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Related party transactions | 9 Months Ended
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Sep. 30, 2023
Related Party Transactions |
Related Party Transactions | Note 23 – 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 Until August 15, 2022, the Corporation had an investment in Evertec, Inc. (“Evertec”) which provides various processing and information technology services to the Corporation and its subsidiaries and gave BPPR access to the ATH network owned and operated by Evertec. This investment was accounted for under the equity method. The Corporation recorded $ 1.5 million in dividends from its investment in Evertec during the nine months ended September 30, 2022. On July 1, 2022, BPPR completed the acquisition of certain assets from Evertec Group, LLC (“Evertec Group”) to service certain BPPR channels, in exchange for shares of Evertec held by BPPR. The transaction was accounted for as a business combination. In connection with this transaction, BPPR also entered into amended and restated service agreements with Evertec Group pursuant to which Evertec Group continues to provide various information technology and transaction processing services to Popular, BPPR and their respective subsidiaries. As part of the transaction, BPPR and Evertec entered into a revenue sharing structure for BPPR in connection with its merchant acquiring relationship with Evertec. On August 15, 2022, the Corporation completed the sale of its remaining shares of common stock of Evertec, together with the aforementioned business acquisition (the "Evertec Transactions"). As a result, the Corporation discontinued accounting for its proportionate share of Evertec’s income (loss) and changes in stockholder’s equity under the equity method of accounting in the third quarter of 2022. In connection with the Evertec Transactions and related accounting adjustments, the Corporation recorded an aggregate pre-tax gain of $ 257.7 million considering the initial exchange of Evertec shares as well as the sale of the remaining shares. The following table presents the Corporation’s proportionate share of Evertec’s income (loss) and changes in stockholders’ equity for the quarter and nine months ended September 30, 2022. Quarter ended Nine months ended (In thousands) September 30, 2022 September 30, 2022 Share of income from the investment in Evertec [1] $ 257,712 $ 269,539 Share of other changes in Evertec's stockholders' equity - 3,168 Share of Evertec's changes in equity recognized in income $ 257,712 $ 272,707 [1] The Gain from Evertec Transactions and related accounting adjustments are reflected within other operating income in the accompanying consolidated financial statements. The Corporation recognized an additional $ 17.3 million as an operating expense in connection with the Evertec Transactions. The following table presents the impact of transactions and service payments between the Corporation and Evertec (as an affiliate) and their impact on the results of operations for the nine months ended September 30, 2022. Items that represent expenses to the Corporation are presented with parenthesis. Nine months ended (In thousands) September 30, 2022 [1] Category Interest expense on deposits $ (267) Interest expense ATH and credit cards interchange income from services to Evertec 13,955 Other service fees Rental income charged to Evertec 3,258 Net occupancy Processing fees on services provided by Evertec (128,681) Professional fees Other services provided to Evertec 420 Other operating expenses Total $ (111,315) [1] Includes activity through June 30, 2022. Centro Financiero BHD, S.A. At September 30, 2023, the Corporation had a 15.84 % equity interest in Centro Financiero BHD, S.A. (“BHD”), one of the largest banking and financial services groups in the Dominican Republic. During the nine months ended September 30, 2023, the Corporation recorded $ 38 million in equity pickup from its investment in BHD (September 30, 2022 - $ 28 million), which had a carrying amount of $ 223.7 million at September 30, 2023 (December 31, 2022 - $ 199.8 million). The Corporation received $ 14.1 million in cash dividend distributions and $ 2.1 million in stock dividends during the nine months ended September 30, 2023 from its investment in BHD (September 30, 2022 - $ 16 million cash dividends). Investment Companies The Corporation, through its subsidiary Popular Asset Management LLC (“PAM”), provides advisory services to several investment companies registered under the Investment Company Act of 1940 in exchange for a fee. The Corporation, through its subsidiary BPPR, also provides 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, 2023 administrative fees charged to these investment companies amounted to $ 1.7 million (September 30, 2022 - 1.9 million) and waived fees amounted to $ 0.7 million (September 30, 2022 - $ 0.7 million), for a net fee of $ 1 million (September 30, 2022 - $ 1.2 million).

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI https://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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