BELLINGHAM — "At Horizon Bank, we're pleased to report that in the toughest banking environment in recent memory, our profitability remains steady, our reserves are quite solid, and our delivery of value to both shareholders and customers continues."

So said Horizon Financial Corp.'s annual report in early 2008.

Less than two years later, on the rainy evening of Friday Jan. 8, 2010, black-suited bank examiners from the Federal Deposit Insurance Corp. were shaking off their umbrellas and wheeling small black suitcases into the bank's main entrance at Cornwall Avenue and Champion Street. They would spend the weekend going over Horizon's books and enabling a smooth transition for customers as Seattle-based Washington Federal took over the failed Bellingham bank.

How could an 87-year-old financial institution fall so far so fast?

The bank's financial trajectory mirrors what was happening in the real estate development sector in the region, said Brad Williamson, director of the banking division at the Washington Department of Financial Institutions.

Horizon, like many community and regional banks, moved into riskier real estate development loans in recent years, as larger national institutions captured an ever-larger share of home and auto loans.

Read the complete story at bellinghamherald.com