Related party transactions

6 Months Ended

Jun. 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 $

1.2

 million in

dividends from its investment in Evertec during the six months ended June 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 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. 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 and six months ended June 30, 2022.

Quarter ended

Six months ended

(In thousands)

June 30, 2022

June 30, 2022

Share of income from the investment in Evertec

$

5,480

$

11,827

Share of other changes in Evertec's stockholders' equity

1,410

3,168

Share of Evertec's changes in equity recognized in income

$

6,890

$

14,995

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 and six months ended June 30, 2022. Items that represent expenses to

the Corporation are presented with parenthesis.

Quarter ended

Six months ended

(In thousands)

June 30, 2022

June 30, 2022

Category

Interest expense on deposits

$

(135)

$

(267)

Interest expense

ATH and credit cards interchange income from services to Evertec

7,272

13,955

Other service fees

Rental income charged to Evertec

1,577

3,258

Net occupancy

Processing fees on services provided by Evertec

(66,459)

(128,681)

Professional fees

Other services provided to Evertec

202

420

Other operating expenses

Total

$

(57,543)

$

(111,315)

Centro Financiero BHD, S.A.

At June 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 six months ended June 30, 2023, the Corporation recorded

$

32.3

 million in equity pickup from its investment in BHD (June 30, 2022 - $

20.5

 million), which had a carrying amount of $

218

million at June 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 six months ended June 30, 2023 from its investment in BHD (June 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 six months ended June 30, 2023 administrative fees charged to these investment companies amounted to $

1.1

 million (June

30, 2022 -

1.3

 million) and waived fees amounted to $

0.4

 million (June 30, 2022 - $

0.5

 million), for a net fee of $

0.7

 million (June 30,

2022 - $

0.8

 million).