Revenue Recognition

3 Months Ended

Mar. 31, 2023

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 months ended March 31, 2023 and 2022:

	For the Three Months Ended March 31,
(in thousands)	2023		2022
Deposit-Related Fees and Charges
Debit card interchange income	$	1,610	$	1,572
Overdraft charges	840		769
ATM service charges	178		171
Demand deposit fees and charges	139		94
Savings service charges	22		20
Total deposit-related fees and charges	2,789		2,626
Commissions and fees
Loan fees	547		809
Wire transfer charges	432		457
Investment services income	429		405
Merchant fees	291		251
Commissions from sales of checks	88		84
Safe deposit income	103		54
Other income	31		37
Total commissions and fees	1,921		2,097
Gains on sales of loans held for sale	430		1,426
Other income
Gains on customer swap transactions	56		—
Title insurance income	19		—
Other income	133		269
Total other income	208		269
Revenue not from contracts with customers	917		362
Total Noninterest Income	$	6,265	$	6,780
Timing of Revenue Recognition:
Products and services transferred at a point in time	5,348		6,418
Revenue not from contracts with customers	917		362
Total Noninterest Income	$	6,265	$	6,780