AUBURN NATIONAL BANCORPORATION INC

In addition to results presented in accordance with U.S. generally accepted

accounting principles (GAAP), this quarterly

report on Form 10-Q includes certain designated net interest income

amounts presented on a tax-equivalent basis, a non-

GAAP financial measure, including the presentation and calculation

of the efficiency ratio.

The Company believes the presentation of net interest income on a tax-equivalent

basis provides comparability of net

interest income from both taxable and tax-exempt sources and facilitates comparability

within the industry. Although

the

Company believes these non-GAAP financial measures enhance investors’

understanding of its business and performance,

these non-GAAP financial measures should not be considered an alternative

to GAAP.

The reconciliations

of these non-

GAAP financial measures to their most directly comparable GAAP financial measures

are presented below.

Third

Second

First

Fourth

Third

(in thousands)

Quarter

Quarter

Quarter

Quarter

Quarter

$

6,790

6,709

6,657

6,059

6,272

Tax-equivalent adjustment

Net interest income (Tax

-equivalent)

$

6,811

6,728

6,677

6,154

6,380

$

20,156

20,269

Tax-equivalent adjustment

Net interest income (Tax

-equivalent)

$

20,216

20,591

Table 2

• Selected Quarterly Financial Data