Banner earned $48.9m in the second quarter, up from a year ago but down from a strong first quarter

Banner's profit went two ways at once. The Walla Walla parent of Banner Bank reported second-quarter net income of $48.9m, or $1.43 per diluted share, up from $45.5m, or $1.31, a year earlier, but down from $54.7m, or $1.60, in the first quarter.

The margin explains the annual gain. Net interest income rose to $153.7m from $144.4m a year earlier, and the net interest margin on a tax-equivalent basis rose 21 basis points to 4.13 percent as funding costs eased. Against the prior quarter the margin barely moved, up two basis points, and net interest income rose on one additional calendar day and a larger balance of earning assets.

The sequential drop is mostly provisioning. Banner booked a $3.8m provision for credit losses this quarter, after recapturing $796,000 of reserves in the first quarter, a swing that lowers reported profit without any stated deterioration in the loan book. Return on average assets was 1.20 percent, down from 1.37 percent. The board declared a dividend of $0.52 per share, and Chief Executive Mark Grescovich pointed to the bank's credit quality and funding.