PRESS RELEASE

BOSTONFED BANCORP, INC. ANNOUNCES THE DECLARATION OF A DIVIDEND OF
$.16 PER SHARE.

TUESDAY, JULY 27, 2004

Burlington,  Mass.  July 27, 2004 - BostonFed  Bancorp,  Inc.  (AMEX:  BFD) (the
"Company"),   the  parent  of  Boston  Federal  Savings  Bank  (the  "Bank"),  a
federally-chartered stock savings bank, announced the declaration of a quarterly
cash dividend of $0.16 per share. The dividend is payable on or about August 19,
2004, to shareholders of record at the close of business on August 5, 2004.

On June 21,  2004,  the  Company  announced  that it entered  into a  definitive
agreement  to merge  into  Banknorth  Group,  Inc.  in a  transaction  valued at
approximately  $195  million.   The  transaction  is  subject  to  all  required
regulatory  approvals,  approval  of the  shareholders  of the Company and other
customary conditions.  The transaction is expected to be completed in early 2005
with operational integration to follow soon thereafter.

This press release may contain certain forward-looking statements with regard to
the  Company's  prospective  performance  and  strategies  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  and  Exchange  Act of 1934,  as amended.  The Company  intends  such
forward-looking  statements  to be  covered  by the safe  harbor  provision  for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 and is including this statement for such purpose.

Forward-looking  statements are based on certain  assumptions  and  management's
current expectations regarding economic, legislative, and regulatory issues that
may impact the Company's  earnings in future  periods.  Factors that could cause
future results to vary materially from current management  expectations include,
but are not limited to, general economic  conditions,  acts of terrorism or war,
changes in interest rates,  deposit flows, real estate values,  and competition;
changes  in  accounting   principles,   policies,  or  guidelines;   changes  in
legislation  or  regulation;  and  other  economic,  competitive,  governmental,
regulatory  and  technological   factors  affecting  the  Company's  operations,
pricing, products and services. The Company does not undertake, and specifically
disclaims any obligation,  to publicly  release the result of any revisions that
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.

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