6. ALLOWANCE FOR LOAN AND LEASE LOSSES

The following table presents by class, the activity in the Allowance for the periods indicated:

	Commercial,			Real estate
	financial &						Mortgage -			Mortgage -
	agricultural			Construction			residential			commercial			Consumer			Leases			Unallocated		Total
	(Dollars in thousands)
Three Months Ended March 31, 2013
Beginning balance	$	4,987		$	4,510		$	29,910		$	48,500		$	2,421		$	85		$	6,000	$	96,413
Provision (credit) for loan and lease losses	3,406			(971		)	264			(9,791		)	542			(11		)	—		(6,561		)
	8,393			3,539			30,174			38,709			2,963			74			6,000		89,852
Charge-offs	(244		)	(78		)	(414		)	(3,674		)	(315		)	—			—		(4,725		)
Recoveries	492			485			231			254			216			1			—		1,679
Net charge-offs	248			407			(183		)	(3,420		)	(99		)	1			—		(3,046		)
Ending balance	$	8,641		$	3,946		$	29,991		$	35,289		$	2,864		$	75		$	6,000	$	86,806

Three Months Ended March 31, 2012
Beginning balance	$	6,110		$	28,630		$	32,736		$	47,729		$	2,335		$	553		$	4,000	$	122,093
Provision (credit) for loan and lease losses	603			(6,049		)	792			(1,820		)	(170		)	(346		)	2,000		(4,990		)
	6,713			22,581			33,528			45,909			2,165			207			6,000		117,103
Charge-offs	(1,682		)	(1,626		)	(200		)	—			(426		)	(28		)	—		(3,962		)
Recoveries	270			425			117			2			366			1			—		1,181
Net charge-offs	(1,412		)	(1,201		)	(83		)	2			(60		)	(27		)	—		(2,781		)
Ending balance	$	5,301		$	21,380		$	33,445		$	45,911		$	2,105		$	180		$	6,000	$	114,322

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the Allowance.

Our Provision was a credit of $6.6 million in the three months ended March 31, 2013, compared to a credit of $5.0 million in the three months ended March 31, 2012. The decrease in our Allowance is directly attributable to continued improvement in our credit risk profile as evidenced by declines in nonperforming assets and lower levels of net charge-offs.

In determining the amount of our Allowance, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions, as well as regulatory requirements and input. If our assumptions prove to be incorrect, our current Allowance may not be sufficient to cover future loan losses and we may experience increases to our Provision.