Banner Corporation (NASDAQ:BANR), the parent company of Banner Bank and Islanders Bank, today reported that net income increased to $9.2 million in the first quarter of 2012, compared to net income of $5.1 million in the preceding quarter. In the first quarter a year ago Banner reported a net loss of $7.8 million. “Banner’s first quarter operating results provided further evidence, and confirmed through the hard work of our employees throughout the Company, that we are successfully executing on our strategies to strengthen our franchise and deliver sustainable profitability,” said Mark J. Grescovich, President and Chief Executive Officer. “Our return to profitability for the last four quarters reflects significant progress on the key objectives of our turnaround plan. Banner’s operating performance again showed improvement on every key metric compared to the first quarter a year ago. Our first quarter revenues from core operations* (net interest income before the provision for loan losses plus total other operating income excluding fair value and other-than-temporary impairment (OTTI) adjustments) increased 7% when compared to the first quarter a year ago. Our net interest margin expanded to 4.11% in the first quarter compared to 3.94% in the first quarter a year ago, our deposit fee income remained strong, increasing by 11% compared to the first quarter a year ago, and revenues from mortgage banking, which increased by 37% compared to the immediately preceding quarter, were nearly three times larger than the first quarter of 2011. This progress clearly demonstrates that our strategic turnaround plan is effective and is building shareholder value.” In the first quarter of 2012, Banner paid a $1.6 million dividend on the $124 million of senior preferred stock it issued to the U.S. Department of the Treasury under the Capital Purchase Program. In addition, Banner accrued $454,000 for related discount accretion. Including the preferred stock dividend and related accretion, net income available to common shareholders was $0.40 per share for the first quarter of 2012, compared to net income available to common shareholders of $0.18 per share in the fourth quarter of 2011 and a net loss to common shareholders of $0.60 per share for the first quarter a year ago.