NOTE

Revenue Recognition

Effective

January 1, 2018,

the Company adopted ASU

2014

09,

Revenue from Contracts with Customers (Topic

606

)

and all subsequent amendments to the ASU (collectively, “ASC

606”

), which (

) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (

) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets, such as securities and premises and equipment. The majority of the Company’s revenues come from interest income on loans and securities that are outside the scope of ASC

606.

The Company’s services that fall within the scope of ASC

606

are presented on the income statement within non-interest income and are recognized as revenue as the Company satisfies its performance obligation to the customer. Services within the scope of ASC

606

include fees and service charges on deposit accounts, ATM and debit card interchange income, safe deposit box rental fees, check printing charges and income earned on the sale of uninsured investment products.

The Company, using a modified retrospective transition approach, determined that there was

cumulative effect adjustment to retained earnings as a result of adopting the new standard, nor did the standard have a material impact on our consolidated financial statements relating to the timing or amounts of revenue recognized.

All of the Company’s revenue from contracts with customers within the scope of ASC

606

is recognized within non-interest income. The following table presents the Company’s sources of non-interest income for the years ended

December 31, 2019

and

2018.

Sources of revenue outside the scope of ASC

606

are noted as such.

	Year ended December 31,
(Dollars in thousands)	2019		2018
Non-interest income:
Fees and service charges on deposit accounts	$	1,257		1,308
Other fees and service charges		433		585
Debit card interchange fees		1,410		1,437
Gain on sale of loans (1)		2,941		2,095
Loan servicing fees (1)		1,278		1,255
Uninsured investment product sales		909		870
Other		227		164
Total non-interest income		8,455		7,714

(

)

Not

within the scope of ASC

606.

A description of the Company’s revenue categories that are accounted for under ASC

606

is as follows:

Fees and Service Charges on Deposit Accounts

The Company earns fees from deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, wire transfer fees, check cashing fees, stop payment charges, statement rendering, ACH fees, and other deposit related fees, are recognized at the time the transaction is executed or when the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Other Fees and Service Charges

Other fees and service charges consist of revenues that are both within the scope of and outside the scope of ASC

606.

Other fees and service charges within the scope of ASC

606

consist of fees for the rental of safe deposit boxes and check printing charges. Revenues for these fees are recognized at the point the service is provided or the fee is incurred by the customer. Other fees and service charges outside the scope of ASC

606

consist of loan commitment fees and late charges on loans.

Debit Card Interchange Fees

The Company earns interchange fees from debit card holder transactions conducted through various payment networks. Interchange fees from cardholder transactions are recognized daily, concurrently with the transaction processing services provided by an outsourced technology solution and are presented on a net basis.

Uninsured Investment Product Sales

Commission revenues on the sale of uninsured investment products

may

be recognized up front on the sale date of the investment or monthly over a period of years depending on the product being sold. The commissions on investment sales are recognized when the product sale is completed or monthly for trailer fees in accordance with the customer agreement. Any subsequent commission adjustments are recognized upon our receipt of notification from the investment companies concerning matters necessitating such adjustments. Profit-sharing contingent commissions are recognized when determinable, which is generally when such commissions are received from the investment companies.

Other

Other consists of revenues that are both within the scope of and outside the scope of ASC

606.

Other income within the scope of ASC

606

consists of gains and losses on asset sales. Other income outside the scope of ASC

606

consists of gains and losses on equity securities and rental income on buildings.