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Revenue Recognition
 6 Months Ended
Jun. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
The Company accounts for revenue from contracts with customers under ASC 606, which requires revenue that is derived from a contract with a customer to be recognized when the Company satisfies the related performance obligations by transferring to the customer a good or service. The majority of the Company’s contracts with customers associated with revenue streams that are within the scope of ASC 606 are considered short-term in nature and can be canceled at any time by the customer or the Company without penalty, such as a deposit account agreement. These revenue streams are included in noninterest income.

The Company’s principal source of revenue is interest income on loans, investment securities, and other interest earning assets, all of which are not within the scope of ASC 606. The remainder of the Company’s revenue is classified as noninterest income and is earned from a variety of fees, such as custodial and other fees, service charges, gains and losses, and other income.
The following tables provide a summary of the Company’s noninterest income, segregated by revenue streams within and outside the scope of ASC 606 for the periods indicated:
Three Months Ended
June 30, 2021March 31, 2021June 30, 2020
(Dollars in thousands)
Within Scope(1)
Out of Scope(2)
Within Scope(1)
Out of Scope(2)
Within Scope(1)
Out of Scope(2)
Noninterest income
Loan servicing income$— $622 $— $458 $— $434 
Service charges on deposit accounts2,222 — 2,032 — 1,399 — 
Other service fee income352 — 473 — 297 — 
Debit card interchange income1,099 — 787 — 457 — 
Earnings on bank-owned life insurance— 2,279 — 2,233 — 1,314 
Net gain (loss) from sales of loans— 1,546 — 361 — (2,032)
Net gain (loss) from sales of investment securities— 5,085 — 4,046 — (21)
Trust custodial account fees7,897 — 7,222 — 2,397 — 
Escrow and exchange fees1,672 — 1,526 — 264 — 
Other income97 3,858 282 4,320 (80)2,469 
Total noninterest income$13,339 $13,390 $12,322 $11,418 $4,734 $2,164 
______________________________
(1) Revenues from contracts with customers accounted for under ASC 606.
(2) Revenues not within the scope of ASC 606 and accounted for under other applicable GAAP requirements.
Six Months Ended
June 30, 2021June 30, 2020
(Dollars in thousands)
Within Scope(1)
Out of Scope(2)
Within Scope(1)
Out of Scope(2)
Noninterest income
Loan servicing income$— $1,080 $— $914 
Service charges on deposit accounts4,254 — 3,114 — 
Other service fee income825 — 608 — 
Debit card interchange income1,886 — 805 — 
Earnings on bank-owned life insurance— 4,512 — 2,650 
Net gain (loss) from sales of loans— 1,907 — (1,261)
Net gain from sales of investment securities— 9,131 — 7,739 
Trust custodial account fees15,119 — 2,397 — 
Escrow and exchange fees3,198 — 264 — 
Other income379 8,178 137 4,006 
Total noninterest income$25,661 $24,808 $7,325 $14,048 
______________________________
(1) Revenues from contracts with customers accounted for under ASC 606.
(2) Revenues not within the scope of ASC 606 and accounted for under other applicable GAAP requirements.

The major revenue streams by type that are within the scope of ASC 606 presented in the tables above are described in additional detail below:

Service Charges on Deposit Accounts and Other Service Fee Income
Service charges on deposit accounts and other service fee income consists of periodic service charges on deposit accounts and transaction based fees such as those related to overdrafts, ATM charges, and wire transfer fees. The majority of these revenues are accounted for under ASC 606. Performance obligations for periodic service charges on deposit accounts are typically short-term in nature and are generally satisfied on a monthly basis, while performance obligations for other transaction based fees are typically satisfied at a point in time (which may consist of only a few moments to perform the service or transaction) with no further obligations on behalf of the Company to the customer. Periodic service charges are generally collected monthly directly from the customer’s deposit account, and at the end of a statement cycle, while transaction based service charges are typically collected at the time of or soon after the service is performed.

Debit Card Interchange Income

Debit card interchange fee income consists of transaction processing fees associated with customer debit card transactions processed through a payment network and are accounted for under ASC 606. These fees are earned each time a request for payment is originated by a customer debit cardholder at a merchant. In these transactions, the Company transfers funds from the debit cardholder’s account to a merchant through a payment network at the request of the debit cardholder by way of the debit card transaction. The related performance obligations are generally satisfied when the transfer of funds is complete, which is generally a point in time when the debit card transaction is processed. Debit card interchange fees are typically received and recorded as revenue on a daily basis.
Trust Custodial Account Fees

Custodial account fees is a revenue stream acquired in the Opus acquisition and is governed by contracts executed with Pacific Premier Trust clients to perform maintenance and custodial services over their alternative IRA investments as well as certain accounts that do not qualify as individual retirement accounts pursuant to the Internal Revenue Code. Typically, such fees are billed and collected on a quarterly basis and recognized commensurate with completion of the performance obligations required under the contracts. At June 30, 2021, the Company had accrued fees receivable of approximately $6.9 million, which are included in other assets in the consolidated statements of financial position. The balance of accrued fees receivable is net of approximately $382,000 of allowance for credit losses on doubtful accounts. The allowance represents the Company’s estimate of credit losses on accrued fees receivable in accordance in ASC 326. The Company recorded approximately $104,000 and $131,000 in credit loss expense associated with accrued fees receivable for the three and six month periods ended June 30, 2021, respectively. The credit loss expense for the three and six month periods ended June 30, 2020, was $64,000. Credit loss expense for fees receivable is included in other expense of the Company’s consolidated statements of income (loss).

Escrow and exchange fees

Escrow and exchange fees is a revenue stream from the Commerce Escrow division acquired in the Opus acquisition, which are related to agreements with customers participating in escrow transactions. Transactions under Section 1031 of the Internal Revenue Code generate exchange fees as well as escrow fees. These fees relate to services that include preparation of closing statements and custody of escrow funds. The fees are received from the sale proceeds of a relinquished property and are recognized as revenue upon closing of the escrow transaction, which is the final performance obligation.

Other Income

Other noninterest income includes other miscellaneous fees, which are accounted for under ASC 606; however, much like service charges on deposit accounts, these fees have performance obligations that are very short-term in nature and are typically satisfied at a point in time. Revenue is typically recorded at the time these fees are collected, which is generally upon the completion the related transaction or service provided.

Other revenue streams that may be applicable to the Company include gains and losses from the sale of nonfinancial assets such as other real estate owned and property premises and equipment. The Company accounts for these revenue streams in accordance with ASC 610-20, which requires the Company to look to guidance in ASC 606 in the application of certain measurement and recognition concepts. The Company records gains and losses on the sale of nonfinancial assets when control of the asset has been surrendered to the buyer, which generally occurs at a specific point in time.

Practical Expedient
The Company also employs a practical expedient with respect to contract acquisition costs, which are generally capitalized and amortized into expense. These costs relate to expenses incurred directly attributable to the efforts to obtain a contract. The practical expedient allows the Company to immediately recognize contract acquisition costs in current period earnings when these costs would have been amortized over a period of one year or less.