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Revenue Recognition
 12 Months Ended
Dec. 31, 2020
Revenue From Contract With Customer [Abstract]  
Revenue Recognition

NOTE 19. Revenue Recognition

 

Substantially all of the Company's revenue from contracts with customers that is within the scope of ASC 606, "Revenue from Contracts with Customers" is reported within noninterest income.  A limited amount of other in-scope items such as gains and losses on other real estate owned are recorded in noninterest expense.  The recognition of interest income and certain sources of noninterest income (e.g. gains on securities transactions, bank owned life insurance income, etc.) are governed by other areas of U.S. GAAP.  Significant revenue streams that are within the scope of ASC 606 and included in noninterest income are discussed in the following paragraphs.

Income from Fiduciary Activities

Trust asset management fee income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives.  Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.

Service Charges on Deposit Accounts

Service charges on deposit accounts are principally comprised of overdrawn account fees and account maintenance charges. The Company’s performance obligations on revenue generated from deposit accounts are generally satisfied immediately, when the transaction occurs, or by month-end. Typically, the duration of a contract does not extend beyond the services performed. Due to the short duration of most customer contracts which generate these sources of noninterest income, no significant judgments must be made in the determination of the amount and timing of revenue recognized.

Other Service Charges and Fees

The majority of the Company’s noninterest income is derived from short term contracts associated with services provided for other ancillary services such as ATM fees, brokerage commissions, secondary market fees and wire transfer fees. The Company’s performance obligations on revenue generated from these ancillary services are generally satisfied immediately, when the transaction occurs, or by month-end. Typically, the duration of a contract does not extend beyond the services performed. Due to the short duration of most customer contracts which generate these sources of noninterest income, no significant judgments must be made in the determination of the amount and timing of revenue recognized.

The Company earns interchange fees from credit cardholder transactions conducted through the Visa payment network.  Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized no less than monthly.

Noninterest income disaggregated by major source, for the years ended December 31, 2020 and 2019 consisted of the following:

 

 

 

December 31, 2020

 

 

December 31, 2019

 

 

 

(dollar in thousands)

 

Noninterest income:

 

 

 

 

 

 

 

 

Income from fiduciary activities(1):

 

 

 

 

 

 

 

 

Trust asset management fees

 

$

1,398

 

 

$

1,380

 

Service charges on deposit accounts(1):

 

 

 

 

 

 

 

 

Overdrawn account fees

 

 

695

 

 

 

961

 

Monthly and other service charges

 

 

225

 

 

 

226

 

Other service charges and fees:

 

 

 

 

 

 

 

 

Interchange fees (1)

 

 

372

 

 

 

380

 

ATM fees (1)

 

 

2,578

 

 

 

2,431

 

Brokerage commissions (1)

 

 

916

 

 

 

1,150

 

Secondary market fees

 

 

431

 

 

 

486

 

Other charges and fees (2)

 

 

460

 

 

 

446

 

Gain (loss) on the sale and disposal of bank premises and equipment (1)

 

 

5

 

 

 

137

 

Gain (loss) on sale of securities

 

 

687

 

 

 

(7

)

Bank owned life insurance income

 

 

310

 

 

 

(48

)

Other operating income (3)

 

 

502

 

 

 

217

 

Total noninterest income

 

$

8,579

 

 

$

7,759

 

 

(1)

Income within the scope of Topic 606.

(2)

Includes income within the scope of Topic 606 of $390 thousand and $412 thousand for the years ended December 31, 2020 and 2019, respectively. The remaining balance is outside the scope of Topic 606.

(3)

Includes income within the scope of Topic 606 of $505 thousand and $212 thousand for the years ended December 31, 2020 and 2019, respectively. The remaining balance is outside the scope of Topic 606.

Contract Balances

A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of December 31, 2020 and December 31, 2019, the Company did not have any significant contract balances.