NON-INTEREST REVENUES

As provided in NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION, Customers' adoption of ASU 2014-09, Revenue from Contracts with Customers (ASC 606), on January 1, 2018 did not have a significant impact to Customers' consolidated financial statements and, as such, a cumulative effect adjustment to beginning retained earnings was not necessary. Customers determined that its debit and prepaid card interchange income, previously reported on a gross basis for periods prior to adoption will need to be presented on a net basis under this ASU. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported in accordance with the previous accounting guidance under ASC 605. Debit and prepaid card interchange expense for the three months ended June 30, 2018 and 2017 amounted to $1.2 million and $1.3 million, respectively. Debit and prepaid card interchange expense for the six months ended June 30, 2018 and 2017 amounted to $2.7 million and $3.2 million, respectively.

In addition, as part of the enhanced disclosure requirements under the new guidance, Customers is presenting disaggregated revenue by business segment, nature of the revenue stream, and the pattern or timing of revenue recognition. The accounting treatment for interest-related revenues is covered under ASC-310 and is out of the scope of ASU 2014-09.

The following tables present Customers' non-interest revenues affected by ASU 2014-09 by business segment for the three and six months ended June 30, 2018 and 2017:



	Three Months Ended June 30, 2018
	Community Business Banking		BankMobile		Consolidated
Revenue from contracts with customers:
Revenue recognized at point in time:
Interchange and Card Revenue	$	183	$	6,199	$	6,382
Deposit Fees	294		1,338		1,632
University Fees - Card and Disbursement Fees	—		185		185
Total revenue recognized at point in time	477		7,722		8,199
Revenue recognized over time:
University Fees - Subscription Revenue	—		907		907
Total revenue recognized over time	—		907		907

Total revenue from contracts with customers	$	477	$	8,629	$	9,106



	Three Months Ended June 30, 2017
	Community Business Banking		BankMobile		Consolidated
Revenue from contracts with customers:
Revenue recognized at point in time:
Interchange and Card Revenue	$	126	$	8,522	$	8,648
Deposit Fees	258		1,875		2,133
University Fees - Card and Disbursement Fees	—		206		206
Total revenue recognized at point in time	384		10,603		10,987
Revenue recognized over time:
University Fees - Subscription Revenue	—		784		784
Total revenue recognized over time	—		784		784
Total revenue from contracts with customers	$	384	$	11,387	$	11,771



	Six Months Ended June 30, 2018
	Community Business Banking		BankMobile		Consolidated
Revenue from contracts with customers:
Revenue recognized at point in time:
Interchange and Card Revenue	$	406	$	15,637	$	16,043
Deposit Fees	580		3,144		3,724
University Fees - Card and Disbursement Fees	—		512		512
Total revenue recognized at point in time	986		19,293		20,279
Revenue recognized over time:
University Fees - Subscription Revenue	—		1,777		1,777
Total revenue recognized over time	—		1,777		1,777

Total revenue from contracts with customers	$	986	$	21,070	$	22,056



	Six Months Ended June 30, 2017
	Community Business Banking		BankMobile		Consolidated
Revenue from contracts with customers:
Revenue recognized at point in time:
Interchange and Card Revenue	$	328	$	21,830	$	22,158
Deposit Fees	582		4,678		5,260
University Fees - Card and Disbursement Fees	—		595		595
Total revenue recognized at point in time	910		27,103		28,013
Revenue recognized over time:
University Fees - Subscription Revenue	—		1,579		1,579
Total revenue recognized over time	—		1,579		1,579
Total revenue from contracts with customers	$	910	$	28,682	$	29,592

The following is a discussion of revenues within the scope of ASC 606:

Card revenue

Card revenue primarily relates to debit and prepaid card fees earned from interchange and ATM fees. Interchange fees are earned whenever Customers' issued debit and prepaid cards are processed through card payment networks. Interchange fees are recognized concurrent with the processing of the debit or prepaid card transaction.

Deposit Fees

Deposit fees relate to service charges on deposit accounts for transaction-based, account maintenance and overdraft services. Transaction-based fees, which include services such as stop-payment charges, wire transfer fees, cashier or money order fees are recognized at the time the transaction is executed. Account maintenance fees, which relate primarily to monthly maintenance and account analysis fees, are earned on a monthly basis representing the period over which Customers satisfies its performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposit accounts are withdrawn from the depositor's account balance.

The revenues recognized at a point in time primarily consist of contracts with no specified terms, but which may be terminated at any time by the customer without penalty. Due to the transactional nature and indefinite term of these agreements, there were no related contract balances that were recorded for these revenue streams on Customers' consolidated balance sheets as of June 30, 2018 and December 31, 2017.

University Fees

University fees represent revenues from higher education institutions and is generated from fees charged for the services provided. For higher education institution clients, Customers through BankMobile facilitates the distribution of financial aid and other refunds to students, while simultaneously enhancing the ability of the higher education institutions to comply with the federal regulations applicable to financial aid transactions. For these services, higher education institution clients are charged an annual subscription fee and/or per-transaction fee (e.g., new card or card replacement fees) for certain transactions. The annual subscription fee is recognized ratably over the period of service and the transaction fees are recognized when the transaction is completed. BankMobile also enters into long-term (generally three- or five-year initial term) contracts with higher education institutions to provide these refund management disbursement services. Deferred revenue consists of amounts billed to or received from clients prior to the performance of services. The deferred revenues are earned over the service period on a straight line basis. As of June 30, 2018 and December 31, 2017, Customers recorded deferred revenue of $3.1 million and $2.0 million, respectively, related to these university subscription contracts. At June 30, 2018 and December 31, 2017, Customers had accounts receivable of $2.5 million and $1.1 million, respectively, related to the university fee arrangements.