NORTHERN STATES FINANCIAL CORPORATION..

   CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
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  ($ 000's)

  Years Ended December 31, 1998  1997  1996 

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Cash flows from operating activities
Net income   ................................................................................... $ 7,304) $ 7,010) $ 6,011)
Adjustments to reconcile net income to cash from operating activities:
Depreciation ................................................................................. 590) 568) 546)
Provision for loan losses ........................................................... 10) 480) 1,190)
Provision for losses on other real estate owned .................... 10) 21) 22)
Deferred loan fees ....................................................................... (78) (38) (172)
Net gains on sales of securities ................................................ 0) 0) (5)
Net change in loans held for sale ............................................. (4,267) (349) 2,863)
Net gains on sales of loans ....................................................... (334) (172) (210)
Net (gains) losses on sales of other real estate owned ........ 2) (142) (305)
Amortization of mortgage servicing rights ............................. 65) 36) 15)
Net change in interest receivable ............................................. (100) (353) 411)
Net change in interest payable ................................................. 260) 1,192) 342)
Net change in other assets ........................................................ 128) 742) 1,218)
Net change in other liabilities .................................................... 268) 205) 290)



Net cash from operating activities 3,322) 8,790) 12,216)



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Cash flows from investing activities
Proceeds from sales of securities available for sale ................ 0) 0) 2,675)
Proceeds from maturities of securities available for sale ........ 173,014) 90,148) 90,571)
Purchases of securities available for sale ................................. (192,926) (120,273) (83,959)
Change in loans made to customers .......................................... 547) (9,151) (17,847)
Property and equipment expenditures ....................................... (1,338) (217) (209)
Net change in direct lease financing .......................................... 287) (275) (377)
Proceeds from sales of other real estate owned ....................... 46) 586) 2,180)



Net cash from investing activities .............................................. 20,370) 39,182) 6,966)



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Cash flows from financing activities
Net increase (decrease) in:
Deposits ......................................................................................... 7,806) 19,155) 1,240)
Securities sold under repurchase agreements and other short-term borrowings ................................................................. 9,486) 1,746) (6,520)
Advances from borrowers for taxes and insurance ................ (174) 145) (260)
Federal Home Loan Bank term advance .................................. 5,000) 5,000) 0)
Net proceeds from exercise of stock options ........................... 54) 4) 77)
Dividends paid ............................................................................. 2,671) 2,134) 1,779)



Net cash from financing activities ............................................. 19,501) 23,916) 7,242)



Net change in cash and cash equivalents ............................... 2,453) (6,476) (1,992)
Cash and cash equivalents at beginning of year ................... 25,506) 31,982) 33,974)



Cash and cash equivalents at end of year ............................... $ 27,959) $ 25,506) $ 31,982)



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Supplemental disclosures
Cash paid during the year for
Interest ........................................................................................... $ 16,636) $ 14,423) $ 14,466)
Income taxes .................................................................................. 3,234) 3,089) 2,335)
Noncash investing activities )
Transfers made from loans to other real estate owned   .......... 0) 174) 2,432)
Transfers made from tax-exempt loans to securities available for sale, at fair value ..................................................................... 0) 0) 4,700)
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The accompanying notes are an integral part of these consolidated financial statements.
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NSFC ANNUAL

34

REPORT 1998

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