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[ARCADIA FINANCIAL LTD LOGO]
THIS IS A SUPPLEMENT TO THE PROSPECTUS DATED AUGUST 14, 1998
SUBORDINATED NOTE INTEREST RATES
EFFECTIVE JANUARY 3, 1998
These interest rates are subject to change from time to time.
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PRINCIPAL AMOUNT (1) $1,000 - $24,999 $25,000 - $49,999 $50,000 - $99,999 Over $100,000
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INTEREST ANNUAL INTEREST ANNUAL INTEREST ANNUAL INTEREST ANNUAL
NOTE RATE % YIELD % RATE % YIELD % RATE % YIELD % RATE % YIELD %
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
90-DAY EXTENDIBLE (2) 8.00 8.24 8.25 8.51 8.50 8.77 8.75 9.04
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180-DAY EXTENDIBLE (2) 8.50 8.68 8.75 8.94 9.00 9.20 9.25 9.46
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365-DAY EXTENDIBLE (3) 9.00 9.00 9.25 9.25 9.50 9.50 9.75 9.75
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ONE YEAR FIXED-TERM (3) 9.00 9.00 9.25 9.25 9.50 9.50 9.75 9.75
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TWO YEAR FIXED-TERM (4) 9.50 9.84 9.75 10.11 10.00 10.38 10.25 10.65
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THREE YEAR FIXED-TERM (4) 9.75 10.11 10.00 10.38 10.25 10.65 10.50 10.92
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FOUR YEAR FIXED-TERM (4) 10.00 10.38 10.25 10.65 10.50 10.92 10.75 11.19
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FIVE YEAR FIXED-TERM (4) 10.75 11.19 11.00 11.46 11.25 11.73 11.50 12.01
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TEN YEAR FIXED-TERM (4) 11.00 11.46 11.25 11.73 11.50 12.01 11.75 12.28
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(1) The applicable interest rate is determined at the time a Note is purchased
by aggregating the principal amounts of all Notes currently owned by the
investor and the investor's immediate family members. Immediate family members
are considered to be parents, children, siblings, grandparents and
grandchildren. Members of sibling families are also considered immediate family
members if both siblings are investors.
(2) Earns simple interest. The Annual Yield calculation assumes that the term of
the Note is extended sequentially for an entire year, that the interest earned
during each term is included in the principal amount for the next term and that
the listed interest rate is the interest rate for each term.
(3) Earns simple interest, which results in the Interest Rate and the Annual
Yield being equal during the initial term.
(4) Interest compounds quarterly. The Annual Yield calculation assumes that
accrued interest is paid annually.
