FOR IMMEDIATE RELEASE                                 March 6, 2003

Contact: Amy L. Timmerman, AVP, Investor Relations - 781-221-6396
         John A. Simas, EVP and CFO - 781-221-6307
         FAX: 781 221-7594

BOSTONFED BANCORP, INC. ANNOUNCES STATE TAX PROVISION FOR REIT ISSUE.

Burlington,  MA - BostonFed  Bancorp,  Inc.  (AMEX - BFD) (the  "Company"),  the
parent of Boston Federal Savings Bank, a federally-chartered stock savings bank,
and Broadway  National Bank, a national  chartered  commercial  bank,  announced
today  that  it will  record  a  provision  in the  first  quarter  of 2003  for
approximately $4.6 million  (approximately $3.0 million,  net of any federal tax
deduction  associated with such taxes and interest) for additional  state taxes,
including  interest,  relating to the deduction for dividends received from real
estate investment trust subsidiaries  ("REITs") for the 1999 through 2002 fiscal
years, thus reducing earnings for the first quarter of 2003 by the net after tax
amount.

The provision  relates to new  legislation  signed  yesterday by the Governor of
Massachusetts  that  amends   Massachusetts's  law  to  expressly  disallow  the
deduction  for  dividends   received  from  a  REIT.   This  amendment   applies
retroactively  to tax years ending on or after  December  31, 1999.  The Company
believes  that  this  new   legislation   would  apply  to  numerous   financial
institutions in Massachusetts.  As a result of the new legislation,  the Company
will also cease recording the tax benefits associated with the dividend received
deduction, effective for the 2003 tax year.

The Company  believes that the  legislation  will be challenged,  especially the
retroactive  provisions,  on constitutional and other grounds. The Company would
support  such a  challenge  and  otherwise  intends  to  vigorously  defend  its
position.