QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
                                
                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                           Form 10-QSB/A
                                
     [X]  Quarterly Report Pursuant to Section 13 or 15(d) of
               the Securities Exchange Act of 1934
              For the period ended March 31, 1998.
                                
                               or
                                
   [  ]  Transition Report Pursuant to Section 13 or 15(d) of
               the Securities Exchange Act of 1934
          For the transition period from _____ to _____
                                
                Commission file number 001-13819
                                
                 MegaBank Financial Corporation
     (Exact name of registrant as specified in its charter)
                                
          Colorado                           84-0949755
          (State or other jurisdiction of    (I.R.S. Employer
          incorporation or organization)     Identification Number)

      8100 E. Arapahoe Road, Suite 214, Englewood, Colorado 80112
        (Address of principal executive offices)     (Zip code)

                        (303) 740-2265
                 (Registrant's telephone number)
                                
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.
[X] Yes [  ]No

At May 4, 1998, there were 213,578 shares of the registrant's
common stock, no par value, outstanding.

Transitional Small Business Disclosure Format
     [  ] Yes  [X] No

<PAGE>
                 MEGABANK FINANCIAL CORPORATION
                                
                        TABLE OF CONTENTS


PART I.   FINANCIAL INFORMATION                   PAGE NO.

          Item 1.   Financial Statements              3

          Item 2.   Management's Discussion and
                    Analysis of Financial Condition
                    And Results of Operations         8

PART II.  OTHER INFORMATION

          Item 4.   Submission of Matters to a Vote
                    of Security Holders              13

          Item 6.   Exhibits and Reports on Form 8-K 13

          SIGNATURES                                 14

<PAGE>
<TABLE>

                 PART I.  FINANCIAL INFORMATION
                                
Item 1. Financial Statements
        
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                      (Dollars in thousands)

<CAPTION>
                                            March 31,    December 31,
                                              1998          1997
                                              ____          ____
                                           (unaudited)                                    
<S>                                     <C>             <C>
ASSETS                                                       
  Cash and due from banks               $  13,009       $   9,910
  Interest-bearing deposits                 1,373           1,470
  Federal funds sold                       26,145           1,775
  Investment securities available           
   for sale                                14,011          13,999                           
  Loans                                   129,622         126,087
    Less allowance for loan losses         (2,174)         (2,083)
                                       ____________    ____________                      
                                          127,448         124,004
                                                              
  Bank premises, leasehold improvements                      
   and equipment, net                       4,810           4,799
  Accrued interest receivable                 993             898
  Deferred tax asset                          633             636
  Preferred securities issuance costs, 
   net                                        747             255
  Other                                       197             134
                                       ____________     ____________
          Total assets                 $  189,366      $  157,880
                                       ============     ============
           
LIABILITIES AND SHAREHOLDERS' EQUITY                          
  Liabilities                                                   
    Deposits                                                      
      Demand, non-interest bearing     $   51,202      $   42,515
      Demand, interest bearing             67,338          56,339
      Savings                               4,482           4,562
      Time                                 39,897          38,462
                                       ___________     ____________
          Total deposits                  162,919         141,878
                                                              
    Federal Home Loan Bank borrowings           -           1,423
    Securities sold under agreement to
     repurchase                             1,025               -
    Income taxes payable                      300             132
    Accrued interest payable                  314             152
    Note payable                                -           2,000
    Other                                     550             717
                                      ____________     ____________
          Total liabilities               165,108         146,302
    Company obligated manditorily
     redeemable preferred securities     
     of subsidiary trust holding solely 
     Junior Subordinated Debentures        12,000               -
                                                              
  Shareholders' equity                                          
    Preferred stock; no par value, 
     10,000,000 shares authorized, 
     none issued                                -               -
    Common stock; no par value, 
     50,000,000 shares authorized, 
     213,578 shares issues and 
     outstanding                            1,961           1,961
    Retained earnings                      10,261           9,578
    Accumulated other comprehensive 
     income                                    36              39
                                       ____________     ____________
          Total shareholders' equity       12,258          11,578
                                       ____________     ____________
          Total liabilities and 
           shareholders' equity       $   189,366      $  157,880
                                       ============     ============
<FN>                                
The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
     Three months ended March 31, 1998 and 1997 (Unaudited)
          (Dollars in thousands, except per share data)
                          
<CAPTION>                                         
                                             Three months ended
                                                  March 31,
                                             1998            1997
                                             ____            ____ 
                                                 (Unaudited)
<S>                                    <C>             <C>
Interest income                                           
   Loans, including fees               $    3,902      $     3,085
   Taxable investment securities               72               68                        72           68
   Nontaxable investment securities           187              138
   Funds sold                                 106               87
   Other interest                              35                9
       Total interest income                4,302            3,387
                                       ____________     ____________
                                                            
Interest expense                                         
   Deposits                                 1,265              972
   Borrowed funds                              73               58
   Trust preferred securities                 149                -
   Notes payable                               19               49
                                       ____________     ____________

   Total interest expense                   1,506            1,079
                                       ____________     ____________
       Net interest income                  2,796            2,308
Provision for loan losses                      90              150
                                       ____________     ____________
       Net interest income after            
        provision for loan losses           2,706            2,158 
                                                            
Other income                                             
   Service charges on deposit accounts         28               16
   Gain on sale of investment                              
    securities                                 25                -
   Other income                               168              195
                                       ____________     ____________
       Total other income                     221              211
                                                     
Other expenses                                           
   Salaries and employee benefits             896              695
   Occupancy expenses of premises             185              157
   Furniture and equipment expense            115               63
   Other expenses                             699              653
                                       ____________     ____________
       Total other expenses                 1,895            1,568
                                       ____________     ____________
       Income before income taxes           1,032              801
Income tax expense                            349              280
                                       _____________    ____________
       Net income                      $      683       $      521
                                                            
Other comprehensive income, net of                       
 tax
   Unrealized gains on securities                           
     Unrealized holding gains (losses)        
      arising during the period                (5)             (26)
   Income tax benefit related to items                       
    of other comprehensive income               2                9
                                       _____________    ____________
     Other comprehensive income, 
      net of tax                               (3)             (17)
     Comprehensive income              $      680       $      504
                                       ============     ============    
Income per share                                         
   Basic earnings per share            $     3.20       $     2.44
                                       ============     ============
   Common shares outstanding              213,578          213,578


<FN>

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
     Three months ended March 31, 1998 and 1997 (unaudited)
                      (Dollars in thousands)
<CAPTION>
                           
                                            Three months ended
                                                 March 31,
                                           1998             1997
                                           ____             ____
                                               (Unaudited)
<S>                                    <C>              <C>     
Cash flows from operating activities                    
   Net income                          $      683       $      521
   Adjustments to reconcile net income 
    to net cash provided by operating 
    activities
      Provision for loan losses                90              150
      Depreciation and amortization           110               56
      Gain on sale of investment securities                   
       available for sale                     (25)               -
      Deferred income taxes                    (1)             (10)
   Changes in deferrals and accruals                       
      Interest receivable                     (95)             (72)
      Interest payable                        162               25
      Income taxes payable                    158              179
      Other, net                              (63)              (3)
                                       ____________     ____________
        Net cash provided by operating 
         activities                         1,019              846
                                                        
Cash flows from investing activities                    
   Net (increase) in federal funds sold   (24,370)         (17,375)
   Net (increase) decrease in 
    interest-bearing deposits                  97             (157)
   Purchase of securities available 
    for sale                                 (150)               -
   Proceeds from maturities of investment      
    securities available for sale               -              482
   Proceeds from sales of securities 
    available for sale                        175                -
   Net increase in loans                   (3,535)          (8,393)
   Expenditures for bank premises and 
    equipment                                (117)            (807)
                                       ____________     ____________
        Net cash used in investing 
         activities                       (27,900)         (26,250)
                        
Cash flows from financing activities                    
   Net increase in deposits                21,041           30,977
   Net increase (decrease) in advances 
    from Federal Home Loan Bank            (1,423)             144
   Net increase in repurchase agreements    1,025                -
   Proceeds from trust preferred 
    securities                             12,000                -
   Debt issuance costs                       (496)               -
   Principal payments on notes payable     (2,000)            (628)
   Other                                     (167)              89
                                       ____________     ____________
        Net cash provided by financing 
         activities                        29,980           30,582
                                       ____________     ____________

Net increase in cash and due 
 from banks                                 3,099            5,178
Cash and due from banks at beginning 
 of period                                  9,910            9,130
                                       ____________     ____________
Cash and due from banks at end 
 of period                             $   13,009       $   14,308
                                       ============     ============

Supplemental disclosures of cash flow                   
 information
   Cash paid year to date for:                             
      Interest expense                 $    1,324       $    1,090
      Income taxes                            179               86
                                
<FN>                                
The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>

         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        Three month period ended March 31, 1998 and 1997
                           (Unaudited)


1.   Unaudited Financial Statements

The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-QSB  and
do  not include all of the information and footnotes required  by
generally  accepted accounting principles for complete  financial
statements.   All  adjustments  that  are,  in  the  opinion   of
management,  of  a normal recurring nature necessary  to  a  fair
statement of results for the interim periods presented have  been
made.  The results of operations for such interim periods are not
necessarily indicative of results of operations for a full  year.
The statements should be read in conjunction with the summary  of
significant   accounting  policies  and  notes  to   consolidated
financial  statements included in the prospectus of  the  Company
dated February 3, 1998 SEC File Nos. 333-42189 and 333-42191.

In   the   opinion  of  management,  the  accompanying  financial
statements  contain all adjustments necessary to  present  fairly
the  financial position of the Company at March 31, 1998, and the
results of operations and cash flows for the periods ended  March
31, 1998 and 1997.

The consolidated financial statements include the accounts of the
Company's  respective  subsidiaries.  All  material  intercompany
transactions have been eliminated.


2.   Nature of Operations

MegaBank  Financial Corporation (the "Company")  was  founded  in
1984  with the objective of building a banking franchise  in  the
Denver,  Colorado metropolitan area that would  deliver  a  broad
based  package  of  products  and  services  to  businesses   and
individuals.   The  Company's  banking  subsidiary,  MegaBank  of
Arapahoe  (the "Bank"), was organized in 1983.  Since the  advent
of  branch  banking in Colorado in 1993, the Bank has opened  six
additional  banking locations throughout the Denver  area.   Four
more  branches  are  in the planning and construction  phases  of
which one is expected to open in 1998.


3.   Offering of Trust Preferred Securities by MB Capital I

On  February 9, 1998 the Company and its wholly-owned subsidiary,
MB  Capital I (the "Trust"), completed the sale of $12.0  million
of 8.75% Cumulative Trust Preferred Securities of the Trust.  Net
proceeds were approximately $11.2 million after payment of  sales
commissions and other offering costs, and were invested in Junior
Subordinated Debentures maturing February 9, 2028, issued by  the
Company  to  the  Trust in connection with the  public  offering.

<PAGE>

Interest  on the Junior Subordinated Debentures will be  paid  by
the  Company to the Trust, will be the sole revenues of the Trust
and  the source for distributions by the Trust to the holders  of
the Trust Preferred Securities.

For  financial  reporting purposes, the Trust  is  treated  as  a
subsidiary of the Company, and accordingly, the accounts  of  the
Trust  are  included in the consolidated financial statements  of
the  Company.  The Trust Preferred Securities are presented as  a
separate  line item in the consolidated balance sheet  under  the
caption   "Company  obligated  mandatorily  redeemable  preferred
securities of subsidiary trust holding solely Junior Subordinated
Debentures."   For  financial  reporting  purposes,  the  Company
records  distributions payable on the Trust Preferred  Securities
as interest expense in the consolidated statements of income.

The  Junior Subordinated Debentures are unsecured and rank junior
and  are  subordinate  to  all senior debt  of  the  Company  and
constitute  a  full and unconditional guarantee on a subordinated
basis  by  the Company of the obligations of the Trust under  the
Preferred Securities.

Pursuant to Regulation S-B, Item 701(f), the Company is reporting
the use of proceeds on behalf of the Trust.  The effective date of
the Registration Statement, assigned Commission File Nos. 333-42189
and 333-42191, was February 3, 1998.  The offering commenced
shortly thereafter and closed on February 9, 1998.  All 1.200,000
shares of the Trust Preferred Securities which were registered were
sold to the managing underwriter, Howe Barnes Investments, Inc., at
the offered price of $10.00 per share for total gross proceeds of
$12 million.  The Company incurred total offering expenses in the
amount of $750,500 as direct payment to others including $510,000 to
the underwriter for discounts.  The net offering proceeds after
expenses were $11,249,500.  The Company used $6 million for capital 
in its subsidiary bank.  Debt in the amount of $2 million was retired.
A temporary investment of $1.5 million was made in an 8.6% trust
preferred security offering.  The Company purchased real estate from
a third party for $1.2 million.  The remainder of the proceeds will be
used for working capital as required.  The proceeds have been used as
specified in the Prospectus dated February 3, 1998.

4.   Comprehensive Income

The   Company   adopted  Financial  Accounting  Standards   Board
Statement  No.  130, "Reporting Comprehensive Income"  (SFAS  No.
130),  effective  January  1, 1998.   SFAS  No.  130  establishes
standards  for reporting comprehensive income and its  components
(revenues,   expenses,   gains  and   losses).    Components   of
comprehensive  income  are net income  and  all  other  non-owner
changes in equity.  The Statement requires that an enterprise (a)
classify items of other comprehensive income by their nature in a
financial  statement and (b) display the accumulated  balance  of
other comprehensive income separately from retained earnings  and
additional  paid-in capital in the equity section of a  statement
of  financial position.  Reclassification of financial statements
for   earlier  periods  provided  for  comparative  purposes   is
required.  Amounts formerly presented in Shareholders' Equity  as
"Unrealized  gains  on  securities available  for  sale,  net  of
taxes",  are  now  reflected as "Accumulated other  comprehensive
income".


<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition 
        and Results of Operations


Overview

It is presumed that readers of these interim financial statements
have  read  or  have  access to the Management's  Discussion  and
Analysis of Financial Condition and Results of Operations for the
year   ended  December  31,  1996,  included  in  the   Company's
Prospectus  dated February 3, 1998, SEC File Nos.  333-42189  and
333-42191.   The following discussion of the financial  condition
and  results  of  operation  of the Company  should  be  read  in
conjunction with the unaudited consolidated financial  statements
of the Company included elsewhere herein.


Results of Operations

In  the  quarter  ended  March 31, 1998,  the  Company  generated
interest income of $4.3 million compared to $3.4 million for  the
same  period last year.  The increase was due to higher  balances
of  interest  earning  assets.  Interest  expense  for  the  same
periods  was  $1.5 million compared to $1.1 million.   Additional
interest bearing deposits contributed to the increase in interest
expense, as well as the additional interest expense of the  Trust
Preferred Securities offering discussed elsewhere herein.   Other
income  generated in the first quarter of 1998 increased slightly
to  approximately $221,000 as compared to $211,000 for the  first
quarter of 1997. This overall increase is attributable to a  one-
time  gain  on  sale of equity securities.  At the same  time,  a
decrease in other income is also attributable to the decrease  in
rental  income  from third parties in the Company's  main  office
building.   Prior  to 1998, the Company had let  space  to  third
parties.   The Bank has gradually occupied much of this space  as
it  has  become available, decreasing the amount of rental  space
occupied  by third parties.  Other expenses in the first  quarter
of  1998  were $1.9 million as compared to $1.6 million  for  the
same  period  last  year.   An  increase  in  other  expenses  is
primarily  due to additional employee expense required by  branch
expansion and internal growth.

In  the  quarter ended March 31, 1998, the Company generated  net
income  after provisions for income tax of $682,577  compared  to
$521,145  for  the  same period last year.  This  improvement  is
attributable to the overall growth of the Bank.  Total assets  of
the  Company were approximately $189 million and $150 million  at
March 31, 1998 and 1997, respectively.

On  February 9, 1998 the Company and its wholly-owned subsidiary,
MB  Capital I (the "Trust"), completed the sale of $12.0  million
of 8.75% Cumulative Trust Preferred Securities of the Trust.  Net
proceeds were approximately $11.2 million after payment of  sales
commissions and other offering costs, and were invested in Junior
Subordinated  Debentures issued by the Company to  the  Trust  in
connection  with  the public offering.  Interest  on  the  Junior
Subordinated Debentures will be paid by the Company to the Trust,
will  be  the  sole  revenues of the Trust  and  the  source  for
distributions by the Trust to the holders of the Trust  Preferred
Securities.

<PAGE>

With  a  portion  of  the  net proceeds obtained  in  the  public
offering  of Trust Preferred Securities, the Company infused  the
Bank  with $6 million in capital of which $2 million was targeted
for  additional  branch expansion.  This additional  capital  has
allowed  the  Bank  to  increase its legal lending  limits.   The
increased  lending  limit  is  designed  to  further  the  Bank's
internal growth objectives.

Net  increases in loans were $3.5 million and $8.4 million during
the quarters ended March 31, 1998 and 1997, respectively.  It  is
important  to  note  that  this  was  a  net  increase.    Actual
origination  of new loans was approximately $60.6 million  during
the first quarter of 1998 as compared to $40.6 million during the
same period in 1997.

Net  increases  in  deposits were $21.0  million  for  the  first
quarter  of 1998 compared to a net increase of $31.0 million  for
the same time period in 1998.  Although the net increase is lower
than  the previous year, total deposits were approximately $162.9
million at March 31, 1998 as compared to $135.6 million at  March
31, 1997.


Analysis  of  Allowance for Loan Losses. The allowance  for  loan
losses  represents  management's  recognition  of  the  risks  of
extending  credit and its evaluation of the quality of  the  loan
portfolio.   The  allowance is maintained at a  level  considered
adequate  to  provide  for  anticipated  loan  losses  based   on
management's  assessment of various factors  affecting  the  loan
portfolio.   The allowance is increased by additional charges  to
operating  income  and  reduced by  loans  charged  off,  net  of
recoveries.

<TABLE>

The  following table sets forth information regarding changes  in
the  allowance  for  loan losses of the Company  for  the  period
indicated.

<CAPTION>

                                   Three Months Ended
                                      March 31, 1998
                                   (Dollars in thousands)
<S>                                  <C>
Average total loans                  $128,664
                                     ========

Total loans at end of period         $129,622
                                     ========

Allowance at beginning of period     $  2,083

Charge-offs:
     Construction                           -
     Commercial and industrial             (2)
     Installment                            -
     Mortgage                               -
     Other                                 (1)
                                     _________

          Total charge-offs                (3)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                   Three Months Ended
                                     March 31, 1998
                                   (Dollars in thousands)
<S>                                <C>
Recoveries:
     Construction                           -
     Commercial and industrial              1
     Installment                            3
     Mortgage                               -
     Other                                  -
                                    __________

          Total recoveries                  4

Net (charge-offs) recoveries                1
Provisions for loan losses                 90
                                    __________

Allowance at end of period          $   2,174
                                    __________

Ratio of net (charge-offs) recoveries
     to average loans                    0.001%
Allowance to total loans   
 to end of period                        1.68%
Allowance to nonperforming loans       135.54%

</TABLE>

The  Company's  lending personnel are responsible for  continuous
monitoring  of  the  quality  of  loan  portfolios.    The   loan
portfolios  are also monitored and examined by the  Company  loan
review  personnel.   The  allowance  for  loan  losses  is  based
primarily on management's estimates of possible loan losses  from
the   foregoing  processes  and  historical  experience.    These
estimates involve ongoing judgments and may be adjusted over time
depending   on   economic  conditions  and  changing   historical
experience.

State  and  federal regulatory agencies, as an integral  part  of
their  examination process, review the Company's  loans  and  its
allowance  for  loan  losses.   Management  believes   that   the
Company's  allowance  for  loan  losses  is  adequate  to   cover
anticipated  losses.   There can be no assurance,  however,  that
management  will not determine a need to increase  the  allowance
for  loan losses or that regulators, when reviewing the Company's
loan  portfolios in the future, will not require the  Company  to
increase  such allowance, either of which could adversely  affect
the  Company's earnings.  Further, there can be no assurance that
the  Company's  actual loan losses will not exceed its  allowance
for loan losses.

Nonperforming  loans.  Nonperforming loans consist  of  loans  90
days  or  more delinquent and still accruing interest, nonaccrual
loans   and   restructured  loans.   When,  in  the  opinion   of
management, a reasonable doubt exists as to the collectibility of
interest,  regardless of the delinquency status of  a  loan,  the
accrual  of interest income is discontinued and interest  accrued
during  the current year is reversed through a charge to  current
year's  earnings.   While  the  loan  is  on  nonaccrual  status,
interest income is recognized only upon receipt and then only if,
in the judgment of management, there is no reasonable doubt as to

<PAGE>

the collectibility of the principal balance.  Loans 90 days or
more delinquent generally are changed to  nonaccrual  status 
unless the loan  is  in  the  process  of collection  and
management determines that  full  collection  of principal and 
accrued interest is probable.

Restructured loans are those for which concessions, including the
reduction  of interest rates below a rate otherwise available  to
the  borrower or the deferral of interest or principal, have been
granted  due  to  the  borrower's weakened  financial  condition.
Interest  on  restructured loans is accrued at  the  restructured
rates  when it is anticipated that no loss of original  principal
will  occur.  The Company did not have any restructured loans  as
of March 31, 1998.

<TABLE>

The   following  table  sets  forth  information  concerning  the
nonperforming assets of the Company at the dates indicated:

<CAPTION>

                                         March  31,     December 31,
                                          1998            1997
                                          ____            ____
<S>                                      <C>             <C>
Nonaccrual loans                         $1,604          $1,604
Other loans 90 days past due                  -               -
Other real estate                             -               -
                                       ____________     ____________

Total nonperforming loans                $1,604          $1,604
                                       ============     ============

Ratio of nonaccrual and other loans 
    90 days past due to total loans       1.24%           1.27%
Ratio of nonperforming assets to 
    total loans plus other real estate    1.24            1.27
Ratio  of  nonperforming assets to 
    total  assets                         0.85            1.02

</TABLE>

Of  the  amount of nonaccrual loans as of December 31,  1997  and
March 31, 1998, all of the $1.6 million is the Bank's portion  of
the  five related loans totaling approximately $4.5 million which
are  subject  to a Chapter 11 bankruptcy proceeding.   The  loans
were originated by the Bank and were made at various times during
1994,  1995 and 1996 in connection with a real estate development
on  which  the  developer has constructed a residential  building
assembly plant.  The loans are secured by real estate.  The loans
are  also  secured by certificates of deposit in the  approximate
amount  of $792,000 as well as two personal guarantees  from  the
owners  of  the  developer  as well as guaranteed  by  a  related
limited  partnership,  all three of which  have  substantial  net
worth.   Management  believes  that  the  Company  is  adequately
collateralized on these loans.  Subsequent to March 31, 1998, the
Bank  received payment of $210,482 on such loans that was applied
to principal.

Management  is  not aware of any adverse trend  relating  to  the
Company's  loan portfolio.  As of March 31, 1998, there  were  no
significant  balances of loans excluded from nonperforming  loans
set  forth  above, where known information about possible  credit
problems of borrowers caused management to have serious doubts as
to  the ability of such borrowers to comply with the present loan
repayment  terms  and  which may result in  such  loans  becoming
nonperforming.

<PAGE>

Liquidity and Capital Resources

The Company has two basic sources of liquidity.  The first is its
retail deposit market served by its banking offices.  The Company
has  increased  core  deposits through  growth  of  its  existing
deposits   and  through  promotions  directed  at  existing   and
potential  customers.  Deposits increased to  $162.9  million  at
March 31, 1998 as compared to $135.6 million at March 31, 1997.

The second source of the Company's liquidity is Federal Home Loan
Bank  ("FHLB")  advances  and  Company  lines  of  credit.   FHLB
advances are used regularly in the cash management function  both
to fund a portion of the lending portfolio and to manage the day-
to-day   fluctuations  in  liquidity  resulting  from  needs   of
depositors  and  borrowers.  At March 31, 1998, the  Company  had
available $7.0 million of unused borrowing capacity from the FHLB
and $5.5 million from its other lenders.  The Company anticipates
that  it  will continue to rely primarily upon customer deposits,
FHLB  borrowings,  other lending sources, loan  repayments,  loan
sales  and retained earnings to provide liquidity, and  will  use
funds provided primarily to make loans and to purchase investment
securities.

The Trust Preferred Securities were structured to qualify as Tier
1  capital  for  the  Company  for regulatory  capital  purposes.
However, they cannot be used to constitute more than 25%  of  the
Company's  total Tier 1 capital.  Any future increases  in  other
elements  of  the  Company's Tier 1 capital,  including  retained
earnings,  should permit the Company to include greater  portions
of the trust preferred securities proceeds in Tier 1 capital.

Based  on  risk-based capital guidelines of the  Federal  Reserve
Bank,  a  bank holding company is required to maintain a  Tier  1
capital  to risk-adjusted assets ratio of 4% and a total  capital
to  risk-adjusted  assets ratio of 8%.  At March  31,  1998,  the
Company  had a Tier 1 capital ratio of 11.3% and a total  capital
ratio of 18.1%.


Year 2000 Considerations

A  significant issue has emerged in the banking industry and  for
the  economy overall regarding how existing application  software
programs and operating systems can accommodate the date value for
the  year 2000.  Implementation of the Company's plan to test in-
house  and out-sourced software is already underway.  Testing  of
applications  considered to be "mission critical"  are  scheduled
for  completion  by first quarter of 1999.  Total compliance  for
all  systems is expected to be complete by the third  quarter  of
1999.   The  financial impact to the Company to ensure year  2000
compliance is not anticipated by management to be material to the
financial  position, results of operations or cash  flow  of  the
Company.   The  in-house  plan was  presented  to  the  Board  of
Directors at the monthly meeting in February 1998.  The team  for
the  plan  is responsible for the implementation of the plan  and
progress reports to the Board on a quarterly basis until  October
1998  and  on  a  monthly  basis thereafter  until  the  plan  is
completed.

<PAGE>

                   PART II.  OTHER INFORMATION
                                
                                
Item 4.   Submission of Matters to a Vote of Security Holders

<TABLE>

      The  Company  held  its Annual Meeting of  Shareholders  on
      January 15, 1998.  The following proposals were voted  upon
      at   the   Annual  Meeting:   (i)  the  election  of   five
      individuals  as  directors, and (ii)  the  approval  of  an
      amendment  to  the  Company's Articles of Incorporation  to
      increase  the number of authorized shares of capital  stock
      to  50,000,000 shares of common stock and 10,000,000 shares
      of   preferred  stock.   The  results  of  voting  were  as
      follows:


<CAPTION>
           Proposal 1 - Election of Directors:
           Nominee                           Votes for   Votes Withheld
           -------                           ---------   --------------
           <S>                               <C>             <C>
           Thomas R. Kowalski                 188,760          0
           Raymond L. Anilionis               188,760          0
           Larry A. Olsen                     188,760          0
           Dr. Donald B. Brown                188,760          0
           William F. Sievers                 188,760          0
      
<CAPTION>
           Proposal 2 - Approval to Increase Authorized Shares:
           Votes for           Votes Against            Votes Withheld
           ---------           -------------            --------------
           <S>               <C>                       <C>
           186,260             2,500                    0

</TABLE>
      
Item 6.   Exhibits and Reports on Form 8-K
          a.   Exhibits.
               Exhibit 27 - Financial Data Schedule (filed
                 electronically only).
          b.   Reports on Form 8-K.
               None.


<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.

                                
                                
                               MEGABANK FINANCIAL CORPORATION
                               (Registrant )

                               /s/ Hiram J. Welton
Date:  July 2, 1998            Hiram J. Welton
                               Treasurer
                               Chief Accounting Officer