**UNITED        STATES SECURITIES AND EXCHANGE        COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-Q**

| þ | QUARTERLY                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                  ACT OF                  1934 FOR THE QUARTERLY PERIOD ENDED March                  31, 2006 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  ̈ | TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                  ACT OF                  1934 FOR TRANSITION PERIOD FROM                  ______________TO_________________ |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**CASCADE        FINANCIAL CORPORATION**

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

| Class                                          | Outstanding                  as of April 30, 2006 |
|------------------------------------------------|---------------------------------------------------|
| Common                  Stock ($.01 par value) | 9,642,758                                         |

----

**CASCADE        FINANCIAL CORPORATION**

**FORM        10-Q**

**For        the Quarter Ended**
**March 31, 2006**

**INDEX**

|                                                       | **PAGE**                                                                                                                |
|------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
| **PART                  I — Financial Information:** |                                                                                                                    |
| Item                  1                                    | —                  Financial Statements:                                                                          |   |
|                                                       | —                  Condensed Consolidated Balance Sheets                                                          | 3 |
|                                                       | —                  Condensed Consolidated Statements of Income                                                    | 4 |
|                                                       | —                  Consolidated Statements of Comprehensive Income                                                | 5 |
|                                                       | —                  Condensed Consolidated Statements of Cash Flows                                                | 6 |
|                                                       | —                  Notes to Condensed Consolidated Financial Statements                                           | 8 |
|                                                       |                                                                                                                    |   |
| Item                  2                                    | —                  Management’s Discussion and Analysis of Financial Condition and                  Results |   |
|                                                       | of                  Operations                                                                                          | 11 |
|                                                       |                                                                                                                    |   |
| Item                  3                                    | —                  Quantitative and Qualitative Disclosures about Market Risk                                     | 21 |
|                                                       |                                                                                                                    |   |
| Item                  4                                    | —                  Controls and Procedures                                                                        | 22 |
|                                                       |                                                                                                                    |   |
| **PART                  II — Other Information**     |                                                                                                                    |
| Item                  1                                    | —                  Legal Proceedings                                                                              | 23 |
| Item                  1A                                   | —                  Risk Factors                                                                                   | 23 |
| Item                  2                                    | —                  Unregistered Sales of Equity Securities and Use of                  Proceeds                   | 23 |
| Item                  3                                    | —                  Defaults Upon Senior Securities                                                                | 24 |
| Item                  4                                    | —                  Submission of Matters to a Vote of Security Holders                                            | 24 |
| Item                  5                                    | —                  Other Information                                                                              | 24 |
| Item                  6                                    | —                  Exhibits                                                                                       | 24 |
|                                                       | Signatures                                                                                                              | 24 |

----

**PART        I -- FINANCIAL INFORMATION**

**Item        1 - Financial Statements**

**CASCADE        FINANCIAL CORPORATION AND SUBSIDIARY**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

|                                                                         |   | March                  31, |      | December                  31, |   |
|------------------------------------------------------------------------------|--------|----------------------------|-----------|-------------------------------|--------|
| **ASSETS**                                                                   |   | 2006                       |      | 2005                          |   |
|                                                                         |   |                       |      |                          |   |
| Cash                  on hand and in banks                                   |   | $                          | 15,762    |                          | $      | 16,616 |   |
| Interest-bearing                  deposits in other institutions             |   |                       | 1,976     |                          |   | 14,493 |   |
| Securities                  available-for-sale                               |   |                       | 142,030   |                          |   | 140,596 |   |
| Securities                  held-to-maturity                                 |   |                       | 98,221    |                          |   | 95,122 |   |
| Federal                  Home Loan Bank (FHLB) Stock                         |   |                       | 11,920    |                          |   | 11,920 |   |
| Loans,                  net                                                  |   |                       | 910,052   |                          |   | 867,049 |   |
| Goodwill                  and intangibles, net                               |   |                       | 26,083    |                          |   | 26,121 |   |
| Premises                  and equipment, net                                 |   |                       | 12,169    |                          |   | 12,270 |   |
| Cash                  surrender value of bank-owned life insurance           |   |                       | 17,473    |                          |   | 17,313 |   |
| Deferred                  tax asset                                          |   |                       | 1,082     |                          |   | 568 |   |
| Accrued                  interest receivable and other assets                |   |                       | 9,741     |                          |   | 9,716 |   |
| TOTAL                  ASSETS                                                |   | $                          | 1,246,509 |                          | $      | 1,211,784 |   |
|                                                                         |   |                       |      |                          |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS’ EQUITY**              |   |                       |      |                          |   |   |   |
|                                                                         |   |                       |      |                          |   |   |   |
| Liabilities:                                                                 |   |                       |      |                          |   |   |   |
| Deposits                                                                     |   | $                          | 779,993   |                          | $      | 795,768 |   |
| Federal                  Home Loan Bank advances                             |   |                       | 251,000   |                          |   | 236,000 |   |
| Securities                  sold under agreements to repurchase              |   |                       | 72,047    |                          |   | 51,058 |   |
| Junior                  subordinated debentures payable                      |   |                       | 25,206    |                          |   | 15,212 |   |
| Advance                  payments by borrowers for taxes and insurance       |   |                       | 403       |                          |   | 689 |   |
| Dividends                  payable                                           |   |                       | 867       |                          |   | 864 |   |
| Accrued                  interest payable, expenses and other liabilities    |   |                       | 10,072    |                          |   | 7,000 |   |
| TOTAL                  LIABILITIES                                           |   |                       | 1,139,588 |                          |   | 1,106,591 |   |
|                                                                         |   |                       |      |                          |   |   |   |
| Stockholders’                  Equity:                                 |   |                       |      |                          |   |   |   |
| Preferred                  stock, $.01 par value, Authorized 500,000 shares; |   |                       |      |                          |   |   |   |
| no                  shares issued or outstanding                             |   |                       | -         |                          |   | - |   |
| Common                  stock, $.01 par value, Authorized 25,000,000 shares; |   |                       |      |                          |   |   |   |
| issued                  and outstanding 9,641,195 shares at March 31,        |   |                       |      |                          |   |   |   |
| 2006                  and 9,603,787 shares at December 31, 2005              |   |                       | 96        |                          |   | 96 |   |
| Additional                  paid-in capital                                  |   |                       | 38,599    |                          |   | 38,149 |   |
| Retained                  earnings, substantially restricted                 |   |                       | 71,154    |                          |   | 68,945 |   |
| Accumulated                  other comprehensive income (loss)               |   |                       | (2,928    | )                             |   | (1,997 | ) |
| TOTAL                  STOCKHOLDERS’ EQUITY                            |   |                       | 106,921   |                          |   | 105,193 |   |
| TOTAL                  LIABILITIES AND STOCKHOLDERS’ EQUITY            |   | $                          | 1,246,509 |                          | $      | 1,211,784 |   |

----

**CASCADE        FINANCIAL CORPORATION AND SUBSIDIARY**

**CONDENSED        CONSOLIDATED STATEMENTS OF INCOME**

|                                                                 |   | Three                  Months EndedMarch                  31,  |
|----------------------------------------------------------------------|--------|---------------------------------------------------------------------|
|                                                                 |   | 2006                                                                |   |  2005 |
| **Interest                  income:**                                |   |                                                                |   |    |
| Loans                                                                |   | $                                                                   | 15,924 |   | $ | 13,156 |
| Securities                  held-to-maturity                         |   |                                                                | 1,112 |   |   | 1,076 |
| Securities                  available-for-sale                       |   |                                                                | 1,694 |   |   | 1,302 |
| FHLB                  stock dividends                                |   |                                                                | - |   |   | 48 |
| Interest-earning                  deposits                           |   |                                                                | 57 |   |   | 18 |
| Total                  interest income                               |   |                                                                | 18,787 |   |   | 15,600 |
|                                                                 |   |                                                                |   |   |   |   |
| **Interest                  expense:**                               |   |                                                                |   |   |   |   |
| Deposits                                                             |   |                                                                | 5,933 |   |   | 3,544 |
| FHLB                  advances and repurchase agreements             |   |                                                                | 3,007 |   |   | 3,009 |
| Junior                  subordinated debentures                      |   |                                                                | 327 |   |   | 273 |
| Total                  interest expense                              |   |                                                                | 9,267 |   |   | 6,826 |
|                                                                 |   |                                                                |   |   |   |   |
| Net                  interest income                                 |   |                                                                | 9,520 |   |   | 8,774 |
| Provision                  for loan losses                           |   |                                                                | 250 |   |   | 245 |
| Net                  interest income after provision for loan losses |   |                                                                | 9,270 |   |   | 8,529 |
|                                                                 |   |                                                                |   |   |   |   |
| **Other                  income:**                                   |   |                                                                |   |   |   |   |
| Gain                  on sale of loans                               |   |                                                                | 39 |   |   | 30 |
| Gain                  on sale of securities available-for-sale       |   |                                                                | - |   |   | 12 |
| Net                  (loss) gain on sale of REO                      |   |                                                                | (27 | ) |   | 33 |
| Checking                  service fees                               |   |                                                                | 756 |   |   | 776 |
| Other                  service fees                                  |   |                                                                | 256 |   |   | 212 |
| Bank-owned                  life insurance                           |   |                                                                | 187 |   |   | 188 |
| Other                                                                |   |                                                                | 114 |   |   | 349 |
| Total                  other income                                  |   |                                                                | 1,325 |   |   | 1,600 |
|                                                                 |   |                                                                |   |   |   |   |
| **Other                  expenses:**                                 |   |                                                                |   |   |   |   |
| Salaries                  and employee benefits                      |   |                                                                | 3,221 |   |   | 3,159 |
| Occupancy                                                            |   |                                                                | 888 |   |   | 807 |
| Marketing                                                            |   |                                                                | 253 |   |   | 84 |
| Data                  processing                                     |   |                                                                | 103 |   |   | 145 |
| Other                                                                |   |                                                                | 1,410 |   |   | 1,358 |
| Total                  other expenses                                |   |                                                                | 5,875 |   |   | 5,553 |
|                                                                 |   |                                                                |   |   |   |   |
| Income                  before provision for federal income taxes    |   |                                                                | 4,720 |   |   | 4,576 |
| Provision                  for federal income taxes                  |   |                                                                | 1,548 |   |   | 1,505 |
| Net                  income                                          |   | $                                                                   | 3,172 |   | $ | 3,071 |
|                                                                 |   |                                                                |   |   |   |   |
| Net                  income per common share, basic                  |   | $                                                                   | 0.33 |   | $ | 0.32 |
| Weighted                  average number of shares                   |   |                                                                | 9,616,978 |   |   | 9,574,296 |
|                                                                 |   |                                                                |   |   |   |   |
| Net                  income per share, diluted                       |   | $                                                                   | 0.32 |   | $ | 0.31 |
| Weighted                  average number of shares                   |   |                                                                | 9,874,958 |   |   | 9,874,799 |
|                                                                 |   |                                                                |   |   |   |   |
| Dividends                  declared per share                        |   | $                                                                   | 0.09 |   | $ | 0.08 |

----

**CASCADE        FINANCIAL CORPORATION AND SUBSIDIARY**

**CONSOLIDATED        STATEMENTS OF COMPREHENSIVE INCOME **

|                                                                                     |   | Three                  Months EndedMarch                  31, |   |
|------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
|                                                                                     |   | 2006                                                          |   | 2005 |   |
| **Net                  Income**                                                          |   | $                                                             | 3,172  |   | $ | 3,071 |   |
| Increase                  in unrealized (loss) on securities                             |   |                                                          |   |   |   |   |   |
| available-for-sale,                  net of tax (benefit) of                             |   |                                                          |   |   |   |   |   |
| $(501)                  and $(668) for the three months ended                            |   |                                                          |   |   |   |   |   |
| March                  31, 2006 and 2005, respectively.                                  |   |                                                          | (931   | ) |   | (1,240 | ) |
| Increase                  in unrealized gain on swaps available-                         |   |                                                          |   |   |   |   |   |
| for-sale,                  net of tax expense of $0 and $111                             |   |                                                          |   |   |   |   |   |
| for                  the three months ended March 31, 2006                               |   |                                                          |   |   |   |   |   |
| and                  2005, respectively.                                                 |   |                                                          | -      |   |   | 215 |   |
| Less                  reclassification adjustment for gains on                           |   |                                                          |   |   |   |   |   |
| securities included                  in net income, net of                  tax     |   |                                                          |   |   |   |   |   |
| expense                  of $0 and                  $4 for the three months         |   |                                                          |   |   |   |   |   |
| ended March                  31, 2006                  and 2005, respectively. |   |                                                          | -      |   |   | 8 |   |
| Less                  reclassification adjustment for gains on                           |   |                                                          |   |   |   |   |   |
| swaps included                  in net income, net of tax expense                   |   |                                                          |   |   |   |   |   |
| (benefit)                  of $0 and $(94) for the three months ended                    |   |                                                          |   |   |   |   |   |
| March                  31, 2006                  and 2005, respectively.            |   |                                                          | -      |   |   | (181 | ) |
|                                                                                     |   |                                                          |   |   |   |   |   |
| Comprehensive                  Income                                                    |   | $                                                             | 2,241  |   | $ | 1,873 |   |

----

**CASCADE        FINANCIAL CORPORATION AND SUBSIDIARY**

**CONDENSED        CONSOLIDATED STATEMENTS OF CASH FLOWS**

|                                                                                                       |   |   | Three                  Months EndedMarch                  31, |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                                                                       |   |   | 2006                                                          |   |   | 2005 |   |
| **Cash                  flows from operating activities:**                                                 |   |   |                                                          |   |   |   |   |
| Net                  income                                                                                |   | $      | 3,172                                                         |   | $ | 3,071 |   |
| Adjustments                  to reconcile net income to net cash provided by                               |   |   |                                                          |   |   |   |   |
| (used                  in) operating activities:                                                           |   |   |                                                          |   |   |   |   |
| Depreciation                  and amortization of premises and equipment                                   |   |   | 500                                                           |   |   | 459 |   |
| Provision                  for losses on loans                                                             |   |   | 250                                                           |   |   | 245 |   |
| Increase                  in cash surrender value of bank-owned life insurance                             |   |   | (160                                                          | )      |   | (164 | ) |
| Amortization                  of retained servicing rights                                                 |   |   | 3                                                             |   |   | 9 |   |
| Amortization                  of core deposit intangible                                                   |   |   | 35                                                            |   |   | 35 |   |
| Deferred                  federal income taxes                                                             |   |   | (13                                                           | )      |   | - |   |
| Deferred                  loan fees, net of amortization                                                   |   |   | (64                                                           | )      |   | 178 |   |
| Stock-based                  compensation                                                                  |   |   | 62                                                            |   |   | - |   |
| Net                  gain on sales of securities available-for-sale                                        |   |   | -                                                             |   |   | 12 |   |
| Net                  (loss) gain on sales of real estate owned, investment property                  and   |   |   |                                                          |   |   |   |   |
| other                  repossessed assets                                                                  |   |   | (27                                                           | )      |   | 33 |   |
| Federal                  Home Loan Bank stock dividend received                                            |   |   | -                                                             |   |   | (48 | ) |
| Excess                  tax benefits from share-based payment arrangements                                 |   |   | (76                                                           | )      |   | (201 | ) |
| Net                  (increase) decrease in accrued interest receivable and other                  assets  |   |   | (315                                                          | )      |   | 1,624 |   |
| Net                  increase in accrued interest payable, expenses and other                  liabilities |   |   | 3,149                                                         |   |   | 2,241 |   |
| Net                  cash provided by operating activities                                                 |   |   | 6,516                                                         |   |   | 7,494 |   |
|                                                                                                       |   |   |                                                          |   |   |   |   |
| **Cash                  flows from investing activities:**                                                 |   |   |                                                          |   |   |   |   |
| Loans                  originated, net of principal repayments                                             |   |   | (43,273                                                       | )      |   | (38,735 | ) |
| Purchases                  of securities held-to-maturity                                                  |   |   | (3,744                                                        | )      |   | (5,054 | ) |
| Principal                  repayments on securities held-to-maturity                                       |   |   | 645                                                           |   |   | 1,082 |   |
| Principal                  repayments on securities available-for-sale                                     |   |   | 2,851                                                         |   |   | 5,510 |   |
| Purchases                  of securities available-for-sale                                                |   |   | (5,716                                                        | )      |   | (20,000 | ) |
| Proceeds                  from sales of securities available-for-sale                                      |   |   | -                                                             |   |   | 1,519 |   |
| Purchases                  of premises and equipment                                                       |   |   | (400                                                          | )      |   | (376 | ) |
| Proceeds                  from sales/retirements of premises and equipment                                 |   |   | -                                                             |   |   | 21 |   |
| Proceeds                  from loan participations sold                                                    |   |   | 83                                                            |   |   | (12 | ) |
| Net                  cash used in investing activities                                                     |   |   | (49,554                                                       | )      |   | (56,045 | ) |
|                                                                                                       |   |   |                                                          |   |   |   |   |
| Subtotal,                  carried forward                                                                 |   | $      | (43,038                                                       | )      | $ | (48,551 | ) |

----

**CASCADE        FINANCIAL CORPORATION AND SUBSIDIARY**

**CONDENSED        CONSOLIDATED STATEMENTS OF CASH FLOWS**

|                                                                                                                       |   | Three                  Months Ended |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                                                       |   | March                  31,          |    |
|                                                                                                                       |   | 2006                                |    | 2005 |   |
|                                                                                                                       |   |                                |    |   |   |
| **Subtotal,                  brought forward**                                                                             |   | $                                   | (43,038 | ) | $ | (48,551 | ) |
|                                                                                                                       |   |                                |    |   |   |   |   |
| **Cash                  flows from financing activities:**                                                                 |   |                                |    |   |   |   |   |
| Proceeds                  from issuance of common stock                                                                    |   |                                | 317     |   |   | 296 |   |
| Excess                  tax benefits from share-based payment arrangements                                                 |   |                                | 76      |   |   | 201 |   |
| Dividends                  paid                                                                                            |   |                                | (864    | ) |   | (766 | ) |
| Repurchase                  of common stock                                                                                |   |                                | (100    | ) |   | (857 | ) |
| Net                  (decrease) increase in deposits                                                                       |   |                                | (15,775 | ) |   | 59,890 |   |
| Net                  increase in Federal Home Loan Bank advances                                                           |   |                                | 15,000  |   |   | (7,000 | ) |
| Net                  increase (decrease) in securities sold under agreements to                  repurchase                |   |                                | 20,989  |   |   | (33 | ) |
| Proceeds                  from Trust Preferred Securities issued                                                           |   |                                | 10,310  |   |   | - |   |
| Net                  (decrease) in advance payments by borrowers for taxes and                  insurance                  |   |                                | (286    | ) |   | (203 | ) |
| Net                  cash provided by financing activities                                                                 |   |                                | 29,667  |   |   | 51,528 |   |
| Net                  (decrease) increase in cash and cash equivalents                                                      |   |                                | (13,371 | ) |   | 2,977 |   |
|                                                                                                                       |   |                                |    |   |   |   |   |
| Cash                  and cash equivalents at beginning of period                                                          |   |                                | 31,109  |   |   | 13,029 |   |
| Cash                  and cash equivalents at end of period                                                                |   | $                                   | 17,738  |   | $ | 16,006 |   |
|                                                                                                                       |   |                                |    |   |   |   |   |
| Supplemental                  disclosures of cash flow information—cash paid during the period                  for: |   |                                |    |   |   |   |   |
| Interest                                                                                                                   |   | $                                   | 9,395   |   | $ | 6,630 |   |
| Federal                  income taxes                                                                                      |   |                                | 210     |   |   | 100 |   |
|                                                                                                                       |   |                                |    |   |   |   |   |
| Supplemental                  schedule of noncash investing activities:                                                    |   |                                |    |   |   |   |   |
| Mark-to-market                  on securities available-for-sale                                                           |   |                                | 1,432   |   |   | 1,895 |   |
|                                                                                                                       |   |                                |    |   |   |   |   |
| Retirement                  of common stock in retained earnings                                                           |   |                                | 95      |   |   | - |   |
| Dividends                  declared                                                                                        |   |                                | 867     |   |   | - |   |

----

**CASCADE        FINANCIAL CORPORATION AND SUBSIDIARY**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**March        31, 2006**

**(unaudited)**

**1.   Presentation        of Financial Information**

**2.  Commitments        and Contingencies**

**3.   Junior        Subordinated Debentures Payable (Trust Preferred        Securities)**

----

**4.   Stockholders’      Equity**

|                                                           |   | Three                  Months Ended                                         |      |
|----------------------------------------------------------------|--------|-----------------------------------------------------------------------------|-----------|
|                                                           |   | March                  31,                                                  |      |
|                                                           |   | 2006                                                                        |      | 2005 |   |
|                                                           |   | *Dollars                  in thousands, except share and per share amounts* |      |
| **Numerator**:                                                 |   |                                                                        |      |   |   |   |   |
| Net                  income                                    |   | $                                                                           | 3,172     |   | $ | 3,071 |   |
|                                                           |   |                                                                        |      |   |   |   |   |
| **Denominator**:                                               |   |                                                                        |      |   |   |   |   |
| Denominator                  for basic net income per share-   |   |                                                                        |      |   |   |   |   |
| Weighted                  average shares                       |   |                                                                        | 9,616,978 |   |   | 9,574,296 |   |
| Effect                  of dilutive securities:                |   |                                                                        |      |   |   |   |   |
| Stock                  options                                 |   |                                                                        | 257,980   |   |   | 300,503 |   |
| Denominator                  for diluted net income per share- |   |                                                                        |      |   |   |   |   |
| Weighted                  average shares and assumed           |   |                                                                        |      |   |   |   |   |
| conversion                  of dilutive stock options          |   |                                                                        | 9,874,958 |   |   | 9,874,799 |   |
|                                                           |   |                                                                        |      |   |   |   |   |
| Basic                  net income per share                    |   | $                                                                           | 0.33      |   | $ | 0.32 |   |
| Diluted                  net income per share                  |   | $                                                                           | 0.32      |   | $ | 0.31 |   |

----

*“Accounting        for Stock Issued to Employees,”*

|                                                   |   |     Options |    |   Weighted-AverageExercisePrice                  per Share |   | Weighted-AverageRemainingContractualTerm(in                  years) |   |    AggregateIntrinsicValue |   |
|---------------------------------------------------|--------|---------------------------------|---------|----------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|-------------------------------------------|--------|
| Outstanding                  on December 31, 2005 |   |                            | 587,157 |                                                                 | $      | 9.67                                                                |   |                                      | 5.86   |   | $ | - |   |
| Granted                                           |   |                            | 76,830  |                                                                 |   | 18.75                                                               |   |                                      | 9.99   |   |   | - |   |
| Exercised                                         |   |                            | (38,998 | )                                                                    |   | 6.42                                                                |   |                                      | -      |   |   | - |   |
| Forfeited/Canceled                                |   |                            | (1,355  | )                                                                    |   | -                                                                   |   |                                      | -      |   |   | - |   |
| Outstanding                  on March 31, 2006    |   |                            | 623,634 |                                                                 | $      | 10.98                                                               |   |                                      | 6.21   |   | $ | 5,054,421 |   |
|                                              |   |                            |    |                                                                 |   |                                                                |   |                                      |   |   |   |   |   |
| Exercisable                  on March 31, 2006    |   |                            | 336,449 |                                                                 | $      | 7.86                                                                |   |                                      | 4.77   |   | $ | 3,763,013 |   |

| Expected                  price volatility               | 24.0 | %      |
|----------------------------------------------------------|------|--------|
| Risk-free                  interest rate                 | 4.5  | %      |
| Dividend                  yield on underlying stock      | 2.0  | %      |
| Weighted-average                  expected life in years | 5.1  |   |

----

| *(Dollars                  in thousands, except per share amounts)*       |   | Three                  Months EndedMarch                  31, 2005 |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|--------|
| Net                  Income, as reported                                       |   | $                                                                  | 3,071  |   |
| Less                  pro forma expense related to options granted, net of tax |   |                                                               | (53    | ) |
|                                                                           |   |                                                               |   |   |
| Pro                  forma net income                                          |   | $                                                                  | 3,018  |   |
|                                                                           |   |                                                               |   |   |
| Pro                  forma net income per share:                               |   |                                                               |   |   |
| Basic                  - as reported                                           |   | $                                                                  | 0.32   |   |
| Basic                  - pro forma                                             |   |                                                               | 0.32   |   |
|                                                                           |   |                                                               |   |   |
| Diluted                  - as reported                                         |   | $                                                                  | 0.31   |   |
| Diluted                  - pro forma                                           |   |                                                               | 0.31   |   |

**Item        2 - Management’s Discussion and Analysis of Financial Condition and Results of        Operations**

*The        following discussion is intended to assist in understanding the financial        condition and results of the Corporation. The information contained in this        section should be read with the unaudited condensed consolidated financial        statements and accompanying notes, and the December 31, 2005 audited        consolidated financial statements and accompanying notes included in our        recent        Annual Report on Form 10-K.*

*This        section contains forward-looking statements, within the meaning of Section        27A        of the Securities Act of 1933, as amended, and Section 21E of the Securities        Exchange Act of 1934, as amended, and subject to the safe harbor created        by the        Private Securities Litigation Reform Act of 1995, that are subject to risks        and        uncertainties that could cause actual results to differ materially from those        projected. Those factors include, but are not limited to: the impact of national        and regional economic trends on small business loan demand in the Puget Sound        area; loan delinquency rates; the Bank’s ability to continue to attract quality        commercial business; interest rate movements; changes in the demographic        make-up        of the Bank’s market area; fluctuation in demand for the Bank’s products and        services; the Corporation’s ability to attract and retain qualified people, and        other factors. These factors should be considered in evaluating the        forward-looking statements and undue reliance should not be placed on such        statements. The Corporation shall not be responsible to update any such        forward-looking statements. For a discussion of factors that could cause        actual        results to differ, and for certain mandated SEC guide 3 information that        has not        materially changed since the audited statements, please see the Corporation’s        Annual Report on Form 10-K for the year ended December 31,        2005.*

----

**Selected        Financial Data**

|                                                                                                      |   | At                  or for thethree                  months ended March                  31, |   |
|-----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   | 2006                                                                                              |   | 2005 |   |
| Return                  on average assets                                                                 |   |                                                                                              | 1.04   | % |   | 1.10 | % |
| Return                  on average stockholders’ equity                                             |   |                                                                                              | 12.03  |   |   | 12.82 |   |
| Average                  stockholders’ equity to average assets                                     |   |                                                                                              | 8.65   |   |   | 8.60 |   |
| Other                  expenses to average assets                                                         |   |                                                                                              | 1.93   |   |   | 1.99 |   |
| Efficiency                  ratio                                                                         |   |                                                                                              | 54.17  |   |   | 53.53 |   |
| Average                  interest-bearing assets to average interest-bearing                  liabilities |   |                                                                                              | 111.91 |   |   | 111.79 |   |

**CHANGES        IN FINANCIAL CONDITION**

----

| *(Dollars                      in thousands)*                            |   | **MARCH                      31, 2006** |    |
|--------------------------------------------------------------------------|--------|-----------------------------------------|---------|
|    **Securities                      available-for-sale** |   |    AmortizedCost         |    | Gross                      Unrealized                      GainsLess                      Than1                      Year |   | Gross                      Unrealized                      GainsMore                      Than1                      Year |   | Gross                      Unrealized                      LossesLess                      Than1                      Year |   | Gross                      Unrealized                      Losses                      More                      Than 1                      Year |   | Fair                      Value |   |
| MBS                                                                      |   | $                                       | 50,721  |   | $ | 134 |   | $ | 11 |   | $ | 76 |   | $ | 813 |   | $ | 49,977 |   |
| Agency                      notes                                        |   |                                    | 95,813  |   |   | - |   |   | - |   |   | 682 |   |   | 3,078 |   |   | 92,053 |   |
|                                                                     |   | $                                       | 146,534 |   | $ | 134 |   | $ | 11 |   | $ | 758 |   | $ | 3,891 |   | $ | 142,030 |   |

|    **Securities                    held-to-maturity** |   |    AmortizedCost |   | Gross                    Unrealized                    GainsLess                    Than1                    Year |   | Gross                    Unrealized                    GainsMore                    Than1                    Year |   | Gross                    Unrealized                    LossesLess                    Than1                    Year |   | Gross                    Unrealized                    Losses                    More                    Than 1                    Year |   |    FairValue |   |
|----------------------------------------------------------------------|--------|---------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
| MBS                                                                  |   | $                               | 26,611 |                                                                                                              | $      | -                                                                                                                 |   | $                                                                                                                  | 2      |                                                                                                                                    | $      | 55                          |   | $ | 1,215 |   | $ | 25,343 |   |
| Agency                    notes                                      |   |                            | 70,835 |                                                                                                              |   | -                                                                                                                 |   |                                                                                                               | -      |                                                                                                                                    |   | 419                         |   |   | 2,930 |   |   | 67,486 |   |
| Corporate/other                                                      |   |                            | 775    |                                                                                                              |   | -                                                                                                                 |   |                                                                                                               | -      |                                                                                                                                    |   | -                           |   |   | - |   |   | 775 |   |
|                                                                 |   | $                               | 98,221 |                                                                                                              | $      | -                                                                                                                 |   | $                                                                                                                  | 2      |                                                                                                                                    | $      | 474                         |   | $ | 4,145 |   | $ | 93,604 |

| *(Dollars                    in thousands)*                            |   | **DECEMBER                    31, 2005** |    |
|------------------------------------------------------------------------|--------|------------------------------------------|---------|
|    **Securities                    available-for-sale** |   |    AmortizedCost          |    | Gross                    Unrealized                    GainsLess                    Than1                    Year |   | Gross                    Unrealized                    GainsMore                    Than1                    Year |   | Gross                    Unrealized                    LossesLess                    Than1                    Year |   | Gross                    Unrealized                    Losses                    More                    Than 1                    Year |   | Fair                    Value |   |
| MBS                                                                    |   | $                                        | 47,847  |   | $ | 16 |   | $ | 14 |   | $ | 71 |   | $ | 383 |   | $ | 47,423 |   |
| Agency                    notes                                        |   |                                     | 95,822  |   |   | - |   |   | - |   |   | 2,258 |   |   | 391 |   |   | 93,173 |   |
|                                                                   |   | $                                        | 143,669 |   | $ | 16 |   | $ | 14 |   | $ | 2,329 |   | $ | 774 |   | $ | 140,596 |   |

|    **Securities                    held-to-maturity** |   |    Amortized                    Cost |   | Gross                    Unrealized                    GainsLess                    Than1                    Year |   | Gross                    Unrealized                    GainsMore                    Than1                    Year |   | Gross                    Unrealized                    LossesLess                    Than1                    Year |   | Gross                    Unrealized                    Losses                    More                    Than 1                    Year |   | Fair                    Value |   |
|----------------------------------------------------------------------|--------|-----------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|
| MBS                                                                  |   | $                                                   | 23,830 |                                                                                                              | $      | -                                                                                                                 |   | $                                                                                                                  | 8      |                                                                                                                                    | $      | 188                           |   | $ | 601 |   | $ | 23,049 |   |
| Agency                    notes                                      |   |                                                | 70,827 |                                                                                                              |   | -                                                                                                                 |   |                                                                                                               | -      |                                                                                                                                    |   | 376                           |   |   | 1,845 |   |   | 68,606 |   |
| Corporate/other                                                      |   |                                                | 465    |                                                                                                              |   | -                                                                                                                 |   |                                                                                                               | -      |                                                                                                                                    |   | -                             |   |   | - |   |   | 465 |   |
|                                                                 |   | $                                                   | 95,122 |                                                                                                              | $      | -                                                                                                                 |   | $                                                                                                                  | 8      |                                                                                                                                    | $      | 564                           |   | $ | 2,446 |   | $ | 92,120 |   |

----

**Loan        Portfolio**

| **Types                    of Loans**             |   | March                    31, |    | %                    of |   | December                    31, |   | %                    of |    |
|---------------------------------------------------|--------|------------------------------|---------|-------------------------|--------|---------------------------------|--------|-------------------------|---------|
| *(Dollars                    in thousands)*       |   | 2006                         |    | Portfolio               |   | 2005                            |   | Portfolio               |    |
|                                              |   |                         |    |                    |   |                            |   |                    |    |
| Business                                          |   | $                            | 423,954 |                    |   | 45.9                            | %      | $                       | 394,034 |   |   | 44.8 | % |
| Real                    estate construction (net) |   |                         | 177,158 |                    |   | 19.2                            |   |                    | 165,957 |   |   | 18.8 |   |
| Commercial                    real estate         |   |                         | 147,549 |                    |   | 16.0                            |   |                    | 141,109 |   |   | 16.0 |   |
| Consumer                                          |   |                         | 30,531  |                    |   | 3.3                             |   |                    | 32,160  |   |   | 3.7 |   |
| Residential                    real estate        |   |                         | 102,799 |                    |   | 11.1                            |   |                    | 95,429  |   |   | 10.8 |   |
| Multifamily                    real estate        |   |                         | 41,949  |                    |   | 4.5                             |   |                    | 52,057  |   |   | 5.9 |   |
| Total                    loans                    |   | $                            | 923,940 |                    |   | 100.0                           | %      | $                       | 880,746 |   |   | 100.0 | % |
| Deferred                    loan fees             |   |                         | (3,379  | )                       |   |                            |   |                    | (3,443  | ) |   |   |   |
| Loans                                             |   | $                            | 920,561 |                    |   |                            |   | $                       | 877,303 |   |   |   |   |

----

**Deposits,        Other Borrowings, and Shareholder Equity**

| *(Dollars                  in thousands)* |   | March                  31, |    | %                  of |   | December                  31, |   | %                  of |    |
|-------------------------------------------|--------|----------------------------|---------|-----------------------|--------|-------------------------------|--------|-----------------------|---------|
|                                      |   | 2006                       |    | Deposits              |   | 2005                          |   | Deposits              |    |
| Checking                  accounts        |   | $                          | 121,359 |                  |   | 15.6                          | %      | $                     | 120,468 |   |   | 15.1 | % |
| Savings                  & MMDA       |   |                       | 199,872 |                  |   | 25.6                          |   |                  | 196,790 |   |   | 24.8 |   |
| CD's                                      |   |                       | 458,762 |                  |   | 58.8                          |   |                  | 478,510 |   |   | 60.1 |   |
|                                      |   | $                          | 779,993 |                  |   | 100.0                         | %      | $                     | 795,768 |   |   | 100.0 | % |

**Asset        Quality**

----

|                                                               |   | March                  31, |   | December                  31, |   |
|--------------------------------------------------------------------|--------|----------------------------|--------|-------------------------------|--------|
|                                                               |   | 2006                       |   | 2005                          |   |
| Non-performing                  loans to total assets              |   |                       | 0.05   | %                             |   | 0.16 | % |
| Non-performing                  loans to total loans outstanding   |   |                       | 0.07   |                          |   | 0.23 |   |
| Non-performing                  assets to total assets             |   |                       | 0.05   |                          |   | 0.17 |   |
| Allowance                  for loan losses to non-performing loans |   |                       | 1,592  |                          |   | 516 |   |
| Allowance                  for loan losses to total loans          |   |                       | 1.14   |                          |   | 1.16 |   |
| Net                  charge-offs to total loans                    |   |                       | 0.00   |                          |   | 0.00 |   |

**RESULTS        OF OPERATIONS**

**General**

----

**Net        Interest Income**

|                                                  |   |  At                  or for thethree                  months endedMarch                  31, |                                    |
|-------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|-----------------------------------------|
|                                                  |   |                                                                                              | 2006                                    |   |   | 2005 |   |
|                                                  |   |                                                                                              | (dollars                  in thousands) |   |
| Average                  interest earning assets      |   | $                                                                                                 | 1,151,619                               |   | $ | 1,052,860 |   |
| Average                  interest bearing liabilities |   |                                                                                              | 1,029,080                               |   |   | 941,853 |   |
| Yield                  on interest earning assets     |   |                                                                                              | 6.53                                    | % |   | 5.97 | % |
| Cost                  of interest bearing liabilities |   |                                                                                              | 3.60                                    |   |   | 2.94 |   |
| Net                  interest spread                  |   |                                                                                              | 2.93                                    |   |   | 3.03 |   |
| Net                  interest margin                  |   |                                                                                              | 3.31                                    |   |   | 3.34 |   |

**Provision        for Loan Losses**

**Other        Income**

----

**Other        Expense**

**Segment        Results **

**For          the three months ended March 31, 2006**

|                                                                                          |   |  BUSINESS |   | RESI-                      DENTIAL |   | CONS-                      TRUCTION |   | INCOME                      PROPERTY |   |  RETAIL |   | ADMIN-                      ISTRATION |   |  TOTAL |   |
|-----------------------------------------------------------------------------------------------|--------|----------------|--------|------------------------------------|--------|-------------------------------------|--------|--------------------------------------|--------|--------------|--------|---------------------------------------|--------|-------------|--------|
| Condensed                      Income Statement                                               |   |           |   |                               |   |                                |   |                                 |   |         |   |                                  |   |        |   |   |   |   |   |   |   |   |
| Net                      interest income after                      provision for loan losses |   | $              | 3,680  |                               | $      | 283                                 |   | $                                    | 2,987  |         | $      | 1,171                                 |   | $           | 247    |   | $ | 902 |   | $ | 9,270 |   |
| Other                      income                                                             |   |           | 44     |                               |   | 67                                  |   |                                 | 7      |         |   | -                                     |   |        | 904    |   |   | 303 |   |   | 1,325 |   |
| Other                      expense                                                            |   |           | 322    |                               |   | 105                                 |   |                                 | 86     |         |   | 85                                    |   |        | 447    |   |   | 4,830 |   |   | 5,875 |   |
| Contribution                      before overhead                                             |   |           | 3,402  |                               |   | 245                                 |   |                                 | 2,908  |         |   | 1,086                                 |   |        | 704    |   |   | (3,625 | ) |   | 4,720 |   |
| Support                      transfer                                                         |   |           | 1,563  |                               |   | 397                                 |   |                                 | 754    |         |   | 782                                   |   |        | 129    |   |   | (3,625 | ) |   | - |   |
| Income                      before provision for federal income tax                           |   |           | 1,839  |                               |   | (152                                | )      |                                 | 2,154  |         |   | 304                                   |   |        | 575    |   |   | - |   |   | 4,720 |   |
| Provision                      for federal                      income taxes                  |   |           | 604    |                               |   | (50                                 | )      |                                 | 706    |         |   | 99                                    |   |        | 189    |   |   | - |   |   | 1,548 |   |
| Net                      income (loss)                                                        |   | $              | 1,235  |                               | $      | (102                                | )      | $                                    | 1,448  |         | $      | 205                                   |   | $           | 386    |   | $ | - |   | $ | 3,172 |   |

*Inome          Property includes Commercial Real Estate and Multifamily          lending.*

----

**For        the three months ended March 31, 2005**

|                                                                                      |   |  BUSINESS |   | RESI-                    DENTIAL |   | CONS-                    TRUCTION |   | INCOME                    PROPERTY |   |  RETAIL |   | ADMIN-                    ISTRATION |   |  TOTAL |   |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|----------------------------------|--------|-----------------------------------|--------|------------------------------------|--------|--------------|--------|-------------------------------------|--------|-------------|--------|
| Condensed                    Income Statement                                             |   |           |   |                             |   |                              |   |                               |   |         |   |                                |   |        |   |   |   |   |   |   |   |   |
| Net                    interest income after provision                    for loan losses |   | $              | 3,807  |                             | $      | 132                               |   | $                                  | 1,633  |         | $      | 2,006                               |   | $           | 273    |   | $ | 678 |   | $ | 8,529 |   |
| Other                    income                                                           |   |           | 36     |                             |   | 77                                |   |                               | 4      |         |   | -                                   |   |        | 893    |   |   | 590 |   |   | 1,600 |   |
| Other                    expense                                                          |   |           | 392    |                             |   | 130                               |   |                               | 117    |         |   | 246                                 |   |        | 440    |   |   | 4,228 |   |   | 5,553 |   |
| Contribution                    before overhead                                           |   |           | 3,451  |                             |   | 79                                |   |                               | 1,520  |         |   | 1,760                               |   |        | 726    |   |   | (2,960 | ) |   | 4,576 |   |
| Support                    transfer                                                       |   |           | 1,065  |                             |   | 379                               |   |                               | 398    |         |   | 1,012                               |   |        | 106    |   |   | (2,960 | ) |   | — |   |
| Income                    before provision for federal                    income tax      |   |           | 2,386  |                             |   | (300                              | )      |                               | 1,122  |         |   | 748                                 |   |        | 620    |   |   | — |   |   | 4,576 |   |
| Provision                    for federal                    income taxes                  |   |           | 785    |                             |   | (99                               | )      |                               | 369    |         |   | 246                                 |   |        | 204    |   |   | — |   |   | 1,505 |   |
| Net                    income (loss)                                                      |   | $              | 1,601  |                             | $      | (201                              | )      | $                                  | 753    |         | $      | 502                                 |   | $           | 416    |   | $ | — |   | $ | 3,071 |   |

*In*
*ome        Property includes Commercial Real Estate and Multifamily        lending.*

**Liquidity        and Sources of Funds**

----

**Capital        Resources**

----

**Capital        Requirements**

| **Core                  capital**                      |   |   | Amount  |   |   | Percentage |   |
|--------------------------------------------------------|--------|--------|---------|--------|--------|------------|--------|
| Tier                  1 (Core) capital                 |   | $      | 107,669 |   |   | 9.03       | %      |
| Less:                  Minimum requirement             |   |   | 47,679  |   |   | 4.00       |   |
| Excess                                                 |   | $      | 59,990  |   |   | 5.03       | %      |
|                                                   |   |   |    |   |   |       |   |
| **Risk-based                  capital**                |   |   | Amount  |   |   | Percentage |   |
| Risk-based                  capital                    |   | $      | 118,178 |   |   | 11.51      | %      |
| Less:                  Minimum requirement(1)          |   |   | 82,109  |   |   | 8.00       |   |
| Excess                                                 |   | $      | 36,069  |   |   | 3.51       | %      |
| *(1)**Based                  on risk-weighted assets.* |   |   |    |   |   |       |   |

**Item        3 - Quantitative and Qualitative Disclosures about Market        Risk**

**ASSET/LIABILITY        MANAGEMENT**

----

| **Type**   | **Percentage** |
|------------|----------------|
| Variable   | 27%            |
| Adjustable | 44%            |
| Fixed      | 29%            |

**Item        4 - Controls and Procedures**

**EVALUATION        OF DISCLOSURE CONTROLS AND PROCEDURES**

----

**CHANGES        IN INTERNAL CONTROLS**

**PART        II **
**--        **
**OTHER        INFORMATION**

**Item        1. Legal Proceedings**

**Item        1A. Risk Factors**

**Item        2. Unregistered Sales of Equity Securities and Use of        Proceeds**

| **Issuer                  Purchases of Equity Securities**                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |         |                               |                                     |   |                                  |   |                                                    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------------------------------|-----------------------------------------------|--------|--------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              |                               |                                          |   | TotalNumber                                |   | Maximum                                                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |         |                               |                                     |   | of                  SharesPurchased        |   |  Number                  ofShares                  that |   |
| Period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  TotalNumber |                               |  AveragePrice                            |   |  as                  Part of Publicly |   |  May                  Yet be Purchased                  |   |
| Beginning                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  Ending      |                               |  of                  Shares Purchased(1) |   |  Paid                  per Share |   |  Announced                  Plan                        |   |  Under                  the Plan(2) |   |
| January                  1, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |              | January                  31, 2006  |                                          |   | -                                          |   | $                                                            | -      |   |   | - |   |   | 199,362 |   |
| February                  1, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |              | February                  28, 2006 |                                          |   | -                                          |   |                                                         | -      |   |   | - |   |   | 199,362 |   |
| March                  1, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |              | March                  31, 2006    |                                          |   | 5,473                                      |   |                                                         | 18.27  |   |   | - |   |   | 199,362 |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 5,473             |                               | $                                             | 18.27  |                                       |   | -                                                            |   |   | 199,362 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |              |                               |                                          |   |                                       |   |                                                         |   |   |   |   |   |   |   |   |
| 1)                  During the period presented, there were 5,473 shares purchased,                  which were                  acquired at current market value as consideration for the exercise                  of                  fully vested options.2) In                  May 2005, the Corporation announced a new stock repurchase plan                  to                  purchase up to 200,000 shares of the Corporation’s stock. The Plan will                  expire on May 31, 2006. |

----

**Item        3. Defaults upon Senior Securities**

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

**Item        5. Other information**

**Item        6. Exhibits**

|  (a) Exhibits                                                       |                                                                                                                                                                                                                                      |
|--------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                    (i)                                               | Bylaws                  of Cascade Financial Corporation (Incorporated by reference to                  the                  Corporation’s Registration Statement on Form S-4 (File No.                  33-83200)).                |
| 3.2                    (ii)                                              | Amendment                  to the Bylaws of Cascade Financial Corporation (Incorporated by                  reference                  to the Corporation’s Form 8-K filed September 27, 2005 (File No.                  0-25286)). |
| 3.3                    (ii)                                              | Amended                  and restated Bylaws of Cascade Financial Corporation (Incorporated                  by                  reference to the Corporation’s Form 8-K filed March 29, 2006 (File No.                  0-25286)). |
| 31.1                                                           | Certifications                    of the Chief Executive Officer pursuant to Section 302 of the                    Sarbanes-Oxley Act                                                                                                |
| 31.2                                                                | Certifications                  of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act                                                                                                    |
| 32                                                                       | Certification                  pursuant to Section 906 of the Sarbanes-Oxley Act                                                                                                                                                     |
|  (b) Reports                    on Form                    8-K |

**SIGNATURES**

|                               | **CASCADE                    FINANCIAL CORPORATION**  |
|------------------------------------|------------------------------------------------------------|
|  May                  8, 2006 | /s/                  Lars H. Johnson                       |
|                               | By: Lars                  H. Johnson,                 |
|                               | Its: Executive Vice President                              |
|                               | (Chief                    Financial Officer)               |

----