REVENUE RECOGNITION

The Company’s primary source of revenue is interest income generated from loans, leases and investment securities. Interest income is recognized according to the terms of the financial instrument agreement over the life of the loan, lease or investment security unless it is determined that the counterparty is unable to continue making interest payments. Interest income also includes prepaid interest fees from commercial customers, which approximates the interest foregone on the balance of the loan prepaid.

The Company’s additional source of income, also referred to as noninterest income, is generated from deposit related fees, interchange fees, loan and lease fees, merchant fees, loan sales and other miscellaneous income and is largely based on contracts with customers. In these cases, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The Company considers a customer to be any party to which the Company will provide goods or services that are an output of the Company’s ordinary activities in exchange for consideration. There is little seasonality with regards to revenue from contracts with customers and all inter-company revenue is eliminated when the Company’s financial statements are consolidated.

Generally, the Company enters into contracts with customers that are short-term in nature where the performance obligations are fulfilled and payment is processed at the same time. Such examples include revenue related to merchant fees, interchange fees and investment services income. In addition, revenue generated from existing customer relationships such as deposit accounts are also considered short-term in nature, because the relationship may be terminated at any time and payment is processed at the time performance obligations are fulfilled. As a result, the Company does not have contract assets, contract liabilities or related receivable accounts for contracts with customers. In cases where collectability is a concern, the Company does not record revenue.

Generally, the pricing of transactions between the Company and each customer is either (i) established within a legally enforceable contract between the two parties, as is the case with the loan sales, or (ii) disclosed to the customer at a specific point in time, as is the case when a deposit account is opened or before a new loan is underwritten. Fees are usually fixed at a specific amount or as a percentage of a transaction amount. No judgment or estimates by management are required to record revenue related to these transactions and pricing is clearly identified within these contracts.

The Company primarily operates in one geographic region, Northern and Central New Jersey and contiguous areas. Therefore, all significant operating decisions are based upon analysis of the Company as one operating segment or unit.

We disaggregate our revenue from contracts with customers by contract-type and timing of revenue recognition, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Noninterest income not generated from customers during the Company’s ordinary activities primarily relates to mortgage servicing rights, gains/losses on the sale of investment securities, gains/losses on the sale of other real estate owned, gains/losses on the sale of property, plant and equipment, and income from bank owned life insurance.

The following table sets forth the components of noninterest income for the years ended December 31, 2018, 2017 and 2016:



	2018		2017		2016
	(in thousands)
Deposit Related Fees and Charges
Debit card interchange income	$	5,150	$	4,474	$	4,086
Overdraft charges	3,938		4,656		4,763
ATM service charges	830		808		705
Demand deposit fees and charges	540		679		546
Savings service charges	126		123		57
Total	10,584		10,740		10,157
Commissions and Fees
Loan and lease fees	1,264		1,136		1,198
Wire transfer charges	1,093		1,005		914
Investment services income	1,314		1,045		973
Merchant fees	784		718		444
Commissions from sales of checks	434		457		448
Safe deposit income	371		269		247
Other income	264		202		96
Total	5,524		4,832		4,320
Gains on Sale of Loans	1,329		1,836		2,123
Other Income
Gains on customer swap transactions	1,992		982		1,056
Title insurance income	195		200		142
Other income	295		518		431
Total	2,482		1,700		1,629
Revenue not from contracts with customers	2,391		6,327		3,101
Total Noninterest Income	$	22,310	$	25,435	$	21,330
Timing of Revenue Recognition
Products and services transferred at a point in time	$	19,844	$	19,040	$	18,192
Products and services transferred over time	75		68		37
Revenue not from contracts with customers	2,391		6,327		3,101
Total Noninterest Income	$	22,310	$	25,435	$	21,330