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Note 2 - Revenue Recognition
 3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

NOTE 2 – REVENUE RECOGNITION

 

Per ASC Topic 606, Revenue from Contracts with Customers (Topic 606), management determined that the primary sources of revenue, which emanate from interest income on loans and investments, along with noninterest revenue resulting from investment security gains, gains and losses on loans, and BOLI income, are not within the scope of ASC 606. These revenue sources cumulatively comprise 90.4% of the total revenue of the Company.

 

The main types of revenue within the scope of the standard are as follows:

 

Service charges on deposit accounts – The Company has contracts with its deposit customers where fees are charged if the account balance falls below predetermined levels defined as compensating balances. These agreements can be canceled at any time by either the Company or the deposit customer. Revenue from these transactions is recognized monthly as the Company has an unconditional right to the fee consideration. The Company also has transaction fees related to specific customer requests or activities that include overdraft fees, online banking fees, and other transaction fees. All of these fees are attributable to specific performance obligations of the Company where the revenue is recognized at a defined point in time, which is the completion of the requested service/transaction.

 

Net gains (losses) on sale of other real estate owned (“OREO”) – Gains and losses are recognized after the property sale when the buyer obtains control of the real estate and all of the performance obligations of the Company have been satisfied. Evidence of the buyer obtaining control of the asset includes the transfer of the property title, physical possession of the asset, and the buyer securing control of the risks and rewards related to the asset. In situations where the Company agrees to provide financing to facilitate the sale, additional analysis is performed to ensure that the contract for sale identifies the buyer and seller, the asset to be transferred, and the payment terms, that the contract has an actual commercial substance and that amounts due from the buyer are reasonable. In situations where financing terms are not reflective of current market terms, the transaction price is discounted, impacting the gain/loss and the carrying value of the asset. Gains and losses on the sale of OREO are reported in the Consolidated Statement of Income.

 

Revenue from investment services – The Company earns investment services revenue through its servicing partnership with LPL Financial. The performance obligation to investment management customers is satisfied over time, and therefore, revenue is recognized over time.  The Company generally receives trailing investment services revenue in arrears and recognizes the revenue when the monthly statement is received.

 

The following table depicts the disaggregation of revenue derived from contracts with customers to represent the nature, amount, timing, and uncertainty of revenue and cash flows:

 

   

For the Three Months Ended March 31,

  

Noninterest Income

  

2022

    

2021

  

(Dollar amounts in thousands)

                

Service charges on deposit accounts:

                

Overdraft fees

   $ 201     $ 168  

ATM banking fees

     309       312  

Service charges and other fees

     404       307  

Gain (loss) on equity securities (a)

     33       81  

Earnings on bank-owned life insurance (a)

     106       226  

Gain on sale of loans (a)

     3       592  

Revenue from investment services

     141       127  

Other income

     206       405  

Total noninterest income

   $ 1,403     $ 2,218  
                 

Net loss on other real estate owned (b)

   $ 8     $ 46  

 

(a) Not within scope of ASC 606

(b) Recognized within noninterest expense