(

)

Revenue from contracts with customers

Bancorp adopted Accounting Standards Update (ASU)

2014

09,

Revenue from Contracts with Customers and all related amendments (ASC

606

), which created a single framework for recognizing revenue from contracts with customers that fall within its scope and revised when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, effective

January 1, 2018

using the full retrospective method. Bancorp recognizes revenue upon satisfying a performance obligation as services are rendered to a customer. All of Bancorp’s revenue from contracts with customers in the scope of ASC

606

is recognized within non-interest income. The only impact to financial statement presentation was reclassification from expense to contra income costs incurred to obtain and fulfill contracts associated with investment product sales. All periods presented in these financial statements have been adjusted to reflect the reclassification. The table below presents the Company’s sources of non-interest income for years ended

December 31, 2018,

2017,

and

2016

respectively. Items outside the scope of ASC

606

are noted as such.

Revenue by operating segment
	Years ended December 31,
(In thousands, except per share data)	2018		2017			2016

Wealth Management and Trust
Wealth management and trust services	$	21,536	$	20,505		$	19,155

Commercial
Deposit service charges		5,759		6,172			6,037
Debit and credit cards		6,769		5,979			5,655
Treasury management		4,571		4,297			3,867
Mortgage banking (1)		2,568		3,221			3,897
(Loss) on sale of securities available for sale (1)		–		(232	)		–
Net investment product sales commissions and fees		1,677		1,629			1,563
Bank owned life insurance (1)		1,129		1,159			871
Other (2)		1,337		1,769			1,875
Total Commercial non-interest income		23,810		23,994			23,765
Total non-interest income	$	45,346	$	44,499		$	42,920

(

)

Not

within scope of ASC

606

(

) Includes safe box deposit fees of

$177

thousand,

$165

thousand, and

$168

thousand included within the scope of ASC

606

2018,

2017,

and

2016,

respectively

Revenue sources within the scope of ASC

606

are discussed below.

The Company earns fees from its deposit customers for transactions-based, account management, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payments fees, and ACH fees, are recognized at the time the transaction is executed as that is when the company fulfills the performance obligation. Account management fees are earned over the course of a month and charged in the month in which the services are provided. Overdraft fees are recognized at the point in time that the overdraft occurs. Deposit service charges are withdrawn from customer’s account balances.

Treasury management transaction fees are recognized at the time the transaction is executed as that is when the company fulfills the performance obligation. Account management fees are earned over the course of a month and charged in the month in which the services are provided. Treasury management fees are withdrawn from customer’s account balances.

The Wealth Management and Trust Group provides customers fiduciary and investment management services as agreed upon in asset management contracts. Contracts require WM&T to provide a series of distinct services for which fees are earned over time. Contracts are cancellable upon demand with fees typically based upon the asset value of investments. Revenue is accrued and recognized monthly based upon month-end asset values and collected from the customer predominately in the following month except for a small percentage of fees collected quarterly. Contracts between WM&T and clients do

not

permit performance based fees and accordingly,

none

of the fees earned by WM&T are performance based.

Investment products sales commissions and fees represent the Bank’s share of transaction fees and wrap fees resulting from investment services and programs provided through an agent relationship with a

third

party broker-dealer. Transaction fees are assessed at the time of the transaction. Those fees are collected and recognized on a monthly basis. Trailing fees are based upon market value and are assessed, collected, and recognized on a quarterly basis. Variable costs considered costs of obtaining the contracts related to investment product sales activities include incentive compensation expense and trading activity charges. Incentive compensation has been reclassified from compensation expense and the trading activity fees from technology and communication in prior years’ presentation to a reduction of income.

Debit and credit card interchange revenue represents fees assessed within the payment card system for acceptance of card based transactions. Interchange fees are assessed as the performance obligation is satisfied, which is at the point in time the card transaction is authorized. Revenue is collected and recognized daily through the payment network settlement process.

Bancorp did

not

establish any contract assets or liabilities as a result of adopting ASC

606,

nor were any recognized during

2018.

Trust fees receivable as of

December 31, 2018

were

$1.9

million compared with

$2.2

million as of

December 31, 2017.

Bancorp’s revenue on the consolidated statement of income is categorized by product type, which effectively depicts how the nature, timing, and extent of cash flows are affected by economic factors.