Revenue From Contracts With Customers

The Company records revenue from contracts with customers in accordance with ASC Topic

606,

“

Revenue from Contracts with Customers

” ASC Topic

606

requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized when, or as, the Company satisfies a performance obligation. Primarily all of the Company’s revenue from contracts with customers in the scope of ASC Topic

606

is recognized within noninterest income. Net gains or losses on the sale of other real estate owned (“OREO”) are included in net other real estate expenses. The following table presents the Company’s sources of noninterest income for the

three

and

six

months ended

June 30, 2018

and

2017.

Amounts in the table are within the scope of ASC Topic

606

unless otherwise noted.

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2018		2017			2018		2017
Service charges and fees on deposits
Overdraft fees	$	968	$	969		$	1,924	$	1,896
Dormant account fees		574		659			1,167		1,324
Service charges on checking and savings accounts		304		328			618		638
Other		51		56			100		112
Allotment processing fees		677		651			1,397		1,366
Other service charges, commissions, and fees
Interchange fees		917		808			1,744		1,589
Other 1		573		520			1,118		1,111
Trust income		695		626			1,484		1,330
Net loss on sales of available for sale investment securities 2		-		(1	)		-		(10	)
Net gain on sales of equity investment securities 2		808		-			808		-
Gain on sale of mortgage loans, net 2		104		189			199		343
Income from company-owned life insurance 2		213		221			506		456
Other		89		76			109		198
Total noninterest income	$	5,973	$	5,102		$	11,174	$	10,353

Includes fees totaling

$147

thousand and

$139

thousand for the

three

months ended

June 30, 2018

and

2017,

respectively, and

$289

thousand and

$272

thousand for the

six

months ended

June 30, 2018

and

2017,

respectively, which are primarily servicing fees on loans originated for sale on the secondary market and are

not

within the scope of ASC Topic

606.

Not

within the scope of ASC Topic

606.

Net other real estate expenses include a net loss on the sale of OREO of

$33

thousand and

$43

thousand for the

three

months ended

June 30, 2018

and

2017,

respectively, and a net loss of

$76

thousand and a net gain of

$72

thousand for the

six

months ended

June 30, 2018

and

2017,

respectively.

A description of the Company’s revenue-generating activities accounted for under Topic

606

follows.

Service charges and fees on deposits consist primarily of overdraft fees, dormant account fees, and service charges on checking and savings accounts. Overdraft fees are recognized at the time an account is overdrawn. Dormant account fees are recognized when an account is inactive for

365

days. The majority of service charges on checking and savings accounts are for account maintenance services performed and recognized in the same calendar month. Other fees are primarily for transaction-based services completed at the request of the customer and recognized at the time the transaction is executed. These transaction-based services include foreign ATM usage and stop payments services. All service charges and fees on deposits are withdrawn from the customer’s account balance.

Allotment processing fees relate to the Company’s bill payment and electronic funds transfer (“EFT”) services provided under the name of FirstNet. The Company processes payments by individual customers to unaffiliated

third

party lenders on bi-weekly and monthly schedules. Other EFT services are available to customers upon request. The Company does

not

provide credit to individuals under the program. Fees are primarily withdrawn from the customer’s account and recognized at the time the transaction is executed.

Other service charges, commissions, and fees include interchange fees earned primarily from debit card holder transactions conducted through the VISA payment network and other networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are received and recognized daily, concurrent with the transaction processing services provided to the cardholder.

Trust income is earned from living trusts and investment management agency accounts, estate planning and estate settlement, custody accounts, individual retirement accounts, and other related services. These fees are primarily earned and accrued over the period of time the Company provides the contracted services and are generally assessed based on tiered scale of the market value of the assets of the accounts. Fees for other services, including the preparation of fiduciary income tax returns, are recognized when the services are rendered. Fees are generally paid out of the assets held in the customer’s account.