AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows page 38 Year ended December 31 (In thousands) 2011 2010 2009 Cash flows from operating activities: Net earnings $ 5,538 $ 5,346 $ 2,404 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for loan losses 2,450 3,580 5,250 Depreciation and amortization 665 579 477 Premium amortization and discount accretion, net 2,445 2,071 1,562 Deferred tax benefit (368) (777) (2,190) Net (gain) loss on securities available for sale (878) (1,423) 1,723 Net gain on sale of loans held for sale (1,680) (2,143) (3,002) Loss on nonmarketable equity investments — — 1,980 Net loss (gain) on other real estate owned 1,830 1,217 (64) Loans originated for sale (71,350) (100,721) (157,041) Proceeds from sale of loans 73,550 102,940 158,067 Net loss on disposition of premises and equipment — 4 — Increase in cash surrender value of bank owned life insurance (460) (452) (424) Loss on prepayment of long-term debt — 679 — Loss on affordable housing partnership investments 646 323 228 Net decrease (increase) in other assets 1,015 1,694 (4,409) Net increase (decrease) in accrued expenses and other liabilities 685 (1,034) (240) Net cash provided by operating activities $ 14,088 $ 11,883 $ 4,321 Cash flows from investing activities: Proceeds from sales of securities available-for-sale 128,715 180,206 146,966 Proceeds from maturities of securities available-for-sale 95,641 194,570 105,497 Purchase of securities available-for-sale (200,106) (359,547) (288,633) Increase in loans, net (2,824) (3,221) (17,593) Net purchases of premises and equipment (1,568) (146) (824) Proceeds from sale of other real estate owned 1,966 660 724 Improvements to other real estate owned — — (129) Capital contributions to affordable housing limited partnerships (4,378) (1,500) — Net decrease (increase) in FHLB stock 856 227 (107) Net cash provided by (used in) investing activities $ 18,302 $ 11,249 $ (54,099) Cash flows from financing activities: Net increase (decrease) in noninterest-bearing deposits 18,616 11,163 (1,516) Net (decrease) increase in interest-bearing deposits (6,191) 16,555 30,082 Net increase (decrease) in federal funds purchased and securities sold  under agreements to repurchase 120 (13,275) 5,050 Repayments or retirement of long-term debt (8,018) (25,697) (5,019) Stock repurchases — (9) (90) Proceeds from sale of treasury stock 1 2 3 Dividends paid (2,914) (2,842) (2,770) Net cash provided by (used in) financing activities $ 1,614 $ (14,103) $ 25,740 Net change in cash and cash equivalents $ 34,004 $ 9,029 $ (24,038) Cash and cash equivalents at beginning of period 21,424 12,395 36,433 Cash and cash equivalents at end of period $ 55,428 $ 21,424 $ 12,395 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 11,713 $ 15,044 $ 18,560 Income taxes 347 2,113 1,830 Supplemental disclosure of non-cash transactions: Real estate acquired through foreclosure $ 3,569 $ 2,710 $ 7,499 See accompanying notes to consolidated financial statements