CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CASH FLOWS See notes to consolidated financial statements. 26 =================================================================================================================================== Year Ended December 31, (in thousands, except share data) 2003 2002 2001 =================================================================================================================================== Operating activities: Net income ......................................................... $ 27,571 $ 27,836 $ 22,209 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses ........................................ 9,477 7,174 3,576 Depreciation and amortization..................................... 4,769 4,273 2,984 Mortgage loans originated for sale ............................... (212,243) (140,584) (22,705) Proceeds from sales of mortgage loans ............................ 230,745 126,905 22,398 Net change in Interest receivable .......................................... 1,368 763 2,514 Interest payable ............................................. (1,695) (1,318) (1,727) Other adjustments ................................................ 5,677 (7,354) 1,963 --------- --------- --------- Net cash provided by operating activities .................... 65,669 17,695 31,212 --------- --------- --------- Investing activities: Net change in interest-bearing deposits ............................ (4,573) 10,729 (2,988) Purchases of Securities available for sale .................................... (260,467) (182,511) (34,500) Proceeds from maturities of Securities available for sale .................................... 174,003 164,273 108,692 Securities held to maturity ...................................... 4,307 3,612 Proceeds from sales of Securities available for sale .................................... 58,245 21,363 770 Net change in loans ................................................ (56,825) (100,650) (50,384) Net cash received (paid) in acquisition............................. (7,793) (12,532) 5,261 Other adjustments .................................................. (6,355) (5,494) (2,993) --------- --------- --------- Net cash provided (used) by investing activities ............. (103,765) (100,515) 27,470 --------- --------- --------- Cash flows from financing activities: Net change in Demand and savings deposits ...................................... 39,400 34,818 55,640 Certificates of deposit and other time deposits .................. 14,476 (26,662) (72,940) Borrowings ....................................................... (11,452) 106,934 10,823 Cash dividends ..................................................... (16,557) (13,995) (11,127) Stock issued under employee benefit plans .......................... 819 658 504 Stock issued under dividend reinvestment and stock purchase plan .......................................... 1,224 951 803 Stock options exercised ............................................ 1,191 494 225 Stock redeemed ..................................................... (488) (4,333) (7,023) Cash paid in lieu of issuing fractional shares ..................... (28) (35) (22) --------- --------- --------- Net cash provided (used) by financing activities ............. 28,585 98,830 (23,117) --------- --------- --------- Net change in cash and cash equivalents ............................... (9,511) 16,010 35,565 Cash and cash equivalents, beginning of year .......................... 119,038 103,028 67,463 --------- --------- --------- Cash and cash equivalents, end of year ................................ $ 109,527 $ 119,038 $ 103,028 ========= ========= ========= Additional cash flows information: Interest paid ....................................................... $ 53,727 $ 53,228 $ 56,921 Income tax paid ..................................................... 13,952 14,313 12,440