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 -
	Aagricultural			Construction			Residential			Commercial			Consumer		Leases			Unallocated		Total
	(Dollars in thousands)
Three Months Ended September 30, 2013
Beginning balance	$	9,653		$	6,460		$	25,613		$	35,461		$	3,848	$	70		$	6,000	$	87,105
Provision (credit) for loan and lease losses	3,385			(2,505		)	1,141			(6,486		)	1,292		(16		)	—		(3,189		)
	13,038			3,955			26,754			28,975			5,140		54			6,000		83,916
Charge-offs	360			3			63			—			466		—			—		892
Recoveries	259			569			91			1,137			146		2			—		2,204
Net charge-offs (recoveries)	101			(566		)	(28		)	(1,137		)	320		(2		)	—		(1,312		)
Ending balance	$	12,937		$	4,521		$	26,782		$	30,112		$	4,820	$	56		$	6,000	$	85,228

Three Months Ended September 30, 2012
Beginning balance	$	6,262		$	12,331		$	29,821		$	47,242		$	2,008	$	150		$	6,000	$	103,814
Provision (credit) for loan and lease losses	(465		)	(3,127		)	2,981			(4,780		)	434		(25		)	—		(4,982		)
	5,797			9,204			32,802			42,462			2,442		125			6,000		98,832
Charge-offs	476			1,813			757			—			398		—			—		3,444
Recoveries	208			353			236			472			269		2			—		1,540
Net charge-offs (recoveries)	268			1,460			521			(472		)	129		(2		)	—		1,904
Ending balance	$	5,529		$	7,744		$	32,281		$	42,934		$	2,313	$	127		$	6,000	$	96,928

Nine Months Ended September 30, 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	9,230			(2,432		)	(2,836		)	(16,808		)	2,903		(34		)	—		(9,977		)
	14,217			2,078			27,074			31,692			5,324		51			6,000		86,436
Charge-offs	2,201			358			857			3,674			1,023		—			—		8,113
Recoveries	921			2,801			565			2,094			519		5			—		6,905
Net charge-offs (recoveries)	1,280			(2,443		)	292			1,580			504		(5		)	—		1,208
Ending balance	$	12,937		$	4,521		$	26,782		$	30,112		$	4,820	$	56		$	6,000	$	85,228

Nine Months Ended September 30, 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	1,661			(15,255		)	60			(4,951		)	286		(403		)	2,000		(16,602		)
	7,771			13,375			32,796			42,778			2,621		150			6,000		105,491
Charge-offs	3,552			7,154			1,130			320			1,147		28			—		13,331
Recoveries	1,310			1,523			615			476			839		5			—		4,768
Net charge-offs (recoveries)	2,242			5,631			515			(156		)	308		23			—		8,563
Ending balance	$	5,529		$	7,744		$	32,281		$	42,934		$	2,313	$	127		$	6,000	$	96,928

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 $3.2 million and $10.0 million in the third quarter and first nine months of 2013, respectively, compared to a credit of $5.0 million and $16.6 million in the third quarter and first nine months of 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.