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Related party transactions
 3 Months Ended
Mar. 31, 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
 
$
0.6
 
million
 
in
dividends from its investment in Evertec during
 
the quarter ended March 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
 
connection
 
with
 
the
 
Evertec
 
Business
 
Acquisition
 
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. 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 following
 
table presents
 
the Corporation’s
 
proportionate share
 
of Evertec’s
 
income (loss)
 
and changes
 
in stockholders’
 
equity
for the quarter ended March 31, 2022.
Quarter ended March 31,
(In thousands)
2022
Share of income from
 
investment in Evertec
$
6,318
Share of other changes in Evertec's stockholders' equity
1,787
Share of Evertec's changes in equity recognized in income
$
8,105
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
 
quarter
 
ended
 
March
 
31,
 
2022.
 
Items
 
that
 
represent
 
expenses
 
to
 
the
Corporation are presented with parenthesis.
Quarter ended March 31,
(In thousands)
2022
Category
Interest expense on deposits
$
(132)
Interest expense
ATH and credit cards interchange
 
income from services to EVERTEC
6,683
Other service fees
Rental income charged to EVERTEC
1,681
Net occupancy
Processing fees on services provided by EVERTEC
(62,222)
Professional fees
Other services provided to EVERTEC
218
Other operating expenses
Total
$
(53,772)
Centro Financiero BHD León
At March
 
31, 2023,
 
the Corporation
 
had a
15.84
% equity
 
interest in
 
Centro Financiero
 
BHD León,
 
S.A. (“BHD
 
León”), one
 
of the
largest banking and financial services groups in the Dominican Republic. During the quarter ended March 31, 2023, the Corporation
recorded $
9.1
 
million in earnings from
 
its investment in BHD
 
León (March 31,
 
2022 - $
7.4
 
million), which had a
 
carrying amount of
$
201.4
 
million
 
at
 
March
 
31,
 
2023
 
(December
 
31,
 
2022
 
-
 
$
199.8
 
million).
 
There
 
were
 
no
 
dividends
 
distributions
 
received
 
by
 
the
Corporation from its investment in BHD León, during
 
the quarter ended March 31, 2023 and 2022.
 
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 quarter ended March 31, 2023 administrative fees charged to
 
these investment companies amounted to $
0.6
 
million (March
31, 2022 -
0.7
 
million) and waived fees amounted to $
0.2
 
million (March 31, 2022 - $
0.3
 
million), for a net fee of $
0.4
 
million (March
31, 2022 - $
0.4
 
million).