b'CNB FINANCIAL SERVICES, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWSYEARS ENDED DECEMBER 31, 2018 AND 20172018 2017CASH FLOWS FROM OPERATING ACTIVITIES Net income $2,869,509 $2,177,286 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization on premises, equipment and software527,741498,594 Provision for (recovery of) loan losses201,259 (398,640) Deferred income taxes454,686 1,917,141 Net (gain) on sales and calls of securities(18,549) (189,810) Net (gain) on sale of other real estate owned (9,370) (16,021) Writedowns of other real estate owned 44,600- Net loss (gain) on disposal of premises, equipment and software1,140 (4,121) Net (gain) on loans sold (225,001) (228,926) Loans originated for sale(11,972,733)(11,211,272) Proceeds from loans sold 12,197,733 11,440,198 (Increase) decrease in accrued interest receivable (99,751)28,956 (Increase) decrease in other assets 1,427,842(1,075,050) Increase (decrease) in accrued interest payable4,554 (60,424) (Increase) in cash surrender value on life insurance in excessof premiums paid (199,628) (44,845) Increase (decrease) in accrued expenses and other liabilities548,005(2,020,179) Amortization of deferred loan (fees) cost516,575457,718 Amortization (accretion) of premium and discount on investments394,305491,569 NET CASH PROVIDED BY OPERATING ACTIVITIES $6,662,917 $1,762,174CASH FLOWS FROM INVESTING ACTIVITIESNet (increase) in loans $ (30,817,130) $ (35,354,570)Proceeds from sales of securities 3,269,294 16,249,692Proceeds from maturities, repayments and calls of securities 7,592,780 11,802,204Purchases of securities(9,344,343)(12,536,786)Redemptions of Federal Home Loan Bank stock 2,661,900 1,917,000Purchases of Federal Home Loan Bank stock(2,790,000)(2,327,200)Purchases of premises, equipment and software (969,746) (394,952)Proceeds from sale of other real estate owned193,099446,420Proceeds from sale of premises, equipment and software - 4,300Premiums paid on life insurance (51,129)(4,048,568) NET CASH (USED IN) INVESTING ACTIVITIES $ (30,255,275) $ (24,242,460)CASH FLOWS FROM FINANCING ACTIVITIES Net increase in demand and savings deposits $22,662,118 $26,137,145 Net (decrease) in time deposits(1,471,354)(12,889,371) Net increase in FHLB borrowings 2,900,000 12,000,000 Purchase of treasury stock (147,288) (304,266) Cash dividends paid (859,137) (748,198) NET CASH PROVIDED BY FINANCING ACTIVITIES $23,084,339 $24,195,310 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $(508,019) $1,715,024CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,433,677 5,718,653CASH AND CASH EQUIVALENTS AT END OF YEAR $6,925,658 $7,433,677SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year:Interest paid on deposits and borrowed funds $2,451,976 $1,852,097 Income taxes $ 20,000 $ 521,290 Non cash investing and financing activities:Net transfer to foreclosed real estate, held for sale from loans receivable $ 379,988 $ 277,598Unrealized gain (loss) on investment securities available for sale (net of tax) $(335,606) $ 156,600The Notes to Consolidated Financial Statements are an integral part of these statements.7'