SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the Appropriate Box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12

CASCADE FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

March 15, 2004

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
Cascade Financial Corporation, to be held at the Everett Golf and Country Club,
1500 52nd Street SE, Everett, Washington, on Tuesday, May 4, 2004.

The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the meeting. During the meeting, we will also
report on the operations of the Corporation, and its bank subsidiary, Cascade
Bank. Directors and officers of the Corporation will be present to respond to
appropriate questions from shareholders.

Detailed information concerning our activities and operating performance during
the fiscal year ended December 31, 2003 is contained in the Annual Report to
Shareholders.

Your vote is important. Whether or not you are able to attend, it is important
that your shares be represented at the Annual Meeting. Accordingly, we ask
that you please sign, date and return the enclosed proxy card at your earliest
convenience.

We look forward to seeing you at the meeting.

Sincerely,

/s/ Frank M. McCord /s/ Carol K. Nelson
-------------------------- ---------------------------
Frank M. McCord Carol K. Nelson
Chairman of the Board President and Chief Executive Officer

Enclosure

2828 Colby Avenue, Everett, WA 98201
425-339-5500 or 800-326-8787
www.cascadebank.com

CASCADE FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS

TIME 6:30 p.m., Pacific Standard Time, on Tuesday, May 4, 2004.

PLACE Everett Golf & Country Club
1500 52nd Street SE
Everett, Washington

ITEMS OF BUSINESS 1. To elect three directors to hold office until the 2007
annual meeting of shareholders;
2. To take action on any other business that may properly
be considered at the meeting or any adjournment thereof.

RECORD DATE You may vote at the meeting if you were a shareholder of
record at the close of business on March 15, 2004.

VOTING BY PROXY Whether or not you plan to attend the meeting, please sign,
date and return the enclosed proxy card to ensure that your
shares will be represented at the meeting.

ANNUAL REPORT Cascade Financial Corporation's December 31, 2003 Annual
Report, which is not part of the proxy soliciting material,
is enclosed.

By Order of the Board of Directors,

/s/ Lars H. Johnson
---------------
Lars H. Johnson
Secretary

This Notice of Annual Meeting, Proxy Statement and accompanying proxy card
are being distributed on or about April 1, 2004.

CASCADE FINANCIAL CORPORATION

2828 Colby Avenue
Everett, Washington 98201

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

PROXY STATEMENT
Annual Meeting of Shareholders
May 4, 2004

We are providing these proxy materials in connection with the solicitation
by the Board of Directors of Cascade Financial Corporation (the "Company") of
proxies to be voted at the Company's Annual Meeting of Shareholders to be held
on May 4, 2004, and at any adjournment of the meeting.

GENERAL INFORMATION ABOUT THE MEETING AND VOTING
------------------------------------------------

Who may vote at the meeting?
- ----------------------------

The Board of Directors of the Company (the "Board") has set March 15, 2004,
as the record date for the meeting. If you were the owner of Company common
stock at the close of business on March 15, 2004, you may vote at the meeting.
You are entitled to one vote for each share of common stock you held on the
record date.

How many shares must be present to hold the meeting?
- ----------------------------------------------------

A majority of the Company's outstanding common shares as of the record date
must be present at the meeting in order to hold the meeting and conduct
business. On the record date, there were 8,261,483 shares of Company common
stock outstanding. Shares are counted as present at the meeting if you:

Are present and vote in person at the meeting; or

Have properly submitted a proxy card.

What proposals will be voted on at the meeting?
- -----------------------------------------------

The one proposal scheduled to be voted on at the meeting is the election of
three directors to hold office until the 2007 Annual Meeting of Shareholders.

How many votes are required to approve the proposals?
- -----------------------------------------------------

The affirmative vote of a plurality of the votes cast at the meeting is
required for the election of directors.

How are votes counted?
- ----------------------

You may either vote "FOR" or "WITHHOLD" authority to vote for each nominee
for the Board of Directors. If you withhold authority to vote for the election
of directors, your shares will not be voted with respect to the director or
directors identified. If you just sign and submit your proxy card without
voting instructions, your shares will be voted "FOR" each director nominee.

-1-

If you hold your shares in street name and do not provide voting
instructions to your broker, your shares will not be voted on any proposal
on which your broker does not have discretionary authority to vote. This is
called a "broker non-vote." Shares for which there is a broker non-vote are
not considered as entitled to vote on the proposal in question.

How does the Board recommend that I vote?
- -----------------------------------------

The Board recommends that you vote your shares "FOR" each of the director
nominees.

How do I vote my shares?
- ------------------------

You can vote the following ways:

By Mail: If you are a holder of record, you can vote your shares by marking,
dating, and signing your proxy card and returning it by mail in the enclosed
postage paid envelope. If you hold stock in street name, you should follow the
voting directions provided by your broker or nominee. You may complete and
mail a voting instruction card to your broker or nominee. If you provide
specific voting instructions by mail, your shares will be voted by your broker
or nominee as you have directed.

At the Annual Meeting: If you are planning to attend the Annual Meeting, and
wish to vote your common shares in person, we shall provide you a ballot at the
meeting. You may vote shares held in street name at the meeting only if you
obtain a signed proxy card from the record holder (broker or other nominee)
giving you the right to vote the shares.

Even if you plan to attend the meeting, we encourage you to complete and
mail the enclosed card to vote your shares by proxy.

What does it mean if I receive more than one proxy card?
- --------------------------------------------------------

It means you hold shares registered in more than one account. To ensure
that all your shares are voted, sign and return each proxy card.

May I change my vote?
- ---------------------

Yes. If you vote by mail, you may later change your vote and revoke your
proxy card by:

Sending a written statement to that effect to the Secretary of the Company
on or before April 20, 2004;

Submitting a properly signed proxy card with a later date; or

Voting in person at the Annual Meeting.

-2-

PROPOSAL 1 - ELECTION OF DIRECTORS
----------------------------------

Directors and Nominees
- ----------------------

The Board of Directors is divided into three classes approximately equal in
size. The members of each class are elected to serve three-year terms with the
term of office of each class ending in successive years. Janice Halladay, Henry
Robinett, and Craig Skotdal are the directors whose terms expire at this Annual
Meeting and who have been nominated for re-election to the Board to serve until
the 2007 Annual Meeting or until their successors are elected and qualified.
All of the nominees are currently directors.

All the nominees have indicated a willingness to serve if elected. However,
if any nominee becomes unable to serve before the election, the shares
represented by proxies may be voted for a substitute nominee designated by the
Board, unless a contrary instruction is indicated on the proxy. Set forth
hereafter is a short biographical summary of each director and the first date
they served as a director for either the Company or prior to formation of the
Company in 1994, Cascade Bank.

NOMINEES FOR DIRECTOR FOR THREE-YEAR TERMS ENDING 2007
------------------------------------------------------

JANICE HALLADAY Director since 1999
- ---------------
Janice Halladay is a retired bank executive. Ms. Halladay was previously
employed by Pioneer Bank in Lynnwood, Washington for 20 plus years and served
as Senior Vice President of Operations from 1987 to 1993. She is a graduate of
the School for Executive Development. She was subsequently employed by Moss
Adams LLP, a regional accounting firm from 1997 to 2000. She is currently a
member of the Board of Directors of the Northwest Service Area of the
Providence Health System where she is a member of the Executive Committee and
Chair of the Quality Care Committee, and serves as a member of the Camping
Board of Stewards of the Pacific Northwest Conference of the Methodist Church.
Ms. Halladay serves as Vice Chair of the Company's Compensation and Personnel
Committee, as a member of the Bank's Loan Committee, and a member of the
Corporate Governance and Nominating Committee.

HENRY ROBINETT Director since 1997
- --------------
Henry M. Robinett is a general partner of Boyden, Robinett & Associates, LP,
a real estate partnership involved in residential building, development and
investments. Mr. Robinett was a founding director of American First National
Bank in 1984. He is a retired Marine Corp Officer, and holds a Bachelor's
degree in General Education from the University of Omaha. Mr. Robinett is a
National Director Emeritus in the Navy League of the United States; Lions Club
International Melvin Jones Fellow; Director, Snohomish County Economic
Development Council; and Director, Snohomish Affordable Housing Group. He
previously served as a Director of the Everett Chamber of Commerce, USO Puget
Sound, General Hospital Foundation, Snohomish County-Camano and Washington
State Board of Realtors, and Snohomish County Airport Commission. Mr. Robinett
serves as a member of the Company's Audit and Finance Committee and as Vice
Chair of the Bank's Loan Committee.

CRAIG G. SKOTDAL Director since 2001
- ----------------
Craig Skotdal is President of Skotdal Real Estate, a property development,
investment and management company based in Everett, Washington. Mr. Skotdal
graduated from Stanford University and from the University of Washington's
Business Management Program. Mr. Skotdal serves on the board of the Downtown
Everett Association and actively supports urban revitalization projects that
promote economic development, smart growth, and quality of life. Mr. Skotdal

-3-

serves as a member of the Company's Audit and Finance Committee and as a member
of the Corporate Governance and Nominating Committee.

THE BOARD RECOMMENDS A VOTE FOR THESE NOMINEES

DIRECTORS CONTINUING IN OFFICE UNTIL 2005
-----------------------------------------

DAVID W. DUCE Director since 1991
- -------------
David W. Duce is a practicing attorney with the Everett law firm of Duce,
Bastian, and Peterson. From 1995 to 2002, Mr. Duce served as Vice Chair of the
Company. He currently chairs the Company's Compensation and Personnel Committee
and serves as a member of the Executive Committee. Mr. Duce graduated from
Pepperdine University School of Law in 1984 with his Juris Doctor degree, Magna
Cum Laude. Mr. Duce is a past chairman of the Professional Negligence Section
of the Washington State Trial Lawyers Association and is an arbitrator for
Snohomish County Superior Court.

FRANK M. MCCORD Director since 1986
- ---------------
Frank M. McCord serves as Chairman of the Board of Directors of the Company
and Cascade Bank. Mr. McCord retired as Chief Executive Officer of the Company
effective May 1, 2002, a position he had held since 1990. From 1990 to
February 2001, Mr. McCord also served as Chief Executive Officer of the Bank.
He was the Managing Partner of KPMG LLP, in the Seattle, Washington office
until his retirement in 1986. Mr. McCord holds a Bachelor's degree in
Business Administration from the University of California at Los Angeles (UCLA)
and a Masters degree in Accounting and Finance from the University of Southern
California. He has chaired the American Institute of Certified Public
Accountants and state CPA Society committees, and currently serves on the
Advisory Committee to the Washington CPA Society. He has been an instructor
and lecturer in Accounting and Auditing classes for the University of
California, University of Washington, Seattle Pacific University, American
Institute of Certified Public Accountants and other professional groups. He
has testified as an expert witness in accounting in several legal cases. Mr.
McCord has served as Audit Committee Chairman of a NYSE healthcare company. He
is President of the Corporate Roundtable of the Arts, President of the Everett
Rotary Club and President of the Downtown Everett Association. Mr. McCord has
previously served as Vice-President of the Chief Seattle Council of Boy Scouts
of America, Treasurer of the Washington Society of Certified Public
Accountants, Director of the Washington Financial League, Director of the
Seattle Chamber of Commerce and Director and Chairman of the Everett Area
Chamber of Commerce. Mr. McCord also serves as chair of the Company's
Executive Committee.

CAROL K. NELSON Director since 2001
- ---------------
Carol K. Nelson was appointed Chief Executive Officer of the Company
commencing May 1, 2002. She has served as President and Chief Operating
Officer of the Company and President and Chief Executive Officer of the Bank
since February 2001. She was previously Senior Vice President and Northern
Region Executive of Bank of America. Ms. Nelson holds a Bachelor's degree in
Business Finance and a Master's degree in Business Administration from Seattle
University. Ms. Nelson is the immediate past Chair of the Board of United Way
of Snohomish County and chaired the 1999 Community Campaign. She serves on the
Board of Directors of the Boys and Girls Club of Snohomish County, Washington
Financial League, Washington Bankers Association, Snohomish County Economic
Development Council, the Leadership Snohomish County Advisory Board and the
Executive Advisory Board of the Albers School of Business and Economics at
Seattle University. She is a past President of the Puget Sound Council of Camp
Fire Boys and Girls. Ms. Nelson also serves as Vice Chair of the Company's
Executive Committee and as a member of the Bank's Loan Committee.

-4-

DAVID O'CONNOR Director since 1997
- --------------
David O'Connor is co-owner of Mobile Country Club in Everett, Washington and
was a founding director of American First National Bank. He was co-owner of
O'Connor & Oehler Construction, Inc. from 1974 to 1996 and continues in his
development business. Mr. O'Connor is a member of the Manufactured Housing
Communities of Washington. Mr. O'Connor serves as a member of the Company's
Compensation and Personnel Committee, the Corporate Governance and Nominating
Committee and Executive Committee. He chairs the Bank's Loan Committee.

DIRECTORS CONTINUING IN OFFICE UNTIL 2006
-----------------------------------------

DWAYNE LANE Director Since 1995
- -----------
Dwayne Lane is the owner of three automobile dealerships in Everett and
Arlington, Washington. Mr. Lane is active in community affairs. He served 12
years as an Everett Port Commissioner and was a board member for Olympic Bank
and Providence Hospital. Mr. Lane serves as a member of the Company's
Compensation and Personnel Committee.

DENNIS R. MURPHY, PH.D. Director Since 1991
- -----------------------
Dennis Murphy is Dean of the College of Business and Economics and Professor
of Economics at Western Washington University in Bellingham, Washington. He
served on the board of the Northwest Medical Bureau, where he chaired the Audit
and Finance Committee, the Audit and Finance Committee of Western Washington
University Foundation and the Regence Blue Shield Advisory Board. He is an
immediate past member of the Whatcom Chamber of Commerce and Industry board and
serves on the board of Jr. Achievement. He is past president of the United Way
of Whatcom County and the Rotary Club of Bellingham. Dr. Murphy chairs the
Company's Audit and Finance Committee and serves as a member of the Executive
Committee.

RONALD E. THOMPSON Director since 1991
- ------------------
Ronald E. Thompson is the President of Windermere Commercial/NW and
Windermere Property Management/NW and Turnkey Repair and Maintenance in
Everett, Washington, a commercial real estate brokerage, property management
and property maintenance company. He is a past president of the Snohomish
County-Camano Association of Realtors, a past state director of the Washington
Association of Realtors, has served in the past on the Board of Directors of
the Mount Baker Council Boy Scouts of America and Providence Hospital
Foundation's Board. Mr. Thompson is a current member of the Everett Golf and
Country Club and a past member of its Board of Directors and past vice
president. He received his Bachelor's degree in Business Administration from
the University of Washington. Prior to his 23 plus years in real estate, Mr.
Thompson was a commercial banker in the Everett area for almost 10 years. Mr.
Thompson serves as the Chair of the Corporate Governance and Nominating
Committee, Vice Chair of the Company's Audit and Finance Committee, a member
of the Bank's Loan Committee, and a member of the Executive Committee.

G. BRANDT WESTOVER Director since 1986
- ------------------
G. Brandt Westover is Senior Vice President and Complex Manager for UBS
Financial Services, Inc. in Seattle, Washington. Prior to this position, Mr.
Westover was a corporate vice president and branch manager for UBS-Paine Webber
in Bellevue, Washington. He received his Bachelor's degree in Business
Administration and graduated from the Wharton School's Securities Institute
advanced course work program. Mr. Westover is a past trustee of the University
of Washington Alumni Association. He is also active with many charitable and

-5-

community organizations and is currently involved with Childhaven, the Boys and
Girls Club, and Issaquah Little League. Mr. Westover serves as Vice Chair of
the Board and as a member of the Company's Executive Committee and Compensation
and Personnel Committee.

Independence of Directors
- -------------------------

NASDAQ listing standards (the market on which Cascade Financial's stock
trades) require that a majority of the board of directors of each listed
company must be independent as defined under NASDAQ rules.

The Board of the Corporation has concluded that David W. Duce, Janice
Halladay, Dwayne Lane, Dennis R. Murphy, David O'Connor, Henry Robinett,
Ronald E. Thompson, Craig G. Stkotdal, and G. Brandt Westover qualify as
independent directors under the NASDAQ established criteria.

Board Committees and Meetings
- -----------------------------

During the year ended December 31, 2003, the Board of Directors held seven
regular and two special meetings. The Board has an Executive Committee, an
Audit and Finance Committee (the "Audit Committee"), a Compensation and
Personnel Committee, and a Loan Committee. In January 2004, the Board appointed
a Corporate Governance and Nominating Committee. The Executive Committee
consists of the CEO, the Chair and Vice-Chair of the Board, and Chairs of the
other committees and has authority to generally act for the full Board.

The Compensation and Personnel Committee is responsible for establishing and
reviewing the compensation and employee benefit policies of the Company and the
Bank. The Committee approves compensation of executive officers, and
recommends the granting of stock options. Only independent directors serve on
this Committee.

The Loan Committee reviews and approves loans in excess of the limits
established for the Management Loan Committee. Included in that review are all
extensions of credit to borrowers whose aggregate borrowing levels exceed the
limits placed on the Management Loan Committee. The Loan Committee also
reviews loans that do not conform to the Loan Policy.

Effective January 29, 2004 the Board created a Corporate Governance and
Nominating Committee. The Committee reviews and assesses the composition of
the Board; assists in identifying potential candidates for directors;
recommends candidates for director; and provides a leadership with respect to
corporate governance of the Company. The Committee is responsible for
establishing criteria for director eligibility; procedures for nominating
directors, including director nominations from shareholders and timelines for
the nomination process; as well as nominating the Chair and Vice-Chair of the
Board. Only independent directors serve on this Committee.

-6-

The Board and its committees may retain outside advisors as they determine
necessary to fulfill their responsibilities. All committees report their
activities to the full Board.

Each Board member attended at least 75% of the aggregate meetings of the
Board and of the Committees on which he or she served that were held during
the period for which he or she was a Board or Committee member.

The following table summarizes the membership of the Board and each of its
committees, as well as the number of times each met during 2003.

Corporate
Governance
Audit and Compensation and
Board Executive Finance and Personnel Loan (*) Nominating
----- --------- --------- ------------- ------- -----------

David W. Duce Member Member Chair
Janice Halladay Member Vice-Chair Member Member
Dwayne Lane Member Member
Frank M. McCord Chair Chair
Dennis R. Murphy Member Member Chair
Carol K. Nelson Member Vice-Chair Member
David O'Connor Member Member Member Chair Member
Henry Robinett Member Member Vice-Chair
Craig G. Skotdal Member Member Member
Ronald E. Thompson Member Member Vice-Chair Member Member Chair
G. Brandt Westover Vice-Chair Member Member Member

Number of 2003 Meetings 9 1 7 8 51 1

(*) The Loan Committee is a committee of the Bank only.

The Directors of the Company also serve as directors of Cascade Bank, the only
operating subsidiary of the Company. Cascade Bank has parallel committees and
committee assignments.

Nominations Process
- -------------------

The Corporate Governance and Nominating Committee (the "Governance
Committee") is the nominating committee of the Board of Directors. The
Governance Committee is governed by the Company's Articles of Incorporation and
Bylaws with respect to the nominations. The Governance Committee is
responsible for selecting nominees for election to the Board of Directors. The
Governance Committee will consider nominations from shareholders, provided that
such nominations are received by the Company's Secretary in accordance with the
Articles of Incorporation, the Bylaws, and the date set in the prior year's
proxy statement for the annual meeting of shareholders.

-7-

The Governance Committee will perform the following duties with respect to
director nominations: (a) consider the criteria for identifying and selecting
individuals who may be nominated for election to the Board of Directors; (b)
determine the slate of nominees for election to the Board of Directors; (c) as
the need arises, fill vacancies and actively seek individuals qualified to
become Board of Director members; and (d) consider shareholder nominations for
the Board of Directors when properly submitted in accordance with the Company's
Articles of Incorporation and Bylaws.

The Governance Committee will consider candidates for the Board who are
recommended by its members, other Board members, by shareholders, and
management as well as those identified by a third party search firm the Company
may retain to assist in identifying and evaluating possible candidates. The
Committee evaluates candidateds recommended by shareholders in the same manner
that it evaluates other candidates. The Committee's evaluations will be based
upon several criteria, including their broad-based business and professional
skills and experiences; commitment to representing the long-term interests of
shareholders; an inquistive and objective prospective; the willingness to take
appropriate risks; leadership ability; personal and professional ethics;
personal integrity and judgment; and practical wisdom and sound judgement.
Candidates should have reputations, both personal and professional, consistent
with the Company's image and reputation.

At a minimum, the majority of directors on the Board of Directors should be
"independent," not only as that term may be legally defined, but also without
the appearance of any conflict in serving as a director. In addition,
directors must have time available to devote to Board activities and to enhance
their knowledge of the banking industry. Accordingly, the Governance Committee
seeks to attract and retain highly qualified directors who have sufficient time
to attend to their substantial duties and responsibilities to the Company.

The Governance Committee will utilize the following process for identifying
and evaluating nominees to the Board. In the case of incumbent directors whose
terms of office are set to expire, the Governance Committee will review such
directors' overall service to the Company during their term, including the
number of meetings attended, level of participation and quality of performance.
In the case of new director candidates, the members of the Governance Committee
will be polled for suggestions as to potential candidates that may meet the
criteria above, discuss candidates suggested by Company shareholders and may
also engage, if the Board of Directors deems appropriate, a professional search
firm. To date, the Board of Directors and the Governance Committee have not
engaged professional search firms to identify or evaluate potential nominees
but may do so in the future, if necessary. The Governance Committee will then
meet to discuss and consider these candidates' qualifications and then choose a
candidate by majority vote.

Directors' Compensation
- -----------------------

The Chair of the Board of Directors received a retainer at the rate of
$36,000 per year plus 150 shares of the Company's common stock. During 2003,
the Chairs of the Audit and Compensation/Personnel Committees each received an
annual retainer of $24,000 plus 150 shares of common stock, and members of the
Loan Committee each received $18,000 per annum and 150 shares of common stock.
All other outside directors of the Company were paid a retainer of $12,000.
Under the Director Bonus Program, outside directors individually qualify for an
annual bonus equal to .025% of the Corporation's net income. For the fiscal
year ended December 31, 2003, a total of $2,400 was paid to each outside
director under the Program.

Under the Corporation's 1997 Elective Equity Plan and 2002 Equity
Compensation Plan, directors could elect to receive shares of the Corporation's
stock in lieu of receiving cash compensation for the year. Those plans were
replaced by the 2003 Long Term Stock Incentive Plan, which was approved at the
2002 Annual Shareholders' Meeting.

-8-

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------

Persons and groups who beneficially own more than 5% of the Company's common
stock are required to file certain reports with the Securities and Exchange
Commission ("SEC") and to provide a copy to the Company disclosing such
ownership. Based on such reports, the following table sets forth, as of March
15, 2004, certain information as to those persons who were beneficial owners of
more than 5% of the outstanding shares of common stock. Management knows of no
persons other than those set forth below who beneficially owned more than 5% of
the outstanding shares of common stock at March 15, 2004.

The following table shows the number of shares of the Company's common stock
beneficially owned at March 15, 2004 by the Company's directors and nominees
for director, executive officers identified in the Summary Compensation Table
and all directors and executive officers as a group. The address of each
person, except as set forth below, is the same as the Company's principal
office.

Number of Shares % of Shares
Name Beneficially Owned (1) Outstanding
- --------------------- ---------------------- ------------
Beneficial Owners of
more than 5%:
- --------------------
Arthur W. Skotdal, Andrew P.
Skotdal and Craig G. Skotdal
c/o Douglas A. Schafer
Schafer Law Firm
P.O. Box 1134
Tacoma, WA 98401 700,824 8.0%

Directors:
- ---------
David W. Duce 43,395(2) *
Janice Halladay 19,913 *
Dwayne Lane 62,613 *
Frank M. McCord ** 337,286 3.8%
Dennis R. Murphy 36,105 *
Carol K. Nelson ** 80,718 1.0%
David O'Connor 81,543(3) 1.0%
Henry Robinett 25,135 *
Craig G. Skotdal 700,284(4) 8.5%
Ronald E. Thompson 46,671 *
G. Brandt Westover 34,315 *

-9-

Executive Officers:
- ------------------
Steven R. Erickson 51,925 *
Wayne Fjelstad 434 *
Lars H. Johnson 49,750 *
Debbie E. McLeod 7,672 *

All executive officers and
Directors as a group (18 persons) 1,734,056 20.0%

* Less than 1% of shares outstanding.
** Also a director of the Company and the Bank.

(1) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), a person is deemed to be the beneficial
owner, for purposes of this table, of any shares of common stock if he or she
has voting and/or investment power with respect to such security. The table
includes shares owned by spouses or other immediate family members in trust,
shares held in retirement accounts or funds for the benefit of the named
individuals, and other forms of ownership over which shares the persons named
in the table possess voting and/or investment power. Shares held in accounts
under the Company's ESOP as of December 31, 2003 are included in the above
table as follows: Ms. Nelson: 643; Mr. McCord: 12,880; Mr. Erickson: 10,466;
Mr. Johnson: 771; and Ms. McLeod: 187; all executive officers and directors as
a group: 46,811. Shares held under the Bank's 401(k) plan as of December 31,
2003 are included as follows: Mr. Johnson: 2,592; Mr. McCord: 20,925; Mr.
Erickson: 4,038; and Mr. Fjelstad: 171. These amounts do not include the
remaining shares held by the Bank's 401(k) plan for which Messrs. McCord,
Westover, and Johnson act as trustees. The amounts shown also include the
following amounts of common stock which the following individuals have the
right to acquire within 60 days of March 15, 2004 through the exercise of stock
options granted pursuant to the Company's stock option plans: Mr. Erickson:
31,158; Ms. Halladay: 10,070; Mr. Johnson: 44,375; Ms. McLeod: 6,750; Ms.
Nelson: 76,438; Mr. Robinett: 6,799; Mr. Skotdal: 4,834; all executive officers
and directors as a group: 222,169.

(2) Includes 387 shares held by Mr. Duce's five children, and 2,276 shares
held by a testamentary trust of which Mr. Duce is trustee.

(3) Includes 33,141 shares held by a trust in which Mr. O'Connor has a
pecuniary interest.

(4) Includes 242,942 shares held by Mr. Skotdal's brother of which Mr. Skotdal
has the authority to vote, 194,932 shares held by a limited liability company
in which Mr. Skotdal has a pecuniary interest, and 13,107 shares held by Mr.
Skotdal's father which Mr. Skotdal has the authority to vote.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of beneficial ownership and
changes in beneficial ownership with the SEC. The rules promulgated by the SEC
under Section 16(a) of the Exchange Act require those persons to furnish the
Company with copies of all reports filed with the SEC pursuant to Section
16(a).

Based solely upon a review of Form(s) 3, Form(s) 4 and Form(s) 5, and
amendments thereto, furnished to the Company pursuant to Rule 16(a)(3)(e) for
the year ended December 31, 2003, and written representations of certain of its

-10-

directors and officers that no additional Form(s) 5 were required to be filed,
the Company believes that all directors, executive officers and beneficial
owners of more than 10% of the common stock have filed with the SEC on a timely
basis the reports required to be filed under Section 16(a) of the Exchange Act;
provided however, that: (a) Mr. Skotdal filed a Form 4 two days late after
purchasing certain shares of common stock, and also filed a Form 4 about one
month late after his brother made certain stock purchases; (b) Dr. Murphy filed
a Form 4 one day late after a cashless exercise of options; and (c) eight
officers were late in reporting certain options granted by the Company in July
of 2003.

EXECUTIVE COMPENSATION
----------------------

The following Summary Compensation Table sets forth the compensation earned
by the Company's Chief Executive Officer and the four other most highly
compensated executive officers who were serving as such as of December 31, 2003
(collectively, the "Named Officers") and each of whose aggregate compensation
for calendar 2003 exceeded $100,000 for services rendered in all capacities to
the Company and its subsidiaries for that year.

Summary Compensation Table

Long-Term
Compensation All Other
Annual Compensation Awards Compensation(4)
- ------------------------------------------------------------------------------------------------------------------------
Securities
Other Annual Underlying
Name and Position Year Salary Bonus(1) Compensation(2) Options (#)(3)
- ------------------------------------------------------------------------------------------------------------------------

Carol K. Nelson 2003 $210,000 $208,620 --- 16,250 $ 7,523
President and Chief 2002 200,000 304,720 --- 12,500 10,697
Executive Officer of 2001 174,231 130,000 --- 137,500 ---
the Company and the
Bank(5)

Steven R. Erickson 2003 $100,631 $ 64,250 --- 8,125 $ 5,492
Executive Vice President 2002 88,340 65,000 --- 8,750 7,719
of the Bank-Real Estate 2001 86,350 107,000 --- --- 8,207
Lending

Wayne Fjelstad 2003 $ 91,000 $ 60,000 --- 8,125 $ 2,463
Executive Vice President 2002 34,818 32,500 --- 6,250 ---
of the Bank-Business
Banking

Lars H. Johnson 2003 $128,400 $ 50,000 --- 11,250 $ 7,323
Executive Vice President 2002 123,000 40,000 --- 8,750 8,375
and Chief Financial 2001 106,667 50,000 --- --- 3,904
Officer of the Bank and
Treasurer/Secretary of
the Company

-11-

Debbie E. McLeod 2003 $ 91,638 $ 45,000 --- 8,125 $ 5,782
Executive Vice President 2002 87,125 40,000 --- 6,250 3,468
-Retail Banking 2001 74,375 26,666 --- 13,750 ---

(1) Bonus totals for 2003 include awards attributed to the year ended
December 31, 2003. Bonus totals for 2002 include awards attributed to the
year ended December 31, 2002 except for Carol K. Nelson. Ms. Nelson's
2002 bonus includes $212,050 attributable to the twelve month period from
July 1, 2001 to June 30, 2002 and $92,700 attributable to the six month
period from July 1, 2002 to December 31, 2002. Mr. Erickson's 2001 bonus
includes payments of $70,000 and $37,000 which are attributable to the
fiscal year ended June 30, 2001 and the six-month period ended December
31, 2001, respectively. Mr. Johnson's bonus is based upon $30,000 for the
June 30, 2001 period and $20,000 for the December 31, 2001 period.

(*) Does not include perquisites which did not exceed the lesser of $50,000 or
10% of salary and bonus.

(*) Option grants for all years are adjusted for 5 for 4 stock split that was
effective December 19, 2003.

(4) All Other Compensation for calendar year 2003 includes the following: for
Ms. Nelson, employer contribution to 401(k) Plan of $6,000 and ESOP
contribution of $1,523; for Mr. Erickson, employer contribution to 401(k)
Plan of $4,207 and ESOP contribution of $1,286; for Mr. Fjelstad, employer
contribution to 401(k) Plan of $2,463; for Mr. Johnson, employer
contribution to 401(k) Plan of $6,000 and ESOP contribution of $1,323, and
for Ms. McLeod, employer contribution to 401(k) Plan of $4,762 and ESOP
contribution of $1,020. (ESOP contributions include the reallocation of
the unvested amounts forfeited by departing Plan participants.)

(5) Ms. Nelson became Chief Executive Officer of the Company on May 1, 2002.
She previously served as Chief Operating Officer of the Company. She
continues to serve as President and Chief Executive Officer of the Bank.

Employment Agreement. The Bank entered into an employment agreement with
Carol K. Nelson on January 24, 2001, which was effective February 19, 2001. The
agreement was amended and extended on July 23, 2003. Ms. Nelson's current base
salary (which is subject to annual review) is $210,000. She is entitled to
participate in employee benefit plans and other fringe benefits applicable to
executive personnel. The three-year term of the agreement may be extended
annually for an additional year. The employment of Ms. Nelson is terminable at
any time for cause as defined in the agreement, and she may be terminated
without cause in which case she would continue to receive compensation
otherwise payable over the remaining term of the agreement. The agreement
provides for payment of bonuses each year based on the amount of the Bank's net
profit before taxes. The agreement also provides for the payment of severance
benefits to Ms. Nelson in the event of her termination of employment following
a change in control of the Company or the Bank. Such benefits would include:
(i) if the termination is within 12 months after the change in control,
severance benefit/pay would be three times Ms. Nelson's annual compensation and
bonus for the prior year paid, or (ii) if the termination occurs more than 12
months after a change in control, the severance benefit/pay would be Ms.
Nelson's annual compensation and bonuses for the balance of the term of the
agreement, or two times the amount of her then current year base salary and
bonus, whichever is greater, and subject to reduction to avoid any "excess
parachute payment" for federal income tax purposes.

Change in Control Agreements. The Bank has entered into Change of Control/
Severance Agreements with Steven Erickson, Wayne Fjelstad, Lars Johnson, Debbie
E. McLeod and three other executive officers who are not included in the above

-12-

tables. These agreements generally provide that within twenty-four months after
a change of control, if an executive is terminated other than for cause or for
good reason (as such terms are defined in the agreements), such executive will
generally be entitled to receive a severance payment equal to two times the
executive's annual compensation. The agreements generally define a change in
control as the acquisition of all or a substantial part of the Company or the
Bank, the merger of the Company or the Bank into another company that is the
surviving company, the sale of substantially all of the assets of the Company
or the Bank to another company, or a hostile acquisition of substantially all
of the stock of the Company or the Bank.

Option Grants in Last Fiscal Year. The following table sets forth
information concerning the grant of stock options to Carol K. Nelson, Steven R.
Erickson, Wayne Fjelstad, Lars H. Johnson, and Debbie E. McLeod during the year
ended December 31, 2003.

Option Grants

Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
- ----------------------------------------------------------------------------------------------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted (*) in Period ($/Share) Date 5% 10%
- -----------------------------------------------------------------------------------------------------------

Carol K. Nelson 16,250 16.9% $12.50 7/22/13 $127,725 $323,700
Steven R. Erickson 8,125 8.5 12.50 7/22/13 63,862 161,850
Wayne Fjelstad 8,125 8.5 12.50 7/22/13 63,862 161,850
Lars H. Johnson 11,250 11.7 12.50 7/22/13 87,509 224,100
Debbie E. McLeod 8,125 8.5 12.50 7/22/13 63,862 161,850

(*) Options granted vest 10% after the first year of grant; 20% per annum in
years 2 through 4; and 30% at the end of the fifth year. Options will
become immediately exercisable in the event of a change in control of the
Company. Options were granted under the Company's 2003 Stock Option Plan,
and have an exercise price equal to the fair market value of the common
stock on the date of grant. The dollar gains under these columns result
from calculations required by the SEC rules and are not intended to
forecast future price appreciation of the common stock of the Company. It
is important to note that options have value to the listed executive only
if the stock price increases above the exercise price shown in the table
during the effective option period. In order for the listed executive to
realize the potential values set forth in the 5% column and the 10% column
in the table, the price per share of the Company's common stock would be
approximately $20.36 and $32.42.

-13-

Option Exercise/Value Table. The following information is presented for
the Chief Executive Officer and the other Named Officers with respect to
options exercised during the fiscal year ended December 31, 2003, and
remaining unexercised at the end of 2003.

Aggregated Option Exercises in Last Fiscal Year
and Year-End Option Values

Number of Securities $ Value of Unexercised In-the
Shares Value Underlying Unexercised -Money Options at Fiscal
Acquired on Realized Options at Year-End Year- End (2)
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------

Carol K. Nelson --- --- 46,437 119,821 $642,688 $1,527,848
Steven R. Erickson --- --- 29,409 31,173 387,241 349,285
Wayne Fjelstad --- --- --- 14,375 --- 121,525
Lars H. Johnson --- --- 28,876 63,311 388,217 761,394
Debbie E. McLeod --- --- 2,750 25,375 38,060 280,765

(1) The value realized on exercised options is calculated on the difference
between the strike price of the options and the price at the close of
business of the Company's stock on the date of exercise.

(2) The value of unexercised in-the-money options is calculated using a fair
market value of $19.38 as of December 31, 2003, based on the last known
trade, less the strike price on those options. Options have been adjusted
for stock dividends.

EQUITY COMPENSATION PLAN INFORMATION
------------------------------------

The following table sets forth information regarding outstanding options and
shares reserved for future issuance under the equity compensation plans as of
February 28, 2004.

(number of shares in thousands):

Number of Shares
to be Issued Upon Weighted Average Number of shares
Exercise of Exercise Price of Remaining
Outstanding Outstanding Available for
Plan Category Options Options Future Issuance
- --------------------------------------------------------------------------------------------------

Equity compensation plans approved by
shareholders-1992 & 1997 Plans 555 $ 5.72 --
Equity compensation plans approved by
shareholders-2003 Plan 100 12.61 654
Equity compensation plans not
approved by shareholders -- -- --
Total 655 $ 7.34 654

(a) No further shares will be awarded under either the Company's 1997 Elective
Equity Plan.

-14-

2003 Long Term Stock Incentive Plan
- -----------------------------------

The 2003 Plan allows for the grant of incentive stock options and non-
statutory stock options to all officers, directors and employees of the Company
and its subsidiaries.

The Option Plan is administered by a committee of independent directors.
During 2003, options to purchase a total of 96,120 shares were granted to all
employees under the Option Plan. As of December 31, 2003, options to purchase
a total of 653,875 shares remain available (of the original split adjusted
750,000 shares) for issuance under the Option Plan.

REPORT OF THE COMPENSATION AND PERSONNEL COMMITTEE (1)
------------------------------------------------------

Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits
provided to the Company's Chief Executive Officer and other executive officers
of the Bank and Company. The Compensation and Personnel Committee's duties are
to establish and administer policies that govern executive compensation for the
Company. The Committee evaluates the individual performance of the President
and Chief Executive Officer, the Chief Financial Officer, and other senior
level officers and reviews compensation policies for all senior management.
The committee receives input from the President on the other executive
officers' performance and has final authority to set individual compensation
levels.

The executive compensation policies of the Company are designed to reflect
the attainment of short-term and long-term financial performance goals and to
enhance the ability of the Company to attract and retain qualified executive
officers. The Committee considers a variety of subjective and objective
factors in determining the compensation package for individual executives.
These factors include the performance of the Company overall, the
responsibilities assigned to each executive, and the performance of each
executive in their assigned areas of oversight.

Base Salary. The Company's compensation plan involves a combination of
salary and cash bonuses tied to short-term performance. Salary levels are
designed to be competitive within the banking industry based on a peer group
analysis of Pacific Northwest financial institutions. Given the Company's
performance and size, the Committee concluded that the base salaries of the
reviewed executive officers were adjusted appropriately for 2003.

Bonus Programs. An incentive bonus plan is in effect for the executive
officers of the Company that is designed to compensate for performance. The
plan for the President is based upon the profitability of the Company as
established within her employment contract. The plan for all other executive
officers is based upon the attainment of certain negotiated goals including
Company and line of business profitability; loan levels and credit quality;
expense management; as well as leadership and teamwork. Performance is
evaluated by the President (and reviewed by the Compensation and Personnel
Committee) quarterly, with 70% of any award paid at the end of each quarter and
the remaining 30% at the end of the year.

Option Grants. The Committee selects employees who will receive stock
options and determines the number to be granted. Stock options are designed
to provide long-term incentives for key employees. These grants were made at
current market prices under the rules of the 1997 Stock Option Plan, as amended
prior to March 11, 2003 and under the rules of the 2003 Long-Term Incentive
Plan following March 11, 2003.

- ----------
(1) This section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.

-15-

Compensation of the Chief Executive Officer. As of May 1, 2002, Carol K.
Nelson was appointed Chief Executive Officer of Cascade Financial Corporation.
Previously, Ms. Nelson was President and Chief Operating Officer of Cascade
Financial and President and Chief Executive Officer of Cascade Bank, titles
which she retains. For the year ended December 31, 2003, Ms. Nelson's base
salary was $210,000. In addition, per her employment contract, as amended on
July 23, 2003, Ms. Nelson was paid a bonus based upon the Company's net profit
before tax. For the year ended December 31, 2003, Ms. Nelson received 1.5% of
the Company's net profit before tax or $208,620.

Stock Awards. For the year ended December 31, 2003, Ms. Nelson was awarded
options to purchase 16,250 shares of stock (as adjusted for the 5 for 4 stock
split), which reflected the attainment of specific performance criteria
established by the Compensation and Personnel Committee, including but not
limited to profitability, regulatory examination ratings, and investor
relations. These options were granted at current market prices under the rules
of the 2003 Stock Option Plan. The Committee believes that Ms. Nelson's
compensation is appropriate based upon the Company's overall performance.

COMPENSATION AND PERSONNEL COMMITTEE
David Duce, Chairman
Janice Halladay
Dwayne Lane
David O'Connor
G. Brandt Westover

REPORT OF THE AUDIT AND FINANCE COMMITTEE (2)
---------------------------------------------

The Audit and Finance Committee is responsible to the board for the areas of
audit and compliance, asset and liability management, risk assessment and
technology management. The Committee is directly responsible for the
appointment compensation, and oversight of the external auditor who reports
directly to the Committee. The Audit Committee oversees the Company's financial
reporting process on behalf of the Board of Directors. Management has the
primary responsibility for the consolidated financial statements and the
reporting process, including the system of internal controls. In fulfilling
its oversight responsibilities, the Committee reviewed the audited consolidated
financial statements for the 12 month period ended December 31, 2003, with
management and the independent auditors who are responsible for expressing an
opinion on the conformity of those audited consolidated financial statements
with accounting principles generally accepted in the United States of America.
The review included a discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.

The Committee has discussed with the independent auditors the auditors'
independence from management and the Company including the matters in the
written disclosures required by the Independence Standards Board, and
considered the compatibility of non-audit services with the auditors'
independence.

The Committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Committee meets
with internal and independent auditors, with and without management present, to
discuss the results of their examination, their evaluation of the Company's
internal controls, and the overall quality of the Company's financial
reporting.

- ----------
(2) This section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.

The Committee acts pursuant to the Audit Committee Charter. Each of the
members of the committee qualifies as an "independent" director under the
current listing standards of the National Association of Securities Dealers
(NASDAQ).

The members of the Committee are not professionally engaged in the practice
of auditing or accounting and are not experts in the fields of accounting or
auditing, including auditor independence. Members of the Committee rely
without independent verification on the information provided to them and on the
representations made by management and the independent auditors. Accordingly,
the Committee's oversight does not provide an independent basis, other than
that provided by the external auditors, to determine that management has
maintained appropriate accounting and financial reporting principles or
appropriate internal control and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. Furthermore, the
Committee's consideration and discussions referred to above do not assure that
the audit of the Company's financial statements has been carried out in
accordance with auditing standards generally accepted in the United States of
America, and that the financial statements are presented in accordance with
generally accepted accounting principles or that the Company's auditors are in
fact "independent".

In reliance on the review and discussions above, the Committee recommended
to the Company's Board of Directors that the Company's audited consolidated
financial statements be included in the Company's Annual Report and Form 10-K
for the year ended December 31, 2003.

AUDIT AND FINANCE COMMITTEE
Dennis R. Murphy, PH.D. Chairman
Henry Robinett
Ronald E. Thompson
Craig G. Skotdal

-17-

SHAREHOLDER RETURN PERFORMANCE GRAPH (3)
----------------------------------------

The following graph compares the Company's cumulative shareholder return on
its common stock with the return on the Nasdaq (U.S. Stock) Index and a peer
group of the Nasdaq's Financial Index. Total return assumes (i) the
reinvestment of all dividends and (ii) the value of the investment in the
Company's common stock and each index was $100 at the close of trading on
December 31, 1998.

[GRAPH] Comparison of Five Year Cumulative Total Return*

12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
Cascade Financial
Corporation $100.00 $101.48 $ 80.44 $ 81.92 $126.22 $256.08
Nasdaq (Composite)
Index $100.00 $185.69 $112.67 $ 90.27 $ 60.93 $ 91.37
Nasdaq OTC Bank
Index $100.00 $ 92.02 $114.67 $110.08 $104.83 $129.54

*Assumes that the value of the investment in the Company's common stock and
each index was $100 on December 31, 1998, and that all dividends were
reinvested.

- ----------
(3) This section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.

-18-

TRANSACTIONS WITH MANAGEMENT AND OTHERS
---------------------------------------

Certain transactions involving loans, deposits, credit cards and sales of
commercial paper, certificates of deposit and other money market instruments
and certain other banking transactions occurred during 2003 between the Bank
and certain directors or executive officers of the Company and its
subsidiaries, members of their immediate families, corporations or
organizations of which any of them is an executive officer or partner or of
which any of them is the beneficial owner of 10% or more of any class of
securities, or associates of the directors, the executive officers or their
family members. The transactions were made in the ordinary course of business
on substantially the same terms, including interest rates and collateral, that
prevailed at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectibility or present other
unfavorable features.

INDEPENDENT AUDITORS
--------------------

KPMG LLP were the Company's independent auditors for the year ended December
31, 2003. The Board of Directors has appointed Moss Adams LLP as independent
auditors for the fiscal year ending December 31, 2004.

Fees Billed To The Company By KPMG LLP During 2003 and 2002
- -----------------------------------------------------------

The Audit Committee of the Board of Directors has the responsibility for
appointing, compensating, and overseeing the work of the independent auditor.
The Audit Committee's policy is to pre-approve all audit and permissible non-
audit services provided by the independent auditors. The independent
accountants and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the independent auditor,
and the fees for such services.

Set forth below are the aggregate fees paid or accrued for professional
services rendered to the Company by its independent auditors for fiscal years
2003 and 2002.

Audit Fees. The aggregate fees billed and unbilled to the Company by KPMG
LLP for professional services rendered for the audit of the Company's financial
statements for the years ended December 31, 2003 and December 31, 2002 and the
reviews of the financial statements included in the Company's Forms 10-Q for
the calendar year, including travel expenses were 108,328 and 91,350
respectively.

Financial Information Systems Design and Implementation Fees. KPMG LLP
performed no financial statement design or implementation work for the Company
during the calendar year ended December 31, 2003 or December 31, 2002.

Audit and All Other Fees. The aggregate fees billed to the Company by KPMG
LLP for 2003 and 2002 were as follows:

Fiscal Years Ended December 31,
-------------------------------
2003 2002
------------- --------------
Audit Fees $108,328 $ 91,350
Audit-related Fees 18,195 27,900
Tax Fees 9,500 9,500
All Other Fees --- 11,675
------------- ---------------
Total Fees $136,023 $140,425
============= ===============

-19-

The Audit and Finance Committee of the Board of Directors determined that
the services performed by KPMG LLP, other than audit services, are not
incompatible with KPMG LLP maintaining its independence.

OTHER INFORMATION
-----------------

Shareholder Communications with the Board
- -----------------------------------------

To contact members of the Board, individually or collectively, on any
subject please address that communication to:

Lars H. Johnson, Corporate Secretary
Cascade Financial Corporation
2828 Colby Avenue
Everett, WA 98201

The Corporate Secretary will acknowledge the receipt of the communication;
inform the shareholder concerning the distribution of that communication; and
when any action (if requested) would be reviewed by the Board and/or the
relevant functional committee. The Corporate Secretary will notify the
shareholder of any action taken by the Board in reference to the shareholder's
request.

While the Company does not have a formal policy regarding attendance by
members of the Board of Directors at the Company's annual meetings of
shareholders, it has always encouraged its directors to attend and expects to
continue this informal policy. Shareholders are encouraged to interact with
the directors at that time. Ten directors attended the 2002 Annual Meeting,
which was held May 6, 2003 at the Everett Golf and Country Club.

Code of Conduct
- ---------------

The Board of Directors has approved a code of conduct which constitutes
conduct that is applicable to the senior financial officers, the Chief
Executive Officer, and other employees. A copy of the document is available
without charge at www.Cascadebank.com. If the Company makes substantive
amendments to this code of conduct or grants any waiver, including any implicit
waiver, the Company will disclose the nature of such amendment or waiver in a
report on Form 8-K within five days of such amendment or waiver to the extent
then required by applicable securities laws.

Expenses of Solicitation
- ------------------------

The Company will bear the costs of soliciting proxies, including the
reimbursement to record holders of their expenses in forwarding proxy materials
to beneficial owners. Directors, officers and regular employees of the
Company, without extra compensation, may solicit proxies personally or by mail,
telephone, facsimile or electronic mail.

Shareholder Proposals and Director Nominations
- ----------------------------------------------

In order to be eligible for inclusion in the Company's proxy materials for
the 2004 Annual Meeting of Shareholders (to be held in Spring 2005), any
shareholder proposal to take action at such meeting must be received at the
Company's executive offices at 2828 Colby Avenue, Everett, Washington 98201 no
later than November 15, 2004. Any such proposal shall be subject to the
requirements of the proxy rules adopted under the Exchange Act.

Shareholders wishing to submit recommendations for Director candidates must
provide the following information in writing to the attention of the Secretary
of the Company by certified or registered mail:

-20-

* the name, address, and biography of the candidate, including such person's
written consent to being named in the Proxy Statement as a nominee and to
serving as a director, if elected, and certain information regarding the
shareholder giving such notice;

* the name address, and phone number of the shareholder or group of
shareholders making the recommendation;

* with respect to common stock beneficially owned by the shareholder or
group of shareholders making the recommendation, and to the extent any
shareholder is not a registered holder, proof of the number of shares
held.

To be considered by the Corporate Governance and Nominating Committee for
the 2004 Annual Meeting of Shareholders, a director candidate nomination must
be received by the Secretary by December 31, 2004.

The notice with respect to business proposals to be brought before the
Annual Meeting must state the shareholder's name, address and the number of
shares of common stock held, and briefly discuss the business to be brought
before the Annual Meeting, the reasons for conducting such business at the
Annual Meeting and any interest of the shareholder in the proposal.

MISCELLANEOUS
-------------

The Company's December 31, 2003 Annual Report is being sent to shareholders
of record as of March 15, 2004, together with this Proxy Statement.

The Company will furnish to shareholders without charge a copy of its Annual
Report and Form 10-K for the fiscal year ended December 31, 2003, as filed with
the Securities and Exchange Commission, upon receipt of a written request
addressed to Cascade Financial Corporation, 2828 Colby Avenue, Everett, WA
98201. Reports, proxy statements and other information filed by the Company
are also available on the Internet at the SEC's World Wide Web site at http:
//www.sec.gov.

The Board of Directors knows of no other matters to be presented at the
Annual Meeting. If any other business properly comes before the Annual Meeting
or any adjournment thereof, the proxies will vote on that business in
accordance with their best judgment.

By Order of the Board of Directors,

/s/ Lars H. Johnson
-------------------
Lars H. Johnson
Secretary

-21-

REVOCABLE PROXY
CASCADE FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS

May 4, 2004

The undersigned hereby appoints the official proxy committee consisting of
all of the members of the Board of Directors of Cascade Financial Corporation
("Corporation"), Everett, Washington, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common
Stock of the Corporation which the undersigned is entitled to vote at the
Annual Meeting of Shareholders, to be held at the Everett Golf & Country Club,
Everett, Washington, on May 4, 2004 at 6:30 p.m., and at any and all
adjournments thereof, as follows.

Address Change/Comments (Mark the corresponding box on the reverse side)
-----------------------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------------------

- -------------------------------------------------------------------------------
Fold and Detach Here

You can now access your Cascade Financial Corporation account online.

Access your Cascade Financial Corporation shareholder account online via
Investor ServiceDirectSM (ISD).

Mellon Investor Services LLC, Transfer Agent for Cascade Financial Corporation,
now makes it easy and convenient to get current information on your shareholder
account.

* View account status * View payment history for dividends

* View certificate history * Make address changes
* View book-entry information * Obtain a duplicate 1099 tax form
* Establish/change your PIN

Visit us on the web at http://www.meloninvestor.com
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time

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

Please Mark Here for Address Change or Comments [ ] SEE REVERSE SIDE

THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE PROPOSAL.

Proposal 1: The election as directors of all nominees listed below (except as
marked to the contrary below).

FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
(1) Janice Halladay [ ] [ ] [ ]
(2) Henry Robinett [ ] [ ] [ ]
(3) Craig G. Skotdal [ ] [ ] [ ]

INSTRUCTION: To withhold authority to vote, mark "For All Except" and write the
nominee's number on the line below.

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

This proxy will be voted as directed, but if no instructions are specified,
this proxy will be voted "for" the proposals stated. If any other business is
presented at the meeting, this proxy will be voted by those named in this proxy
in their best judgment. At the present time, the Board of Directors knows of
no other business to be presented at the meeting. This proxy also confers
discretionary authority on the Board of Directors to vote with respect to the
election of any person as director where the nominee is unable to serve or for
good cause will not serve, and matters incident to the conduct of the Annual
Meeting.

This Proxy is solicited by the Board of Directors
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Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the
Corporation at the Annual Meeting of the shareholder's decision to terminate
this proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.

The undersigned acknowledges receipt from the Corporation, prior to the
execution of this proxy, of the Notice of the Annual Meeting of Shareholders,
the Proxy Statement, and the 2003 Annual Report to Shareholders.

Dated: , 2004
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Print Name of Shareholder Print Name of Shareholder

- ------------------------- -------------------------
Signature of Shareholder Signature of Shareholder

Please sign exactly as your name appears on the envelope in which this card was
mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a partnership,
please sign in partnership name by authorized person. For joint accounts, only
one signature is required.

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.

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Fold and Detach Here

Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59PM Eastern Time
the day prior to annual meeting day.

Your Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and
returned your proxy card.

Internet OR Telephone OR Mail
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http://www.eproxy.com/casb 1-800-435-6710 Mark, sign and
Use the Internet to vote Use any touch-tone date your proxy
your proxy. Have your proxy telephone to vote your card and return
card in hand when you access proxy. Have your proxy it in the
the web site. Card in hand when you call. enclosed postage
-paid envelope.