AUBURN NATIONAL BANCORPORATION, INC

In addition to the other information set forth in this report, you should carefully consider

the factors discussed in Part I,

in the Company’s Annual

which could materially affect our business, financial condition

or future results. The risks described in our annual report on

Form 10-K are not the only the risks facing our Company.

The persistence of inflation above the Federal Reserve’s

long

term targets, and the maintenance of or further increases in,

tightened Federal Reserve monetary policy by increased target

interest rates and/or reductions in the Federal Reserve’s

securities portfolio, have and may continue to affect the levels of

interest rates, mortgage originations and income, the market values of

our securities portfolio and loans and have resulted in

unrealized securities losses that have adversely affected our stockholders’

equity.

Although inflation has remained above

the Federal Reserve’s 2% target

rate, since December 2025, the Federal Reserve has maintained its target

federal funds

range from 3.50% to 3.75% and in October 29, 2025 announced that it would

end the roll-off of maturing securities it held

beginning December 1, 2025 as the Federal Reserve sought to meet its dual mandate

of maximum employment and 2%

inflation over the longer run.

Beginning December 11, 2025, the Federal

Reserve began increasing its holdings of

securities through purchases of Treasury

bills and, if needed, other Treasury securities with

remaining maturities of 3 years

or less to maintain an ample level of reserves, and reinvested all principal payments on Treasury

securities and reinvested

all principal payment on agency securities into Treasury

bills.

This policy was continued at the Federal Reserve’s

April 30,

2026 meeting.

The reductions in the target federal funds rates and Federal Reserve

purchases of additional securities may

be viewed as a more accommodative monetary policy,

which has affected and may continue to affect our deposit

costs and

mixes, and consumer savings and payment behaviors.

These may also affect our borrowers’ operating costs, expected

returns and cash flows available to service our loans.

The Federal Reserve may or may not continue this accommodative

policy, and has stated that

future monetary policy action “will take into account a wide range of information, including

readings on labor market conditions, inflation pressures and inflation

expectations, and financial and international

developments.” Such changes and other risks and uncertainties not currently

known to us or that we currently deem to be

immaterial also may materially adversely affect our business, financial

condition, and/or operating results in the future.

The United States and Israel attacked Iran on February 28, 2026 and hostilities continue

subject to various cease fire

arrangements.

As a result, shipments of oil through the Straits of Hormuz have been limited, reducing

the total volumes of

oil in the international markets and causing oil prices to rise significantly.

Supply chains where petroleum is an input have

been adversely affected, and transportation costs, prices and inflation

in the United States and elsewhere have increased.

The duration of these hostilities and the long-term effects of

the blockage of oil through the Straits of Hormuz and the other

c

osts and effects of these hostilities cannot be predicted.