If we exclude the yield adjustment on covered loans our tax exempt net interest margin was 3.50% for the fourth quarter compared with 3.53% for the third quarter and 3.47% for the year ago quarter. If we include the yield adjustment on formally covered loans as we will report going forward for future quarters, our tax exempt net interest margin was 3.58% for the fourth quarter of 2014.
During the fourth quarter, our commercial real estate loans increased by $14.4 million, our agribusiness loans increased by $2.3 million and our dairy and livestock loan portfolio increased by $85.6 million. Dairy and livestock loans typically increased significantly during the fourth quarter as many dairy owners choose to defer their milk checks into the first quarter of the following year or prepay their fee expense.
In terms of loan quality, nonperforming assets defined as nonaccrual loans plus OREO were $37.8 million for the fourth quarter of 2014 compared with $43.3 million for the prior quarter. The decrease was primarily due to reductions of $1.9 million in non-performing commercial and industrial loans, $1.4 million in dairy and livestock and agribusiness loans and $1.1 million in commercial real estate loans.
The allowance for loan and lease losses was $59.8 million or 1.57% of total loans at December 31st, 2014, compared with $59.6 million or 1.67% of non-covered loans at September 30, 2014. Net recoveries for the fourth quarter were $243,000 compared with net charge-offs of $392,000 for the third quarter of 2014. Net recoveries for 2014 totaled $690,000, this represents the first year of net recoveries since 2006.
At December 31st, 2014, we had loans delinquent 30 to 89 days of $1.7 million or 0.04% of total loans. Classified loans for the fourth quarter were $160.7 million. This included $21.2 million of formally covered loans. Classified loans totaled $147.2 million for the prior quarter. We will have more detailed information on classified loans available in our year end form 10-Q.
Now I would like to discuss deposits. For the fourth quarter of 2014, our noninterest bearing deposits decreased to $2.87 billion compared with $3.04 billion for the prior quarter. Noninterest bearing deposits were up $303 million from the same quarter a year ago. This represents an 11.8% increase year over year. Noninterest bearing deposits represent 51.14% of our total deposits. We believe the decrease in quarter over quarter noninterest bearing deposits was result of timing. We experienced a substantial decline in our total natural deposits at year end primary due to the volume of real estate closings. For the most part these deposits have rebounded to where they were before.
