Summary of Significant Accounting Policies	6 Months Ended
Jun. 30, 2021
Summary of Signficant Accounting Policies
Summary of Significant Accounting Policies Text Block	AUBURN NATIONAL BANCORPORATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General Auburn National Bancorporation, Inc. (the “Company”) provides a full range of banking services to individual and corporate customers in Lee County, Alabama and surrounding counties through its wholly owned subsidiary, AuburnBank (the “Bank”). The Company does not have any segments other than banking that are considered material. Basis of Presentation and Use of Estimates The unaudited consolidated financial statements in this report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited consolidated financial statements include, in the opinion of management, all adjustments necessary to present a fair statement of the financial position and the results of operations for all periods presented. All such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results of operations that the Company and its subsidiaries may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant intercompany transactions and accounts are eliminated in consolidation. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include other-than-temporary impairment on investment securities, the determination of the allowance for loan losses, fair value of financial instruments, and the valuation of deferred tax assets and other real estate owned (“OREO”). Revenue Recognition On January 1, 2018, the Company implemented Accounting Standards Update (“ASU” or “updates”) 2014-09, Revenue from Contracts with Customers , codified at Accounting Standards Codification (“ASC”) 606. The Company adopted ASC 606 using the modified retrospective transition method. The majority of the Company’s revenue stream is generated from interest income on loans and deposits which are outside the scope of ASC 606. The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, investment services, interchange fees and gains and losses on sales of other real estate, all of which are presented as components of noninterest income. The following is a summary of the revenue streams that fall within the scope of ASC 606: ● Service charges on deposits, investment services, ATM and interchange fees – Fees from these services are either transaction-based, for which the performance obligations are satisfied when the individual transaction is processed, or set periodic service charges, for which the performance obligations are satisfied over the period the service is provided. Transaction-based fees are recognized at the time the transaction is processed, and periodic service charges are recognized over the service period. ● Gains on sales of OREO – A gain on sale should be recognized when a contract for sale exists and control of the asset has been transferred to the buyer. ASC 606 lists several criteria required to conclude that a contract for sale exists, including a determination that the institution will collect substantially all of the consideration to which it is entitled. In addition to the loan-to-value, the analysis is based on various other factors, including the credit quality of the borrower, the structure of the loan, and any other factors that may affect collectability. Subsequent Events The Company has evaluated the effects of events and transactions through the date of this filing that have occurred subsequent to June 30, 2021. The Company does not believe there were any material subsequent events during this period that would have required further recognition or disclosure in the unaudited consolidated financial statements included in this report. Accounting Developments In the first six months of 2021, the Company did not adopt any new accounting guidance.

AUBURN NATIONAL

BANCORPORATION,

INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES

General

Auburn National Bancorporation, Inc. (the “Company”) provides

a full range of banking services to individual and

corporate customers in Lee County,

Alabama and surrounding counties through its wholly owned subsidiary,

AuburnBank

(the “Bank”). The Company does not have any segments other

than banking that are considered material.

Basis of Presentation and Use of Estimates

The unaudited consolidated financial statements in this report

have been prepared in accordance with U.S. generally

accepted accounting principles (“GAAP”) for interim financial

information.

Accordingly, these financial

statements do not

include all of the information and footnotes required by U.S. GAAP

for complete financial statements.

The unaudited

consolidated financial statements include, in the opinion of management,

all adjustments necessary to present a fair

statement of the financial position and the results of operations for

all periods presented. All such adjustments are of a

normal recurring nature. The results of operations in the interim statements

are not necessarily indicative of the results of

operations that the Company and its subsidiaries may achieve

for future interim periods or the entire year.

For further

information, refer to the consolidated financial statements and

footnotes included in the Company's Annual Report on Form

10-K for the year ended December 31, 2020.

The unaudited consolidated financial statements include the accounts

of the Company and its wholly-owned subsidiaries.

Significant intercompany transactions and accounts are eliminated

in consolidation.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and

liabilities and disclosures of contingent assets and liabilities as of

the balance sheet date and the reported amounts of revenues and

expenses during the reporting period.

Actual results could

differ from those estimates.

Material estimates that are particularly susceptible to significant change

in the near term

include other-than-temporary impairment on investment securities,

the determination of the allowance for loan losses, fair

value of financial instruments, and the valuation of deferred

tax assets and other real estate owned (“OREO”).

Revenue Recognition

On January 1, 2018, the Company implemented Accounting Standards

Update (“ASU”

or “updates”) 2014-09,

Revenue

from Contracts with Customers

, codified at

Accounting Standards Codification

(“ASC”)

606. The Company adopted ASC

606 using the modified retrospective transition method.

The majority of the Company’s revenue

stream is generated from

interest income on loans and deposits which are outside the scope

of ASC 606.

The Company’s sources of income that

fall within the scope of ASC 606 include service charges

on deposits, investment

services, interchange fees and gains and losses on sales of other

real estate, all of which are presented as components of

noninterest income. The following is a summary of the revenue streams

that fall within the scope of ASC 606:

●

Service charges on deposits, investment services, ATM

and interchange fees – Fees from these services are either

transaction-based, for which the performance obligations are satisfied

when the individual transaction is processed,

or set periodic service charges, for which the performance

obligations are satisfied over the period the service is

provided. Transaction-based fees are recognized

at the time the transaction is processed, and periodic

service

charges are recognized over the service period.

●

Gains on sales of OREO

–

A gain on sale should be recognized when a contract for sale exists and

control of the

asset has been transferred to the buyer.

ASC 606 lists several criteria required to conclude that a contract

for sale

exists, including a determination that the institution will collect

substantially all of the consideration to which it is

entitled.

In addition to the loan-to-value, the analysis is based

on various other factors, including the credit quality

of the borrower, the structure of the loan, and

any other factors that may affect collectability.