NOTE 4 — Noninterest Income The majority of the Company’s revenue-generating transactions are not subject to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, including revenue generated from financial instruments, such as loans, letters of credit, and investment securities. Descriptions of revenue-generating activities that are within the scope of ASC 606, and are presented in the Consolidated Statements of Income as components of noninterest income, are as follows: | | | | | | | | | Three Months Ended March 31, | | | 2025 | | 2024 | | | | (In thousands) | Payment processing fees: | | | | | | | Payment processing income | | $ | 4,750 | | $ | 5,100 | ACH income | | | 162 | | | 196 | Total payment processing fees | | | 4,912 | | | 5,296 | Customer related fees, service charges and other: | | | | | | | Administrative service income | | | 880 | | | 746 | Other | | | 359 | | | 347 | Total customer related fees, service charges and other | | | 1,239 | | | 1,093 | Total noninterest income | | $ | 6,151 | | $ | 6,389 |
The Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from the above-described contracts with customers. | ● | Payment processing income – We provide payment processing services as an acquiring bank through the third-party or independent sales organization (“ISO”) business model in which we process credit and debit card transactions on behalf of merchants. We enter into a tri-party merchant agreement, between the Company, ISO and each merchant. The Company’s performance obligation is clearing and settling credit and debit transactions on behalf of the merchants. The Company recognizes revenue monthly once it summarizes and computes all revenue and expenses applicable to each ISO, which is our performance obligation. |
| ● | ACH income – We provide ACH services for merchants and other commercial customers. Contracts are entered into with third parties that require ACH transactions processed on behalf of their customers. Fees are variable and based on the volume of transactions within a given month. Our performance obligations are |
| | processing and settling ACHs on behalf of the customers. Our obligation is satisfied within each business day when the transactions (ACH files) are sent to the FRB for clearing. Revenue is recognized based on the total volume of transactions processed that month for a given customer. |
| ● | Administrative service income – Administrative service income is derived primarily from the management of qualified settlement funds (“QSFs”), which are funds from settled mass torts and class action lawsuits. Our performance obligations with the QSFs are outlined in court approved orders which includes ensuring funds are invested into safe investment vehicles such as U.S. treasuries and FDIC insured products. Our fees for placing these funds in appropriate vehicles are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. |
| ● | Other – The other category includes revenue from service charges on deposit accounts, debit card fees, asset management fees, and certain loan related fees where revenue is recognized as performance obligations are satisfied. |
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