XML 72 R39.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Related party transactions | 12 Months Ended
--- | ---
Dec. 31, 2023
Related Party Transactions |
Related Party Transactions | Note 27 – Related party transactions The Corporation grants loans to its directors, executive officers, including certain related individuals or organizations, and affiliates in the ordinary course of business. The activity and balance of these loans were as follows: (In thousands) Balance at December 31, 2021 $ 102,579 New loans 11,090 Payments (15,402) Other changes, including existing loans to new related parties 27,070 Balance at December 31, 2022 $ 125,337 New loans 23,381 Payments (9,731) Other changes, including existing loans to new related parties 7,030 Balance at December 31, 2023 $ 146,017 New loans and payments include disbursements and collections from existing lines of credit. The Corporation has had loan transactions with the Corporation’s directors, executive officers, including certain related individuals or organizations, and affiliates, and proposes to continue such transactions in the ordinary course of its business, on substantially the same terms, including interest rates and collateral, as those prevailing for comparable loan transactions with third parties. Except as discussed below, the extensions of credit have not involved and do not currently involve more than normal risks of collection or present other unfavorable features. In 2010, as part of the Westernbank FDIC assisted transaction, BPPR acquired five commercial loans made to entities that were wholly owned by one brother-in-law of a director of the Corporation. The loans were secured by real estate and personally guaranteed by the director’s brother-in-law. The loans were originated by Westernbank between 2001 and 2005 and had an aggregate outstanding principal balance of approximately $ 33.5 million when they were acquired by BPPR in 2010. Between 2011 and 2014, the loans were restructured to consist of (i) five notes with an aggregate outstanding principal balance of $ 19.8 million with a 6 % annual interest rate (“Notes A”) and (ii) five notes with an aggregate outstanding balance of $ 13.5 million with a 1 % annual interest rate, to be paid upon maturity (“Notes B”). The restructured notes had an original maturity of September 30, 2016 and, thereafter, various interim renewals were approved to allow for the re-negotiation of a longer-term extension. On April 2022, one of these interim extensions decreased the interest rate applicable to the Notes A to 4.25 % and maintained the Notes B at an interest rate of 1 %. In November 2022, BPPR and related parties of the Corporation’s director entered into a three-year extension of the loans, until November 2025, which, among other things: (i) increased the interest rate applicable to Notes A to 5.25 % and maintained the Notes B at an interest rate of 1 % and (ii) established a principal repayment schedule for Notes A, including a $ 0.7 million mandatory prepayment. The three-year extension of the loans was approved by the Audit Committee in accordance with the Related Party Policy. The aggregate outstanding balance on the loans as of December 31, 2023 was approximately $ 28.5 million, of which approximately $ 15.0 million corresponded to Notes A and $ 13.5 million to Notes B. During 2023, the borrower paid approximately $ 0.8 million and $ 0.8 million in principal and interest, respectively. In April 2010, in connection with the acquisition of the Westernbank assets from the FDIC, as receiver, BPPR acquired a term loan to a corporate borrower partially owned by an investment corporation in which the Corporation’s Chairman, at that time the Chief Executive Officer, as well as certain of his family members, are the owners. In addition, the Chairman’s sister is the owner of an entity that holds an ownership interest in the borrower. At the time the loan was acquired by BPPR, it had an unpaid principal balance of $ 40.2 million. In May 2017, this loan was sold by BPPR to Popular, Inc., holding company (“PIHC”). At the time of sale, the loan had an unpaid principal balance of $ 37.9 million. PIHC paid $ 37.9 million to BPPR for the loan, of which $ 6.0 million was recognized by BPPR as a capital contribution representing the difference between the fair value and the book value of the loan at the time of transfer. Immediately upon being acquired by PIHC, the loan’s maturity was extended by 90 days (under the same terms as originally contracted) to provide the PIHC additional time to evaluate a refinancing or long-term extension of the loan. In August 2017, the credit facility was refinanced with a stated maturity in February 2019. During 2017, the facility was subject to the loan payment moratorium offered as part of the hurricane relief efforts. As such, interest payments amounting to approximately $ 0.5 million were deferred and capitalized as part of the loan balance. In February 2019, the Audit Committee approved, under the Related Party Policy, a 36 -month renewal of the loan at an interest rate of 5.75 % and a 30 -year amortization schedule. In December 2021, the Corporation refinanced the then-current $ 36.0 million principal balance of the loan at an interest rate of 4.50 %, a maturity date of December 2026 and a 20 -year amortization schedule. Payments of principal and interest of approximately $ 1.2 million and $ 1.5 million, respectively, were made during 2023. As of December 31, 2023, the outstanding balance of the loan was approximately $ 32.4 million. The borrower is current on its payments. At December 31, 2023, the Corporation’s banking subsidiaries held deposits from related parties amounting to approximately $ 655 million (2022 - $ 628 million). From time to time, the Corporation, in the ordinary course of business, obtains services from related parties that have some association with the Corporation. Management believes the terms of such arrangements are consistent with arrangements entered into with independent third parties. For the year ended December 31, 2023, the Corporation made contributions of approximately $ 2.6 million to Fundación Banco Popular and Popular Bank Foundation, which are not-for-profit corporations dedicated to philanthropic work (2022 - $ 4.8 million). The Corporation also provided human and operational resources to support the activities of the Fundación Banco Popular which in 2023 amounted to approximately $ 1.4 million (2022- $ 1.5 million). Related party transactions with Evertec, as an affiliate 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 year ended December 31, 2022. On July 1, 2022, BPPR completed its previously announced 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 will continue 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. The Corporation recorded a 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 years ended December 31, 2022 and 2021. Year ended December 31, (In thousands) 2022 2021 Share of Evertec income and Gain from the Evertec Transactions and related accounting adjustments [1] $ 269,539 $ 26,096 Share of other changes in Evertec's stockholders' equity 3,168 53 Share of Evertec's changes in equity recognized in income and Gain from the Evertec Transaction and related accounting adjustments $ 272,707 $ 26,149 [1] The Gain from the Evertec Transactions and related accounting adjustments are reflected within other operating income in the accompanying consolidated financial statements. As discussed in Note 4, the Corporation recognized an additional $ 17.3 million as an operating expense in connection with the Business Acquisition Transaction. 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 years ended December 31, 2022 and 2021. Items that represent expenses to the Corporation are presented with parenthesis. Years ended December 31, (In thousands) 2022 [1] 2021 Category Interest expense on deposits $ (267) $ (388) Interest expense ATH and credit cards interchange income from services to Evertec 13,955 27,384 Other service fees Rental income charged to Evertec 3,258 6,593 Net occupancy Fees on services provided by Evertec (128,681) (245,945) Professional fees Other services provided to Evertec 420 740 Other operating expenses Total $ (111,315) $ (211,616) [1] Includes activity through June 30, 2022. Centro Financiero BHD, S.A. At December 31, 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 year ended December 31, 2023, the Corporation recorded $ 40.1 million in equity pickup from its investment in BHD (December 31, 2022 - $ 31.2 million), which had a carrying amount of $ 225.9 million at December 31, 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 year ended December 31, 2023 from its investment in BHD (December 31, 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 year ended December 31, 2023 administrative fees charged to these investment companies amounted to $ 2.3 million (December 31, 2022 - 2.5 million) and waived fees amounted to $ 0.9 million (December 31, 2022 - $ 0.9 million), for a net fee of $ 1.4 million (December 31, 2022 - $ 1.6 million).

X
- References No definition available. + Details
Name: | us-gaap_RelatedPartyTransactionsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-5 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-6 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 235 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481062/946-235-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 235 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481062/946-235-50-2 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 850 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483326/850-10-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 220 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.6-07(2)(g)(3)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 220 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.6-07(2)(c)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 220 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.6-07(2)(e)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 850 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//850/tableOfContent Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 850 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Publisher FASB -URI https://asc.fasb.org//1943274/2147483326/850-10-50-6 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 850 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483326/850-10-50-1 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 850 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483326/850-10-50-1 + Details
Name: | us-gaap_RelatedPartyTransactionsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration