SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                               FORM 10-Q/A

(Mark One)

[X]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
       Exchange Act of 1934

               For the quarterly period ended June 30, 1999
                                              -------------
                                  OR

[ ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities and
       Exchange Act of 1934

       For the transition period from March 31, 1999 to June 30, 1999

                        Commission file number 0-27062

                             Horizon Financial Corp.
                             -----------------------
          (Exact name of registrant as specified in its charter)

                    Chartered by the State of Washington
                    ------------------------------------
       (State or other jurisdiction of incorporation or organization)

                                  91-1695422
                                  ----------
                     (IRS Employer Identification No.)

                              1500 Cornwall Avenue
                             Bellingham, Washington
                             ----------------------
                  (Address of principal executive offices)

                                     98225
                                     -----
                                  (Zip Code)

Registrant's telephone number including area code:          (360) 733-3050
                                                            --------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                 YES   X   NO
                                     -----    -----
As of  August 6, 1999,  8,529,869 common shares, $1.00 par value, were
outstanding.

<PAGE>



Item 1  Financial Statements

                              HORIZON FINANCIAL CORP.
                Consolidated Statements of Financial Condition

                                                     June 30,      March 31,
                                                       1999          1999*
                                                       ----          ----
                                                   (Unaudited)    (Unaudited)
ASSETS:
------
  Cash and Due from Banks                        $  11,904,662  $ 10,889,530
  Interest-Bearing Deposits                          8,909,050    15,572,363
  Investment Securities - Available for Sale        25,295,797    27,631,904
  Investment Securities-Held to Maturity             1,364,383     1,391,873

  Mortgage-Backed Securities - Available for Sale   51,527,520    43,886,859
  Mortgage-Backed Securities - Held to Maturity      9,889,458    10,959,539
  Federal Home Loan Bank stock                       4,879,600     4,861,700
  Loans Receivable                                 533,664,035   533,649,169
  Accrued Interest and Dividends Receivable          3,899,654     3,739,470
  Property and Equipment, Net                       12,248,075    11,609,414
  Goodwill                                             674,495       688,846
  Other Assets                                       2,950,731     3,235,435
                                                  ------------  ------------
        Total Assets                              $667,207,460  $668,116,102
                                                  ============  ============
LIABILITIES:
-----------
  Deposits                                        $537,079,130  $537,389,845
  Securities sold under agreements to repurchase    14,700,000    14,800,000
  Borrowings                                         7,000,000     7,918,151
  Accounts payable and other liabilities             6,556,482     6,034,947
  Advances by Borrowers for Taxes and Insurance        472,920       928,618
  Deferred Compensation                              1,275,875     1,260,100
  Net Deferred Income Tax Liabilities                2,046,289     2,572,474
  Income Tax Payable                                 1,334,592       770,986
                                                  ------------  ------------
                 Total Liabilities                $570,465,288  $571,675,121
                                                  ============  ============
STOCKHOLDERS' EQUITY:
--------------------
  Serial Preferred Stock, $1.00 Par Value,
    10,000,000 Shares Authorized;
    None Issued or Outstanding                             -             -
  Common Stock, $1.00 Par Value,
    30,000,000 shares Authorized;
    8,517,539 and 8,491,523 Shares Issued
    and Outstanding                               $  8,517,539  $  8,491,523
  Paid-in Capital                                   56,670,363    56,459,066
  Retained Earnings                                 29,785,032    28,638,576
  Net unrealized gain/(loss) on investments
    available for sale                               2,273,963     3,201,816
  Debt Related to ESOP                                <504,725>     <350,000>
                                                  ------------  ------------
  Total Stockholders' Equity                      $ 96,742,172  $ 96,440,981
                                                  ============  ============
  Total Liabilities and Stockholders' Equity      $667,207,460  $668,116,102
                                                  ============  ============

*     All prior year numbers have been restated to reflect the merger of
        Bellingham Bancorporation effective June 19, 1999.

                   (See Notes to Financial Statements)

2

<PAGE>



                          HORIZON FINANCIAL CORP.
               CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

                                                        3 Months Ended
                                                            June 30
                                                       1999        1998*
                                                       ----        ----
INTEREST INCOME:
---------------
  Interest on Loans                                $10,533,781    $10,141,493
  Interest and Dividends on Investment and
    Mortgage-Backed Securities                       1,566,627      1,531,751
                                                   -----------    -----------
       Total Interest Income                        12,100,408     11,673,244

INTEREST EXPENSE:
----------------
  Interest on Deposits                               5,988,484      6,144,642
  Interest on Borrowings                               311,402         81,636
                                                   -----------    -----------
       Total Interest Expense                        6,299,886      6,226,278
                                                   -----------    -----------
       Net Interest Income                           5,800,522      5,446,966
                                                   -----------    -----------
  Provision for Loan Losses                             44,000        344,500
                                                   -----------    -----------
       Net Interest Income After Provision
       For Loan Losses                               5,756,522      5,102,466
                                                   -----------    -----------
NON-INTEREST INCOME:
-------------------
  Service Fees                                         482,646        455,764
  Net Gain (Loss) on Sale of Loans                   <  44,641>      <114,712>
  Net Gain (Loss) on Sale of Investments               185,018        301,836
  Other                                                174,913        359,753
                                                   -----------    -----------
       Total Non-Interest Income                       797,936      1,002,641
                                                   -----------    -----------
NON-INTEREST EXPENSE:
--------------------
  Compensation and Employee Benefits                 1,654,038      1,282,485
  Building Occupancy                                   532,567        381,538
  Other Expenses                                     1,278,245        938,923
                                                   -----------    -----------
       Total Non-Interest Expense                    3,464,850      2,602,946
                                                   -----------    -----------
  Income Before Provision for
    Income Taxes                                     3,089,608      3,502,161
  Provision for Income Taxes                         1,006,222      1,189,391
                                                   -----------    -----------
  Net Income                                        $2,083,386     $2,312,770
                                                   ===========    ===========
  Earnings Per Share:
    Basic Earnings Per Share                              $.25           $.27
    Diluted Earnings Per Share                            $.23           $.27

*        All prior year numbers have been restated to reflect the merger
              of Bellingham Bancorporation effective June 19, 1999.

                    (See Notes to Financial Statements)

3

<PAGE>


<TABLE>
                                                HORIZON FINANCIAL CORP.
                         Consolidated Statements of Changes in Stockholder's Equity
                                     3 Months Ended June 30, 1999 and 1998 *
                                                      (unaudited)

                        Common Stock
                        ------------        Additional               Accum Other     Debt
                      Number                 Paid-In      Retained  Comprehensive  Related
                    Of Shares    At  Par     Capital      Earnings     Income      to ESOP        Total
                    ---------    -------     -------      --------     ------      -------        -----
<S>                 <C>        <C>         <C>          <C>          <C>          <C>         <C>
Balance at 3/31/98  8,460,858  $8,460,858  $55,688,886  $22,993,399  $3,135,677   $<400,000>  $ 89,878,820

Cash div on common
 stock at $.11 per
 share                                                     <823,734>                              <823,734>

Stock opts.
 exercised              2,923       2,923       25,696                                              28,619

DRIP                    7,356       7,356      124,588                                             131,944

Net change in other
Comprehensive income                                                     <1,660>                    <1,660>

Net income                                                2,312,770                              2,312,770
                    ---------  ----------  -----------  -----------  ----------   ---------   ------------
Balance at 6/30/98  8,471,137  $8,471,137  $55,839,170  $24,482,435  $3,134,017   $<400,000>  $ 91,526,759
                    =========  ==========  ===========  ===========  ==========   =========   ============

Balance at 3/31/99  8,491,523  $8,491,523  $56,459,066  $28,638,576  $3,201,816   $<350,000>  $ 96,440,981

Cash div on common                                         <936,930>                              <936,930>
stock at $.11 per share

Stock opts
 exercised             16,638      16,638      106,390                                             123,028

DRIP                    9,378       9,378      104,907                                             114,285

Net change in other
comprehensive income                                                  <$927,853>                  <927,853>

Loan to ESOP                                                                       <154,725>      <154,725>

Net income                                                2,083,386                              2,083,386

                    ---------  ----------  -----------  -----------  ----------   ---------   ------------
Balance at 6/30/99  8,517,539  $8,517,539  $56,670,363  $29,785,032  $2,273,963   $<504,725>   $96,742,172
                    =========  ==========  ===========  ===========  ==========   =========   ============

           * All prior year numbers have been restated to reflect the merger of Bellingham
                               Bancorporation effective June 19, 1999.

                                (See Notes to Financial Statements)
</TABLE>
4

<PAGE>



                          HORIZON FINANCIAL CORP.
                     CONSOLIDATED STATEMENT OF CASH FLOWS

                                                         3 Months Ended
                                                             June 30,
                                                        1999       1998 *
                                                        ----       ----

Cash Flows From Operating Activities:
 Net Income                                        $ 2,083,386    $2,312,770
 Adjustments to Reconcile Net Income
   to Net Cash Provided by Operating Activities:
      Depreciation                                     234,735       121,520

 Provision for loan losses                              44,000       344,500

 Changes in Assets and Liabilities:
  Interest & Dividends Receivable                     <160,184>      211,672

  Interest Payable                                      68,126        20,362

  Federal Income Tax (rec) Payable                     563,606     1,189,391

  Other Assets                                         284,704       <82,331>
  Other Liabilities                                    <41,558>   <3,108,727>
  Goodwill                                              14,351        23,918
                                                    ----------    ----------
 Net Cash Flows from Operating Activities            3,091,166     1,033,075
                                                    ----------    ----------
Cash Flows From Investing Activities:
 Inv in Interest-Bearing Deposits, Net               6,663,313     7,858,065
 FHLB Stock                                            <17,900>       <3,500>
 Purchases of Investment securities-AFS             <5,280,000>     <500,000>
 Proceeds from Sales and Mat of                      7,466,427     4,829,936
 Purchases of Investment Securities-HTM                      -             -
 Proceeds from Sales & Mat of HTM                       27,490     1,002,049
 Purchases of Mtge Backed Securities -  AFS                  -             -
 Sales from Mat of Mtge Backed Sec - AFS             1,635,273     7,415,266
 Purch Mtg. Backed  - HTM                                    -             -
 Mat Mtge Back - HTM                                 1,070,081     1,106,518
 Net Change in Loans                               <10,738,840>  <29,883,848>
 Purchases of Bank Premises and Equipment             <873,396>     <761,069>
                                                    ----------    ----------
 Net Cash Flows From Investing Activities              <47,552>   <8,936,583>
                                                    ----------    ----------

   *    All prior year numbers have been restated to reflect the merger of
               Bellingham Bancorporation effective June 19, 1999.

                      (See Notes to Financial Statements)

5

<PAGE>




                            HORIZON FINANCIAL CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                         3 Months Ended
                                                             June 30,
                                                        1999       1998 *
                                                        ----       ----
Cash Flows From Financing Activities:
  Change in Deposits                                  <310,715>    508,918
  Borrowings                                        <1,018,151>  7,710,353
  Common Stock Issued, Net                             237,313     160,563
  Cash Dividends Paid                                 <936,929>   <823,734>
                                                    ----------   ---------
  Net Cash Flows from Financing Activities          <2,028,482>  7,556,100
                                                    ----------   ---------
Net change in Cash and Cash Equivalents              1,015,132    <347,408>

Cash and Cash Equivalents,
  Beginning of Year                                 10,889,530   9,841,417

Cash and Cash Equivalents,
  End of Year                                       11,904,662   9,494,009

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION

Cash Paid During the Period for:

  Interest Expense                                  $5,988,484   6,145,873

  Income Taxes                                      $  425,000           -

    *  All prior year numbers have been restated to reflect the merger of
              Bellingham Bancorporation effective June 19, 1999.

                  (See Notes to Financial Statements)

6

<PAGE>




                       HORIZON FINANCIAL CORP.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  THREE MONTHS ENDED JUNE 30, 1999
                            (unaudited)

NOTE A - Basis of Presentation
------------------------------

The unaudited consolidated financial statements have been prepared in
accordance with general accepted accounting principles for interim financial
information and with the instructions to the Form 10-Q and Rule 10-01 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation are reflected in the interim financial statements.  The results
of operations for the periods ended June 30, 1999 and 1998 are not necessarily
indicative of the operating results for the full year.  The March 31, 1999,
consolidated statement of financial condition presented with the interim
financial statements has been restated to reflect the merger of Bellingham
Bancorporation effective June 19, 1999.  For audited financial results, refer
to the consolidated financial statements and footnotes thereto included in the
Bank's annual report for the year ended March 31, 1999.

On October 13, 1995, Horizon Bank, a savings bank, ("Bank") reorganized into
the holding company form of ownership ("Reorganization"), resulting in the
Registrant becoming the sole stockholder of the Bank.  Each outstanding share
of common stock of the Bank and options to acquire shares of common stock of
the Bank, became outstanding shares of common stock of the Registrant and
options to acquire shares of common stock of the Registrant, respectively, as
a result of the Reorganization.  The consolidated financial statements for the
three months ended June 30, 1999, include the accounts of Horizon Financial
Corp., the Bank and other subsidiaries of the Bank.  Significant intercompany
balances and transactions have been eliminated in consolidation.

Prior to Reorganization, Horizon Financial Corp. had no material assets or
liabilities and engaged in no business activity.  Subsequent to the
acquisition of the bank, Horizon Financial Corp. has engaged in no significant
activity other than holding the stock of the Bank.

On June 19, 1999 Bellingham Bancorporation merged into Horizon Financial Corp.
This transaction was accounted for as a pooling of interests.  As such, all
prior year numbers have been restated to reflect the merger.

NOTE B - Net Income Per Share
-----------------------------

Basic earnings per share for the three months ended June 30, 1999 and 1998 are
calculated on the basis of 8,500,329 and 8,461,843 weighted average shares
outstanding. Diluted earnings per share for the three months ended June 30,
1999 and 1998 are calculated on the basis of 8,632,551 and 8,640,979 weighted
average share outstanding, respectively.  Diluted EPS figures are computed by
determining the number of additional shares that are deemed outstanding due to
stock options under the treasury stock method.

7

<PAGE>


NOTE C - Reclassification
-------------------------
Certain reclassifications have been made to prior financial statements to
conform with current presentation.  Such reclassifications have no effect on
net income.  All prior year numbers have been restated to reflect the merger
with Bellingham Bancorporation.

8

<PAGE>





                               SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   HORIZON FINANCIAL CORP.


                                   By:  V. Lawrence Evans
                                      ----------------------------------
                                      V. Lawrence Evans
                                      President and Chief Executive Officer


                                   By:  Richard P. Jacobson
                                      ----------------------------------
                                      Richard P. Jacobson
                                      Chief Financial Officer



                                   Dated:  August 27, 1999
                                          -----------------

9

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