, the Company also
had  restructured  real estate loans amounting to $213,000 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.
                                      16
<PAGE>

Non-Interest Income

     Total  non-interest  income in the  second  quarter  of 1999  increased  by
$144,000,  or 9.1%, to $1.7 million from $1.6 million for the three months ended
June 30, 1998. The largest component of non-interest  income was gain on sale of
loans,  which  increased  to $932,000  during the quarter  ended June 30,  1999,
compared to $771,000 for the  comparable  quarter last year. The gain on sale of
loans  improved due to an increase in the volume of loans sold. The Company sold
$100.2 million of loans during the quarter ended June 30, 1999 compared to $83.3
million during last year's comparable  quarter. On a year to date basis, gain on
sale of loans  amounted to $1.7 million,  compared to $1.4 million for the first
six months of 1998, also due to increased volume of loans sold.  Generally lower
market  interest  rates and the position of the  interest  rate yield curve have
provided many borrowers an opportunity to re-finance  their  mortgages to lower,
and  generally  fixed  interest  rates.  The Company  sells the vast majority of
fixed-rate loans it originates.  The continuation of a strong housing market and
economy also contributed to increased volume for financing of home purchases.

Non-Interest Expense

     Total non-interest expense was $6.3 million and $6.1 million, respectively,
for the quarters  ended June 30, 1999 and 1998.  On a year to date basis,  total
non-interest  expense increased from $12.1 million for the six-months ended June
30, 1999 to $12.3 million for the six-months  ended June 30, 1998.  Compensation
and benefits  increased  by $177,000 and $393,000 for the three- and  six-months
ended June 30, 1999 compared to the comparable prior year totals.  The increases
were due to  additional  staff hired to expand the Company's  corporate  lending
department and normal year over year salary increases.  On a year to date basis,
other non-interest  expense declined to $3.3 million for the six-months June 30,
1999  compared  to $3.5  million for the  six-months  ended June 30, 1998 as the
prior year's period  included  consulting  and legal costs incurred to assist in
establishing the Company's tax saving strategies.  These strategies included the
formation of real estate investment trusts and securities  subsidiaries in early
1998.

Income Tax Expense

     Income tax expense for the  quarter  ended June 30, 1999 was $1.3  million,
compared to $1.2  million for the quarter  ended June 30,  1998.  The  effective
income tax rate was 39.4% during the current quarter,  compared to 40.7% for the
quarter ended June 30, 1998. On a year to date basis,  the current period income
tax expense was $2.6 million,  for an effective rate of 38.8%,  compared to $2.6
million,  for an effective rate of 41.1% for the six-months ended June 30, 1998.
The  lower  effective  rate  during  the  current  periods  is due  to the  full
implementation of the tax saving strategies.

                                       17

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

     The principal  market risk affecting the Company is interest rate risk. The
objective of the Company's interest rate risk management function is to evaluate
the interest rate risk included in certain balance sheet accounts, determine the
level of risk  appropriate  given the  Company's  business  strategy,  operating
environment,  capital and liquidity requirements and performance objectives, and
manage the risk consistent with Board of Directors' approved guidelines. Through
such management, the Company seeks to reduce the vulnerability of its operations
to changes in interest  rates.  The Company  monitors its interest  rate risk as
such risk relates to its operating strategies.  The Company's Board of Directors
has established a management  Asset/Liability  Committee that is responsible for
reviewing  the  Company's  asset/  liability  policies  and  interest  rate risk
position.  The Committee  reports  trends and interest rate risk position to the
Board of Directors on a quarterly  basis. The extent of the movement of interest
rates is an uncertainty that could have a negative impact on the earnings of the
Company.

     In recent  years,  the Company has utilized  the  following  strategies  to
manage  interest rate risk: (1)  emphasizing  the  origination  and retention of
adjustable-rate,  one- to four-family  mortgage loans; (2) generally  selling in
the secondary market substantially all fixed-rate mortgage loans originated with
terms  greater than 15 years while  generally  retaining  the  servicing  rights
thereof;  (3) primarily  investing in investment  securities or mortgage- backed
securities  with  adjustable  interest  rates;  and (4) attempting to reduce the
overall  interest rate  sensitivity of  liabilities  by emphasizing  longer-term
deposits and utilizing FHLB advances to replace rate sensitive deposits.

     The 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, 1999,  the Company's one year gap was a negative .66% of
total assets, compared to a positive 6.6% of total assets at December 31, 1998.

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

                                       18

<PAGE>

     As in the case with the gap analysis,  certain shortcomings are inherent in
the  methodology  used in the above  interest rate risk  measurements.  Modeling
changes in NPV  require the making of certain  assumptions  which may or may not
reflect the manner in which actual yields and costs respond to changes in market
interest rates. In this regard,  the NPV model used assumes that the composition
of the  Company's  interest  sensitive  assets and  liabilities  existing at the
beginning of a period  remains  constant over the period being measured and also
assumes that a particular change in interest rates is reflected uniformly across
the yield curve  regardless of the duration to maturity or repricing of specific
assets and  liabilities.  Accordingly,  although  the NPV  measurements  and net
interest income models provide an indication of the Company's interest rate risk
exposure at a particular  point in time, such  measurements  are not intended to
and do not  provide a  precise  forecast  of the  effect  of  changes  in market
interest rates on the Company's net interest  income and will differ from actual
results.  See the Company's Form 10-K for the year ended December 31, 1998 for a
detail of the GAP and NPV tables. There have been no material changes in the net
portfolio value since December 31, 1998.


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

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


SUBSEQUENT EVENTS

     On August 4, 1999,  the Company  entered  into an  agreement  to purchase a
privately-held  mortgage  company,  Diversified  Ventures,  Inc.,  d/b/a Forward
Financial  Company and Ellsmere  Insurance Agency,  Inc., both  headquartered in
Northborough,  Massachusetts. The tax deductible transaction premium will result
in approximately $20 million of goodwill to be amortized over 15 years. See Note
5 "Other Information" for further details.

                                      19
<PAGE>

                         PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

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


Item 2.  Changes in Securities and Use of Proceeds

       Not applicable

Item 3.  Defaults Upon Senior Securities

       Not applicable

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

(A) The Annual Meeting of Stockholders of the Corporation
was held on April 28, 1999.
(B) Directors elected at Annual Meeting:

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

Nominee                 Total Votes For                 Total Votes Withheld

David P. Conley         4,455,539                               184,207
W. Robert Mill          4,455,539                               184,207

(2) Continuing Directors                Year Term Expires

Edward P. Callahan                      2000
Richard J. Dennis, Sr.                  2000
David F. Holland                        2001
Charles R. Kent                         2000
Irwin W. Sizer                          2001

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

Selection of Independent Auditors

Votes For         Votes Against        Abstentions       Broker Non-Votes
4,628,523             5,748                 5,475              None

Item 5.  Other Information

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

Item 6.  Exhibits and Reports on Form 8-K

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

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

    (b) No reports on Form 8-K


                                       20

<PAGE>

                                  SIGNATURES



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

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

undersigned thereunto duly authorized.


                                           BOSTONFED BANCORP, INC.
                                                  (Registrant)


Date:  August 13, 1999                         By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  August 13, 1999                         By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Executive Vice President,
                                                  Chief Financial Officer
                                                  and Corporate Secretary

                                       21