XML 77 R29.htm IDEA: XBRL DOCUMENT

Related party transactions with affiliated company

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements [Abstract]

Note 20 – Related party transactions with affiliated company / joint venture

On September 30, 2010, the Corporation completed the sale of a 51% majority interest in EVERTEC, Inc. (“EVERTEC”) to an unrelated third-party, including the Corporation's merchant acquiring and processing and technology businesses (the “EVERTEC transaction”), and retained a 49% ownership interest in Carib Holdings, the holding company of EVERTEC. EVERTEC continues to provide 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. 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 investment has occurred that is other than temporary. Refer to Note 25 “Related party transactions” to the consolidated financial statements included in the Corporation's 2011 Annual Report for details on this sale to an unrelated third-party.

The Corporation's investment in EVERTEC, including the impact of intra-entity eliminations, amounted to $ 192 million at March 31, 2012 (December 31, 2011 - $ 203 million; March 31, 2011 - $ 203 million), and is included as part of “other assets” in the consolidated statements of financial condition. The Corporation did not receive any capital distributions from EVERTEC during the period from January 1, 2012 through March 31, 2012 or during the year ended December 31, 2011.

The Corporation's proportionate share of income or loss from EVERTEC is included in other operating income in the consolidated statements of operations since October 1, 2010. The following table presents the Corporation's proportionate share of income (loss) from EVERTEC for the quarters ended March 31, 2012 and 2011. The unfavorable impact of the elimination in non-interest income presented in the table is principally offset by the elimination of 49% of the professional fees (operating expenses) paid by the Corporation to EVERTEC during the same period.

		Quarters ended March 31,
(In thousands)		2012		2011
Share of income from the equity investment in EVERTEC	$	1,730	$	11,792
Intra-company eliminations considered in other operating income (detailed in next table)		(13,345)		(13,713)
Share of loss from the equity investment in EVERTEC, net of eliminations	$	(11,615)	$	(1,921)

The following tables present 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 quarters ended March 31, 2012 and 2011. Items that represent expenses to the Corporation are presented with parenthesis. For consolidation purposes, the Corporation eliminates 49% of the income (expense) between EVERTEC and the Corporation from the corresponding categories in the consolidated statements of operations and the net effect of all items at 49% is eliminated against other operating income, which is the category used to record the Corporation's share of income (loss) as part of its equity method investment in EVERTEC. The 51% majority interest in the table that follows represents the share of transactions with the affiliate that is not eliminated in the consolidation of the Corporation's results of operations.

		Quarters ended
		March 31, 2012						March 31, 2011
(In thousands)	100%		Popular's 49% interest (eliminations)		51% majority interest		100%		Popular's 49% interest (eliminations)		51% majority interest		Category
Interest income on loan to EVERTEC	$	823	$	403	$	420	$	1,056	$	518	$	538	Interest income
Interest income on investment securities issued by EVERTEC		963		472		491		963		472		491	Interest income
Interest expense on deposits		(110)		(54)		(56)		(295)		(145)		(150)	Interest expense
ATH and credit cards interchange income from services to EVERTEC		5,853		2,868		2,985		6,793		3,328		3,465	Other service fees
Processing fees on services provided by EVERTEC		(36,659)		(17,963)		(18,696)		(38,678)		(18,952)		(19,726)	Professional fees
Rental income charged to EVERTEC		1,682		824		858		1,807		886		921	Net occupancy
Transition services provided to EVERTEC		213		105		108		369		181		188	Other operating expenses
Total	$	(27,235)	$	(13,345)	$	(13,890)	$	(27,985)	$	(13,712)	$	(14,273)

The Corporation had the following financial condition accounts outstanding with EVERTEC at March 31, 2012, December 31, 2011 and March 31, 2011. The 51% majority interest represents the share of transactions with the affiliate that is not eliminated in the consolidation of the Corporation's statements of financial condition.

	At March 31, 2012				At December 31, 2011				At March 31, 2011
(In thousands)		100%		51% majority interest		100%		51% majority interest		100%		51% majority interest
Loans	$	53,306	$	27,186	$	53,215	$	27,140	$	57,459	$	29,304
Investment securities		35,000		17,850		35,000		17,850		35,000		17,850
Deposits		79,241		40,413		54,288		27,687		50,846		25,932
Accounts receivables (Other assets)		3,251		1,658		5,132		2,617		3,709		1,891
Accounts payable (Other liabilities)		14,685		7,489		14,684		7,489		17,078		8,710

EVERTEC has certain performance bonds outstanding, which are guaranteed by the Corporation under a general indemnity agreement between the Corporation and the insurance companies issuing the bonds. EVERTEC's performance bonds guaranteed by the Corporation amounted to approximately $14.0 million at March 31, 2012 (December 31, 2011 - $15.0 million; March 31, 2011 - $10.4 million). Also, EVERTEC has a letter of credit issued by BPPR, for an amount of $2.9 million at March 31, 2012, December 31, 2011 and March 31, 2011. As part of the merger agreement, the Corporation also agreed to maintain outstanding this letter of credit for a 5-year period. EVERTEC and the Corporation entered into a Reimbursement Agreement, in which EVERTEC will reimburse the Corporation for any losses incurred by the Corporation in connection with the performance bonds and the letter of credit. Possible losses resulting from these agreements are considered insignificant.

As indicated in Note 19 to the consolidated financial statements, the Corporation holds a 24.9% equity interest in PRLP 2011 Holdings LLC and currently provides certain financing to the joint venture as well as holds certain deposits from the entity.

The following table presents transactions between the Corporation and PRLP 2011 Holdings, LLC and their impact on the Corporation's results of operations for the quarter ended March 31, 2012.

		March 31, 2012
(In thousands)	100%		Popular's 24.9% interest (eliminations)		75.1% majority interest		Category
Interest income on loan to PRLP 2011 Holdings, LLC	$	785	$	195	$	590	Interest income

The Corporation had the following financial condition accounts outstanding with PRLP 2011 Holdings, LLC at March 31, 2012 and December 31, 2011. The 75.1% majority interest represents the share of transactions with the affiliate that is not eliminated in the consolidation of the Corporation's statement of financial condition.

	At March 31, 2012				At December 31, 2011
(In thousands)		100%		75.1% majority interest		100%		75.1% majority interest
Loans	$	91,290	$	68,559	$	86,167	$	64,711
Deposits (non-interest bearing)		8,573		6,438		64		48
Accrued interest receivable		265		199		-		-

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. 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 235

-SubTopic 10

-Section S99

-Paragraph 1

-Subparagraph (SX 210.4-08.(k))

-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Article 3A

-Section 04

-Paragraph b

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 57

-Paragraph 1-4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 850

-SubTopic 10

-Section 50

-Paragraph 5

-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Article 4

-Section 08

-Paragraph k

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 850

-SubTopic 10

-Section 50

-Paragraph 6

-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 850

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 850

-SubTopic 10

-Section 50

-Paragraph 4

-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 850

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864

+ Details