Revenue Recognition
The Company records revenue from contracts with customers in accordance with ASU 2014-09, Revenue from Contracts with Customers ("Topic 606"). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities, which comprise the majority of the Company’s revenue.
The Company’s revenue streams that are within the scope of Topic 606 include service charges on deposit accounts, ATM and card interchange fees, investment services fees, and other miscellaneous income. Fees and service charges for customer services include: (i) service charges on deposit accounts, including account maintenance fees, analysis fees, insufficient funds fees, wire fees, and other deposit related fees; (ii) ATM and card interchange fees, which include fees generated when a Bank cardholder uses a non-Bank ATM or a non-Bank cardholder uses a Bank ATM, and fees earned whenever the Bank's debit cards are processed through card payment networks such as Visa; and (iii) investment services fees earned through partnering with a third-party investment and brokerage service firm to provide insurance and investment products to customers. The Company's performance obligation for fees and service charges is satisfied and related revenue recognized immediately or in the month of performance of services. For the years ended December 31, 2024 and 2023, other income primarily included fee income on interest rate swaps and rental income from subleasing one of the Company's branches to a third party. For the year ended December 31, 2022, other income primarily included rental income from subleasing one of the Company's branches to a third party, loan servicing fees, and fee income on interest rate swaps.
The following table summarizes non-interest income for the periods indicated (in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | December 31, |
| | | 2024 | | 2023 | | 2022 |
| Fees and service charges for customer services: | | | | | | |
| Service charges | | $ | 3,730 | | | $ | 3,085 | | | $ | 3,380 | |
| ATM and card interchange fees | | 1,856 | | | 1,932 | | | 1,920 | |
| Investment fees | | 844 | | | 462 | | | 405 | |
| Total fees and service charges for customer services | | 6,430 | | | 5,479 | | | 5,705 | |
Income on bank-owned life insurance (1) | | 4,216 | | | 3,631 | | | 3,414 | |
(Losses)/gains on available-for-sale debt securities, net (1) | | (6) | | | (17) | | | 279 | |
Gains/(losses) on trading securities, net (1) | | 1,665 | | | 1,721 | | | (2,206) | |
Gains on sale of loans (1) | | 51 | | | 134 | | | 453 | |
Gains on sale of property (1) | | 3,402 | | | — | | | — | |
Other (1) | | 1,064 | | | 948 | | | 338 | |
| Total non-interest income | | $ | 16,822 | | | $ | 11,896 | | | $ | 7,983 | |
| | | | | | |
(1) Not within the scope of Topic 606
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.