Preliminary Financial Results and Other Matters for the Quarter Ended March 31, 2024: Significant or Non-Recurring Items: During the three months ended March 31, 2024, the Company recorded the following significant or non-recurring items:(1) an expense in Legal and Professional Fees totaling $929,000 related to training and implementation costs for the core systems conversion and professional fees to consultants that were engaged to support the Company in its transition of core and ancillary software and information technology systems.(2) the Company received an annual marketing and card expense reimbursement for qualifying expenditures from its debit card brand provider of $423,000; this was used to offset marketing and advertising costs that included this branding. Liquidity: The Company had secured borrowing line availability at the FHLBank and Federal Reserve Bank of $1.23 billion and $391.9 million, respectively, at March 31, 2024. In addition, at March 31, 2024, the Company had unpledged securities with a market value totaling $344.7 million, which could be pledged as collateral for additional borrowing capacity at either the FHLBank or Federal Reserve Bank, if needed or desired. The Company estimates that its uninsured deposits, excluding deposit accounts of the Company's consolidated subsidiaries, were approximately $710.2 million (15% of total deposits) at March 31, 2024. The Company believes it has ample sources of liquidity. Capital: The Company's capital position remained strong as of March 31, 2024, significantly exceeding the thresholds established by regulators. On a preliminary basis, as of March 31, 2024, the Company's Tier 1 Leverage Ratio was 11.0%, Common Equity Tier 1 Capital Ratio was 11.9%, Tier 1 Capital Ratio was 12.4%, and Total Capital Ratio was 15.1%. The Company's tangible common equity ratio was 9.6% at March 31, 2024. See "Capital" section for additional information regarding the changes to total stockholders' equity. Net Interest Income: Net interest income for the first quarter of 2024 decreased $8.4 million (or approximately 15.7%) to $44.8 million compared to $53.2 million for the first quarter of 2023. Net interest margin was 3.32% for the quarter ended March 31, 2024, compared to 3.99% for the quarter ended March 31, 2023. Net interest income and net interest margin in the fourth quarter of 2023 were $45.1 million and 3.30%, respectively. Competition for deposits and higher market interest rates, along with a shift in the funding mix, resulted in increased funding costs in the first quarter of 2024. Total Loans: Total outstanding loans, excluding mortgage loans held for sale, decreased $3.4 million, or 0.1%, from $4.59 billion at December 31, 2023 to $4.59 billion at March 31, 2024. This decrease was primarily in commercial business loans and commercial real estate loans, with an increase in other residential (multi-family) loans. Asset Quality: Non-performing assets and potential problem loans totaled $28.7 million at March 31, 2024, an increase of $9.6 million from $19.1 million at December 31, 2023. At March 31, 2024, non-performing assets were $21.3 million (0.4% of total assets), an increase of $9.5 million from $11.8 million (0.2% of total assets) at December 31, 2023. The increase in non-performing assets was mainly related to a single loan relationship in the other residential (multi-family) loan category. See "Asset Quality" section for additional information regarding the changes to non-performing assets. SPRINGFIELD, Mo., April 17, 2024 (GLOBE NEWSWIRE) -- Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for Great Southern Bank, today reported that preliminary earnings for the three months ended March 31, 2024, were $1.13 per diluted common share ($13.4 million net income) compared to $1.67 per diluted common share ($20.5 million net income) for the three months ended March 31, 2023. For the quarter ended March 31, 2024, annualized return on average common equity was 9.36%, annualized return on average assets was 0.93%, and annualized net interest margin was 3.32%, compared to 14.88%, 1.43% and 3.99%, respectively, for the quarter ended March 31, 2023. Great Southern President and CEO Joseph W. Turner said, "Our first quarter performance was steady as we continue to operate in an uncertain and challenging economic environment. Great Southern earned $1.13 per diluted common share ($13.4 million) for the first quarter of 2024, compared to $1.67 per diluted common share ($20.5 million) for the first quarter of 2023, and $1.11 per diluted common share ($13.1 million) for the fourth quarter of 2023. Reflective of current market interest rate and credit conditions, key drivers of our performance included continued moderate increases in deposit costs, significant competition for deposits and lower loan origination volume. Total non-interest expense compared to the year ago first quarter was generally unchanged. Total non-interest expense decreased significantly from the fourth quarter of 2023; as we highlighted previously, there were some significant non-recurring expenses that we recorded in the fourth quarter of 2023. "Like many other banks, we experienced overall higher deposit costs during the first quarter of 2024, primarily due to current market interest rates and competitive pressures. While deposit interest expenses increased, the pace of the increase has moderated compared to the last few quarters. These higher funding costs drove a decrease in net interest income – approximately $8.4 million lower in the first quarter of 2024 compared to the first quarter of 2023, and about $331,000 lower compared to the fourth quarter of 2023. Higher funding costs in the first quarter of 2024 were partially caused by a moderate amount of time deposits maturing at rates which are a bit lower than current replacement rates and due to some deposits shifting from non-interest-bearing accounts to interest-bearing deposit products. In addition to the higher funding cost of deposits, net interest income was negatively affected compared to the year-ago quarter by the Company's interest rate swaps (two of which began net settlements in May 2023). During the first quarter of 2024 and fourth quarter of 2023, these two interest rate swaps combined to reduce interest income by $2.8 million in each of those two quarters. These swaps had no impact in quarters prior to the second quarter of 2023. Another interest rate swap contractually terminated March 1, 2024, which reduced interest income by $1.9 million in the first quarter of 2024, compared to $2.2 million in the same period in 2023. With this termination, there will be no further financial impact from this swap." Turner added, "As anticipated, total outstanding loan balances decreased slightly since the end of 2023. The decreases primarily occurred in commercial business loans and commercial real estate loans, partially offset by an increase in other residential (multi-family) loans. Much of the increase in other residential loans was the movement of completed projects from the construction loan category. At the end of March 2024, the pipeline of loan commitments and unfunded lines increased slightly to $1.2 billion, including $680 million in the unfunded portion of construction loans. Overall credit quality metrics remained strong during the quarter, although non-performing assets did increase. Non-performing assets to total assets were 0.37% at March 31, 2024 versus 0.20% at December 31, 2023. Compared to the end of 2023, non-performing assets increased $9.5 million to $21.3 million at the end of March 2024. The majority of this increase was in the other residential (multi-family) loans category and was due to the unique circumstances of one distinct credit relationship. Delinquencies in our loan portfolio remained at low levels and net charge-offs were not significant in the first quarter of 2024. "The Company's capital and liquidity positions remain strong. Total stockholders' equity was $565.2 million as of March 31, 2024, decreasing by $6.7 million from the end of 2023. Our capital remains substantially above regulatory well-capitalized thresholds. Our tangible common equity ratio was 9.6% at the end of the first quarter of 2024. The Company declared a $0.40 per common share dividend and continued to repurchase shares of its common stock, with approximately 112,000 shares repurchased at an average price of $51.44 during the first quarter of 2024. "In terms of liquidity, the Company had available secured funding lines through the Federal Home Loan Bank and Federal Reserve Bank, along with on-balance sheet liquidity totaling approximately $2.1 billion as of March 31, 2024. Great Southern's deposit base remained diverse in terms of customer type and geography, with a relatively low level of uninsured deposits as of March 31, 2024 (approximately 15% of total deposits, excluding internal subsidiary accounts)." Selected Financial Data: (In thousands, except per share data) Three Months EndedMarch 31,       2024     2023   Net interest income $ 44,816   $ 53,192   Provision for credit losses on loans and unfunded commitments   630     674   Non-interest income   6,806     7,889   Non-interest expense   34,422     34,463   Provision for income taxes   3,163     5,488   Net income $ 13,407   $ 20,456                 Earnings per diluted common share $ 1.13   $ 1.67     NET INTEREST INCOME Net interest income for the first quarter of 2024 decreased $8.4 million to $44.8 million, compared to $53.2 million for the first quarter of 2023. Net interest margin was 3.32% in the first quarter of 2024, compared to 3.99% in the same period of 2023, a decrease of 67 basis points. Net interest margin was 3.30% in the fourth quarter of 2023. In comparing the 2024 and 2023 first quarter periods, the average yield on loans increased 37 basis points, the average yield on investment securities increased 14 basis points and the average yield on other interest earning assets increased 71 basis points. The margin contraction primarily resulted from increasing interest rates on all deposit types due to higher market interest rates and increased competition for deposits. The average rate on interest-bearing demand and savings deposits, time deposits and brokered deposits increased 90 basis points, 186 basis points and 72 basis points, respectively, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The average interest rate spread was 2.66% for the three months ended March 31, 2024, compared to 3.53% for the three months ended March 31, 2023 and 2.65% for the three months ended December 31, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities decreased from 133.3% in the three months ended March 31, 2023, to 127.4% in the three months ended March 31, 2024. In October 2018, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans. The notional amount of the swap was $400 million with a contractual termination date in October 2025. As previously disclosed by the Company, on March 2, 2020, the Company and its swap counterparty mutually agreed to terminate this swap, effective immediately. The Company was paid $45.9 million, including accrued but unpaid interest, from its swap counterparty as a result of this termination. This $45.9 million, less the accrued to date interest portion and net of deferred income taxes, is reflected in the Company's stockholders' equity as part of Accumulated Other Comprehensive Income (AOCI) and is being accreted to interest income on loans monthly through the original contractual termination date of October 6, 2025. The Company recorded $2.0 million of interest income related to the swap in each of the three months ended March 31, 2024 and 2023. The Company currently expects to have a sufficient amount of eligible variable rate loans to continue to accrete this interest income ratably in future periods. If this expectation changes and the amount of eligible variable rate loans decreases significantly, the Company may be required to recognize this interest income more rapidly. In March 2022, the Company entered into another interest rate swap transaction as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans. The notional amount of the swap was $300 million, with a contractual termination date of March 1, 2024. Under the terms of the swap, the Company received a fixed rate of interest of 1.6725% and paid a floating rate of interest equal to one-month USD-LIBOR (or the equivalent replacement USD-SOFR rate once USD-LIBOR rate ceased to be available). The floating rate was reset monthly and net settlements of interest due to/from the counterparty also occurred monthly. To the extent that the fixed rate exceeded one-month USD-LIBOR/SOFR, the Company received net interest settlements, which were recorded as loan interest income. If one-month USD-LIBOR/SOFR exceeded the fixed rate of interest, the Company paid net settlements to the counterparty and recorded those net payments as a reduction of interest income on loans. The Company recorded a reduction of loan interest income related to this swap transaction of $1.9 million in the three months ended March 31, 2024, compared to a reduction of $2.2 million in the three months ended March 31, 2023. The Company recorded a reduction of loan interest income related to this swap transaction of $2.9 million in the three months ended December 31, 2023. As this interest rate swap has reached its contractual termination date, there will be no further interest income impacts related to this swap. In July 2022, the Company entered into two additional interest rate swap transactions as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans. The notional amount of each swap is $200 million with an effective date of May 1, 2023 and a termination date of May 1, 2028. Under the terms of one swap, the Company receives a fixed rate of interest of 2.628% and pays a floating rate of interest equal to one-month USD-SOFR OIS. Under the terms of the other swap, the Company receives a fixed rate of interest of 5.725% and pays a floating rate of interest equal to one-month USD-Prime. In each case, the floating rate resets monthly and net settlements of interest due to/from the counterparty also occur monthly. To the extent the fixed rate of interest exceeds the floating rate of interest, the Company receives net interest settlements, which are recorded as loan interest income. If the floating rate of interest exceeds the fixed rate of interest, the Company pays net settlements to the counterparty and records those net payments as a reduction of interest income on loans. The Company recorded a reduction of loan interest income related to these swap transactions of $2.8 million in the three months ended March 31, 2024, compared to no reduction of interest income in the 2023 period. At March 31, 2024, the USD-Prime rate was 8.50% and the one-month USD-SOFR OIS rate was 5.32240%. The Company's net interest income was negatively impacted in the first quarter of 2024 by the high level of competition for deposits due to asset growth across the industry and the lingering effects of liquidity events at several banks in March 2023. The Company also had a substantial amount of time deposits maturing at relatively low rates after the first quarter of 2023, and these time deposits either renewed at higher rates or left the Company, in turn requiring their replacement with other funding sources at then-current higher market rates. As of March 31, 2024, time deposit maturities over the next 12 months were as follows: within three months -- $368.5 million with a weighted-average rate of 4.31%; within three to six months -- $419.6 million with a weighted-average rate of 4.47%; and within six to twelve months -- $390.9 million with a weighted-average rate of 4.17%. Based on time deposit market rates in March 2024, replacement rates for these maturing time deposits are likely to be approximately 4.00-4.50%. For additional information on net interest income components, see the "Average Balances, Interest Rates and Yields" tables in this release. NON-INTEREST INCOME For the quarter ended March 31, 2024, non-interest income decreased $1.1 million to $6.8 million when compared to the quarter ended March 31, 2023, primarily as a result of the following items: Overdraft and Insufficient funds fees: Overdraft and Insufficient funds fees decreased $607,000 compared to the prior year quarter. This decrease was primarily due to a continuation of a multi-year trend whereby our customers are choosing to forego authorizing payments of certain items which exceed their account balances, resulting in fewer overdrafts in checking accounts and related fees. Point-of-sale and ATM fees: Point-of-sale and ATM fees decreased $518,000 compared to the prior year quarter. This decrease was primarily due to a portion of these transactions now being routed through channels with lower fees to us, which we expect will continue in future periods, and slightly lower usage of debit cards by our customers. Other income: Other income decreased $465,000 compared to the prior year quarter. In the 2024 period, the Company recorded $404,000 related to activity incentives for debit card usage, compared to $799,000 in the 2023 period. NON-INTEREST EXPENSE For the quarter ended March 31, 2024, non-interest expense decreased $41,000 to $34.4 million when compared to the quarter ended March 31, 2023, primarily as a result of the following items: Advertising: Advertising fees decreased $297,000 from the prior year quarter, to $350,000. In the 2024 period, the Company received an annual marketing and card expense reimbursement for qualifying expenditures from its debit card brand provider of $423,000; this was used to offset marketing and advertising costs that included this branding. In the previous year period, $321,000 of this annual reimbursement was applied to marketing and advertising expenses. Legal, Audit and Other Professional Fees: Legal, audit and other professional fees decreased $256,000 from the prior year quarter, to $1.7 million. In the 2023 period, the Company expensed a total of $1.3 million related to legal expenses and training and implementation costs for the core systems conversion and professional fees to consultants engaged to support the Company's transition of core and ancillary software and information technology systems. In the 2024 period, this expense was $929,000. Salaries and employee benefits: Salaries and employee benefits increased $453,000 from the prior year quarter. A majority of this increase related to normal annual merit increases in various lending and operations areas. Insurance: Insurance expense increased $277,000 from the prior year quarter. The increase was primarily due to increases in deposit insurance rates for the FDIC's Deposit Insurance Fund, which went into effect in 2023. The Company's efficiency ratio for the quarter ended March 31, 2024, was 66.68% compared to 56.42% for the same quarter in 2023. The Company's ratio of non-interest expense to average assets was 2.39% and 2.42% for the three months ended March 31, 2024 and 2023, respectively. Average assets for the three months ended March 31, 2024 increased $57.8 million, or 1.0%, compared to the three months ended March 31, 2023, primarily due to an increase in net loans receivable and interest bearing cash equivalents, partially offset by a decrease in investment securities. INCOME TAXES For the three months ended March 31, 2024 and 2023, the Company's effective tax rate was 19.1% and 21.2%, respectively. These effective rates were near or below the statutory federal tax rate of 21%, due primarily to the utilization of certain investment tax credits and the Company's tax-exempt investments and tax-exempt loans, which reduced the Company's effective tax rate. The Company's effective tax rate may fluctuate in future periods as it is impacted by the level and timing of the Company's utilization of tax credits, the level of tax-exempt investments and loans, the amount of taxable income in various state jurisdictions and the overall level of pre-tax income. State tax expense estimates continually evolve as taxable income and apportionment between states is analyzed. The Company's effective income tax rate is currently generally expected to remain at or below the statutory federal tax rate due primarily to the factors noted above. The Company currently expects its effective tax rate (combined federal and state) will be approximately 18.5% to 20.5% in future periods, primarily due to additional investment tax credits expected to be utilized beginning in 2024. CAPITAL As of March 31, 2024, total stockholders' equity and common stockholders' equity were each $565.2 million (9.8% of total assets), equivalent to a book value of $48.31 per common share. Total stockholders' equity and common stockholders' equity at December 31, 2023, were each $571.8 million (9.8% of total assets), equivalent to a book value of $48.44 per common share. At March 31, 2024, the Company's tangible common equity to tangible assets ratio was 9.6%, compared to 9.7% at December 31, 2023. See "Non-GAAP Financial Measures." Included in stockholders' equity at March 31, 2024 and December 31, 2023, were unrealized losses (net of taxes) on the Company's available-for-sale investment securities totaling $45.9 million and $40.5 million, respectively. This change in net unrealized loss during the three months ended March 31, 2024, primarily resulted from increasing intermediate-term market interest rates, which generally decreased the fair value of investment securities. In addition, included in stockholders' equity at March 31, 2024, were realized gains (net of taxes) on the Company's terminated cash flow hedge (interest rate swap), totaling $9.5 million. This amount, plus associated deferred taxes, is expected to be accreted to interest income over the remaining term of the original interest rate swap contract, which was to end in October 2025. At March 31, 2024, the remaining pre-tax amount to be recorded in interest income was $12.3 million. The net effect on total stockholders' equity over time will be no impact as the reduction of this realized gain will be offset by an increase in retained earnings (as the interest income flows through pre-tax income). Also included in stockholders' equity at March 31, 2024, was an unrealized loss (net of taxes) on the Company's two outstanding cash flow hedges (interest rate swaps) totaling $16.0 million. Increases in market interest rates since the inception of these hedges have caused their fair values to decrease. During the three months ended December 31, 2023, decreasing forward swap rates resulted in increasing fair values of these hedges. However, during the three months ended March 31, 2024, increasing forward swap rates resulted in decreasing fair values of these hedges. As noted above, total stockholders' equity decreased $6.7 million, from $571.8 million at December 31, 2023 to $565.2 million at March 31, 2024. Stockholders' equity decreased due to repurchases of the Company's common stock totaling $5.8 million and dividends declared on common stock of $4.7 million. Accumulated Other Comprehensive Loss increased $10.0 million (decrease to stockholders' equity) during the three month ended March 31, 2024, primarily due to changes in the market value of available-for-sale securities and changes in the fair value of cash flow hedges. Partially offsetting these decreases were net income of $13.4 million for the three month ended March 31, 2024 and an increase of $692,000 due to stock option exercises. The adoption of a new accounting standard (ASU 2023-02) in the first quarter of 2024 also decreased equity by $223,000. The Company had unrealized losses on its portfolio of held-to-maturity investment securities, which totaled $25.6 million at March 31, 2024, that were not included in its total capital balance. If these held-to-maturity unrealized losses were included in capital (net of taxes), they would have decreased total stockholder's equity by $19.3 million at March 31, 2024. This amount was equal to 3.4% of total stockholders' equity of $565.2 million. On a preliminary basis, as of March 31, 2024, the Company's Tier 1 Leverage Ratio was 11.0%, Common Equity Tier 1 Capital Ratio was 11.9%, Tier 1 Capital Ratio was 12.4%, and Total Capital Ratio was 15.1%. On March 31, 2024, and on a preliminary basis, the Bank's Tier 1 Leverage Ratio was 11.5%, Common Equity Tier 1 Capital Ratio was 13.0%, Tier 1 Capital Ratio was 13.0%, and Total Capital Ratio was 14.2%. In December 2022, the Company's Board of Directors authorized the purchase of up to one million shares of the Company's common stock. At March 31, 2024, a total of approximately 615,000 shares remained available under our stock repurchase authorization. During the three months ended March 31, 2024, the Company repurchased 112,362 shares of its common stock at an average price of $51.44 and declared a regular quarterly cash dividend of $0.40 per common share, which, combined, reduced stockholders' equity by $10.5 million. LIQUIDITY AND DEPOSITS Liquidity is a measure of the Company's ability to generate sufficient cash to meet present and future financial obligations in a timely manner. Liquid assets include cash, interest-bearing deposits with financial institutions and certain investment securities and loans. As a result of the Company's ability to generate liquidity primarily through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors' requirements and meet its borrowers' credit needs. The Company's primary sources of funds are customer deposits, FHLBank advances, other borrowings, loan repayments, unpledged securities, proceeds from sales of loans and available-for-sale securities and funds provided from operations. The Company utilizes some or all of these sources of funds depending on the comparative costs and availability at the time. The Company has from time to time chosen not to pay rates on deposits as high as the rates paid by certain of its competitors and, when believed to be appropriate, supplements deposits with less expensive alternative sources of funds. At March 31, 2024, the Company had the following available secured lines and on-balance sheet liquidity:                March 31, 2024 Federal Home Loan Bank line      $ 1,227.2 million Federal Reserve Bank line     391.9 million Cash and cash equivalents     171.4 million Unpledged securities – Available-for-sale     317.9 million Unpledged securities – Held-to-maturity     26.8 million         During the three months ended March 31, 2024, the Company's total deposits increased $51.7 million. Interest-bearing checking balances increased $79.3 million (about 3.6%), primarily in money market accounts, while non-interest-bearing checking balances decreased $18.8 million (about 2.1%). Brokered deposits increased $24.0 million. Time deposits generated through the Company's banking center and corporate services networks decreased $29.7 million. At March 31, 2024, the Company had the following deposit balances:                March 31, 2024 Interest-bearing checking      $ 2,295.7 million Non-interest-bearing checking     876.7 million Time deposits     915.5 million Brokered deposits     685.5 million LOANS Total net loans, excluding mortgage loans held for sale, decreased $3.4 million, or 0.1%, from December 31, 2023, to $4.59 billion at March 31, 2024. This decrease was primarily in commercial business loans ($58.6 million decrease), commercial real estate loans ($18.4 million decrease), construction loans ($11.8 million decrease) and one- to four-family residential loans ($10.2 million decrease), significantly offset by an increase in other residential (multi-family) loans ($98.2 million increase). The pipeline of loan commitments increased slightly in the first quarter of 2024. The unfunded portion of construction loans remained significant, but declined, in the first quarter of 2024. As construction projects were completed, the related loans were either moved from the construction category to the appropriate permanent loan categories or paid off. For further information about the Company's loan portfolio, please see the quarterly loan portfolio presentation available on the Company's Investor Relations website under "Presentations." Loan commitments and the unfunded portion of loans at the dates indicated were as follows (in thousands):     March 31, 2024   December 31, 2023   December 31, 2022   December 31, 2021 Closed non-construction loans with unused available lines                 Secured by real estate (one- to four-family) $ 206,992 $ 203,964 $ 199,182 $ 175,682 Secured by real estate (not one- to four-family)   —   —   —   23,752 Not secured by real estate – commercial business   120,387   82,435   104,452   91,786                   Closed construction loans with unused available lines                 Secured by real estate (one-to four-family)   103,839   101,545   100,669   74,501 Secured by real estate (not one-to four-family)   680,149   719,039   1,444,450   1,092,029                   Loan commitments not closed                 Secured by real estate (one-to four-family)   20,410   12,347   16,819   53,529 Secured by real estate (not one-to four-family)   50,858   48,153   157,645   146,826 Not secured by real estate – commercial business   9,022   11,763   50,145   12,920                     $ 1,191,657 $ 1,179,246 $ 2,073,362 $ 1,671,025 PROVISION FOR CREDIT LOSSES AND ALLOWANCE FOR CREDIT LOSSES Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term, as well as for changes in economic conditions, including but not limited to changes in the national unemployment rate, commercial real estate price index, consumer sentiment, gross domestic product (GDP) and construction spending. Challenging or worsening economic conditions from higher inflation or interest rates, COVID-19 and subsequent variant outbreaks or similar events, global unrest or other factors may lead to increased losses in the portfolio and/or requirements for an increase in provision expense. Management maintains various controls in an attempt to identify and limit future losses, such as a watch list of problem loans and potential problem loans, documented loan administration policies and loan review staff to review the quality and anticipated collectability of the portfolio. Additional procedures provide for frequent management review of the loan portfolio based on loan size, loan type, delinquencies, financial analysis, ongoing correspondence with borrowers and problem loan workouts. Management determines which loans are collateral-dependent, evaluates risk of loss and makes additional provisions to expense, if necessary, to maintain the allowance at a satisfactory level. During the quarter ended March 31, 2024, the Company recorded provision expense of $500,000 on its portfolio of outstanding loans, compared to a $1.5 million provision recorded for the quarter ended March 31, 2023. Total net charge-offs were $83,000 for the three months ended March 31, 2024, compared to net recoveries of $7,000 in the three months ended March 31, 2023. For the three months ended March 31, 2024, the Company recorded a provision for losses on unfunded commitments of $130,000, compared to a negative provision of $826,000 for the three months ended March 31, 2023. Total unfunded commitments decreased significantly during 2023, resulting in a lower required reserve, while total unfunded commitments did not change significantly in the three months ended March 31, 2024. General market conditions and unique circumstances related to specific industries and individual projects contribute to the level of provisions and charge-offs. The Bank's allowance for credit losses as a percentage of total loans was 1.40% and 1.39% at March 31, 2024 and December 31, 2023, respectively. Management considers the allowance for credit losses adequate to cover losses inherent in the Bank's loan portfolio at March 31, 2024, based on recent reviews of the Bank's loan portfolio and current economic conditions. If challenging economic conditions were to last longer than anticipated or deteriorate further or management's assessment of the loan portfolio were to change, additional credit loss provisions could be required, thereby adversely affecting the Company's future results of operations and financial condition. ASSET QUALITY At March 31, 2024, non-performing assets were $21.3 million, an increase of $9.5 million from $11.8 million at December 31, 2023. Non-performing assets as a percentage of total assets were 0.37% at March 31, 2024, compared to 0.20% at December 31, 2023. As a result of changes in loan portfolio composition, changes in economic and market conditions and other factors specific to a borrower's circumstances, the level of non-performing assets will fluctuate. Compared to December 31, 2023, non-performing loans increased $9.6 million to $21.3 million at March 31, 2024. The majority of this increase was in the non-performing other residential (multi-family) loans category, which increased $9.6 million from December 31, 2023. Activity in the non-performing loans categories during the quarter ended March 31, 2024, was as follows:     BeginningBalance,January 1   Additionsto Non-Performing   Removedfrom Non-Performing   Transfersto PotentialProblemLoans   Transfers toForeclosedAssets andRepossessions   Charge-Offs   Payments   EndingBalance,March 31     (In thousands)                                   One- to four-family construction $ — $ — $ —   $ — $ — $ —   $ —   $ — Subdivision construction   —   —   —     —   —   —     —     — Land development   384   —   —     —   —   —     —     384 Commercial construction   —   —   —     —   —   —     —     — One- to four-family residential   722   68   (148 )   —   —   —     (16 )   626 Other residential (multi-family)   —   9,572   —     —   —   —     —     9,572 Commercial real estate   10,552   461   —     —   —   —     (401 )   10,612 Commercial business   31   —   —     —   —   (31 )   —     — Consumer   59   41   —     —   —   (8 )   (15 )   77 Total non-performing loans $ 11,748 $ 10,142 $ (148 ) $ — $ — $ (39 ) $ (432 ) $ 21,271                                   At March 31, 2024, the non-performing commercial real estate category included five loans, two of which were added during the current quarter. The largest relationship in the category, which totaled $7.9 million, or 74.7% of the total category, was added to non-performing loans during the second quarter of 2023 and is collateralized by an office building in Missouri. Another loan totaling $2.2 million, which was a purchased participation loan originally obtained through an FDIC-assisted acquisition, was included in non-performing loans at December 31, 2023 and March 31, 2024. This loan is collateralized by a low-income assisted living facility in Wisconsin. During the quarter ended March 31, 2024, material terms were changed on this loan, including the Company purchasing the lead participant's $220,000 interest in this note. The other residential (multi-family) category of non-performing loans included one loan, which totaled $9.6 million and was added during the current quarter. The Company purchased a participation interest in this loan in 2018, and was not the lead lender for the relationship. This loan was collateralized by a student housing project in Texas and was foreclosed upon in April 2024. The Company does not currently expect any material charge-off on this foreclosed asset. The non-performing one- to four-family residential category included three loans, one of which was added during the current quarter. The largest relationship in the category totaled $529,000, or 84.4% of the category. The non-performing land development category consisted of one loan added during the first quarter of 2021, which totaled $384,000 and is collateralized by unimproved zoned vacant ground in southern Illinois. The non-performing consumer category included eight loans, five of which were added during the current quarter. Potential problem loans increased $16,000 from December 31, 2023. The increase during the quarter was primarily due to multiple loans totaling $109,000 added to potential problem loans, partially offset by $72,000 in loan payments and $21,000 in charge offs. Activity in the potential problem loans category during the quarter ended March 31, 2024, was as follows:     BeginningBalance,January 1   Additions toPotentialProblem   RemovedfromPotentialProblem   Transfersto Non-Performing   Transfers toForeclosedAssets andRepossessions   Charge-Offs   Loan Advances (Payments)   EndingBalance,March 31       (In thousands)                                     One- to four-family construction $ — $ — $ — $ — $ — $ —   $ —   $ —   Subdivision construction   —   —   —   —   —   —     —     —   Land development   —   —   —   —   —   —     —     —   Commercial construction   —   —   —   —   —   —     —     —   One- to four-family residential   158   25   —   —   —   —     (62 )   121   Other residential (multi-family)   7,162   —   —   —   —   —     —     7,162   Commercial real estate   —   —   —   —   —   —     —     —   Commercial business   —   13   —   —   —   —     —     13   Consumer   54   71   —   —   —   (21 )   (10 )   94   Total potential problem loans $ 7,374 $ 109 $