Note 12. Revenue Recognition

On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, and all amendments thereto (collectively, ASU 2014-09), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain/loss from the transfer of nonfinancial assets, such as other real estate owned. The Company adopted ASU 2014-09 using the modified retrospective method applied to all contracts not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASU 2014-09, while prior period amounts continue to be reported in accordance with pronouncements in effect prior to January 1, 2018. The adoption of ASU 2014-09 did not result in a change to the accounting for any of the in-scope revenue streams; therefore, no cumulative effect adjustment was recorded.

Most revenue associated with the Company’s financial instruments, including interest income, are outside the scope of ASU 2014-09. The Company’s services that fall within the scope of ASU 2014-09 are presented within noninterest income and are recognized as revenue as the Company satisfies its obligation to the customer. A description of the Company’s primary revenue streams accounted for under ASU 2014-09 follows:

Trust, estate and brokerage fee income: Income is primarily comprised of fees earned from the management and administration of trusts, estates and other customer assets and by providing investment brokerage services. Fees that are transaction-based (e.g., execution of trades) are recognized on a monthly basis. Other fees, or commissions, are earned over time as the contracted monthly or quarterly services are provided and are generally assessed based on either account activity or the market value of assets under management at month end.

Service charges on deposit accounts: The Company earns fees from its deposit customers for overdraft and account maintenance services. Overdraft fees are recognized when the overdraft occurs. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. The Company also earns fees from its customers for transaction-based services. Such services include safe deposit box, ATM, stop payment and wire transfer fees. In each case, these service charges and fees are recognized in income at the time or within the same period that the Company’s performance obligation is satisfied.

Interchange fee income, net: The Company earns interchange fees from debit and credit cardholder transactions conducted through various payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services.

Noninterest income by major source, for the three and nine months ended September 30, 2018 and 2017, consisted of the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
(In thousands)	2018		2017		2018		2017
Noninterest income
Trust and estate fees ⁽¹⁾	$	379	$	379	$	1,154	$	1,151
Brokerage fees ⁽¹⁾		45		38		132		129
Service charges on deposit accounts ⁽¹⁾		413		467		1,261		1,452
Interchange fee income, net ⁽¹⁾		319		302		931		923
Bank-owned life insurance		91		91		271		271
Other service charges, commissions and other income ⁽²⁾		44		11		168		167
Gain on call of securities available for sale		-		1		838		1
Gain on sale of mortgage loans held for sale, net		33		1		56		1
Total noninterest income	$	1,324	$	1,290	$	4,811	$	4,095

⁽¹⁾	Income within scope of Accounting Standards Codification (“ASC”) 606.

⁽²⁾	Income within the scope of ASC 606 of $102,000 for the three months ended September 30, 2018 and 2017, and $239,000 for the nine months ended September 30, 2018 and 2017. The remaining balancing is outside the scope of ASC 606.