SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________________

Commission file number 000-29343

Port Financial Corp.
(Exact name of registrant as specified in its charter)

1380 Soldiers Field Road, Brighton, Massachusetts 02135
(Address of principal executive offices)
(Zip Code)

(617) 779-8300
(Registrant's telephone number including area code)

                    N/A                    
(Former name, former address and former fiscal year,
if changed from 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 twelve 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        .

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

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TABLE OF CONTENTS

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See the accompanying notes to the unaudited consolidated financial statements.

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See the accompanying notes to the unaudited consolidated financial statements

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See the accompanying notes to the unaudited consolidated financial statements

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See the accompanying notes to the unaudited consolidated financial statements

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See the accompanying notes to the unaudited consolidated financial statements.

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1) Basis of Presentation
The unaudited consolidated financial statements of Port Financial Corp. ("Port" or the "Company") include the accounts of the Company and its two wholly owned subsidiaries, Cambridgeport Bank (the "Bank") and Brighton Investment Corporation. Brighton Investment Corporation invests in marketable securities. The Bank is a Massachusetts-chartered stock savings bank with its headquarters located in Cambridge, Massachusetts. The Bank has four wholly-owned subsidiaries, Temple Investment Corporation, River Investment Corporation, Cambridgeport Insurance Services, Inc. and Prospect Real Estate Investment Corp. Temple Investment Corporation and River Investment Corporation both invest in securities. Cambridgeport Insurance Services, Inc. was established in April 2000 and intends to provide insurance. Prospect Real Estate Investment Corp. is a real estate investment trust which holds certain mortgage loans originated by the Bank as well as mortgage-backed securities. In addition, the Bank is the sole member of Temple Realty LLC, which owns the Company's administrative center.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the unaudited consolidated financial statements presented herein reflect all adjustments (consisting only of normal adjustments) necessary for a fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year. The Company believes that the disclosures are adequate to make the information presented not misleading. All significant intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements.

2) Commitments
At September 30, 2002, the Company had outstanding commitments to originate loans amounting to approximately $54.0 million, unadvanced funds on construction loans of approximately $123,000 and unadvanced funds on lines of credit amounting to approximately $188.6 million.

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3) Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period presented. In calculating basic earnings per share, the number of shares of common stock outstanding is reduced by the number of shares held by Port's Employee Stock Ownership Plan (the "ESOP") and its 2000 Recognition and Retention Plan (the "RRP") that have not been allocated or are not committed for release to participants' individual accounts. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed conversion. Potential common shares that may be issued by the Company relate solely to outstanding stock options and unearned RRP shares and are determined using the treasury stock method.

The following table summarizes the calculation of basic and diluted earnings per share:

For the three months ended September 30, 2002 and 2001, there were 2,700 and -0- options, and for the nine months ended September 30, 2002 and 2001, there were 15,100 and -0- options, respectively, to purchase shares of common stock, which were excluded from the calculation of diluted earnings per share because the options exercise price was greater than the average market price of the Company's common stock for the period and their inclusion would have been anti-dilutive.

4) Stock Repurchases
During the third quarter of 2002, the Company completed its sixth stock repurchase program by purchasing 56,500 shares at an average price of $38.33 per share. It also announced a seventh 5% repurchase program and, during the third quarter, purchased 235,325 shares at an average price of $38.83 per share. At September 30, 2002, 39,235 shares remain to be purchased under the seventh repurchase program.

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5) Loans
The loan portfolio consisted of the following (in thousands):

6) Deposits
A summary of deposit balances, by type, is as follows (in thousands):

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7. Real Estate Investment Trust
Prospect Real Estate Investment Corp. ("Prospect"), a subsidiary of the Bank, was established in April 2001 as a Massachusetts-chartered real estate investment trust (the "REIT"). During 2001, the Bank received dividends from Prospect. The Bank filed its 2001 state tax return on September 15, 2002 and, in accordance with the Commonwealth of Massachusetts Tax law, claimed a deduction for the dividends received from Prospect. The positive impact of the REIT dividend received deduction on the Company's 2001 reported net income was approximately $270,000. The additional positive impact on the Company's reported net income for the first nine months of 2002 was approximately $400,000.

The Company is aware that several other financial institutions operating in the Commonwealth of Massachusetts with similar real estate investment trust subsidiaries have recently received Notices of Intent to Assess additional state excise taxes from the Massachusetts Department of Revenue (the "DOR"), challenging the dividends received deduction claimed by those institutions. The institutions that received these notices have indicated their intention to appeal the assessments. There can be no assurance that the Company will receive such a notice pertaining to its 2001 tax filing. However, if it does receive such a notice, the Company intends to appeal any such assessment.

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Forward Looking Statements
This Quarterly Report on Form 10-Q contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Port Financial Corp.'s (the "Company") actual results could differ materially from those projected in the forward-looking statements. Important factors that might cause such a difference include: changes in national or regional economic conditions; changes in loan default and charge-off rates; reductions in deposit levels necessitating increased borrowing to fund loans and investments; changes in interest rates; changes in the size and the nature of the Company's competition; and changes in the assumptions used in making such forward-looking statements. The Company disclaims any obligation to publicly announce future events or developments, which may affect the forward-looking statements contained herewith.

The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes included in this report.

General
Port Financial Corp. is a Massachusetts-chartered stock holding company, which owns all of the capital stock of Cambridgeport Bank (the "Bank"). The Company converted from a Massachusetts-chartered mutual holding company, formerly known as Cambridgeport Mutual Holding Company, to a Massachusetts-chartered stock holding company and changed its name to Port Financial Corp. and sold 7,442,818 shares of its common stock, par value $0.01 per share, to the Company's eligible depositors, management and employees and to the Company's Employee Stock Ownership Plan ("ESOP"). Net proceeds of the stock offering were $71.8 million. The conversion and stock offering were completed on April 11, 2000.

The Company's principal business is its investment in the Bank, a Massachusetts stock savings bank, chartered in 1853, with headquarters in the Cambridgeport neighborhood of Cambridge, Massachusetts. The Cambridgeport neighborhood is located near the Charles River, between the campuses of Harvard and MIT. The Bank is a community-oriented bank, with eleven full service banking offices and a Telebanking Center. It provides retail and business customers with value-driven products and services, including a wide variety of deposit products, investment management services, residential mortgage loans, commercial real estate loans, commercial loans and consumer loans. Most of its customers are located in the cities and towns around Cambridge, Massachusetts. The Bank's newest branch office, located in Brookline, Massachusetts opened in April, 2002.

The Bank's revenues are derived principally from interest on loans and investment securities. The Bank's primary sources of funds are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed securities, maturities and calls of

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investment securities, and funds provided by operations. The Bank also uses borrowings from the Federal Home Loan Bank as a source of funds for loans, investments and other assets. The largest component of the Bank's expenses is the interest it pays on deposits.

Comparison of Financial Condition at September 30, 2002 and December 31, 2001
Total assets increased by $305.4 million from $1.14 billion at December 31, 2001 to $1.44 billion at September 30, 2002. This growth included an increase in net loans totaling $73.4 million and a net increase in cash, cash equivalents and investment securities totaling $225.3 million. The Company's strategy is to deploy funds generated through its deposit promotions into new loans and, if deposit growth exceeds loan growth, to invest the excess in marketable securities, primarily agency-guaranteed mortgage-backed securities.

Growth in the loan portfolio consisted primarily of loans secured by residential real estate located in the Bank's primary market areas. The residential mortgage portfolio grew by $65.6 million, while the commercial real estate portfolio grew by $18.0 million, and other segments of the portfolio declined by a net $9.5 million. The growth in the residential mortgage portfolio reflects the refinancing demand in a low interest rate environment as well as the strong market for purchasing residential property in the Boston area.

Non-performing assets totaled $514,000 and $133,000 at September 30, 2002 and December 31, 2001, respectively. The September, 2002 figure includes two residential mortgages with a combined balance of $434,000. The remaining balance of non-performing assets at September 30, 2002 consisted of student loans in the amount of $80,000.

The allowance for loan losses was $10.0 million at September 30, 2002, or 1.16% of total loans. This compares to $9.3 million and 1.19% at December 31, 2001. The Company believes that the current allowance for loan losses accurately reflects the size and level of risk in the loan portfolio, although no assurance can be made that future additions to the allowance will not be necessary. The Company continues to apply its consistent, systematic methodology for measuring the adequacy of the allowance for loan losses.

Deposits at September 30, 2002 totaled $1.15 billion, an increase of $266.4 million from $884.5 million at December 31, 2001. This increase included a $174.3 million increase in NOW and demand deposit balances. During the 2002 period, the Bank featured its relationship deposit products, offering a premium rate of 4% on its Money Manager Checking account product, guaranteed through September 30, 2002. Deposit growth also included a $53.1 million increase in savings and money market accounts, and a $39.0 million increase in time deposits. This growth reflects the Company's strategic focus on building deposit relationships, including deposit promotions tied to the opening of the new Brookline branch.

Borrowings from the Federal Home Loan Bank of Boston rose $42.1 million, to $157.4 million at September 30, 2002 from $115.2 million at December 31, 2001. The Company

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uses longer term borrowings to manage interest rate risk posed by holding certain loans and investment securities.

The $6.4 million decline in stockholders' equity to $117.0 million at September 30, 2002 from $123.4 million at December 31, 2001 reflects primarily the cost of the Company's stock repurchases, partially offset by increases of $7.3 million in retained earnings and $4.2 million in accumulated other comprehensive income.

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The following tables set forth information relating to the Company's financial condition and net interest income at and for the third quarter ending September 30, 2002 and 2001 and reflect the average yield on assets and average cost of liabilities for the periods indicated. Yields and costs are derived by dividing interest income by the average balance of interest-earning assets and interest expense by the average balance of interest-bearing liabilities for the periods shown. Average balances are derived from actual daily balances over the periods indicated. Interest income includes fees earned from making changes in loan rates of terms, and fees earned when real estate loans were prepaid or refinanced.

The following table shows how changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company's interest income and interest expense during the periods indicated. Information is provided in each category with respect to:

The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Interest and Dividend Income
Interest income increased $4.0 million, or 23.1%, to $21.2 million from $17.2 million in the third quarter of 2001. This increase reflected the $369.0 million (37.4%) growth in the average balance of interest-earning assets to $1.4 billion in the third quarter of 2002, from $985.7 million in the comparable 2001 period.

Investment income rose $2.1 million as the average balances of cash, cash equivalents and investment securities in the 2002 period were $214.0 million, or 77.1% higher than the average balances for the third quarter of 2001. The Company has increased its portfolio of mortgage-backed securities, including one-year ARM securities guaranteed by GNMA, funding them with deposits generated by the Company's marketing promotions and branch expansion. The Company also used extended term borrowings from the Federal Home Loan Bank to fund the purchase of long term mortgage-backed securities. The lower interest rate environment reduced the yield on investment securities to 5.50%, 89 basis points lower in the 2002 period compared with the prior year.

Interest on loans increased $1.9 million as the effect of higher average loan balances, which increased $154.9 million over the 2001 quarter, more than offset the impact of a 44 basis point decline in the average yield on loans.

Total interest expense for the three months ended September 30, 2002 was $9.9 million, up $1.5 million from the same period in 2001. Interest expense on deposit accounts was up $619,000, reflecting higher cost of NOW accounts, which include the promotional Money Manager Checking account product. NOW account interest expense was $1.9 million in the third quarter of 2002, compared to $559,000 in the third quarter of 2001. NOW account balances averaged $276.4 million at a cost of 2.76% in the third quarter of 2002, compared to $108.9 million and 2.04% in the third quarter of 2001. Declining costs of time deposits, reflecting the lower interest rate environment in the 2002 period, partially offset the higher cost of NOW accounts. Time deposit costs were $3.7 million in the third quarter of 2002, down $578,000 from the prior year period. While the average balance of time deposits was $55.8 million higher in the 2002 period, the average cost was 4.07% compared to 5.55% in the third quarter of 2001.

An increase of $86.6 million in the average balance of borrowings, used primarily to fund longer term loans and investment securities, resulted in borrowing expense of $1.8

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million compared to $927,000 in the third quarter of 2001. The average cost of borrowings in the 2002 period was 4.51%, down 89 basis points from the previous year.

Net Interest Income
Net interest income increased 28.5%, or $2.5 million, in the third quarter of 2002 as compared to the same period last year. The net interest margin was 3.33%, down from 3.56% in the 2001 quarter. The interest rate spread was 3.04% in the quarter ended September 30, 2002, compared with 2.97% during the same period last year.

Provision for Loan Losses
The Company recorded a provision for loan losses of $50,000 for the quarter ended September 30, 2002 and $325,000 in the same quarter of 2001. The lower provision reflects the slower growth in portfolio loan balances and low levels of non-performing assets during the 2002 period. Although there has been no significant increase in payment delinquencies or non-performing assets, the Company believes that the provision for loan losses is prudent, given weaknesses in the general economic environment.

Non-Interest Income
Non-interest income totaled $1.3 million in the third quarter of 2002, down $166,000 from $1.4 million in the third quarter of 2001, which included a pre-tax $374,000 gain on the sale of equity securities. Excluding this gain in 2001, non-interest income increased $208,000, or 19.4%, compared to the third quarter of 2001. Loan sale gains of $377,000 represents an increase of $168,000 from the 2001 period level of $209,000. These gains are generated from the sale of fixed rate residential mortgages. The Company sells substantially all of its 30-year fixed rate mortgages into the secondary market to reduce interest rate risk. The lower interest rate environment that prevailed in the third quarter of 2002 produced higher volumes of fixed rate mortgage originations. Customer service fees of $391,000 represents an increase $75,000 over the 2001 quarter, largely due to the increased number of checking accounts and fees derived from activity in those accounts.

Non-Interest Expense
Non-interest expense increased $860,000, or 14.0%, to $7.0 million for the third quarter of 2002, compared to $6.1 million in the 2001 period. Compensation expense rose $803,000, reflecting increased costs of stock benefit plans, pension plans, as well as anticipated payments under the Company's short-term incentive plan. Occupancy and equipment expense of $974,000 represents an increase of $194,000 from the prior year period, reflecting primarily increased rent and depreciation expense at the new Brookline branch and the renovated Harvard Square branch.

The annualized expense ratio, the ratio of non-interest expense to average assets, was 1.98% for the three months ended September 30, 2002, compared to 2.37% in the 2001 period.

Provision for Income Taxes
The Company's effective tax rate for the September 30, 2002 quarter was 37.3% as compared to 34.0% for the 2001 period. Higher consolidated taxable income has moved

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the Company into a higher federal tax bracket. Also, a larger portion of taxable income is subject to the full 10.5% state tax rate.

The following tables set forth information relating to the Company's financial condition and net interest income at and for the nine months ending September 30, 2002 and 2001 and reflect the average yield on assets and average cost of liabilities for the periods indicated. Yields and costs are derived by dividing interest income by the average balance of interest-earning assets and interest expense by the average balance of interest-bearing liabilities for the periods shown. Average balances are derived from actual daily balances over the periods indicated. Interest income includes fees earned from making changes in loan rates of terms, and fees earned when real estate loans were prepaid or refinanced.