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NON-INTEREST INCOME | 9 Months Ended
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Sep. 30, 2018
Revenue from Contract with Customer [Abstract] |
NON-INTEREST INCOME | NON-INTEREST INCOME Adoption of "ASC 606", Revenue from Contracts with Customers The Company completed its overall assessment of revenue streams and review of related contracts within scope of Accounting Standards Codification ("ASC") 606, including trust and investment management fees, financial services fees, interchange fees, customer deposit fees, and other customer service fees. Based on this assessment, the Company concluded that ASC 606 did not materially change the method in which the Company currently recognizes revenue for these revenue streams. The Company also completed its evaluation of certain costs related to these revenue streams to determine whether such costs should be presented as expenses or contra-revenue (i.e., gross vs. net). Based on its evaluation, the Company determined the classification of certain debit and credit card related costs should change (i.e., costs previously recorded as expense are now recorded as contra-revenue, and vice versa). These classification changes resulted in immaterial changes to both revenue and expense. These changes did not have a material effect to non-interest income or expense. Additionally, the Company reviewed deferred revenue from benefits received under various incentive contracts. The Company noted one contract was significantly impacted by the adoption, which the related financial impact and details are reflected in the tables below. The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the prior guidance of ASC 605, Revenue Recognition. The adoption effected the Company's accounting for deferred revenue related to an upfront incentive received in connection with a co-branding agreement. The incentive, which was previously amortized over the life of the contract is now constrained by a termination penalty based on future customer transaction volume. As a result, the remaining deferred liability was re-established to its original value, which increased deferred tax assets by $57 thousand and reduced retained earnings by $184 thousand. Operating results during 2018 were not effected. Financial Statement Impact The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption were as follows:
(in thousands) |  | Balance at December 31, 2017 |  | Adjustments due to Topic 606 |  | Balance at January 1, 2018
Balance Sheet |  |  |  |  |  |
Other Assets |  | $ | 24,389 |  |  | $ | 57 |  |  | $ | 24,446 |
Other Liabilities |  | 28,737 |  |  | 241 |  |  | 28,978 |
Retained Earnings |  | 144,977 |  |  | (184 | ) |  | 144,793 |
Transaction Price Allocated to Future Performance Obligations ASC 606 requires the Company to disclose the aggregate amount of transaction price allocated to performance obligations that have not yet been satisfied as of January 1, 2018. The guidance provides certain practical expedients which limit this requirement and, therefore, the Company does not disclose the value of unsatisfied performance obligations for: (1) contracts with an original expected length of one year or less, (2) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed or (3) variable consideration allocated entirely to a wholly unsatisfied performance obligation for which consideration is allocated in accordance with paragraph 606-10-32-40. All revenue accounted for under the scope of ASC 606 meets one of these three criteria. Disaggregation of Revenue The following tables disaggregates the Company’s revenue by major business line and timing of transfer of products or services:
(in thousands) |  | Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2018
Major Products/Service Lines |  |  |  |
Trust management fees |  | $ | 2,720 |  |  | $ | 8,268 |
Financial services fees |  | 232 |  |  | 768 |
Interchange fees |  | 1,146 |  |  | 3,277 |
Customer deposit fees |  | 1,095 |  |  | 3,093 |
Other customer service fees |  | 249 |  |  | 691 |
Total |  | $ | 5,442 |  |  | $ | 16,097 |
(in thousands) |  | Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2018
Timing of Revenue Recognition |  |  |  |
Products and services transferred at a point in time |  | $ | 2,583 |  |  | $ | 7,576 |
Products and services transferred over time |  | 2,859 |  |  | 8,521 |
Total |  | $ | 5,442 |  |  | $ | 16,097 |
Trust Management Fees The trust management business generates revenue through a range of fiduciary services including trust and estate administration, wealth advisory, and investment management to individuals, businesses, not-for-profit organizations, and municipalities. Revenue from these services are generally recognized over time and is typically based on a time elapsed measure of progress. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service. Financial Services Fees Bar Harbor Financial Services is a branch office of Infinex, an independent registered broker dealer offering securities and insurance products not affiliated with the Company or its subsidiaries. The Company has a revenue sharing agreement with Infinex for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of monthly service requirements. Interchange Fees The Company earns interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction. Customer Deposit Fees The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor related services provided to customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized by the Company at a point in time upon the completion of the service. Other Customer Service Fees The Company has certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. The Company also earns a percentage of the fees generated from third party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress. Contract Balances from Contracts with Customers The following table provides information about receivables, contract assets, and deferred revenues from contracts with customers.
(in thousands) |  | Balance at September 30, 2018 |  | Balance at December 31, 2017
Balances from contracts with customers only: |  |  |  |
Other Assets |  | $ | 1,995 |  |  | $ | 972 |
Other Liabilities |  | 3,816 |  |  | 342 |
The timing of revenue recognition, billings and cash collections results in receivables, contract assets and contract liabilities on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, the Company has an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met. Costs to Obtain and Fulfill a Contract The Company currently expenses contract costs for processing and administrative fees for debit card transactions. The Company also expenses custody fees and transactional costs associated with securities transactions as well as third party tax preparation fees. The Company has elected the practical expedient in ASC 340-40-25-4, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets the Company otherwise would have recognized is one year or less.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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