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Banking and Finanial Service Revenues

6 Months Ended

Jun. 30, 2020

Banking and Financial Service Reveues [Abstract]

NOTE 24 – BANKING AND FINANCIAL SERVICE REVENUES

The following table presents the major categories of banking and financial service revenues for the quarters and six-month periods ended June 30, 2020 and 2019:

	Quarter Ended June 30,				Six-Month Period Ended June 30,
	2020		2019		2020		2019
	(In thousands)
Banking service revenues:
Checking accounts fees	$	1,971	$	1,476	$	4,631	$	2,949
Savings accounts fees		397		141		838		297
Electronic banking fees		10,574		8,211		21,822		16,103
Credit life commissions		13		151		142		268
Branch service commissions		216		345		727		718
Servicing and other loan fees		299		320		809		636
International fees		141		129		297		266
Miscellaneous income		57		3		115		4
Total banking service revenues		13,668		10,776		29,381		21,241

Wealth management revenue:
Insurance income		2,412		1,648		4,821		2,929
Broker fees		1,467		1,966		3,382		3,723
Trust fees		2,276		2,808		5,029		5,412
Retirement plan and administration fees		211		247		420		487
Total wealth management revenue		6,366		6,669		13,652		12,551

Mortgage banking activities:
Net servicing fees		2,676		615		5,366		1,559
Net gains on sale of mortgage loans and valuation		254		88		819		250
Other		142		(74)		121		26
Total mortgage banking activities		3,072		629		6,306		1,835
Total banking and financial service revenues	$	23,106	$	18,074	$	49,339	$	35,627

Oriental recognizes the revenue from banking services, wealth management and mortgage banking based on the nature and timing of revenue streams from contracts with customer:

Banking Service Revenues

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 deposit 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 services revenue are out of the scope of ASC 606 – Revenue from Contracts with Customers.

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:

 Sales commissions generated by advisors for their clients’ purchases and sales of securities and other investment products, which are collected once the stand-alone transactions are completed at trade date or as earned, and managed account fees which are fees charged to advisors’ clients’ accounts on the Company corporate advisory platform. These revenues do not cover future services, as a result there is no need to allocate the amount received to any other service.

 Fees for providing distribution services related to mutual funds, net of compensation paid to a service provider who provides such services, as well as trailer fees (also known as 12b-1 fees). These fees are considered variable and are recognized over time, as the uncertainty of the fees to be received is resolved as the net asset value of the mutual fund 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 assistance with the planning, design and administration of retirement plans, acting as third-party administrator for such plans, and 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 fiduciary services provided to 401K retirement plans, a unit investment trust, 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 ASC 606.

Mortgage Banking Activities

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