NOTE TWENTY-TWO – CONTRACTS WITH CUSTOMERS
The Company's largest source of revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), and non-interest income. The Company's significant sources of non-interest income are: service charges, bankcard revenue, wealth and investment management fee income and bank owned life insurance (which is also excluded from ASC 606).
The Company's significant policies related to contracts with customers are discussed below.
Service Charges: Service charges consist of service charges on deposit accounts (monthly service fees, account analysis fees, non-sufficient funds ("NSF") fees and other deposit account related fees). For transaction-based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, at a point in time. For non-transaction-based fees, the Company's performance obligation is generally satisfied, and the related revenue recognized, over the period in which the service is provided (typically a month). Generally, payments are received immediately through a direct charge to the customer's account.
Bankcard Revenue: Bankcard revenue is primarily comprised of debit card income and ATM fees. Debit card income is primarily comprised of interchange fees earned whenever the Company's debit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a non-Company cardholder uses a Company ATM or when a Company cardholder uses a non-Company ATM. The Company's performance obligation for bankcard revenue is generally satisfied, and the related revenue recognized, when the services are rendered. Generally, payments are received immediately or in the following month.
Wealth and Investment Management Fee Income: Wealth and investment management fee income is primarily comprised of fees earned from the management and administration of customer assets. The Company's performance obligation is generally satisfied over time (typically a quarter), and the related revenue recognized, based upon the quarter-end market value of the assets under management and the applicable fee rate. Generally, payments are received a few days after quarter-end through a direct charge to the customer's account.
The following table illustrates the disaggregation by the Company's major revenue streams (in thousands):
| | | | | | | | | | | | | | |
| Point of Revenue | | | |
| Recognition | 2025 | 2024 | 2023 |
| Major revenue streams | | | | |
| Service charges | At a point in time and over time | $ | 29,980 | | $ | 29,225 | | $ | 27,751 | |
| Bankcard revenue | At a point in time | 28,655 | | 28,500 | | 27,960 | |
| Wealth and investment management fee income | Over time | 12,345 | | 11,255 | | 9,563 | |
| Other income | At a point in time and over time | 3,308 | | 3,012 | | 3,794 | |
| Net revenue from contracts with customers | | 74,288 | | 71,992 | | 69,068 | |
| Non-interest income within the scope of other GAAP topics | | 3,477 | | 1,342 | | 1,561 | |
| Total non-interest income | | $ | 77,765 | | $ | 73,334 | | $ | 70,629 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.