Revenue from Contracts with Customers

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)” and subsequent related updates. The Corporation adopted the guidance effective January 1, 2018 using the modified retrospective method though no adjustments were made to retained earnings as a result of the adoption. The Corporation’s revenue is the sum of net interest income and noninterest income. Revenues are recognized when obligations under the terms of contracts with customers are satisfied, including the transfer of control of the promised goods or services to customers, in an amount that reflects the consideration the Corporation expects to be entitled to in exchange for those goods or services. The Corporation provides services to customers which have related performance obligations that are completed to recognize revenue. The Corporation's revenues are generally recognized either immediately upon the completion of the services or over time as the services are performed. Any services performed over time generally require services to be rendered each period and therefore progress in completing these services is measured based upon the passage of time.

The following tables disaggregate the Corporation's revenue by major source for the three and nine months ended September 30, 2018 and 2017.



	Three Months Ended
	September 30, 2018
(Dollars in thousands)	Banking		Wealth Management		Insurance		Other			Consolidated
Net interest income (1)	$	41,667	$	9	$	—	$	(1,253	)	$	40,423

Noninterest income:
Trust fee income	—		1,960		—		—			1,960
Service charges on deposit accounts	1,454		—		—		—			1,454
Investment advisory commission and fee income	—		3,785		—		—			3,785
Insurance commission and fee income	—		—		3,643		—			3,643
Other service fee income (2)	2,032		50		202		—			2,284
Bank owned life insurance income (1)	708		—		—		157			865
Net gain on mortgage banking activities (1)	754		—		—		—			754
Other (loss) income (2)	122		—		—		(6		)	116
Total noninterest income	$	5,070	$	5,795	$	3,845	$	151		$	14,861



	Three Months Ended
	September 30, 2017
(Dollars in thousands)	Banking		Wealth Management		Insurance		Other			Consolidated
Net interest income (1)	$	38,130	$	4	$	—	$	(1,247	)	$	36,887

Noninterest income:
Trust fee income	—		1,924		—		—			1,924
Service charges on deposit accounts	1,371		—		—		—			1,371
Investment advisory commission and fee income	—		3,455		—		—			3,455
Insurance commission and fee income	—		—		3,492		—			3,492
Other service fee income (2)	1,947		49		127		—			2,123
Bank owned life insurance income (1)	675		—		—		67			742
Net gain on sales of investment securities (1)	6		—		—		1			7
Net gain on mortgage banking activities (1)	908		—		—		—			908
Other income (2)	86		—		1		—			87
Total noninterest income	$	4,993	$	5,428	$	3,620	$	68		$	14,109



	Nine Months Ended
	September 30, 2018
(Dollars in thousands)	Banking		Wealth Management		Insurance			Other			Consolidated
Net interest income (1)	$	120,423	$	22	$	—		$	(3,760	)	$	116,685

Noninterest income:
Trust fee income	—		6,000		—			—			6,000
Service charges on deposit accounts	4,116		—		—			—			4,116
Investment advisory commission and fee income	—		11,246		—			—			11,246
Insurance commission and fee income	—		—		12,243			—			12,243
Other service fee income (2)	6,139		151		594			—			6,884
Bank owned life insurance income (1)	2,567		—		—			177			2,744
Net gain on sales of investment securities (1)	10		—		—			—			10
Net gain on mortgage banking activities (1)	2,412		—		—			—			2,412
Other (loss) income (2)	76		—		(2		)	28			102
Total noninterest income	$	15,320	$	17,397	$	12,835		$	205		$	45,757



	Nine Months Ended
	September 30, 2017
(Dollars in thousands)	Banking		Wealth Management		Insurance		Other			Consolidated
Net interest income (1)	$	110,223	$	6	$	—	$	(3,759	)	$	106,470

Noninterest income:
Trust fee income	—		5,847		—		—			5,847
Service charges on deposit accounts	3,927		—		—		—			3,927
Investment advisory commission and fee income	—		9,969		—		—			9,969
Insurance commission and fee income	—		—		11,530		—			11,530
Other service fee income (2)	5,825		149		381		—			6,355
Bank owned life insurance income (1)	2,886		—		—		261			3,147
Net gain on sales of investment securities (1)	39		—		—		4			43
Net gain on mortgage banking activities (1)	3,558		—		—		—			3,558
Other income (2)	710		—		2		—			712
Total noninterest income	$	16,945	$	15,965	$	11,913	$	265		$	45,088


(1)	Net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities, and derivatives are excluded from the scope of the standard. Noninterest income streams that are out-of-scope of the standard include bank owned life insurance income, sales of investment securities and mortgage banking activities.


(2)	Other service fee income and other income include certain items that are in scope and certain items that are out of scope of the standard and are described further in the following paragraphs.

Banking Segment

The Banking segment provides financial services to consumer and commercial customers and governmental units. These services include a full range of banking services such as deposit taking, loan origination and servicing, mortgage banking, other general banking services and equipment lease financing.

Service charges on deposit accounts are generally earned on depository accounts for commercial and consumer customers and primarily includes fees for account services, overdraft services, and cash management services for commercial customers. Account services include fees for event-driven services such as ATM transactions and fees for periodic account maintenance activities. Cash management services for commercial customers include fees for event-driven services such as lockbox processing and line sweep services and fees for periodic account maintenance activities. The Corporation's obligation for event-driven services is satisfied at the time of the event when the service is delivered, while the obligation for periodic services is satisfied over the course of each month. Obligations for overdraft services is satisfied at the time of the overdraft.

Other service fee income is earned from commercial and consumer customers and primarily includes credit and debit card interchange and merchant revenues, mortgage servicing income, which is out of scope of the standard, and other deposit related service fee income such as wire transfers, check services and safe deposit boxes. Interchange and merchant revenues are recognized concurrently with the delivery of services on a monthly basis. Other deposit related service fee income include fees for event-driven services, such as wire transfers and check services, and fees for periodic services such as safe deposit box services. The obligation for event-driven services is satisfied at the time of the event when the service is delivered, while the obligation for periodic services is satisfied over the course of each month.

Other income primarily includes net gains or losses from the sales of loans and leases, net gains or losses from the sales or disposition of fixed assets and net gains or losses on interest rate swaps, all of which are out of scope of the standard, and net gains or losses on sales and write-downs of other real estate owned. Net gains or losses on sales of other real estate owned are recognized at the point in time in which control of the other real estate owned is transferred.

Wealth Management Segment

The wealth management segment offers trust and investment advisory services, guardian and custodian of employee benefits and other trust and brokerage services, as well as a registered investment advisory managing private investment accounts for both individuals and institutions.

Trust fee income is earned for providing trust, investment management and other related services. Obligations for trust and other related services are generally satisfied over time but may be satisfied at points in time for certain activities that are transactional in nature and obligations for investment management services are generally performed over time. Fees for trust fee income are typically based on a tiered scale relative to the market value of assets under management and are recognized in conjunction with the delivery of services.

Investment advisory commission and fee income include fees for financial planning, guardian and custodian of employee benefits, investment advisory, and brokerage services. Obligations for financial planning, guardian and custodian of employee benefits, and investment advisory services are generally satisfied over time and fees, typically based on a tiered scale relative to the market value of assets under management are recognized in conjunction with the delivery of services. Brokerage services are typically event driven and are based on the size and number of transactions executed at the client’s direction and recognized on the trade date.

Insurance Segment

The insurance segment includes a full-service insurance brokerage agency offering commercial property and casualty insurance, group life and health coverage, employee benefit solutions, personal insurance lines and human resources consulting.

Insurance commission and fee income is derived primarily from commissions from the sale of insurance policies, which are generally calculated as a percentage of the policy premium, and contingent income, which is calculated based on the performance of the policies held by each carrier. Obligations for the sale of insurance policies are generally satisfied at the point in time which the policy is executed and are recognized at the point in time in which the amounts are known and collection is reasonably assured. Obligations for contingent income are generally satisfied over time and are recognized at the point in time in which the amounts are known and collection is reasonably assured.

Other service fee income is earned from human resources consulting services. These obligations are generally satisfied over time and are recognized on a periodic basis.