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Related party transactions | 9 Months Ended
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Sep. 30, 2018
Related Party Transactions |
Related Party Transactions | Note 24 – Related party transactions The Corporation considers its equity method investees as related parties. The following provides information on transactions with equity method investees considered related parties. EVERTEC The Corporation has an investment in EVERTEC, Inc. (“EVERTEC”), which provides various processing and information technology services to the Corporation and its subsidiaries and gives BPPR access to the ATH network owned and operated by EVERTEC. As of September 30, 2018, the Corporation held 11,654,803 share s of EVERTEC, an ownership stake of 16.03%. The Corporation continues to have significant influence over EVERTEC. Accordingly, the investment in EVERTEC is accounted for under the equity method and is evaluated for impairment if events or circumstances indicate that a decrease in value of the inves tment has occurred that is other than temporary. The Corporation received $ 0.6 million in dividend distributions during the nine months ended September 30, 2018, from its investments in EVERTEC’s holding company (September 30, 2017 - $ 3.5 million). The Corporation’s equity in EVERTEC is presented in the table which follows and is included as part of “other assets” in the Consolidated S tatement s of Financial C onditi on.
(In thousands) |  | September 30, 2018 |  |  | December 31, 2017
Equity investment in EVERTEC | $ | 57,839 |  | $ | 47,532
The Corporation had the following financial condition balances outstanding with EVERTEC at September 30, 2018 and December 31, 2017. Items that represent liabilities to the Corporation are presented with parenthesis.
(In thousands) | September 30, 2018 | December 31, 2017
Accounts receivable (Other assets) | $ | 6,233 | $ | 6,830
Deposits |  | (52,339) |  | (22,284)
Accounts payable (Other liabilities) |  | (4,326) |  | (2,040)
Net total | $ | (50,432) | $ | (17,494)
The Corporation’s proportionate share of income or loss from EVERTEC is included in other operating income in the conso lidated statements of operation s. The following table presents the Corporation’s proportionate share of EVERTEC’s income (loss) and changes in stockholder s’ equity for the quarter s and nine months ended September 30, 2018 and 2017.
|  | Quarter ended |  |  | Nine months ended
(In thousands) |  | September 30, 2018 |  |  | September 30, 2018
Share of income from the investment in EVERTEC | $ | 3,682 |  | $ | 10,586
Share of other changes in EVERTEC's stockholders' equity |  | (34) |  |  | 601
Share of EVERTEC's changes in equity recognized in income | $ | 3,648 |  | $ | 11,187
|  | Quarter ended |  |  | Nine months ended
(In thousands) |  | September 30, 2017 |  |  | September 30, 2017
Share of income from the investment in EVERTEC | $ | 1,200 |  | $ | 8,143
Share of other changes in EVERTEC's stockholders' equity |  | 366 |  |  | 2,034
Share of EVERTEC's changes in equity recognized in income | $ | 1,566 |  | $ | 10,177
The following tables present the transactions and service payments between the Corporation and EVERTEC (as an affiliate) and their impact on the results of operations for the quarter s and nine months ended September 30, 2018 and 2017. Items that represent expenses to the Corporation are presented with parenthesis.
|  | Quarter ended | Nine months ended |
(In thousands) | September 30, 2018 | September 30, 2018 | Category
Interest expense on deposits |  | $ | (21) |  | $ | (46) | Interest expense
ATH and credit cards interchange income from services to EVERTEC |  |  | 8,486 |  |  | 24,940 | Other service fees
Rental income charged to EVERTEC |  |  | 1,781 |  |  | 5,297 | Net occupancy
Processing fees on services provided by EVERTEC |  |  | (48,360) |  |  | (142,443) | Professional fees
Other services provided to EVERTEC |  |  | 279 |  |  | 884 | Other operating expenses
Total |  | $ | (37,835) |  | $ | (111,368) |
|  | Quarter ended | Nine months ended |
(In thousands) |  | September 30, 2017 | September 30, 2017 | Category
Interest expense on deposits |  | $ | (12) |  | $ | (33) | Interest expense
ATH and credit cards interchange income from services to EVERTEC |  |  | 7,061 |  |  | 22,656 | Other service fees
Rental income charged to EVERTEC |  |  | 1,737 |  |  | 5,119 | Net occupancy
Processing fees on services provided by EVERTEC |  |  | (43,855) |  |  | (132,289) | Professional fees
Other services provided to EVERTEC |  |  | 291 |  |  | 900 | Other operating expenses
Total |  | $ | (34,778) |  | $ | (103,647) |
PRLP 2011 Holdings LLC As indicated in Note 23 to the C onsolidated F inancial S tatements, the Corporation holds a 24.9% equity interest in PRLP 2011 Holdings LLC and currently holds certain deposits from the entity. The Corporation’s equity in PRLP 2011 Holdings, LLC is presented in the table which follows and is included as part of “other assets” in the Consolidated S tatement s of Financial C ondition.
(In thousands) |  | September 30, 2018 |  |  | December 31, 2017
Equity investment in PRLP 2011 Holdings, LLC | $ | 6,942 |  | $ | 7,199
The Corporation had the following financial condition balances outstanding with PRLP 2011 Holdings, LLC at September 30, 2018 and December 31, 2017.
(In thousands) | September 30, 2018 | December 31, 2017
Deposits (non-interest bearing) | $ | (280) | $ | (20)
The Corporation’s proportionate share of income or loss from PRLP 2011 Holdings, LLC is included in other operating income in the Consolidated Statements of O perations. The following table presents the Corporation’s proportionate share of loss from PRLP 2011 Holdings, LLC for the quarters and nine months ended September 30, 2018 and 2017.
|  | Quarter ended |  | Nine months ended
(In thousands) |  | September 30, 2018 |  |  | September 30, 2018
Share of income (loss) from the equity investment in PRLP 2011 Holdings, LLC | $ | 55 |  | $ | (257)
|  | Quarter ended |  | Nine months ended
(In thousands) |  | September 30, 2017 |  |  | September 30, 2017
Share of income (loss) from the equity investment in PRLP 2011 Holdings, LLC | $ | 101 |  | $ | (808)
No capital distributions were received by the Corporation from its investment in PRLP 2011 Holdings, LLC during the nine months ended September 30, 2018 (September 30, 2017 - $ 1.0 million). There were no transactions between the Corporation and PRLP 2011 Holdings, LLC during the quarters ended September 30, 2018 and 2017. PR Asset Portfolio 2013-1 International, LLC As indicated in Note 23 to the Consolidated Financial Statements, effective March 2013 the Corporation holds a 24.9% equity interest in PR Asset Port folio 2013-1 International, LLC and currently provides certain financing to the joint venture as well as holds certain deposits from the entity. The Corporation’s equity in PR Asset Portfolio 2013-1 International, LLC is presented in the table which follows and is included as part of “other assets” i n the Consolidated S tatement s of Financial C ondition.
(In thousands) |  | September 30, 2018 |  |  | December 31, 2017
Equity investment in PR Asset Portfolio 2013-1 International, LLC | $ | 5,569 |  | $ | 12,874
The Corporation had the following financial condition balances outstanding with PR Asset Portfolio 2013-1 International, LLC at September 30, 2018 a nd December 31, 2017.
(In thousands) | September 30, 2018 | December 31, 2017
Deposits | $ | (8,433) | $ | (10,501)
The Corporation’s proportiona te share of income or loss from PR Asset Portfolio 2013-1 International, LLC is included in other operating income in the consolidated statements of operations. The following table presents the Corporation’s proportionate share of income (loss) from PR Asset Portfolio 2013-1 International, LLC for the quarter s and nine months ended September 30, 2018 and 2017.
|  | Quarter ended |  |  | Nine months ended
(In thousands) |  | September 30, 2018 |  |  | September 30, 2018
Share of income (loss) from the equity investment in PR Asset Portfolio 2013-1 International, LLC | $ | 112 |  | $ | (5,297)
|  | Quarter ended |  |  | Nine months ended
(In thousands) |  | September 30, 2017 |  |  | September 30, 2017
Share of loss from the equity investment in PR Asset Portfolio 2013-1 International, LLC | $ | (1,299) |  | $ | (1,150)
During the nine months ended September 30, 2018, the Corporation received $ 2.0 million in capital distributions from its investment in PR Asset Portfolio 2013-1 International, LLC (September 30, 2017 - $ 7.1 million). T he Corporation received $0.7 million in dividend distributions during the nine months ended September 30, 2017, which were declared by PR Asset Portfolio 2013-1 International, LLC during the quarter ended December 31, 2016. The following table present s transactions between the Corporation and PR Asset Portfolio 2013-1 International, LLC and their impact on the Corporation’s results of operations for the quarters and nine months ended September 30, 2018 and 2017.
|  | Quarter ended |  | Nine months ended |
(In thousands) |  | September 30, 2018 |  | September 30, 2018 | Category
Interest expense on deposits | $ | (5) |  | $ | (16) | Interest expense
|  | Quarter ended |  | Nine months ended |
(In thousands) |  | September 30, 2017 |  | September 30, 2017 | Category
Interest income on loan to PR Asset Portfolio 2013-1 International, LLC | $ | - |  | $ | 9 | Interest income
Interest expense on deposits |  | (8) |  |  | (23) | Interest expense
Total | $ | (8) |  | $ | (14) |
Centro Financiero BHD León At September 30, 2018, the Corporation had a 15.84% stake in Centro Financiero BHD Leon, S.A. (“BHD Leon”), one of the largest banking and financial services groups in the Dominican Republic. During the nine months ended September 30, 2018, the Corporation recorded $ 22.1 million in earnings from its investment in BHD Leon (September 30, 2017 - $ 17.3 million), which had a carrying amount of $ 140.4 million at September 30, 2018 (December 31, 2017 - $ 135.0 million). As of December 31, 2016, BPPR ha d extended a credit facility of $ 50 million to BHD León with an outstanding balance of $ 25 million. This credit facility was repaid and expired during March 2017. On December 2017, BPPR extended a credit facility of $ 40 million to BHD León. This credit facility was repaid during the quarter ended March 31, 2018. The Corporation received $ 12.6 million in dividend distributions during the nine months ended September 30, 2018 from its investment in BHD Leon (September 30, 2017 - $ 11.8 million). On June 30, 2017, BPPR extended an $8 million credit facility to Grupo Financiero Leon, S.A. Panamá (“GFL”), a shareholder of BHD Leon. The sources of repaym ent for this loan were the dividends to be received by GFL from its investment in BHD Leon. BPPR’s credit facility rank ed pari passu with another $8 million credit facility extended to GFL by BHD International Panama, an affiliate of BHD Leon. This credit facility was repaid during the quarter ended June 30, 2018. Puerto Rico Investment Companies The Corporation provides advisory services to several Puerto Rico investment companies in exchange for a fee. The Corporation also provides administrative, custody and transfer agency services to these investment companies. These fees are calculated at an annual rate of the average net assets of the investment company, as defined in each agreement. Due to its advisory role, the Corporation considers these investment companies as related parties. For the nine months ended September 30, 2018 administrati ve fees charged to these investment companies amounted to $ 5.1 million (September 30, 2017 - $ 5.8 million) and waived fees amounted to $ 1.6 million (September 30, 2017 - $ 1.7 million), for a net fee of $ 3.5 million (September 30, 2017 - $ 4.1 million). The Corporation, through its subsidiary Banco Popular de Puerto Rico, has also entered into lines of credit facilities with these companies. As of September 30, 2018, the available lines of credit facilities amounted to $337 million (December 31, 2017 - $356 million). The aggregate sum of all outstanding balances under all credit facilities that may be made available by BPPR, from time to time, to those Puerto Ric o investment companies for which BPPR acts as investment advisor or co-investment advisor, shall never exceed the lesser of $200 million or 10% of BPPR’s capital. At September 30, 2018 there was no outstanding balance for these credit facilities.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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