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

                                 ----------------

                                    FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
                               EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1999

                                        OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                      EXCHANGE ACT OF 1934 FOR TRANSITION PERIOD 
                              fROM_______TO__________

                         Commission file number 0-25286

                       CASCADE FINANCIAL CORPORATION
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                    Delaware                    	91-1661954
       -------------------------------      -------------------
       (State or other jurisdiction of        (IRS Employer
         incorporation or organization)     Identification No.)


                2828 Colby Avenue
               Everett, Washington                 98201
   ----------------------------------------      ----------
   (Address of principal executive offices)      (Zip Code)


Registrant's telephone number, including area code: (425) 339-5500
                                                    --------------

Indicate by a check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding twelve months (or for such shorter periods that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days.  Yes [X]  No [ ]

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

          Class                   Outstanding as of March 31, 1999
          -----                   --------------------------------

 Common Stock ($.01 par value)                4,344,124

<PAGE>
                         CASCADE FINANCIAL CORPORATION

                                    FORM 10-Q
                     for the Quarter Ended March 31, 1999



                                      INDEX


PART I - Financial Information:

  Item 1 - Financial Statements:

    - Condensed Consolidated Balance Sheets. . . . . . . . . . . .3

    - Condensed Consolidated Statements of Operations. . . . . . .4

    - Condensed Consolidated Statements of Cash Flows. . . . . . .5

    - Notes to Consolidated Financial Statements. . . . . . . . . 7

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


PART II - Other Information. . . . . . . . . . . . . . . . . . . 14

                                      2
<PAGE>

                        PART I -- FINANCIAL INFORMATION

                 CASCADE FINANCIAL CORPORATION AND SUBSIDIARY
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (dollars in thousands, unaudited)

                                                 March 31,    June 30,
                                                ----------   ----------
                                                   1999         1998
                                                ----------   ----------
ASSETS
------
Cash on hand and in banks                      $   12,615      10,642
Interest-earning deposits in other institutions       447       1,324
Securities available for sale                      72,412      27,412
Loans available for sale                           32,146      19,920
Mortgage-backed securities held to maturity 
 (market value of $1,854 and $4,654)                1,879       4,725
Loans, net                                        394,229     364,814
Premises and equipment, at cost, net                9,419       8,764
Accrued interest receivable and other assets        7,529       6,554
                                                ----------   ---------
  TOTAL ASSETS                               $    530,676     444,155
                                                ==========   =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits                                       $  358,878     312,518
Federal Home Loan Bank advances                   113,906      73,436
Securities sold under agreements to repurchase      6,414      13,391
Advance payments by borrowers for taxes and 
 insurance                                          3,425       1,953
Accrued expenses and other liabilities             10,177       9,836
Deferred income tax                                 2,929       1,603
                                                ----------   ---------
  TOTAL LIABILITIES                               495,729     412,737

Preferred stock, $.01 par value, 500,000 shares
 authorized;  no shares issued or outstanding          --          --
Common stock, $.01 par value, 8,000,000 shares 
 authorized; 4,344,124 and 4,265,624 shares 
 issued and outstanding                                43          43
Additional paid-in capital                          4,721       4,433
Retained earnings, substantially restricted        30,321      27,046
Cumulative other comprehensive income, 
 net (note 4)                                        (138)       (104)
                                                ----------   ---------
  TOTAL STOCKHOLDERS' EQUITY                       34,947      31,418
                                                ----------   ---------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $  530,676     444,155
                                                ==========   =========

                 See notes to consolidated financial statements
                                         3
<PAGE>
                   CASCADE FINANCIAL CORPORATION AND SUBSIDIARY
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (dollars in thousands, except per share amounts)
                                      (unaudited)

                                 Three Months Ended,      Nine Months Ended
                                      March 31,               March 31,
                                --------------------    --------------------
                                   1999       1998         1999       1998
                                  ------     ------       ------     ------
Interest income:
 Loans                          $  8,723      7,758       25,735     22,907
 Mortgage-backed securities 
  held-to-maturity                    29         70          120        231
 Securities available for sale       650        329        1,538      1,496
 FHLB stock dividends                111        101          325        308
 Interest-earning deposits            99        115          227        185
                                 -------------------------------------------
  Total interest income            9,612      8,373       27,945     25,127
Interest expense:
 Deposits                          4,122      3,699       12,179     11,405
 Borrowings                        1,276      1,189        3,858      3,653
                                 -------------------------------------------
  Total interest expense           5,398      4,888       16,037     15,058

Net interest income                4,214      3,485       11,908     10,069
 Provision for loan losses           127         --          427        202
                                 -------------------------------------------
Net interest income after 
 provision for loan losses         4,087      3,485       11,481      9,867
Other income:
 Gain on sale of loans               212        244          671        329
 Gain on sale of servicing rights    583         --          583         --
 Service charges                     304        328          805        975
 Gain on sale of securities 
  available-for-sale                  --         (2)          17         93
 Net gain (loss) on sale of real 
  estate owned                         2         --           41         (8)
 Other                                47        165          157        308
                                 -------------------------------------------
  Total other income               1,148        735        2,274      1,697
Other expenses:
 Salaries and employee benefits    1,720      1,409        4,536      3,964
 Occupancy                           625        449        1,551      1,270
 Advertising                         114         97          332        273
 Data processing                      36         84          312        220
 Other                               716        669        2,058      2,071
                                 -------------------------------------------
  Total other expenses             3,211      2,708        8,789      7,798
                                 -------------------------------------------

  Income before income taxes       2,024      1,512        4,966      3,766
 Federal income taxes                691        406        1,691      1,241
                                 -------------------------------------------
  Net income                   $   1,333      1,106        3,275      2,525
                                 ===========================================
Earnings per share:
 Basic                         $    0.31       0.26         0.76       0.59
 Diluted                            0.28       0.24         0.69       0.54
Weighted average number of
 shares outstanding:
  Basic                        4,344,124  4,250,110    4,327,157  4,244,584
  Diluted                      4,767,531  4,689,371    4,750,690  4,676,040

                 See notes to consolidated financial statements

                                       4
<PAGE>
                        CASCADE FINANCIAL CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (dollars in thousands, unaudited)

                                               Nine Months Ended March 31,
                                               ---------------------------
                                                    1999          1998
                                                   ------        ------
Cash flows from operating activities:
 Net income                                    $   3,275         2,525
                                                -----------------------
  Adjustments to reconcile net income to 
   net cash provided by operating activities:
    Depreciation and amortization of 
     premises and equipment                          639           500
    Provision for losses on:
     Loans                                           427           202
     Mortgage servicing rights                       187            --
    Change in mortgage servicing rights              969          (398)
    Deferred loan fees, net of amortization         (105)          (22)
    Net change in loans available for sale       (12,226)      (17,987)
    Net loss (gain) on sales of
     Securities available for sale                   (17)          (93)
     Premises and equipment                           (1)           --
     Real estate owned                               (41)            8
     Mortgage servicing rights                      (583)           --
     Investment property                              --          (101)
 Federal Home Loan Bank stock dividend 
     received                                       (325)         (308)
    Net change in accrued interest receivable
     and other assets over accrued expenses 
     and other liabilities                            63         5,992
                                                -----------------------
      Net cash used in operating activities       (7,738)       (9,682)

Cash flows from investing activities:
 Loans originated, net of principal repayments   (30,100)      (15,032)
 Purchases of mortgage-backed securities
  held-to-maturity                                  (291)           --
 Principal repayments on securities held-to 
  maturity                                         3,137         1,619
 Principal repayments on securities available-
  for-sale                                         5,276         3,996
 Purchases of securities available for sale      (56,003)          (64)
 Proceeds from sales of securities available 
  for sale                                         6,016        24,885
 Proceeds from sales of real estate owned            478           546
 Proceeds from sales of investment property           --           555
 Purchases of premises and equipment              (1,295)       (1,414)
 Proceeds from sales of premises and equipment         1            --
                                                -----------------------
  Net cash used in investing activities          (72,781)       15,091

Subtotal, carried forward                        (80,519)        5,409
                                                -----------------------

                  See notes to consolidated financial statements

                                        5
<PAGE>
                        CASCADE FINANCIAL CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (dollars in thousands, unaudited)

                                               Nine Months Ended March 31,
                                               ---------------------------
                                                    1999          1998
                                                   ------        ------

Subtotal, brought forward                      $ (80,519)        5,409
                                                -----------------------

Cash flows from financing activities:
 Proceeds from issuance of common stock              289            97
 Net increase in deposits                         46,360        (2,701)
 Proceeds from Federal Home Loan Bank 
  advances                                       482,950       208,400
 Repayment of Federal Home Loan Bank advances   (442,480)     (210,113)
 Net decrease in securities sold under 
  agreements to repurchase                        (6,977)       (5,369)
 Net decrease in advance payments by 
  borrowers for taxes and insurance                1,472         1,518
                                                -----------------------
  Net cash provided by (used in) financing
   activities                                     81,614        (8,168)
                                                -----------------------

 Net increase in cash and cash equivalents         1,095        (2,759)
Cash and cash equivalents at beginning of
 period                                           11,967        14,311
                                                -----------------------

Cash and cash equivalents at end of period     $  13,062        11,552
                                                =======================

Supplemental disclosures of cash flow 
 information-cash paid during the period for:
  Interest                                     $  15,997        15,015
  Federal income taxes                             1,788         1,100
                                                -----------------------

Supplemental schedule of noncash investing
 activities:
  Mortgage loans securitized into mortgage 
   backed securities and held-for-trading 
   and sold                                       18,092        20,861
  Mortgage loans securitized into mortgage 
   backed securities and held-for-investment          --            13
  Net mortgage loans transferred to real 
   estate owned                                      363           226
  Funds due on sales of mortgage servicing
   rights                                          1,320            --


                  See notes to consolidated financial statements.

                                       6
<PAGE>
                  CASCADE FINANCIAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  March 31, 1999
                                   (unaudited)

1.  Presentation of Financial Information

  The accompanying financial information is unaudited and has been prepared 
from the books and records of Cascade Financial Corporation (the 
"Corporation").  The Corporation's sole subsidiary is Cascade Bank ("Cascade" 
or the "Bank").  In the opinion of management, the financial information 
reflects all adjustments (consisting of normal recurring accruals) necessary 
for a fair presentation of the financial condition, results of operations, and 
cash flows in conformity with generally accepted accounting principles.

  Certain information and footnote disclosures included in the Corporation's 
financial statements for the year ended June 30, 1998, have been condensed or 
omitted from this report.  Accordingly, these statements should be read with 
the financial statements and notes thereto included in the Corporation's Annual 
Report on Form 10-K.

2.  Commitments and Contingencies

  In the normal course of business there are various commitments to fund 
mortgage loans. Management does not anticipate any material loss as a result of
these commitments.

  Periodically, there have been various claims and lawsuits against the 
Corporation or the Bank, such as claims to enforce liens, condemnation 
proceedings on properties in which the Bank holds security interests, claims 
involving the making and servicing of real property loans and other issues 
incidental to the Corporation's and the Bank's business.  In the opinion of 
management, no significant loss is expected from any such pending lawsuits.

3.  Financial Statement Reclassification

  Certain amounts in the financial statements for fiscal 1998 have been 
reclassified to conform with the financial statement classification for fiscal 
1999.

4.  New Accounting Pronouncements

  Effective January 1, 1998, the Corporation adopted Statement of Financial 
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income".  
Comprehensive income for the three months ended March 31, 1999 and 1998, was 
$1.3 million and $1.0 million, respectively.  Comprehensive income for the nine
months ended March 31, 1999 and 1998, was $3.2 million and $2.7 million, 
respectively.  Comprehensive income consists of net income and the change in 
the unrealized gain on investments.

  SFAS No. 131, "Disclosures About Segments of an Enterprise and Related 
Information", was issued in June 1997 and redefines how operating segments are 
determined and requires disclosure of certain financial and descriptive 
information about a company's operating segments.  This statement was adopted 
on July 1, 1998.  Provisions of this statement require annual disclosure in the
year of adoption and interim reporting for periods thereafter.

                                          7
<PAGE>
  SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities",
was issued in June 1998 and establishes accounting and reporting standards for 
derivative instruments, including certain derivative instruments embedded in 
other contracts (collectively referred to as derivatives) and for hedging 
activities.  SFAS No. 133 is effective for all quarters of fiscal years 
beginning after June 15, 1999.  Management is reviewing this statement and does
not expect that application of this statement will have a material effect on 
the results of operations or the financial position of the Corporation.

  Effective January 1, 1999, the Corporation has adopted SFAS No. 134,
"Accounting for Mortgage-Backed Securities Retained after the Securitization 
of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise".  SFAS No. 
134 requires that entities securitizing mortgage loans held for sale classify 
any retained mortgage-backed securities in accordance with the provisions of 
Statement No. 115, which requires the classification be based upon the 
enterprise's ability and intent to sell or hold those investments.

Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
  RESULTS OF OPERATIONS

  This section contains forward-looking statements that have been prepared on 
the basis on the Corporation's best judgments and currently available 
information.  These forward-looking statements are inherently subject to 
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the control of the Corporation.  In addition, these 
forward-looking statements are subject to assumptions with respect to future 
business strategies and decisions that are subject to changes.  Accordingly, 
there can be no assurance that many of these strategies will be implemented, or
if implemented, achieve the amounts described or within the time periods 
currently estimated.

                                       MERGER

  On August 1, 1997, Cascade Financial Corporation completed a merger with 
AmFirst Bancorporation ("AmFirst").  This merger added three new full-service 
offices to Cascade's branch network and immediately established Cascade's 
commercial banking presence in Snohomish County.  Acquired assets were $67.3 
million, including $36.0 million primarily in commercial loans.  Cascade also 
acquired deposits of $60.7 million in the merger.  The merger was accounted for
as a pooling-of-interests.  Accordingly, the assets and liabilities of AmFirst 
were added to those of Cascade at their recorded book values, and the financial
statements of Cascade were restated as if the merger had taken place at the 
beginning of the periods covered.

                               ASSET/LIABILITY MANAGEMENT

  Cascade, like other financial institutions, is subject to fluctuations in 
interest rates because its interest-bearing liabilities reprice on different 
terms than its interest-earning assets.  During periods of interest rate 
declines this position has a generally favorable impact on net interest income,
while increases in interest rates have a generally adverse impact on net 
interest income.

                                        8
<PAGE>
  Cascade uses a simulation model to measure its interest rate risk and the 
effects on net interest income resulting from changes in market interest rates.
Based on this model (which includes a number of significant assumptions and 
estimates), a 200-basis point increase in general interest rates would reduce 
Cascade's annual net interest income by 5% at September 30, 1998.  Cascade 
manages interest rate risk by retaining in its portfolio permanent and 
construction adjustable rate loans with repricing periods that generally do not
exceed seven years.  Principally, all new fifteen and thirty year fixed rate 
loans are sold.  Cascade extends the maturity of its liabilities by offering 
deposit products to long-term, less rate sensitive customers, and by 
periodically obtaining longer term Federal Home Loan Bank-Seattle ("FHLB") 
advances.  Cascade also uses interest rate swap and interest rate cap and floor
agreements to effectively extend the repricing of short-term deposit accounts 
and protect segments of the Bank's loan portfolio from changes in market 
interest rates.

  Cascade uses mandatory and optional forward commitments from investment 
banking firms to mitigate the interest rate risk from its mortgage banking 
operation.

                            CHANGES IN FINANCIAL CONDITION

  Total assets increased to $530.7 million at March 31, 1999, compared with 
$444.2 million at June 30, 1998.  Loans available for sale, net increased $12.2
million to $32.1 million at March 31, 1999. Loans, net increased by $29.4
million, and securities available for sale increased $45.0 million.  Increases 
in assets were funded by a $46.3 million increase in deposits and a $40.4 
million increase in FHLB-Seattle advances.

ASSET QUALITY

  Nonperforming assets totaled $951,000 and $2.0 million at March 31, 1999, and
June 30, 1998, respectively.  Assets classified as substandard totaled $2.9 
million at March 31, 1999, and $4.4 million at June 30, 1998.  The decreases in
nonperforming and substandard assets resulted from the foreclosure of real and
personal property from one borrower totaling $745,000.  The Bank incurred a 
small loss on the sale of these repossessed properties.

                                RESULTS OF OPERATIONS

     Comparison of the Three and Nine Months Ended March 31, 1998 and 1999

General

  Net income for the three months ended March 31, 1999, increased to $1.3 
million compared with $1.1 million in 1998.  The principal reason for the 
increase in the three months earnings was an increase in net interest income of
$602,000 after provisions for loan losses and a gain on sale of servicing 
rights of $583,000.  These increases were partially offset by an increase of 
$503,000 in other expenses, principally due to an increase of $311,000 in 
salaries and employee benefits and an increase of $176,000 in occupancy.  Net 
income for the nine months ended March 31, 1999, increased to $3.3 million from
$2.5 million in 1998.  The principal reason for the increase in the nine months
earnings was an increase in net interest income of $1.6 million after 
provisions for loan losses and a gain on sale of servicing rights of $583,000.
Part of the increase in net interest income for the nine month period was 
offset by an increase in other expenses of $1.0 million, principally due to an 
increase of $572,000 in salaries and benefits expenses and $281,000 in 
occupancy expenses.  Both increases can be attributed to the in-house data 
processing system conversion and an increase in customer service personnel.

                                         9
<PAGE>
Net Interest Income

  Net interest income increased $729,000 to $4.2 million for the three months 
ended March 31, 1999, compared with the $3.5 million for the quarter ended 
March 31, 1998.  Net interest income increased by $1.8 million to $11.9 million
for the nine months ended March 31, 1999, compared with the $10.1 million for 
the nine months ended March 31, 1998.  The Bank's net interest margin increased
9 basis points to 3.51% for the most recent quarter and 17 basis points to 
3.48% for the nine months ended March 31, 1999.  Average interest earning 
assets increased $63.4 million to $479.6 for the quarter ended March 31, 1999, 
and $71.8 million for the nine months ended March 31, 1999, as compared to the 
same periods in 1998.  Average loans increased $53.4 million and average 
securities increased $20.1 million during the most recent quarter as compared 
with the same quarter in 1998.  Average loans increased $51.7 million and 
average securities increased $892,000 during the nine months ended March 31, 
1999, compared with the nine months ended March 31, 1998.  The increase in 
average loans, which provide higher yields than investments, coupled with a 
decrease of 20 basis points in the Bank's cost of funds, which decreased to 
4.73% for the quarter ended March 31, 1999, were the primary factors leading to
the increase in net interest margin. 

  Cascade is focusing on adding commercial businesses, nonconforming one-to-
four family loans, multi-family loans, home equity lines of credit, and one-to-
four family construction loans to its portfolio.  Nonconforming loans generally
include loans where the borrower has a debt level or other financial 
consideration that makes the loan unsaleable to government agencies such as 
FHLMC and FNMA.  Management believes these products provide the best returns 
for Cascade and can be underwritten conservatively to ensure low delinquency, 
absent unforeseen changes in local or national economic conditions.  
Additionally, these loan types are typically variable rate loans and are not 
effected as much by refinance activity as conforming fixed rate loans.  This 
should help to lower Cascade's overall origination and servicing costs in the 
future.

Provision for Loan Losses

  Cascade's provision for loan losses was $127,000 for the three months ended 
March 31, 1999, as compared with $0 for the 1998 period.  Provisions were 
$427,000 and $202,000 for the respective nine months.  At March 31, 1999, and 
June 30, 1998, the Bank's loan loss allowance totaled $4.3 million and $4.1 
million, respectively, and the loan loss allowance as a percent of net loans 
outstanding was 1.1% at each date.  Nonperforming loans decreased $969,000 to 
$951,000 at March 31, 1999, as compared to the period ending June 30, 1998.  
Substandard loans decreased $1.6 million to $2.9 million during the same 
period.  The provision for loan losses reflects management's quarterly 
evaluation of the adequacy of the allowance for losses on loans.  In 
determining adequacy, management considers changes in the size and composition 
of the loan portfolio, actual loan loss experience, current and anticipated 
economic conditions and other factors.  Management intends to grow the 
commercial, nonconforming, construction and income property portfolios.  These 
loans typically have a higher credit risk that will require additions to the 
reserve in future periods.  Management monitors these loans at an increased 
level to maintain credit quality and adequate reserve levels.

Other Income

  Other income increased $413,000 to $1.1 million for the three months ended 
March 31, 1999, as compared with the three months ended March 31, 1998.  This 
increase was the result of a gain on sale of servicing rights of $583,000.  
This gain was partially offset by a decrease in other income of $118,000.  For 
the nine months ended March 31, 1999, other income increased $584,000 to $2.3 
million as compared with the nine months ended March 31, 1998.  This increase 
is primarily due to a gain on sale of servicing rights of $583,000 and an 
increase in gain on sales of loans of $342,000.  These gains were partially 
offset by decreases in service charges of $70,000 and other income of $151,000.
Increased saleable production origination volumes resulted in significant 
increases to gain on sale of loans.
 
                                        10
<PAGE>
Other Expenses

  Other expenses increased to $3.2 million for the three months ended March 31,
1999 compared with $2.7 million for the three months ended March 31, 1998.
This increase is due primarily to increases in salaries and employee benefits 
of $311,000 and occupancy costs of $176,000.  Both increases are due to the in-
house data processing system conversion and an increase in customer service 
personnel.  For the nine month period ended March 31, 1999, other expenses 
totaled $8.8 million, a $1.0 million increase from the March 31, 1998, total.
Increases in salaries and employee benefits and occupancy costs related to 
development of new products and services and the in-house data processing 
system conversion were the primary causes of this increase.

Liquidity and Sources of Funds

  Cascade maintains liquidity balances in FHLB deposits and short-term 
securities at levels in accordance with regulatory guidelines.  The Bank held 
average liquid assets of $32.5 million in March 1999, which were in excess of 
the required liquidity level of $16.6 million.

  Loan commitments outstanding at March 31, 1999, were $15.3 million and will 
be funded through sales of loans, existing liquidity balances, FHLB-Seattle 
advances, and other borrowings.  Outstanding commitments to sell loans totaled 
$7.2 million at March 31, 1999.

  At March 31, 1999, the Bank had an unused line of credit from the FHLB-
Seattle of $71.9 million.  The Bank's credit line with the FHLB-Seattle is 35% 
of total assets or up to approximately $185.8 million.  The Bank also had $6.4 
million of reverse repurchase agreements outstanding, a decrease of $7.1 
million from June 30, 1998.

Capital Resources

  Cascade Bank is in full compliance with all capital requirements established 
by the Office of Thrift Supervision ("OTS") at March 31, 1999.  Cascade's 
regulatory capital requirements and related excess capital amounts as of March 
31, 1999, are presented in the following table:

  Core capital                     Amount      Percentage
  ------------                    --------     ----------
  Tier 1 (Core) capital          $  34,533        6.52%
  Less:  Minimum requirement        21,181        4.00
                                  --------       ------
  Excess                         $  13,352        2.52%
                                  ========       ======

  Risk-based capital               Amount      Percentage
  ------------------              --------     ----------
  Risk-based capital             $  38,194       10.70%
  Less: Minimum requirement (1)     28,553        8.00
                                  --------       ------
  Excess                         $   9,641        2.70%
                                  ========       ======

______________________
  (1) Based on risk-weighted assets.

  The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") 
was signed into law on December 19, 1991.  Among other things, the FDICIA 
provides the OTS, effective December 19, 1992, with broad powers to take 
"prompt corrective action" to resolve problems of insured depository 
institutions.  The actions the OTS can take depend upon whether the institution
in question is "well capitalized," "adequately capitalized," 
"undercapitalized," "significantly undercapitalized" or "critically 
undercapitalized."  The OTS has advised the Corporation that at March 31, 1999,
Cascade Bank is a "well capitalized" institution.

                                        11
<PAGE>
  The OTS issued a final rule on December 1, 1998, that provides comprehensive 
guidance to management and examiners covering among other things, interest rate
risk, investment securities and the use of financial derivatives.  The guidance
provides guidelines for examiners to use in evaluating the effectiveness of a 
financial institution's risk management practices and identifies a set of 
"sound practices" management should consider to improve their own risk 
management practices.  The rule describes the qualitative and quantitative 
guidelines examiners will use to rate an institution's exposure to interest 
rate risk.

  Management does not believe the rule will materially adversely effect the 
current business strategy.

                               YEAR 2000 DISCLOSURE

  In the past, computer software commonly condensed a century date to just two 
digits to conserve computer storage space.  Thus, computers may interpret "00" 
as "1900" rather than "2000".  This could result in the inability of software 
applications to properly process transactions with the dates in the Year 2000 
or thereafter.  The Year 2000 problem is of particular concern to Cascade and 
other financial institutions because most financial transactions, such as 
interest accruals and payments, are date sensitive and there is much 
interaction with numerous customers, vendors and third party service providers 
whom must also address the century date change issue.

State of Readiness

  Cascade is committed to providing continuous, secure, quality banking 
operations and services as we transition to the twenty-first century.  Cascade 
has established a Year 2000 team (the "Team") which is comprised of employees 
from all significant operational areas of the Bank.  This Team is managed at 
the executive vice president level and provides regular status reports to 
senior management and the board of directors.  Examiners from the OTS have also
reviewed the Bank's Year 2000 progress and project plans. 

  The Year 2000 problem will impact both information technology ("IT") and non-
IT.  IT includes computer hardware and software, whereas non-IT typically 
includes embedded technology, such as microcontrollers, automated teller 
machines ("ATMs") and elevators.  With this in mind, the Team performed an 
assessment of its Year 2000 exposure and created a business readiness report in
terms of the Bank's critical business processes (both IT and non-IT), hardware 
and software inventories, significant borrowers, funding sources and 
significant business partners.  This assessment was followed with a technical 
review of the automated systems of the Bank.  The report provides a Year 2000 
project plan with testing schedules, budget estimates and contingency plans.  
The Team identified certain systems as "mission critical" and the project plan 
called for all mission critical Year 2000 testing be completed by December 31, 
1998.  Testing for non-mission critical systems is on-going and testing for 
these systems not tested in 1998 will continue into 1999.

  The majority of software systems used by Cascade Bank are standard vendor-
supplied solutions under maintenance contracts.  These solutions have either 
been certified by the vendors as year 2000 compliant, are being modified for 
Year 2000 compliance by the vendor, or are being replaced by the Bank with Year
2000 compliant systems.

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<PAGE>
  Mission critical software was tested in 1998 and this testing has been 
completed.  Hardware testing for mission critical systems was completed in 
February.  Cascade is participating in the Mortgage Bankers Association Year 
2000 Inter-System Readiness Test, an industry-wide test of various mortgage 
banking software platforms.  This testing is to be completed in May and 
involves testing of loan origination and loan closing systems.  Testing of the 
software and hardware for ATM and debit card systems was completed in April. 
On May 7, 1999, the Bank was notified its ATM and debit card third party 
processor had not completed all Year 2000 testing as proscribed by the Federal
Banking Regulators.  This processor handles many other financial institutions
as well as the Bank.  The processor has until June 30, 1999 to meet its testing
requirements.  Management is reviewing options previously identified in its
renovation plans for resolving this potential issue.

Costs to address Year 2000 issues

  The Team anticipated the Bank would need to spend approximately $250,000 to 
upgrade computer equipment, test software, purchase software upgrades and hire 
additional temporary staff for Year 2000 issues.  As of March 31, 1999, the 
Bank has expensed $85,000 of the budgeted amount.  The Bank added one 
additional employee to work on Year 2000 projects and does not anticipate 
adding additional employees.  These expenses will be funded through normal cash
flows from operations.  There may be costs associated with resolving the ATM-
debit card processor issue.  These costs, if incurred, would not be material
in any single reporting period.  Management will take whatever steps necessary
to enforce its contractual rights.

Risks associated with the Year 2000

  The nature of the Year 2000 problem makes it difficult, if not impossible, to
determine what the exact risks will be to the Bank.  There are numerous issues 
beyond the Bank's control, such as electric power and telephone communications.
The Bank interacts with many customers, vendors and third party service 
providers, who in turn interact with many of the same.  Due to the 
interdependence of computer systems today, it is simply impossible for any one 
party to eliminate the risk related to the Year 2000 problem.  If the computer 
systems of a third party on which Cascade relies are not converted by the Year 
2000, there may be significant costs incurred by Cascade.  The Bank has been in
contact with its large loan customers, to insure they are aware of the Year 
2000 problem and are in the process of addressing the issues.  In the event 
that these loan customers are unable to operate due to a Year 2000 problem, 
there may be a loss of revenue for Cascade.

Contingency Plans

  As the nature of the problems that may result from the Year 2000 problem are 
extremely varied and vague, it has proven to be quite challenging to create one
contingency plan.  However, the Team has created a worst-case-scenario 
contingency plan for each of its mission critical systems.  The Team is 
currently in the stage of implementing this plan and testing will occur in 
June.
                                        13
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                             PART II-OTHER INFORMATION

Item 1.  Legal Proceedings.
---------------------------

  The Corporation and the Bank have certain litigation and negotiations in 
progress resulting from activities arising from normal operations.  In the 
opinion of management, none of these matters is likely to have a materially 
adverse effect on the Corporation's financial position.

Item 2.  Changes in Securities.
-------------------------------

  Not applicable

Item 3.  Defaults upon Senior Securities.
----------------------------------------- 

  Not applicable

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

  Not applicable

Item 5.  Other information.
---------------------------

  Not applicable

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

  Not applicable

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.

                                        CASCADE FINANCIAL CORPORATION


  May 14, 1999                          /S/ Russell E. Rosendal
                                        -----------------------------
                                        By:  Russell E. Rosendal
                                             Executive Vice President
                                             (Chief Financial Officer)














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