Revenue Recognition

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The Company’s primary source of revenue is interest income generated from loans and investment securities. Interest income is recognized according to the terms of the financial instrument agreement over the life of the loan 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 fees, merchant fees, loan sales, investment services 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 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 income from bank owned life insurance, 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 mortgage servicing rights.

The following table sets forth the components of noninterest income for the three and six months ended June 30, 2021 and 2020:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020
Service charges on deposit accounts:
Debit card interchange income	$	1,608	$	1,215	$	3,018	$	2,438
Overdraft charges	551		449		1,138		1,402
ATM service charges	172		62		315		229
Demand deposit fees and charges	100		131		241		265
Savings service charges	14		18		29		41
Total	2,445		1,875		4,741		4,375
Commissions and fees:
Loan fees	484		213		991		553
Wire transfer charges	375		341		750		649
Investment services income	474		316		837		839
Merchant fees	258		166		459		414
Commissions from sales of checks	75		60		153		143
Safe deposit income	79		85		158		171
Other income	42		36		89		87
Total	1,787		1,217		3,437		2,856
Gains on sales of loans	607		710		1,315		1,125
Swap income	72		767		634		3,610
Other Income:
Title insurance income	31		84		44		80
Other income	81		73		163		170
Total	112		157		207		250
Revenue not from contracts with customers	246		755		694		1,276
Total Noninterest Income	$	5,269	$	5,481	$	11,028	$	13,492
Timing of Revenue Recognition:
Products and services transferred at a point in time	5,019		4,708		10,311		12,179
Products and services transferred over time	4		18		23		37
Revenue not from contracts with customers	246		755		694		1,276
Total Noninterest Income	$	5,269	$	5,481	$	11,028	$	13,492