FORM 10-Q

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


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



For Quarter Ended:               March 31, 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 April 30, 1999:  5,036,371.

<PAGE>

                        BOSTONFED BANCORP INC.
                              FORM 10-Q
                               INDEX



PART I - FINANCIAL INFORMATION                                     Page
______________________________                                     ____

 Item 1.    Financial Statements:

            Consolidated Balance Sheets as of 
            March 31, 1999 (unadudited) and December 31, 1998             2

            Consolidated Statements of Operations for the Three
            Months ended March 31, 1999 and 1998 (unaudited)              3

            Consolidated Statement of Changes in Stockholders'
            Equity for the Three Months ended 
            March 31, 1999 (unaudited)                                    4

            Consolidated Statements of Cash Flows for the
            Three Months ended March 31, 1999 and 1998 (unaudited)        5 - 6

            Notes to Consolidated Financial Statements                    7 - 8

            Average Balances and Yield / Costs                            9
 
 Item 2.    Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          10 - 16
 

 Item 3.    Quantitative and Qualitative Disclosures About
            Market Risk                                                  17 - 18





PART II _ OTHER INFORMATION
___________________________

 Item 1.    Legal Proceedings                                           18

 Item 2.    Changes in Securities                                       18

 Item 3.    Defaults Upon Senior Securities                             18

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

 Item 5.    Other Information                                           19

 Item 6.    Exhibits and Reports on Form 8-K                            19

 Signature Page                                                         20


                                       1

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

                                                    March 31,   December 31,
                                                      1999         1998
                                                  -----------  --------------
Assets                                                    (Unaudited)
------------
Cash and cash equivalents                            $ 24,231   $  37,201
Investment securities available for sale
  (amortized cost of $55,010 and $48,837 at
  March 31, 1999 and December 31, 1998
  respectively)                                        54,888      49,137
Investment securities held to maturity (fair
  value of $ 4,346 and $7,371 at March 31,
  1999 and December 31, 1998, respectively)             4,304       7,302
Mortgage-backed securities available for sale
  (amortized cost of $18,422 and $20,935 at
  March 31, 1999 and December 31, 1998, 
  respectively)                                        18,424      21,029
Mortgage-backed securities held to maturity (fair
  value of $18,779 and $23,333 at March 31, 
  1999 and December 31, 1998, respectively)            18,415      22,913
Mortgage loans held for sale                           22,572      17,008
Loans, net of allowance for loan losses of $9,053
  and $8,500 at March 31, 1999 and December 31, 
  1998, respectively                                  977,073     943,662
Accrued interest receivable                             5,769       5,549
Stock in FHLB of Boston and Federal Reserve Bank       18,981      17,802
Premises and equipment                                  6,556       6,614
Real estate owned                                           0          47
Other assets                                           11,350      10,859
                                                     --------    --------
            Total assets                           $1,162,563  $1,139,123
                                                     ========    ========

Liabilities and Stockholders' Equity
---------------------------------------
Liabilities:
 Deposit accounts                                    $708,844    $707,144
 Federal Home Loan Bank advances                      360,159     337,500
 Advance payments by borrowers for taxes
  and insurance                                         3,729       3,405
 Other liabilities                                      7,851       9,280
                                                      -------     -------
            Total liabilities                       1,080,583   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 (5,043,871 and 
  5,112,441 shares outstanding, respectively)              66          66
 Additional paid-in capital                            66,575      66,417
 Retained earnings                                     45,749      44,256
 Accumulated other comprehensive income                   (86)        312
  Less Treasury Stock, (1,545,746 shares and 
   1,477,176 shares, respectively), at cost           (27,316)    (26,128)
  Less unallocated ESOP shares                         (2,418)     (2,418)
  Less unearned Stock-Based Incentive Plan               (590)       (711)
                                                      --------    -------- 
            Total stockholders' equity                 81,980      81,794
                                                      --------    --------
Total liabilities and stockholders' equity         $1,162,563  $1,139,123
                                                      ========    ========

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

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

                                 Three Months Ended        
                                 ------------------       
                                 3/31/99    3/31/98       
                                 ------------------         
                              
                                     (Unaudited)
                          
Interest income:
 Loans                          $ 17,658  $  15,849      
 Mortgage-backed securities          616        941         
 Investment securities             1,257      1,411         
                                 -------    -------       
   Total interest income          19,531     18,201        
                                 -------    -------       
Interest expense:
 Deposit accounts                  6,275      5,694        
 Borrowed funds                    5,088      4,303        
                                 -------    -------       
   Total interest expense         11,363      9,997        
                                 -------    -------       
Net interest income                8,168      8,204        
Provision for loan losses            430        403         
                                 -------    -------       
 Net interest
   income after provision          7,738      7,801        
Non-interest income:
 Loan processing and servicing 
   fees                              161        144           
 Gain on sale of loans               764        655         
 Deposit service fees                409        409         
 Other                               213        196        
                                 -------    -------       
Total non-interest income          1,547      1,404       
                                 -------    -------       
Non-interest expense:
 Compensation and benefits         3,626      3,410        
 Occupancy and equipment             797        774         
 Federal deposit insurance
  premiums                            94         79           
 Real estate operations              (21)       (14)          
 Other                             1,547      1,731         
                                 -------    -------       
  Total non-interest expense       6,043      5,980        
                                 -------    -------       
Income before income taxes         3,242      3,225         
Income tax expense                 1,238      1,336         
                                 -------    -------       
Net income                      $  2,004   $  1,889      
                                 =======    =======           
                                                              
Basic earnings per share           $0.41      $0.37         
Diluted earnings 
  per share                        $0.40      $0.35         
Basic weighted average shares
  outstanding                  4,853,831  5,166,072     
Common stock equivalents
  due to dilutive effect
  of stock options               190,890    261,588       
Diluted total weighted average
  shares outstanding           5,044,721  5,427,660     

See accompanying condensed notes to consolidated financial statements.
                                      3
<PAGE>
<TABLE>
                             BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Changes in Stockholders' Equity
                                        (In Thousands)
                                Three Months Ended March 31, 1999
                                          (Unaudited)
<CAPTION>
                                                                               
                                                                                                    Unearned
                                                                         Accumulated                 Stock-       
                                        Additional                          other     Unallocated    Based      Total            
                                Common    paid-in   Retained  Treasury  Comprehensive   ESOP       Incentive  stockholders'
                                stock     capital   earnings    Stock       income     shares         Plan       equity
                                ------   --------  ---------   --------   ----------   -----------  ----------  ------------    
<S>                             <C>       <C>        <C>       <C>            <C>         <C>          <C>          <C>
Balance at December 31, 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 $148)    - -         - -        - -       - -         (398)          - -        - -           (398)   
                                                                                                                    --------
Total comprehensive income       - -         - -        - -       - -          - -           - -        - -          1,606
                               
Cash dividends declared and
 paid ($0.10 per share)          - -         - -       (511)      - -          - -           - -        - -           (511)
                                                                  
Common Stock repurchased         
 (68,570 shares at an average
  price of $17.33 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
                               -------    -------   --------   ---------    ---------      --------   ---------    --------         


                                     
</TABLE>
See accompanying condensed notes to consolidated financial statements.
                                      4
<PAGE>
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES                           
            Consolidated Statements of Cash Flows                             
                        (In Thousands)                                         
                                                                           
                                                 For the Three Months Ended
                                                         March 31,            
                                                    1999          1998
                                                   -------       -------
                                                      (Unaudited)
Net cash flows from operating activities:
    Net income                                  $    2,004    $    1,889
    Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation, amortization and                              
       accretion, net                                  337           326
      Earned SIP shares                                121           197  
      Appreciation in fair value of shares      
       charged to expense for compensation plans       158           217
      Provision for loan losses                        430           403
      Loans originated for sale                    (80,743)     (103,031)
      Proceeds from sale of loans                   75,943        81,241
      Gain on sale of real estate          
       acquired through foreclosure                      -           (16)
      Gain on sale of loans                           (764)         (655)
      Increase in accrued interest receivable         (220)         (134)
      Decrease(increase) in prepaid expenses 
       and other assets, net                          (544)           96
      Increase (Decrease) in accrued expenses and
       other liabilities, net                       (1,312)        1,448 
                                                   --------       -------
          Net cash used in                      
           operating activities                     (4,590)      (18,019)
                                                   --------       -------
                                                              
Cash flows from investing activities:                         
  Proceeds from maturities of investment
   securities held to maturity                       3,000         6,150    
  Proceeds from maturities of investment              
   securities available for sale                     5,075             -
  Purchase of investment securities               
   available for sale                              (11,249)      (20,187)
  Purchase of FHLB and Federal Reserve Stock        (1,179)            -
  Principal payments on mortgage-backed             
   securities available for sale                     2,492         1,776
  Principal payments on mortgage-           
   backed securities held to maturity                4,478         1,799
  Increase in loans, net                           (33,841)      (22,265)
  Purchases of premises and equipment                 (187)         (117)
  Proceeds from sale of real estate owned               47            16
                                                    -------       -------
       Net cash used in
         investing activities                      (31,364)      (32,828)
                                                    -------     ---------
                          -Continued on next page-  
                                      5
<PAGE>                          
           BOSTONFED BANCORP, INC. AND SUBSIDIARIES                           
            Consolidated Statements of Cash Flows                             
                        (In Thousands)                                         
                                                                           
                                                 For the Three Months Ended
                                                          March 31,        
                                                    1999            1998
                                                   -------        -------
                                                      (Unaudited)

Cash flows from financing activities:                         
    Increase in deposit accounts                     1,700        31,211
    Repayments of securities sold under
     agreement to repurchase                             -        (3,640) 
    Repayments of Federal Home Loan            
     Bank advances                                 (41,632)     (104,502)
    Proceeds from Federal Home Loan 
     Bank advances                                  64,291       132,502       
    Cash dividends paid                               (511)         (387) 
    Common stock repurchased                        (1,188)       (2,089)
    Options exercised                                    -             5
    Increase in advance payments by          
     borrowers for taxes and insurance                 324           358
                                                  --------       -------
                                                              
         Net cash provided by  
            financing activities                    22,984        53,458
                                                   -------       -------        
                        
         Net increase (decrease)   
          in cash and cash equivalents             (12,970)        2,611
                                                              

Cash and cash equivalents at beginning of quarter   37,201        24,690
                                                   -------       ------- 
                                                              
Cash and cash equivalents at end of quarter     $   24,231    $   27,301
                                                   =======       =======
                                                              
Supplemental disclosure of cash flow                          
 information:
     Payments during 
      the quarter for:

       Interest                                 $   10,543     $   9,008
                                                   =======       ======= 
                                                              
       Taxes                                    $    2,621     $   1,390 
                                                   =======       =======
                                                              

See accompanying condensed notes to consolidated financial statements.
                                      6                            


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


NOTE 1:  BASIS OF PRESENTATION

     The accompanying  unaudited  consolidated  financial statements include the
accounts of BostonFed  Bancorp,  Inc.,  ("BostonFed"  or the  "Company") and its
wholly-owned  subsidiaries,   Boston  Federal  Savings  Bank  ("BFS"),  Broadway
National  Bank  ("BNB")  and BF  Funding  Corporation  as of March 31,  1999 and
December 31, 1998 and for the three-month periods ended March 31, 1999 and 1998.

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all necessary adjustments,
consisting only of normal recurring  accruals necessary for a fair presentation,
have been included.  The results of operations for the three-month periods ended
March 31, 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.  This  statement  is  effective  for all fiscal  quarters of fiscal years
beginning after June 15, 1999. The adoption of this statement is not expected to
have a material impact on the Company.


NOTE 2:  COMMITMENTS,  CONTINGENCIES AND CONTRACTS 

     At March  31,  1999,  the  Company  had  commitments  of $88.9  million  to
originate  mortgage loans and $9.2 million to purchase loans from  correspondent
lenders. Of these $98.1 million commitments,  $65.6 million were adjustable rate
mortgage loans at rates ranging from 5.00% to 9.25% and $32.5 million were fixed
rate mortgage loans with interest rates ranging from 5.88% to 8.88%. The Company
also had commitments to sell $50.7 million of mortgage loans.

     At March 31,  1999,  the  Company was  servicing  first  mortgage  loans of
approximately  $665.3  million,  which are either  partially or  wholly-owned by
others.


NOTE 3:  LEGISLATIVE MATTERS

     Currently,  legislation  is pending that would  broaden 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  t he  time  of  sale  and
approximated cost.

     Each  Bank is  managed  separately  with  its own  president,  who  reports
directly  to the  respective  Boards  of  Directors  of each  Bank and the Chief
Executive Officer of the Company and its 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>
                                                                TOTAL
                                                              REPORTABLE                                      CONSOLIDATED
                                      BFS         BNB          SEGMENTS         OTHER      ELIMINATIONS          TOTALS
                                   --------     --------     ------------      -------    --------------      ------------ 
<S>                             <C>             <C>          <C>              <C>           <C>                <C>
At or for the three-months 
ended March 31, 1999:
     Interest income            $   17,240        2,152         19,392           284           (145)              19,531
     Interest expense               10,984          524         11,508                         (145)              11,363  
     Provision for loan losses         400           30            430                                               430 
     Non-interest income             1,366          181          1,547                                             1,547
     Non-interest expense            4,855        1,086          5,941           102                               6,043 
     Income tax expense                893          273          1,166            72                               1,238 
     Net income                      1,474          420          1,894           110                               2,004 
     Total assets                1,015,285      135,755      1,151,040        85,692        (74,169)           1,162,563  
Net interest margin                  2.49%        4.86%           n.m.          n.m.            n.m.               2.95%  
Return on average assets              .59%        1.25%           n.m.          n.m.            n.m.                .70% 
Return on average equity            10.90%       13.50%           n.m.          n.m.            n.m.               9.48%  

At or for the three-months
ended March 31, 1998:
     Interest income            $   15,877        2,043         17,920           425           (144)              18,201
     Interest expense                9,599          462         10,061            80           (144)               9,997  
     Provision for loan losses         378           25            403                                               403 
     Non-interest income             1,227          177          1,404                                             1,404
     Non-interest expense            4,835        1,007          5,842           138                               5,980 
     Income tax expense                950          300          1,250            86                               1,336 
     Net income                      1,341          427          1,768           121                               1,889 
     Total assets                  887,113      127,112      1,014,225        89,050        (71,676)           1,031,599  
Net interest margin                  2.89%        5.15%           n.m.          n.m.            n.m.               3.39%  
Return on average assets              .62%        1.39%           n.m.          n.m.            n.m.                .75% 
Return on average equity            10.40%       14.00%           n.m.          n.m.            n.m.               9.00%  

n.m. = not meaningful


</TABLE>

                                        8

<PAGE>


<TABLE>
                                                   BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                                                      Average Balances and Yields / Costs
                                                                     (Unaudited)
<CAPTION>
For the three months ended March 31:                              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)                     $    87,078      $ 1,257      5.77%        $   91,998       $ 1,411       6.13%
 Loan, net and mortgage loans held for sale (2)    977,834       17,658      7.22%           820,187        15,849       7.73%
 Mortgage-backed securities (3)                     40,838          616      6.03%            56,243           941       6.69%
                                                ----------    ---------     ---------       ---------    ----------  ---------
   Total interest-earning assets                 1,105,750       19,531      7.07%           968,428        18,201       7.52%
                                                              ---------     ---------                    ----------  ---------
 Non-interest-earning assets                        45,290                                    41,397              
                                                ----------                                  ---------   
   Total assets                                $ 1,151,040                                $1,009,825              
                                                ==========                                  =========   

Liabilities and Stockholders' Equity:

Interest-bearing Liabilities:
 Money market deposit accounts                 $   59,832          426      2.85%        $   63,640           470       2.95%
 Savings accounts                                 132,372          779      2.35%           117,551           730       2.48%
 NOW accounts                                     108,568          261      0.96%           102,993           296       1.15%
 Certificate accounts                             341,398        4,809      5.63%           290,692         4,198       5.78%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total                                          642,170        6,275      3.91%           574,876         5,694       3.96%
 Borrowed Funds (4)                               357,564        5,088      5.69%           290,327         4,303       5.93%
                                                ----------    ---------    ---------       ---------    ----------  ---------
   Total interest-bearing liabilities             999,734       11,363      4.55%           865,203         9,997       4.62%
                                                              ---------    ---------                    ----------  ---------  
 Non-interest-bearing liabilities                  66,735                                    60,662           
                                                ----------                                 ---------      
   Total liabilities                            1,066,469                                   925,865               
                                                ----------                                 ---------  
 Stockholders' equity                              84,571                                    83,960               
                                                ----------                                 ---------
   Total liabilities and                        
    stockholders' equity                       $1,151,040                                $1,009,825
                                                ==========                                 ========= 
 Net interest rate spread (5)                                  $ 8,168      2.52%                         $ 8,204       2.90%
                                                              =========    =========                    ==========  =========
 Net interest margin (6)                                                    2.95%                                       3.39%
                                                                           =========                                ========= 
Ratio of interest-earning assets to 
 interest-bearing liabilities                     110.60%                                   111.93%                
                                                 =========                                 =========        
<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 5.65% and 5.91% for the three months ended March 31, 1999 and 
    March 31, 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>
                       BOSTONFED BANCORP, INC. AND SUBSIDIARIES
                            MANAGEMENT'S DISCUSSION AND
                           ANALYSIS OF FINANCIAL POSITION
                              AND RESULTS OF OPERATIONS


A.  GENERAL

     The Company is the holding  company  for two banking  subsidiaries,  Boston
Federal Savings Bank, a federally  chartered community savings bank and Broadway
National Bank, a nationally  chartered commercial bank. On February 7, 1997, the
Company  acquired BNB and as a result of the  acquisition,  the Company became a
bank holding  company subject to regulation by the Federal Reserve Bank ("FRB").
Boston Federal Savings Bank is regulated by the Office of Thrift Supervision and
Broadway  National  Bank is  regulated by the Office of the  Comptroller  of the
Currency. Substantially all of the Company's business is coordinated through its
subsidiary  banks  and  references  herein  to  "Company"  include  the banks as
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
March 31, 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 estimates that 94%
of the critical  applications were renovated at March 31, 1999. The Company will
continue to work with  critical  application  vendors to verify test results and
anticipates  that the  remaining  critical  applications  will be renovated  and
verified  by June  30,  1999,  based  upon  analysis  of  information  currently
available  from these  vendors.  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 is continuing in
1999 and is expected to be 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.

                                      10
<PAGE>


     In the event that the Company's  third-party vendors do not successfully or
timely achieve Year 2000 compliance, the Company's operations could be adversely
effected.  The Company has begun  development of 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  will be  completed  for all mission  critical  applications  after
testing  of  modified systems, and  is expected to be substantially  complete by
June 30, 1999.  Further, the Company will seek alternative vendors should one of
The  critical  vendors fail to achieve satisfactory Year 2000 compliance. In the
Event  the  Company's  current third party data  processing  vendors were not to
Achieve  Year  2000  compliance  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  March  31,  1999  the  Company  has  expensed
approximately  $50,000  year to date and  $300,000  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 already  successfully tested with many of
its critical  application  vendors and will continue to monitor and validate the
remainder,  including  the  Company's  electric al 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  an/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 March 31,  1999 were  $1.163  billion,  compared to $1.139
billion at December  31,  1998,  an  increase of $24 million or 2.1%.  The major
components of asset growth included  investment  securities  available for sale,
mortgage  loans  held for sale and  loans,  net of  allowance  for loan  losses.
Investment securities available for sale increased to $54.9 million at March 31,
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 $22.6  million at March 31, 1999 as sales near the end of
last year reduced the available for sale inventory.  Loans, net of allowance for
loan  losses,  increased  by $33.4  million,  or 3.5%,  from a balance of $943.7
million at December 31, 1998 to $977.1  million at March 31, 1999 as origination
of loans for portfolio  exceeded  amortization and prepayments.  These increases
were  partially  offset by  decreases in cash and cash  equivalents,  investment
securities held to maturity, mortgage-backed securities  available for sale  and
mortgage-backed  securities  held to maturity  amounting to $13.0 million,  $3.0
million, $2.6 million and $4.5 million,  respectively,  compared to the balances
at December 31, 1998.  Deposit accounts increased by $1.7 million from a balance
of $707.1  million at December 31, 1998 to a balance of $708.8  million at March
31, 1999.  Federal Home Loan Bank  advances  increased  by $22.7  million,  to a
balance of $360.2  million at March 31, 1999 from a balance of $337.5 million at
December 31, 1998. These advances were used to fund asset growth.


                                      11
<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 March 31, 1999 and December 31,
1998  BFS's  liquidity  ratio  was 6.2% 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 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 March 31, 1999,  BFS' cash,  loans and
investments  available  for sale  totaled  $71.2  million or 7.0% 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 March 31, 1998, BFS had $354.2 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 March 31,  1999,  the Company had  commitments  to  originate  loans and
unused  outstanding  lines of  credit  totaling  $164.60  million.  The  Company
anticipates  that it will have  sufficient  funds  available to meet its current
loan origination commitments. Certificate accounts which are scheduled to mature
in less than one year from March 31, 1999, totaled $212.1 million.

     At March 31, 1999, the  consolidated  stockholders'  equity to total assets
ratio was 7.1%. As of March 31, 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 11.9%,  13.2% and 6.9%,
respectively.  BFS's tier 1, total  risk-based,  tier 1 risk-based  and tangible
equity capital ratios were 5.3%, 10.1%, 8.9% and 5.2%, respectively. BNB's total
risk-based,  tier 1 risk-based  and tier 1 leverage  capital  ratios were 15.7%,
14.6%, and 7.2%, respectively.

                                       12

<PAGE>
E.  COMPARISON OF THREE-MONTHS ENDED MARCH 31, 1999 AND 1998

   General

     Earnings for the quarter  ended March 31, 1999 were $2.0  million,  or $.41
basic  earnings  per  share,  $.40 per share on a  diluted  basis,  compared  to
earnings of $1.9 million,  or $.37 basic and $.35 diluted earnings per share for
the first  quarter of 1998.  The  current  quarter's  earnings  amount to an 11%
increase in basic earnings per share and a 14% increase in diluted  earnings per
share compared to last year's first quarter.  The Company's annualized return on
average  assets  was .70% and the  annualized  return on  average  stockholders'
equity was 9.48% during the three-months ended March 31, 1999,  compared to .75%
and 9.00%, respectively, for the three-months ended March 31, 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
March 31, 1999 increased by $1.3 million, or 7.3%, to $19.5 million, compared to
the quarter ended March 31, 1998. The increase in interest  income was primarily
attributable to a $137.3 million  increase in average  interest-earning  assets,
offset by a 45 basis point decrease in the average  yield.  The average yield on
interest-earning  assets decreased to 7.07% for the three months ended March 31,
1999 from 7.52% for the three months ended March 31, 1998.

     Interest  income  on loans,  net,  for the  quarter  ended  March 31,  1999
increased by $1.8 million,  or 11.4%, to $17.7 million compared to $15.8 million
for the same quarter in 1998. The increase in interest  income from loans,  net,
for the quarter ended March 31, 1999, compared to the same period last year, was
primarily  attributable to an increase in the average balance of $157.6 million.
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 51 basis points
to 7.22% during the quarter  ended March 31, 1999,  compared to 7.73% during the
quarter ended March 31, 1998.  Interest on  mortgage-backed  securities  for the
quarter  ended March 31, 1999  decreased  by $325,000 to  $616,000,  compared to
$941,000 for the same quarter in 1998. This decrease in income was due primarily
to the $15.4 million lower  average  balance  during the quarter ended March 31,
1999,  compared to the quarter ended March 31, 1998.  Additionally,  the average
yield  declined by 66 basis  points to an average of 6.03%  during the March 31,
1999  quarter,  compared to the same quarter last year.  Income from  investment
securities  was $1.3  million for the quarter  ended March 31, 1999  compared to
$1.4  million  for the prior  year  quarter.  The  average  yield on  investment
securities  decreased  by 36 basis  points in the  current  three-month  period,
compared  to last  year's  quarter  ended March 31,  1998.  The average  balance
decreased  by $4.9  million to an average of $87.1  million  during the  quarter
ended March 31, 1999,  compared to an average  balance of $92.0  million for the
quarter ended March 31, 1998.

                                      13
<PAGE>
   Interest Expense

     Total  interest  expense on  interest-bearing  liabilities  for the quarter
ended  March 31,  1999  increased  by $1.4  million or 13.7%,  to $11.4  million
compared to the quarter ended March 31, 1998.  The increase in interest  expense
for the quarter  ended March 31, 1999 was due primarily to an increase of $134.5
million in the average balance of interest-bearing  liabilities,  which averaged
$999.7 million  during the current  quarter,  compared to an average  balance of
$865.2 million during the quarter ended March 31, 1998. The increase in interest
expense was partially offset by a decrease of 7 basis points in the average cost
of   interest-bearing   liabilities.   The  average  cost  of   interest-bearing
liabilities decreased to 4.55% during the quarter ended March 31, 1999, compared
to 4.62% for last year's comparable  quarter.  The decrease was due to generally
lower  market  rates,  offset by an  increase  in higher  cost  certificates  of
deposit.

     Interest expense on deposit accounts was $6.3 million for the quarter ended
March 31,  1999,  an increase of $581,000  from the $5.7 million for the quarter
ended March 31,  1998.  The  increase  in the expense was due to higher  average
deposit account  balances of $67.3 million,  partially offset by a 5 basis point
decrease in the average cost of funds  during the quarter  ended March 31, 1999,
compared to the quarter ended March 31, 1998.  The cost of funds declined due to
lower rates paid on core  deposit  accounts,  offset  somewhat by an increase in
higher costing  certificate  account  balances.  The average  balance of deposit
accounts increased from $574.9 million for the quarter ending March 31, 1998, to
an average  balance  of $642.2  million  for the  current  quarter.  Most of the
increase  is  attributable  to  the  15  month  retail  certificate  of  deposit
acquisition  program initiated by BFS during 1998.  Interest expense on borrowed
funds  increased  from $4.3 million for the quarter ended March 31, 1998 to $5.1
million for the current  quarter.  The average cost of borrowed funds  decreased
from 5.93% during the quarter ended March 31, 1998 to an average of 5.69% during
the current  quarter.  The average balance  increased from $290.3 million during
the first  quarter of 1998 to an average  balance of $357.6  million  during the
first quarter of 1999.


Net Interest Income

     Net  interest  income  during the first  quarters of 1999 and 1998 was $8.2
million,  as  industry-wide  margin  shrinkage was offset by net interest income
earned from asset  growth.  The net  interest  margin,  at 2.95% for the quarter
ended  March 31,  1999 was 44 basis  points  lower than last  year's  comparable
quarter.

                                      14
<PAGE>

Provision for Loan Losses

     The  Company's  provision  for loan losses  amounted  to  $430,000  for the
quarter ended March 31, 1999,  compared to the $403,000 loan loss  provision for
the comparable  quarter last year. The allowance for loan losses  increased from
$8.5  million at December  31, 1998 to $9.1 million at March 31, 1999 due to the
quarter's provision and net recoveries.

     The Company  establishes  provisions for loan losses,  which are charged to
operations,  in order to maintain the allowance for loan losses at a level which
is deemed to be  appropriate  based  upon  management's  assessment  of the risk
inherent in its loan portfolio in light of current economic  conditions,  actual
loss  experience,  industry  trends and other  factors which may affect the real
estate  values in the  Company's  market area.  In addition  various  regulatory
agencies, as an integral part of their examination process,  periodically review
the Company's  allowance for loan losses.  Such agencies may require the Company
to make  additional  provisions for estimated loan losses based upon  judgements
different  from those of  management.  While  management  believes  the  current
allowance for loan losses is adequate,  actual losses are dependent  upon future
events, and as such, future provisions for loan losses may be necessary. As part
of the Company's determination of the adequacy of the allowance for loan losses,
the  Company  monitors  its loan  portfolio  through  its  Asset  Classification
Committee.   The  Committee   classifies   loans   depending  on  risk  of  loss
characteristics.  The most severe classification before a charge-off is required
is  "sub-standard."  At March 31, 1999, the Company  classified  $3.6 million of
loans ($3.2 million at BFS and $443,000 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 March 31, 1999 was sufficient to provide for  anticipated  losses
inherent in the loan portfolio.

     The Company's allowance for loan losses at March 31, 1999 was $9.1 million,
which  represented  733.0%  of  non-performing  loans  or .90% 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 increased 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 $159.6 million at March 31, 1999.

     Non-performing  loans at March 31, 1999 amounted to $1.2 million or .12% 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 $25,000 and $49,000  for the  three-month  periods  ended March 31, 1999 and
1998,  respectively.  The amount of interest  income that was  recorded on these
loans was $11,000 and $7,000 for the  three-month  periods  ended March 31, 1999
and 1998, respectively.

     At March 31, 1999,  loans  characterized  as impaired,  (which  include all
non-performing loans and some other sub-standard  assets),  pursuant to SFAS No.
114,  "Accounting by Creditors for Impairment of a Loan",  ("SFAS 114") and SFAS
No. 118,  "Accounting by Creditors for Impairment of a Loan--Income  Recognition
and  Disclosure",  ("SFAS 118") totaled $1.7 million.  All of the impaired loans
have been measured  using the fair value of the  collateral  method.  During the
three-months  ended March 31, 1999, the average recorded value of impaired loans
was $1.6 million, $24,000 interest income was recognized and $38,000 of interest
income would have been recognized under the loans' original terms.

     At March 31, 1999 and at December 31, 1998,  the Company had $0 and $47,000
in real estate owned, respectively.  Further, at March 31, 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.

                                      15
<PAGE>

Non-Interest Income

     Total  non-interest  income  in the  first  quarter  of 1999  increased  by
$143,000, or 10.2%, to $1.5 million from $1.4 million for the three months ended
March 31, 1998. The largest component of non-interest income was gain on sale of
loans,  which  increased  to $764,000  during the quarter  ended March 30, 1999,
compared to $655,000 for the  comparable  quarter last year. The gain on sale of
loans  increased, despite a slight reduction in the volume of loans sold, due to
more favorable market conditions.  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.  Loan processing and servicing
fees were $161,000 for the first  quarter of 1999,  compared to $144,000 for the
comparable quarter last year.


Non-Interest Expense

     Total  non-interest  expense was $6.0 million for the quarters  ended March
31, 1999 and 1998.  Compensation  and benefits  increased by $216,000,  or 6.3%,
from $3.4 million for the three-months  ended March 31, 1998 to $3.6 million for
the  three-months  ended March 31, 1999 due to additional  staff hired to expand
the  Company's  corporate  lending  department  and normal year over year salary
increases.  Other non-interest expense declined to $1.5 million for  the quarter
ended March 31, 1999  compared to $1.7  million for the quarter  ended March 31,
1998 as the prior  year's  first  quarter  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 March 31, 1999 was $1.2  million,
compared to $1.3  million for the quarter  ended March 31, 1998.  The  effective
income tax rate was 38.2% during the current quarter,  compared to 41.4% for the
quarter  ended  March 31,  1998.  The lower  effective  rate  during the current
quarter is due to the full implementation of the tax saving strategies.

                                        16

<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 March 31, 1999, the Company's one year gap was a positive .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.

                                      17

<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 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.


                         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


       Not applicable


Item 3.  Defaults Upon Senior Securities


       Not applicable


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

          None

                                  18



<PAGE>

Item 5.  Other Information

       Not applicable


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


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

                                      19

<PAGE>

                                  SIGNATURES



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

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

undersigned thereunto duly authorized.


                                           BOSTONFED BANCORP, INC.
                                                  (Registrant)


Date:  May 17, 1999                         By:     /s/ David F. Holland
                                        __________________________________
                                                     David F. Holland
                                                     President and
                                                 Chief Executive Officer


Date:  May 17, 1999                         By:     /s/ John A. Simas
                                        __________________________________
                                                     John A. Simas
                                                  Executive Vice President,
                                                  Chief Financial Officer
                                                  and Corporate Secretary

                                      20