NORWOOD FINANCIAL CORP Revenue Disclosure
Under ASC Topic 606, management determined that the primary sources of revenue emanating from interest and dividend income on loans and investments along with noninterest revenue resulting from investment securities gains, loans servicing, gains on loans sold and earnings on bank-owned life insurance are not within the scope of this Topic.
The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the year ended December 31:
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|
|
|
|
|
|
(dollars in thousands) |
| 2024 |
| 2023 | ||
Noninterest Income |
|
|
|
|
|
|
In-scope of Topic 606: |
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|
|
|
|
|
Service charges on deposit accounts |
| $ | 453 |
| $ | 428 |
ATM Fees |
|
| 424 |
|
| 446 |
Overdraft Fees |
|
| 1,422 |
|
| 1,344 |
Safe deposit box rental |
|
| 88 |
|
| 92 |
Loan related service fees |
|
| 690 |
|
| 584 |
Debit card |
|
| 2,314 |
|
| 2,301 |
Fiduciary activities |
|
| 943 |
|
| 898 |
Commissions on mutual funds & annuities |
|
| 407 |
|
| 296 |
Gain on sales of other real estate owned |
|
| 32 |
|
| 80 |
Other income |
|
| 626 |
|
| 667 |
Noninterest Income (in-scope of Topic 606) |
|
| 7,399 |
|
| 7,136 |
Out-of-scope of Topic 606: |
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|
|
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|
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Net realized (losses) gains on sales of securities |
|
| (19,962) |
|
| (209) |
Loan servicing fees |
|
| 161 |
|
| 122 |
Gain on sales of loans |
|
| 195 |
|
| 63 |
Earnings on and proceeds from bank-owned life insurance |
|
| 1,056 |
|
| 1,012 |
Noninterest Income (out-of-scope of Topic 606) |
|
| (18,550) |
|
| 988 |
Total Noninterest Income |
| $ | (11,151) |
| $ | 8,124 |
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.