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, 2014
Beginning balance	$	13,196		$	2,774		$	25,272		$	29,947		$	6,576		$	55		$	6,000	$	83,820
Provision (credit) for loan and lease losses	(943		)	11,764			(7,517		)	(4,035		)	(548		)	(37		)	—		(1,316		)
	12,253			14,538			17,755			25,912			6,028			18			6,000		82,504
Charge-offs	73			—			37			—			580			8			—		698
Recoveries	606			402			94			13			239			2			—		1,356
Net charge-offs (recoveries)	(533		)	(402		)	(57		)	(13		)	341			6			—		(658		)
Ending balance	$	12,786		$	14,940		$	17,812		$	25,925		$	5,687		$	12		$	6,000	$	83,162

Three Months Ended March 31, 2013
Beginning balance	$	4,987		$	4,510		$	27,836		$	50,574		$	2,421		$	85		$	6,000	$	96,413
Provision (credit) for loan and lease losses	3,406			(971		)	311			(9,838		)	542			(11		)	—		(6,561		)
	8,393			3,539			28,147			40,736			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 (recoveries)	(248		)	(407		)	183			3,420			99			(1		)	—		3,046
Ending balance	$	8,641		$	3,946		$	27,964		$	37,316		$	2,864		$	75		$	6,000	$	86,806

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 $1.3 million in the three months ended March 31, 2014, compared to a credit of $6.6 million in the three months ended March 31, 2013. The decrease in our Allowance is directly attributable to continued improvement in our credit risk profile as evidenced by net recoveries of $0.7 million in the first three months ended March 31, 2014 compared to net charge-offs of $3.0 million in the same prior year period.

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 significant increases to our Provision.