Banking and Finanial Service Revenues

12 Months Ended

Dec. 31, 2018

NOTE 28 – BANKING AND FINANCIAL SERVICE REVENUES

The following table presents the major categories of banking and financial service revenues for the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018		2017		2016
	(In thousands)
Banking service revenues:
Checking accounts fees	$	5,878	$	6,903	$	7,511
Savings accounts fees		635		601		548
Electronic banking fees		32,431		28,174		30,081
Credit life commissions		541		492		636
Branch service commissions		1,581		811		620
Servicing and other loan fees		1,844		1,758		1,689
International fees		718		712		528
Miscellaneous income		10		17		34
Total banking service revenues		43,638		39,468		41,647

Wealth management revenue:
Insurance income		6,956		6,652		7,287
Broker fees		6,996		7,131		8,385
Trust fees		10,878		10,930		10,789
Retirement plan and administration fees		1,095		1,048		971
Investment banking fees		9		29		1
Total wealth management revenue		25,934		25,790		27,433

Mortgage banking activities:
Net servicing fees		5,024		3,865		6,058
Net gains on sale of mortgage loans and valuation		305		923		693
Other		(562)		(738)		(1,730)
Total mortgage banking activities		4,767		4,050		5,021
Total banking and financial service revenues	$	74,339	$	69,308	$	74,101

In May 2014 issued ASU No. 2014-09 - Revenue from Contracts with Customers (ASC 606) to clarify the principles for recognizing revenue and to develop a common revenue standard that would remove inconsistencies in revenue requirements, provide a more robust framework for addressing the revenue issues, improve comparability in revenue recognition and to simplify the preparation of financial statements by reducing the number of requirements t which an entity must refer.

The standard defines revenue (ASC-606-10-20) as inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.

Revenue is recognized when (or as) the performance obligation is satisfied by transferring control of a promised good or service to a customer, either at a point in time or over time. Where a performance obligation is satisfied over time, the related revenue is also recognized over time.

Following is a description of the nature and timing of revenue streams from contracts with customers:

Banking Revenue Services

Electronic banking fees are credit and debit card processing services, use of the Bank’s ATMs by non-customers, debit card interchange income and service charges on deposits accounts. Revenue is recorded once the contracted service has been provided.

Service charges on checking and saving accounts as consumer periodic maintenance revenue is recognized once the service is rendered, while overdraft and late charges revenue are recorded after the contracted service has been provided.

Other income as credit life commissions, servicing and other loan fees, international fees, and miscellaneous fees recognized as banking revenue services are out of the scope of the 606 guideline.

Wealth Management Revenue

Insurance income from commissions and sale of annuities are recorded once the sale has been completed.

Brokers fees consist of two categories:

Wealth management service revenue subject to commission represents sales commissions generated by advisors for their clients’ purchases and sales of securities on exchanges and over-the-counter, as well as purchases of other investment products like mutual funds, and are collected once the stand alone transactions are completed at trade date or as earned. Also, managed account fees which are fees charged to advisors’ clients’ accounts on the Company corporate advisory platform. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Wealth management service revenue not subject to commission are primarily revenues from transactions related to mutual funds for providing distribution services and, in turn, compensates service provider who entered into agreements with the Company to provide such services netted against revenues, as well as trailer fees (also known as 12-b1 fess). These fees are considered variable and are recognized over time, as the uncertainty of the fees to be received is resolved as NAV is determined and investor activity occurs. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Retirement plan and administration fees are revenues related to the payment received from the clients of OPC for provide assistance with the planning, design, administration, act as third party administrator, daily record keeping services of retirement plans. Fees are collected once the stand alone transaction was completed at trade date. Fees do not cover future services, as a result there is no need to allocate the amount received to any other service.

Trust fees are revenues related to the full fiduciary services of 401k, the dividend growth IRA, and retirement plans which include investment management, payment of distributions, if any, safekeeping, custodial services of plan assets, servicing of Trust officers, on-going due diligence of the Trust, and recordkeeping of transactions. Fees are billed based on services contracted. Negotiated fees are detailed in the contract. Fees collected in advance, are amortized over the term of the contract. Fees are collected on a monthly basis once the administrative service has been completed. Monthly fee does not include future services.

Investment banking fees as compensation fees are out of the scope of the 606 guideline.

Mortgage Banking Activities

Mortgage banking activities as servicing fees, gain on sale of mortgage loans valuation and other are out of the scope of the 606 guideline.