Revenue Recognition

12 Months Ended

Dec. 31, 2019

Note 25. Revenue Recognition

All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income. The following table presents the Company’s sources of noninterest income for the year ended December 31, 2019 and 2018. Items outside of ASC 606 are noted as such.

	Year Ended December 31, 2019		Year Ended December 31, 2018
	(dollars in thousands)
Noninterest income
Service charges on deposits
Overdraft fees	$	1,264	$	847
Other		871		607
Interchange income		761		628
Net gains on sales of loans⁽¹⁾		512		61
Net gains on equity securities⁽¹⁾		294		(266)
Net gains on sales of available-for-sale securities⁽¹⁾		(280)		-
Wire transfer fees⁽¹⁾		481		309
Loan servicing fees⁽¹⁾		515		94
Bank owned life insurance⁽¹⁾		3,484		3,094
Other		133		99
Total noninterest income	$	8,035	$	5,473

⁽¹⁾	Not within scope of ASC 606.

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Table of Contents

CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 25. Revenue Recognition – (continued)

A description of the Company’s revenue streams accounted for under ASC 606 is as follows:

Service Charges on Deposit Accounts: The Company earns fees from deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed at the point in the time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange Income: The Company earns interchange fees from debit and credit card holder transactions conducted through various payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided by the cardholder.

Gains/Losses on Sales of OREO: The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether the collectability of the transaction prices is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.