<PAGE>

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

                           Form 10-QSB

     [X]  Quarterly Report Pursuant to Section 13 or 15(d) of
               the Securities Exchange Act of 1934
       For the quarterly period ended September 30, 1999.

                               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 small business issuer 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
                   (Issuer's telephone number)

Check  mark whether the issuer (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 October 18, 1999, there were 7,769,709 shares of the issuer'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 6.   Exhibits and Reports on Form 8-K   14

          SIGNATURES                                   15






                             -2-
<PAGE>
<TABLE>
<CAPTION>
                 PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                      (Dollars in thousands)
                                       September 30, December 31,
                                            1999        1998
                                        (unaudited)
<S>                                    <C>          <C>
ASSETS
 Cash and due from banks                $  13,305    $  10,326
 Interest-bearing deposits                     83          128
 Federal funds sold                             -        5,625
                                          -------      -------
     Cash and cash equivalents             13,388       16,079

 Investment securities available for sale  17,268       15,677

 Loans                                    252,286      189,602
 Less allowance for loan losses            (3,382)      (2,610)
                                          -------      -------
                                          248,904      186,992
 Federal Home Loan Bank stock, at cost        925          482
 Real estate held for investment              524            -
 Bank premises, leasehold improvements and
  equipment, net                           10,323        8,846
 Accrued interest receivable                1,758        1,104
 Accounts receiveable                         120            -
 Deferred tax asset                           781          718
 Preferred securities issuance costs, net     709          729
 Goodwill                                   2,619            -
 Other                                        653          192
                                          -------      -------
     Total assets                        $297,972     $230,819
                                          =======      =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
 Deposits
  Demand, non-interest bearing           $ 54,782       54,093
  Demand, interest bearing                 69,751       72,444
  Savings                                   7,376        6,271
  Time                                    106,059       57,071

     Total deposits                       237,968      189,879

 Federal Funds borrowings                   2,725            -
 Federal Home Loan Bank borrowings          8,500            -
 Securities sold under agreement to
  repurchase                                  685          443
 Income taxes payable                          74           71
 Accrued interest payable                     796          434
 Other                                      1,961          601
                                          -------      -------
     Total liabilities                    252,709      191,428

 Company obligated manditorily redeemable
  preferred securities of subsidiary trust
  holding solely Junior Subordinated
  Debentures                               12,000       12,000
 Minority interest in subsidiary              195            -
Shareholders' equity
 Preferred stock; no par value, 10,000,000
  shares authorized, none issued                -            -
 Common stock; no par value, 50,000,000
  shares authorized, 7,769,709             15,473       13,974
  and 7,607,340 shares issued and
  outstanding in 1999 and 1998
 Retained earnings                         17,662       13,383
 Accumulated other comprehensive income       (67)          34

     Total shareholders' equity            33,068       27,391

     Total liabilities and shareholders'
      equity                             $297,972     $230,819
                                          =======      =======
</TABLE>
The accompanying notes are an integral part of these statements.

                              -3-
<PAGE>
<TABLE>
<CAPTION>
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
          (Dollars in thousands, except per share data)

                                       Three months ended     Nine months ended
                                          September 30,          September 30,
                                          1999     1998         1999      1998
                                                      (Unaudited)
<S>                               <C>          <C>       <C>         <C>
Interest income
 Loans, including fees                 $ 6,969    $ 5,166     $19,321   $13,448
 Taxable investment securities             210         89         460       231
 Nontaxable investment securities          240        187         623       561
 Funds sold                                  9         74          26       381
 Other interest                             26         47          35       135
                                        ------     ------      ------    ------
     Total interest income               7,454      5,563      20,465    14,756

Interest expense
 Deposits                                2,000      1,499       5,304     4,164
 Borrowed funds                            118         28         262       112
 Trust preferred securities                287        270         812       688
 Note payable                                -          -           -        19
                                        ------     ------      ------    ------
     Total interest expense              2,405      1,797       6,378     4,983
                                        ------     ------      ------    ------
     Net interest income                 5,049      3,766      14,087     9,773
Provision for loan losses                  250        190         840       410
                                        ------     ------      ------    ------
     Net interest income after
      provision for loan losses          4,799      3,576      13,247     9,363

Other income
 Title fees                                851          -       1,872         -
 Service charges on deposit accounts       257        142         745       391
 Gain on sale of investment securities     135          -         135        25
 Other income                              320         92         525       280
                                        ------     ------      ------    ------
     Total other income                  1,563        234       3,277       696

Other expenses
 Salaries and employee benefits          2,273      1,279       5,567     3,183
 Occupancy expenses of premises            330        301         928       688
 Furniture and equipment expense           177        108         524       337
 Other expenses                          1,154        501       2,887     1,681
                                        ------     ------      ------    ------
     Total other expenses                3,934      2,189       9,906     5,889
                                        ------     ------      ------    ------
     Income before income taxes          2,428      1,621       6,618     4,170
Income tax expense                         901        514       2,339     1,348
                                        ------     ------      ------    ------
     Net income                        $ 1,527    $ 1,107     $ 4,279   $ 2,822


Other comprehensive income, net of tax
  Unrealized gains (losses) on invest-
    ment securities available for sale     173        (61)       (101)      (40)
                                        ------     ------      ------    ------
Comprehensive income                   $ 1,700    $ 1,046     $ 4,178   $ 2,782
                                      ========  =========   ========= =========
Income per share
 Basic earnings per share                $ .20      $ .17       $ .55     $ .44
                                      ========  =========   ========= =========
 Weighted average common shares
  outstanding                         7,769,709 6,407,340   7,713,207 6,407,340
                                      ========  =========   ========= =========
</TABLE>
         The accompanying notes are an integral part of these statements.

                                 -4-
<PAGE>
<TABLE>
<CAPTION>
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (Dollars in thousands)

                                                            Nine months ended
                                                               September 30,
                                                           1999           1998
                                                              (Unaudited)
<S>                                                     <C>           <C>
Cash flows from operating activities
 Net income                                               $ 4,279       $ 2,822
 Adjustments to reconcile net income to net
  cash provided by operating activities
   Provision for loan losses                                  840           410
   Depreciation and amortization                              542           350
   Amortization of preferred securities issuance costs         20            16
   Gain on sale of investment securities available for sale  (135)          (25)
   Net discount accretion on investment activities              -           (12)
   Federal Home Loan Bank stock dividend                      (29)          (23)
   Amortization of goodwill                                    49             -
   Deferred income taxes                                       (2)         (126)
   Minority interest                                           61             -
 Changes in deferrals and accruals
   Interest receivable                                       (654)         (278)
   Accounts receivable                                       (122)            -
   Interest payable                                           362           247
   Income taxes payable                                         3             -
   Other, net                                               1,306           105
                                                           ------        ------
     Net cash provided by operating activities              6,520         3,486

Cash flows from investing activities
 Purchase of securities available for sale                 (5,368)       (4,476)
 Purchase of Federal Home Loan Bank stock                    (414)            -
 Proceeds from maturities of investment
  securities available for sale                             3,000         1,250
 Proceeds from sales of securities available for sale         750           616
 Acquisition of company under the purchase
  method of accounting, net of cash acquired               (1,500)            -
 Net (increase) in loans                                  (62,752)      (40,624)
 Expenditures for bank premises and equipment              (2,483)       (3,525)
                                                           ------        ------
     Net cash used in investing activities                (68,767)      (46,759)


Cash flows from financing activities
 Ne increase in deposits                                   48,089        47,016
 Net increase (decrease) in advances from
  Federal Home Loan Bank                                   11,225        (1,423)
 Net increase in repurchase agreements                        242           556
 Proceeds from trust preferred securities                       -        12,000
 Trust preferred securities issuance costs                      -          (495)
 Principal payments on notes payable                            -        (2,000)
                                                           ------        ------
     Net cash provided by financing activities             59,556        55,654
                                                           ------        ------
Net increase (decrease) in cash and cash equivalents       (2,691)       12,381
Cash and cash equivalents at beginning of period           16,079        13,155
                                                           ------        ------
Cash and cash equivalents at end of period                $13,388       $25,536
                                                           ======        ======
Supplemental disclosures of cash flow information
 Cash paid year to date for:
  Interest expense                                        $ 6,016       $ 4,735
  Income taxes                                              2,375         1,408
</TABLE>
     The accompanying notes are an integral part of these statements.

                                -5-
<PAGE>
         MEGABANK FINANCIAL CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      Nine month period ended September  30, 1999 and 1998
                           (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 Form 10-KSB  for  the  year
ended December 31, 1998.

     In  the  opinion  of management, the accompanying  financial
statements  contain all adjustments necessary to  present  fairly
the  financial position of the Company at September 30, 1999, and
the  results  of operations and cash flows for the  quarters  and
nine months ended September 30, 1999 and 1998.

     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  (the
"Bank"),  was  organized in 1983.  Since  the  advent  of  branch
banking in Colorado in 1993, the Bank has opened eight additional
banking locations throughout the Denver area for a total of  nine
locations, with one more branch in the planning phase.

      On  April  5, 1999, the Company purchased Empire Title  and
Escrow  Corporation  and subsequently merged  it  with  MB  Title
Company.   The consideration paid to the stockholders  of  Empire
Title  and  Escrow Corporation consisted of the Company's  common
stock and cash.  MB Title Company then changed its name to Empire
Title and Escrow Corporation ("Empire").  The purchase price  for
Empire includes the potential for additional consideration  based
upon  the  future  performance of Empire during the  three  years
following the purchase (the "Post-Effective Time Consideration").
Empire  provides  a  full range of title insurance  products  and
services to the real estate community including homebuilders  and
real  estate firms. Management expects that this acquisition will
provide   Empire  the  resources  necessary  to  accelerate   its
expansion  plans  while  continuing to provide  services  to  the
Colorado real estate community.  This acquisition also allows the
Company  to  offer  a  broader array of  financial  products  and
services  to  its customers.  Empire operates as a subsidiary  of
the  Company and accordingly, the accounts of the subsidiary  are
included in the consolidated financial statements of the Company.

                              -6-

>PAGE>
3.   Trust Preferred Securities

     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.  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.

                            -7-








<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  included in the Company's Form 10-KSB  for  the  year
ended  December  31, 1998, SEC File No. 1-13819.   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.

       Information  herein  contains  forward-looking  statements
within  the  meaning of the Private Securities Litigation  Reform
Act  of  1995,  which can be identified by words such  as  "may,"
"will,"   "expect,"  "anticipate,"  "believe,"   "estimate,"   or
"continue,"  or  comparable words.  In addition,  all  statements
other than statements of historical facts that address activities
that the Company expects or anticipates will or may occur in  the
future are forward-looking statements.  Readers are encouraged to
read the SEC reports of the Company, particularly its Form 10-KSB
for  the  Year Ended December 31, 1998, for meaningful cautionary
language  disclosing why actual results may vary materially  from
those anticipated by management.

Results of Operations

      Net  interest income was $13.2 million for the nine  months
ended  September 30, 1999, an increase of $3.8 million from  $9.4
million for the same period in 1998.  Net interest income for the
three  months ended September 30, 1999 and 1998 was $4.8  million
and  $3.6  million, respectively.  Interest income for  the  nine
months  ended September 30, 1999 and 1998 was $20.5  million  and
$14.8  million, respectively, and $7.5 million compared  to  $5.6
million  for the three month period ended September 30, 1999  and
1998, respectively.  The increases were due to higher balances of
interest earning assets resulting from internal growth.  Interest
expense  for the same nine-month period was $6.4 million in  1999
compared to $5.0 million in 1998 and the three month period ended
September  30, was $2.4 million in 1999 compared to $1.8  million
in 1998.  Additional interest bearing deposits contributed to the
increase  in  interest expense.  Other income  generated  in  the
first  three  quarters  of 1999 increased to  approximately  $3.3
million  as compared to $696,000 for the first three quarters  of
1998,  and  $1.6 million and $234,000 for the three months  ended
September 30, 1999 and 1998, respectively.  Most of the  increase
was  attributable  primarily to additional  fee  income  from  an
increase  in  service  charges and title fees  from  Empire.  The
Company  was requested to change the ticker symbol for the  Trust
Preferred  Securities issued by MB Capital I.   These  securities
traded  under  the  symbol  "MFC.Pr.A"  on  the  American   Stock
Exchange.   At  the request of the New York Stock  Exchange,  the
Company  agreed  to change its trading symbol  to  "MFG.Pr.A"  to
accommodate another company.  Additional miscellaneous income was
realized through compensation for relinquishing the rights to the
ticker symbol "MFC".  Other expenses in the first nine months  of
1999  were $9.9 million as compared to $5.9 million for the  same
period  the  previous year.  Other expenses in the  three  months
ended  September  30,  1999  were 3.9 million  compared  to  $2.2
million  for  the  three  months ended September  30,  1998.   An
increase  in  other  expenses  was primarily  due  to  additional
employee  and occupancy expense required by internal  growth  and
additional expenses from Empire.

      For  the nine months ended September 30, 1999, the  Company
generated  net  income after provisions for income  tax  of  $4.3
million  compared to $2.8 million for the same period  last  year
and  $1.5  million compared to $1.1 million for the three  months
ended   September   30,  1999  and  1998,   respectively.    This
improvement  is attributable to the overall growth of  the  Bank.
Total assets of the Company were

                              -8-
<PAGE>
approximately $298.0 million and $230.8 million at September  30,
1999 and December 31, 1998, respectively.

      Net  loans increased $62.8 million and $40.6 million during
the  nine  months ended September 30, 1999 and 1998, respectively
and  $23.6  million and $19.3 million for the three months  ended
September 30, 1999 and 1998, respectively.  Actual origination of
new  loans  was approximately $323.8 million for the  first  nine
months  of 1999 compared to $231.6 million during the same period
in 1998.

      Net  deposits increased $1.1 million from $47.0 million  to
$48.1  million for the nine months ended September 30,  1998  and
1999,  respectively.   Total deposits were  approximately  $238.0
million  at  September  30, 1999 compared to  $189.9  million  at
September 30, 1998.

     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.  Based on the increase in loans of $23.6  million  or
10.3%  growth for the three months ended September 30,  1999,  an
additional  $250,000  in  loan loss  reserves  was  added  as  of
September  30, 1999.  The Company's allowance for loan losses  to
total loans has remained relatively level.

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

                             Nine Months Ended September 30, 1999
                                     (Dollars in thousands)
Average total loans                         $218,536
                                            ========
Total loans at end of period                $252,286
                                            ========
Allowance at beginning of period            $  2,610
Charge-offs:
     Construction                                  -
     Commercial and industrial                   (65)
     Installment                                   -
     Mortgage                                      -
     Other                                        (4)
                                             -------
          Total charge-offs                      (69)
Recoveries:
     Construction                                  -
     Commercial and industrial                     -
     Installment                                   1
     Mortgage                                      -
     Other                                         -
                                             -------
          Total recoveries                         1
                                             -------
Net (charge-offs) recoveries                     (68)
Provisions for loan losses                       840
                                             -------
Allowance at end of period                  $  3,382
                                            ========
Ratio of net (charge-offs) recoveries
     to average loans                           0.03%
Allowance to total loans at end of period       1.34%
Allowance to nonperforming loans              162.67%

                                 -9-
<PAGE>
     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.

     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
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 September 30, 1999.

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

                                      September 30,  December 31,
                                         1999            1998

Nonaccrual loans                         $2,079          $3,388
Other loans 90 days past due                  -               -
Other real estate                             -               -
                                         ------          ------
Total nonperforming loans                $2,079          $3,388

Ratio of nonaccrual and other loans
 90 days past due to total loans           0.82%           1.81%
Ratio of nonperforming assets to
 total loans plus other real estate        0.82            1.81
Ratio of nonperforming assets to
 total assets                              0.70            1.47

     Of  the amount of nonaccrual loans as of September 30, 1999,
approximately $1.2 million is the Bank's portion of five  related
loans totaling approximately $4.1 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 had

                             -10-
<PAGE>
constructed a residential building assembly plant.  The loans are
secured by real estate, certificates of deposit, and two personal
guarantees  from  the  owners of the  developer,  as  well  as  a
guarantee by a related limited partnership.

      In  addition to the above, the Bank had a loan position  of
approximately  $2.0  million of two loans totaling  $2.8  million
that  was placed on nonaccrual status just prior to December  31,
1998.   During the quarter ended March 31, 1999, one loan to  the
same borrower in the amount of $178,000 was paid off. During  the
quarter  ended  June  30,  1999,  the  loan  was  paid  down   to
approximately  $923,000 and the interest  brought  current.   The
loan  matured  July 31, 1999 and was placed back on  non-accrual.
The   Bank  has  total  principal  outstanding  of  approximately
$890,000 as of September 30, 1999.

     Management believes that the Company is adequately protected
on  these  loans.  Management is not aware of any  adverse  trend
relating to the Company's loan portfolio.

     As  of  September 30, 1999, there was no significant balance
of  loans excluded from nonperforming loans set forth above.  Nor
was  there  known information about possible credit  problems  of
borrowers  causes  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.


Liquidity and Capital Resources

     The  Company has two basic sources of liquidity.  The  first
source  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.  Additionally, in  compliance
with the Bank's Liquidity Policy, the Company supplemented retail
deposit  growth by obtaining deposits of $6.8 million from  other
sources during the third quarter of 1999.  Deposits increased  to
$238.0  million at September 30, 1999 compared to $189.9  million
at  September  30,  1998.  Deposits from  other  sources  totaled
approximately $32.7 million at September 30, 1999.   Management's
determination  to use an outside funding source may  continue  in
the  future  depending on funding needs and  the  cost  of  these
funds.

     The second source of the Company's liquidity is Federal Home
Loan  Bank  ("FHLB") advances and Company lines of credit.   FHLB
advances are used 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 September 30, 1999, the Company had borrowed $11.2
million  from  the FHLB and its other lenders and  had  available
approximately $12.5 million of unused borrowing capacity from the
FHLB  and $11.8 million from its other lenders.  During the third
quarter,  since  interest  rates were  fluctuating,  the  Company
elected  to  borrow  short-term  funds  in  addition  to  seeking
additional  deposits  from  customers  and  other  sources.   The
Company anticipates that it will continue to rely primarily  upon
customer  and  other  sources,  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 Office of Thrift Supervision capital regulations require
savings  associations  to meet three capital  standards:  a  1.5%
tangible  capital standard, a 4% leverage ratio (or core  capital
ratio) and an 8% risk-based capital standard.

                               -11-
<PAGE>
     The following table presents the Bank's capital ratios:
                                       At September 30, 1999
                                                    Minimum
Ratio                                    Actual     Required

Tangible capital                        11.48%      1.50%
Core (Tier 1) capital                   11.48%      4.00%
Risk-Based capital                      13.54%      8.00%


Year 2000 Considerations

     As  the  year 2000 approaches, a significant business  issue
has  emerged regarding existing application software programs and
operating systems and their ability to accommodate the date value
for  the year 2000.  Many existing software application products,
including products used by the Bank, its suppliers and customers,
were  designed  to accommodate only a two-digit date  value  that
represents  the year.  For example, information relating  to  the
year 1996 is stored in the system as "96."  As a result, the year
1999  (i.e.,  "99") could be the maximum date  value  that  these
systems  will  be  able to process accurately.   In  response  to
concerns  about  this issue, regulatory agencies  have  begun  to
monitor  financial  institutions  and  their  holding  companies'
readiness  for  the year 2000 as part of the regular  examination
process.

     The  Company  presently believes that with modifications  to
existing  software and conversion to new software, the year  2000
issue  will  not  pose significant operational problems  for  the
Company's    computer    systems    or    business    operations.
Implementation  of the Company's plan to test in-house  and  out-
sourced  software  has been underway since the first  quarter  of
1998.    Testing  of  applications  considered  to  be   "mission
critical"  was  completed  in  the  first  quarter  of  1999  and
modifications  and  changes necessary  have  been  completed  and
tested.    Management  currently  estimates   that   such   total
compliance  efforts  will  not exceed $150,000.   Costs  incurred
through September 30, 1999 were approximately $44,100.  The  team
for  the  plan is responsible for the implementation of the  plan
and reports to the Company's Board of Directors.

     However, if the modifications and conversions are not  made,
or  are  not completed timely, the year 2000 issue could  have  a
material  adverse  impact  on  the  operations  of  the  Company.
Because  of  the  factors  discussed  below,  management   cannot
estimate with any reasonable degree of certainty the magnitude of
lost  revenues should management's reasonable worst case scenario
develop in which the Company would need to use an outside  vendor
to  become  year  2000 compliant and noncompliant customers  were
unable to repay their loans.

     Even  though  the Company's "mission critical" systems  have
tested  year 2000 compliant, the Company has in place a  business
resumption contingency plan in the event of an unforeseen problem
in  its computer systems.  This plan details actions to be  taken
in  the  unlikely  event of problems in the change  over  to  the
millennium.   This  process of validation is in  accordance  with
Federal Financial Institutions Examination Council guidelines.

     The  Bank has sent statements to its customers regarding the
year  2000  issue  and  the  need  for  readiness,  pursuant   to
guidelines of the banking industry regulators. Management intends
to  continue  to solicit customer response on this  matter.   The
Bank  has also instituted a policy requiring a loan applicant  to
sign  a year 2000 acknowledgement certificate at closing as  part
of a loan package.  Failure of the Company's customers to prepare
for  year  2000  compatibility could have a  significant  adverse
effect   of   customers'  operations  and   profitability,   thus
inhibiting  their ability to repay loans and adversely  affecting
the  Company's operations.  The Company does not have  sufficient
information accumulated from

                                -12-
<PAGE>
customers  to  enable the Company to assess the degree  to  which
customers'  operations  are  susceptible  to  potential  problems
relating  to  the  year 2000 issue or, further, to  quantify  the
potential lost revenue to the Company in this case.

                                -13-
<PAGE>
                   PART II.  OTHER INFORMATION



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


                                -14-
<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:  October 19, 1999        Hiram J. Welton
                               Treasurer
                                Duly authorized officer and
                                Chief Accounting Officer



                                -15-