COMMON SECURITIES GUARANTEE AGREEMENT


                          CASCADE FINANCIAL CORPORATION


                            Dated as of March 1, 2000









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                                TABLE OF CONTENTS
                                                                          Page
                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.  Definitions and Interpretation................................3

                                   ARTICLE II

                                    GUARANTEE

SECTION 2.1.  Guarantee.....................................................4
SECTION 2.2.  Waiver of Notice and Demand...................................4
SECTION 2.3.  Obligations Not Affected......................................4
SECTION 2.4.  Rights of Holders.............................................5
SECTION 2.5.  Guarantee of Payment..........................................5
SECTION 2.6.  Subrogation...................................................5
SECTION 2.7.  Independent Obligations.......................................6


                                   ARTICLE III

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1.  Limitation of Transactions....................................6
SECTION 3.2.  Ranking.......................................................7

                                   ARTICLE IV

                                   TERMINATION
SECTION 4.1.  Termination...................................................7

                                    ARTICLE V

                                  MISCELLANEOUS

SECTION 5.1.  Successors and Assigns........................................7
SECTION 5.2.  Amendments....................................................8
SECTION 5.3.  Notices.......................................................8
SECTION 5.4.  Benefit.......................................................9
SECTION 5.5.  Governing Law.................................................9



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                      COMMON SECURITIES GUARANTEE AGREEMENT

     This  COMMON  SECURITIES   GUARANTEE   AGREEMENT  (the  "Common  Securities
Guarantee"),  dated as of March 1, 2000,  is executed  and  delivered by CASCADE
FINANCIAL CORPORATION, a Delaware corporation (the "Guarantor"), for the benefit
of the Holders (as defined  herein)  from time to time of the Common  Securities
(as defined herein) of CASCADE  CAPITAL TRUST I, a Delaware  business trust (the
"Issuer").

     WHEREAS,  pursuant to an Amended  and  Restated  Declaration  of Trust (the
"Declaration"),  dated as of March 1,  2000,  by and among the  Trustees  of the
Issuer named therein,  the Guarantor,  as sponsor,  and the holders from time to
time of undivided  beneficial  interests in the assets of the Issuer, the Issuer
is  issuing  on the date  hereof  310  common  securities  having  an  aggregate
liquidation amount of Three Hundred Ten Thousand Dollars ($310,000), to meet the
capital  requirements of the Trust;  such common securities being designated the
11.00% Common Securities (the "Common Securities").

     WHEREAS,  as incentive  for the Holders to purchase the Common  Securities,
the Guarantor desires  irrevocably and  unconditionally  to agree, to the extent
set forth in this Common Securities Guarantee, to pay the Guarantee Payments (as
defined  herein) to the  Holders of the Common  Securities  and to make  certain
other payments on the terms and conditions set forth herein; and

     WHEREAS,  the  Guarantor  is also  executing  and  delivering  the Series A
Capital Securities Guarantee Agreement, dated as of March 1, 2000 (the "Series A
Capital Securities  Guarantee"),  for the benefit of the holders of the Series A
Capital  Securities (as defined in the Declaration) and upon consummation of the
Exchange  Offer (as  defined in the  Declaration)  will  execute and deliver the
Series  B  Capital  Securities   Guarantee  Agreement  (the  "Series  B  Capital
Securities  Guarantee")  for the  benefit of the holders of the Series B Capital
Securities (as defined in the Declaration); it being understood that if an Event
of Default (as defined in the Declaration)  has occurred and is continuing,  the
rights of Holders of the Common Securities to receive  Guarantee  Payments under
this Common  Securities  Guarantee  are  subordinated,  to the extent and in the
manner set forth  herein,  to the rights of  holders of Capital  Securities  (as
defined in the  Declaration)  to receive  Guarantee  Payments under the Series A
Capital Securities Guarantee and the Series B Capital Securities  Guarantee,  as
the case may be.

     NOW,  THEREFORE,  in  consideration  of the  purchase by each Holder of the
Common  Securities,  which  purchase the  Guarantor  hereby  acknowledges  shall
benefit  the  Guarantor,   the  Guarantor  executes  and  delivers  this  Common
Securities Guarantee for the benefit of the Holders.



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                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1.  Definitions and Interpretation

     In this Common Securities Guarantee, unless the context otherwise requires:

     (a)  capitalized  terms used in this Common  Securities  Guarantee  but not
          defined in the preamble above have the respective meanings assigned to
          them in this Section 1.1;

     (b)  terms defined in the  Declaration  as at the date of execution of this
          Common  Securities  Guarantee  have the same meaning when used in this
          Common  Securities  Guarantee unless otherwise  defined in this Common
          Securities Guarantee;

     (c)  a term defined  anywhere in this Common  Securities  Guarantee has the
          same meaning throughout;

     (d)  all  references to "the Common  Securities  Guarantee" or "this Common
          Securities   Guarantee"  are  references  to  this  Common  Securities
          Guarantee as modified, supplemented or amended from time to time;

     (e)  all  references  in this Common  Securities  Guarantee to Articles and
          Sections  are  references  to  Articles  and  Sections  of this Common
          Securities Guarantee unless otherwise specified;

     (f)  a term defined in the Trust  Indenture  Act has the same meaning as in
          the Trust  Indenture  Act  unless  otherwise  defined  in this  Common
          Securities Guarantee; and

     (g)  a reference to the singular includes the plural and vice versa.

     "Guarantee Payments" means the following payments or distributions, without
duplication,  with respect to the Common  Securities,  to the extent not paid or
made by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions
(as  defined in the  Declaration)  that are  required  to be paid on such Common
Securities,  to the extent the Issuer has funds  legally  available  therefor at
such time,  (ii) the  redemption  price,  including all  accumulated  and unpaid
Distributions to the date of redemption (the "Redemption  Price"), to the extent
the Issuer has funds legally  available  therefor at such time,  with respect to
any Common  Securities  called for  redemption,  and (iii) upon a  voluntary  or
involuntary dissolution,  winding-up or liquidation of the Issuer (other than in
connection with the  distribution of Debentures (as defined in the  Declaration)
to the Holders in  exchange  for Common  Securities  or in  connection  with the
redemption  of  the  Common  Securities,   in  each  case  as  provided  in  the
Declaration),  the lesser of (a) the aggregate of the liquidation amount and all
accumulated  and unpaid  Distributions  on the Common  Securities to the date of
payment,  to the extent the Issuer has funds legally available  therefor at such
time,  and (b) the  amount of  assets  of the  Issuer  remaining  available  for
distribution  to the Holders after  satisfaction  of liabilities to creditors of
the Issuer as required  by  applicable  law (in either  case,  the  "Liquidation
Distribution").  If an Event of  Default  under the  Declaration,  the  Series A
Capital  Securities  Guarantee  Agreement  or the  Series B  Capital  Securities
Guarantee Agreement has occurred and is continuing, no Guarantee


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Payments  with respect to the Common  Securities  shall be made until holders of
Capital  Securities  shall be paid in full the Guarantee  Payments to which they
are entitled  under the Series A Capital  Securities  Guarantee and the Series B
Capital Securities Guarantee, as the case may be.

     "Holder"  means any holder,  as  registered on the books and records of the
Issuer, of any Common Securities.

     "Other Guarantees" means all guarantees,  other than this Common Securities
Guarantee,  to be issued by the Guarantor with respect to common  securities (if
any) similar to the Common  Securities issued by trusts other than the Issuer to
be established by the Guarantor (if any), in each case similar to the Issuer.


                                   ARTICLE II
                                    GUARANTEE
SECTION 2.1.  Guarantee

     The Guarantor irrevocably and unconditionally  agrees to pay in full to the
Holders the Guarantee Payments (without  duplication of amounts theretofore paid
by the Issuer), as and when due, regardless of any defense,  right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's  obligation to
make a Guarantee  Payment may be  satisfied  by direct  payment of the  required
amounts by the  Guarantor  to the  Holders or by causing  the Issuer to pay such
amounts to the Holders.

SECTION 2.2.  Waiver of Notice and Demand

     The Guarantor hereby waives notice of acceptance of this Common  Securities
Guarantee  and of any  liability to which it applies or may apply,  presentment,
demand for payment,  any right to require a proceeding  first against the Issuer
or any other Person before proceeding against the Guarantor,  protest, notice of
nonpayment,  notice of dishonor,  notice of redemption and all other notices and
demands.

SECTION 2.3.  Obligations Not Affected

     The  obligations,  covenants,  agreements and duties of the Guarantor under
this  Common  Securities  Guarantee  shall in no way be  affected or impaired by
reason of the happening from time to time of any of the following:

     (a)  the  release or  waiver,  by  operation  of law or  otherwise,  of the
          performance  or  observance  by the  Issuer of any  express or implied
          agreement,   covenant,  term  or  condition  relating  to  the  Common
          Securities to be performed or observed by the Issuer;

     (b)  the  extension  of time for the  payment  by the  Issuer of all or any
          portion   of  the   Distributions,   Redemption   Price,   Liquidation
          Distribution  or any other sums payable  under the terms of the Common
          Securities or the extension of time for the  performance  of any other
          obligation  under,  arising out of, or in connection  with, the Common
          Securities;


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     (c)  any failure,  omission,  delay or lack of diligence on the part of the
          Holders to enforce, assert or exercise any right, privilege,  power or
          remedy  conferred  on the Holders  pursuant to the terms of the Common
          Securities,  or  any  action  on  the  part  of  the  Issuer  granting
          indulgence or extension of any kind;

     (d)  the voluntary or  involuntary  liquidation,  dissolution,  sale of any
          collateral,  receivership,  insolvency, bankruptcy, assignment for the
          benefit of  creditors,  reorganization,  arrangement,  composition  or
          readjustment of debt of, or other similar proceedings  affecting,  the
          Issuer or any of the assets of the Issuer;

     (e)  any invalidity of, or defect or deficiency in, the Common Securities;

     (f)  the  settlement or compromise of any obligation  guaranteed  hereby or
          hereby incurred; or

     (g)  any other  circumstance  whatsoever that might otherwise  constitute a
          legal or equitable discharge or defense of a guarantor;

it being the intent of this Section 2.3 that the  obligations  of the  Guarantor
with respect to the Guarantee Payments shall be absolute and unconditional under
any and all circumstances.

     There  shall be no  obligation  of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 2.4.  Rights of Holders

     The  Guarantor  expressly  acknowledges  that  any  Holder  of  the  Common
Securities may institute a legal  proceeding  directly  against the Guarantor to
enforce  its rights  under  this  Common  Securities  Guarantee,  without  first
instituting a legal proceeding against the Issuer or any other Person.

SECTION 2.5.  Guarantee of Payment

     This Common Securities  Guarantee creates a guarantee of payment and not of
collection.

SECTION 2.6.  Subrogation

     The Guarantor  shall be subrogated to all (if any) rights of the Holders of
the Common Securities  against the Issuer in respect of any amounts paid to such
Holders by the  Guarantor  under this  Common  Securities  Guarantee;  provided,
however,  that the  Guarantor  shall  not  (except  to the  extent  required  by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any  indemnity,  reimbursement  or other
agreement,  in all cases as a result of  payment  under this  Common  Securities
Guarantee,  if, at the time of any such payment,  any amounts are due and unpaid
under this Common Securities Guarantee. If any amount


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shall be paid to the  Guarantor  in  violation of the  preceding  sentence,  the
Guarantor  agrees to hold such  amount in trust for the  Holders and to pay over
such amount to the Holders.

SECTION 2.7.  Independent Obligations

     The Guarantor  acknowledges that its obligations  hereunder are independent
of the obligations of the Issuer with respect to the Common  Securities and that
the  Guarantor  shall be liable as  principal  and as debtor  hereunder  to make
Guarantee  Payments  pursuant to the terms of this Common  Securities  Guarantee
notwithstanding  the  occurrence  of any event  referred to in  subsections  (a)
through (g), inclusive, of Section 2.3 hereof.


                                   ARTICLE III
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 3.1.  Limitation of Transactions

     So long as any Common Securities remain outstanding, the Guarantor will not
(i)  declare or pay any  dividends  or  distribution  on, or  redeem,  purchase,
acquire or make a  liquidation  payment with  respect to any of the  Guarantor's
capital stock, (ii) make any payment of principal of, or interest or premium, if
any, on or repay,  repurchase  or redeem any debt  securities  of the  Guarantor
(including Other  Debentures,  as defined in the Indenture) that rank pari passu
with or junior in right of payment to the Debentures or (iii) make any guarantee
payments with respect to any  guarantee by the Guarantor of the debt  securities
of any subsidiary of the Guarantor  (including Other  Guarantees,  as defined in
the  Indenture)  if such  guarantee  ranks pari passu with or junior in right of
payment to the Debentures  (other than (a) dividends or  distributions in shares
of, or options,  warrants  or rights to  subscribe  for or  purchase  shares of,
common stock of the Guarantor,  (b) any  declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future,  or the  redemption or repurchase of any such
rights  pursuant  thereto,  (c) payments  under the Series A Capital  Securities
Guarantee and the Series B Capital  Securities  Guarantee,  (d) as a result of a
reclassification  of  the  Guarantor's  capital  stock  or the  exchange  or the
conversion of one class or series of the  Guarantor's  capital stock for another
class or series of the Guarantor's capital stock, (e) the purchase of fractional
interests in shares of the Guarantor's  capital stock pursuant to the conversion
or exchange  provisions of such capital stock or the security being converted or
exchanged,  and (f)  purchases of common stock related to the issuance of common
stock or rights under any of the Guarantor's  benefit or compensation  plans for
its  directors,  officers  or  employees  or  any of  the  Guarantor's  dividend
reinvestment  plans) if at such time (1) there shall have  occurred any event of
which the  Guarantor  has  actual  knowledge  that (A) is, or with the giving of
notice or the lapse of time,  or both,  would be, an Event of Default and (B) in
respect of which the Guarantor  shall not have taken  reasonable  steps to cure,
(2) if such Debentures are held by the Property Trustee,  the Guarantor shall be
in default  with  respect to its payment of any  obligations  under the Series A
Capital Securities Guarantee or the Series B Capital Securities Guarantee or (3)
the  Guarantor  shall have given  notice of its  election of the exercise of its
right to  commence  an  Extended  Interest  Payment  Period as  provided  in the
Indenture and shall not have rescinded such notice,  and such Extended  Interest
Payment Period, or an extension thereof, shall have commenced and be continuing.


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SECTION 3.2.  Ranking

     This Common Securities Guarantee will constitute an unsecured obligation of
the  Guarantor and will rank (i)  subordinate  and junior in right of payment to
the Senior Indebtedness (as defined in the Indenture), to the same extent and in
the same manner that the Debentures are subordinated to the Senior  Indebtedness
pursuant to the Indenture,  it being  understood that the terms of Article XV of
the Indenture  shall apply to the obligations of the Guarantor under this Common
Securities  Guarantee as if such Article XV were set forth herein in full,  (ii)
pari passu with the most senior  preferred or preference  stock now or hereafter
issued by the Guarantor and with any Other  Guarantee  and,  except as set forth
herein or  therein,  the  Series A Capital  Securities  Guarantee,  the Series B
Capital Securities  Guarantee and any guarantee now or hereafter entered into by
the Guarantor in respect of any  preferred or preference  stock of any Affiliate
of the Guarantor and (iii) senior to the Guarantor's common stock.


                                   ARTICLE IV
                                   TERMINATION

SECTION 4.1.  Termination

     This Common Securities Guarantee shall terminate and be of no further force
or  effect  upon  (i)  full  payment  of the  Redemption  Price  of  all  Common
Securities,  (ii) the  dissolution,  winding-up  or  liquidation  of the Issuer,
immediately following the full payment of the amounts payable in accordance with
the  Declaration,  or (iii) the  distribution  of all of the  Debentures  to the
Holders of the Trust Securities (as defined in the Declaration). Notwithstanding
the foregoing, this Common Securities Guarantee will continue to be effective or
will be reinstated,  as the case may be, if at any time any Holder of the Common
Securities must restore payment of any sums paid under the Common  Securities or
under this Common Securities Guarantee.


                                    ARTICLE V
                                  MISCELLANEOUS

SECTION 5.1.  Successors and Assigns

     All guarantees and agreements contained in this Common Securities Guarantee
shall bind the successors,  assigns, receivers,  trustees and representatives of
the  Guarantor  and shall  inure to the  benefit  of the  Holders  of the Common
Securities then outstanding.

SECTION 5.2.  Amendments

     Except with  respect to any changes  which do not  adversely  affect in any
material  respect  the  rights of the  Holders  (in which case no consent of the
Holders will be required),  this Common Securities Guarantee may only be amended
with the prior  approval of the Holders of a majority in  liquidation  amount of
all the outstanding Common Securities. The provisions of Section


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12.2 of the  Declaration  with  respect  to  meetings  of  Holders  of the Trust
Securities apply to the giving of such approval.

SECTION 5.3.  Notices

     All notices  provided for in this Common  Securities  Guarantee shall be in
writing,  duly signed by the party giving such notice,  and shall be  delivered,
telecopied or mailed by registered or certified mail, as follows:

     (a)  if given to the Issuer, in care of the  Administrative  Trustee at the
          Issuer's mailing address set forth below (or such other address as the
          Issuer may give notice of to the Holders of the Common Securities):

                         CASCADE CAPITAL TRUST I
                         c/o Cascade Financial Corporation
                         2828 Colby Avenue
                         Everett, Washington 98201
                         Attention:  Chief Financial Officer
                         Telephone:    (425) 339-5500
                         Telecopier:   (425) 259-8512

     (b)  if given to the  Guarantor,  at the  Guarantor's  mailing  address set
          forth below (or such other address as the Guarantor may give notice of
          to the Holders of the Common Securities):

                         CASCADE FINANCIAL CORPORATION
                         2828 Colby Avenue
                         Everett, Washington 98201
                         Attention:  Chief Financial Officer
                         Telephone:    (425) 339-5500
                         Telecopier:   (425) 259-8512

     (c)  if given to any Holder of the Common  Securities,  at the  address set
          forth on the books and records of the Issuer.

     All such  notices  shall be deemed  to have been  given  when  received  in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered  because of a changed  address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.



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SECTION 5.4.  Benefit

     This Common  Securities  Guarantee is solely for the benefit of the Holders
of the Common  Securities  and is not separately  transferrable  from the Common
Securities.

SECTION 5.5.  Governing Law

     THIS COMMON  SECURITIES  GUARANTEE  SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES THEREOF.

     This Common  Securities  Guarantee is executed as of the day and year first
above written.

                                      CASCADE FINANCIAL CORPORATION


                                      By:  /s/ Frank M. McCord
                                         --------------------------------------
                                         Frank M. McCord
                                         Chairman and Chief Executive Officer


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