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 30 “Related party transactions” to the consolidated financial statements included in the Corporation's 2012 Annual Report for details on this sale to an unrelated third-party.

On April 12, 2013, EVERTEC, Inc. completed an initial public offering (“IPO”) of 28.8 million shares of common stock, generating proceeds of approximately $575.8 million. In connection with the IPO, EVERTEC sold 6.3 million shares of newly issued common stock and Apollo Global Management LLC (“Apollo”) and Popular sold 13.7 million and 8.8 million shares of EVERTEC retaining stakes of 29.1% and 33.5%, respectively. As of quarter-end, Popular's stake in EVERTEC was reduced to 32.4% due to exercise by EVERTEC's management of certain stock options that became fully vested as a result of the IPO. A portion of the proceeds received by EVERTEC from the IPO was used to repay and refinance its outstanding debt. In connection with the refinancing, Popular received payment in full for its portion of the EVERTEC debt held by it at that time. As a result of these transactions, Popular recognized an after-tax gain of approximately $156.6 million during the second quarter of 2013. As of June 30, 2013, Popular's investment in EVERTEC has a book value of $63.6 million, before intra-company eliminations.

The Corporation did not receive any capital distribution during the six months ended June 30, 2013 from its investments in EVERTEC's holding company. During the six months ended June 30, 2012, the Corporation received net capital distributions of $131 million from its investments in EVERTEC's holding company, which included $1.4 million in dividend distributions. The Corporation's equity in EVERTEC, including the impact of intra-company eliminations, is presented in the table which follows and is included as part of “other assets” in the consolidated statements of financial condition.

The Corporation had the following financial condition accounts outstanding with EVERTEC at June 30, 2013 and December 31, 2012. Items that represent liabilities to the Corporation are presented with parenthesis. The 67.6% 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 June 30, 2013 (December 31, 2012 - 51.5%).

	At June 30, 2013						At December 31, 2012
(In thousands)		100%	Popular's 32.4% interest (eliminations)			67.6% majority interest		100%	Popular's 48.5% interest (eliminations)			51.5% majority interest
Investment securities	$	-	$	-	$	-	$	35,000	$	16,968	$	18,032
Loans		-		-		-		53,589		25,980		27,609
Accounts receivables (Other assets)		5,249		1,700		3,549		4,085		1,980		2,105
Deposits		(28,065)		(9,087)		(18,978)		(19,968)		(9,680)		(10,288)
Accounts payable (Other liabilities)		(18,702)		(6,056)		(12,646)		(16,582)		(8,039)		(8,543)
Net total	$	(41,518)	$	(13,443)	$	(28,075)	$	56,124	$	27,209	$	28,915

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 EVERTEC's income (loss) and changes in stockholders' equity for the quarters and six months ended June 30, 2013 and 2012.

		Quarter ended		Six months ended
		June 30,		June 30,
(In thousands)		2013		2013
Share of income (loss) from the investment in EVERTEC	$	(18,652)	$	(17,545)
Share of changes in EVERTEC's stockholders' equity		37,722		36,067
Share of EVERTEC's changes in equity recognized in income	$	19,070	$	18,522

		Quarter ended		Six months ended
		June 30,		June 30,
(In thousands)		2012		2012
Share of income from the investment in EVERTEC		104		1,834
Share of changes in EVERTEC's stockholders' equity		(149)		(149)
Share of EVERTEC's changes in equity recognized in income	$	(45)	$	1,685

The following tables present the transactions and service payments between the Corporation and EVERTEC (as an affiliate) and their impact on the results of operations for the quarters and six months ended June 30, 2013 and 2012. Items that represent expenses to the Corporation are presented with parenthesis.


	Quarter ended		Six months ended
(In thousands)	June 30, 2013		June 30, 2013		Category
Interest income on loan to EVERTEC	$	1,638	$	2,491	Interest income
Interest income on investment securities issued by EVERTEC		306		1,269	Interest income
Interest expense on deposits		(30)		(57)	Interest expense
ATH and credit cards interchange income from services to EVERTEC		6,364		12,389	Other service fees
Debt prepayment penalty paid by EVERTEC		5,856		5,856	Net gain (loss) and valuation adjustments on investment securities
Consulting fee paid by EVERTEC		9,854		9,854	Other operating income
Rental income charged to EVERTEC		1,683		3,364	Net occupancy
Processing fees on services provided by EVERTEC		(38,399)		(76,275)	Professional fees
Transition services provided to EVERTEC		226		430	Other operating expenses
Total	$	(12,502)	$	(40,679)


	Quarter ended		Six months ended
(In thousands)	June 30, 2012		June 30, 2012		Category
Interest income on loan to EVERTEC	$	825	$	1,648	Interest income
Interest income on investment securities issued by EVERTEC		962		1,925	Interest income
Interest expense on deposits		(64)		(174)	Interest expense
ATH and credit cards interchange income from services to EVERTEC		6,420		12,273	Other service fees
Rental income charged to EVERTEC		1,673		3,355	Net occupancy
Processing fees on services provided by EVERTEC		(37,855)		(74,514)	Professional fees
Transition services provided to EVERTEC		190		403	Other operating expenses
Total	$	(27,849)	$	(55,084)

At December 31, 2012, EVERTEC had certain performance bonds outstanding, which were 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 $ - million at December 31, 2012 and expired during the quarter ended June 30, 2013. Also, EVERTEC has a letter of credit issued by BPPR, for an amount of $3.6 million at June 30, 2013 (December 31, 2012 - $2.9 million). 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.

During the second quarter of 2013, the Corporation discontinued the elimination of its proportionate ownership share of intercompany transactions with EVERTEC from their respective revenue and expense categories to reflect them as an equity pick-up adjustment in other operating income. The consolidated statements of operations for all periods presented have been adjusted to reflect this change. This change had no impact on the Corporation's net income and did not have a material effect on its consolidated financial statements. The following tables present the impact of the change in the Corporation's results for all comparative prior period presented.

		Quarter ended		Six months ended
		June 30,		June 30,
(In thousands)		2013		2013
Share of EVERTEC's changes in equity recognized in income	$	19,070	$	18,522
Intra-company eliminations considered in other operating income (detailed in next table)		(4,048)		(13,172)
Share of EVERTEC's changes in equity, net of eliminations	$	15,022	$	5,350

	Quarter ended							Six months ended
		June 30, 2013						June 30, 2013
(In thousands)	As currently reported		Impact of eliminations		Amounts net of eliminations		As currently reported		Impact of eliminations		Amounts net of eliminations		Category
Interest income on loan to EVERTEC	$	1,638	$	(531)	$	1,107		2,491	$	(807)	$	1,684	Interest income
Interest income on investment securities issued by EVERTEC		306		(99)		207		1,269		(411)		858	Interest income
Interest expense on deposits		(30)		9		(21)		(57)		18		(39)	Interest expense
ATH and credit cards interchange income from services to EVERTEC		6,364		(2,061)		4,303		12,389		(4,012)		8,377	Other service fees
Debt prepayment penalty paid by EVERTEC		5,856		(1,896)		3,960		5,856		(1,896)		3,960	Net gain (loss) and valuation adjustments on investment securities
Consulting fee paid by EVERTEC		9,854		(3,190)		6,664		9,854		(3,190)		6,664	Other operating income
Rental income charged to EVERTEC		1,683		(545)		1,138		3,364		(1,089)		2,275	Net occupancy
Processing fees on services provided by EVERTEC		(38,399)		12,434		(25,965)		(76,275)		24,698		(51,577)	Professional fees
Transition services provided to EVERTEC		226		(73)		153		430		(139)		291	Other operating expenses
Total	$	(12,502)	$	4,048	$	(8,454)	$	(40,679)	$	13,172	$	(27,507)

		Quarter ended		Six months ended
		June 30,		June 30,
(In thousands)		2012		2012
Share of EVERTEC's changes in equity recognized in income	$	(45)	$	1,685
Intra-company eliminations considered in other operating income (detailed in next table)		(12,929)		(26,274)
Share of EVERTEC's changes in equity, net of eliminations	$	(12,974)	$	(24,589)

	Quarter ended							Six months ended
		June 30, 2012						June 30, 2012
(In thousands)	As currently reported		Impact of eliminations		Amounts net of eliminations, as previously reported		As currently reported		Impact of eliminations		Amounts net of eliminations, as previously reported		Category
Interest income on loan to EVERTEC	$	825	$	(381)	$	444	$	1,648	$	(784)	$	864	Interest income
Interest income on investment securities issued by EVERTEC		962		(445)		517		1,925		(917)		1,008	Interest income
Interest expense on deposits		(64)		28		(36)		(174)		82		(92)	Interest expense
ATH and credit cards interchange income from services to EVERTEC		6,420		(2,960)		3,460		12,273		(5,828)		6,445	Other service fees
Rental income charged to EVERTEC		1,673		(773)		900		3,355		(1,597)		1,758	Net occupancy
Processing fees on services provided by EVERTEC		(37,855)		17,545		(20,310)		(74,514)		35,508		(39,006)	Professional fees
Transition services provided to EVERTEC		190		(85)		105		403		(190)		213	Other operating expenses
Total	$	(27,849)	$	12,929	$	(14,920)	$	(55,084)	$	26,274	$	(28,810)

As indicated in Note 22 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 Corporation's equity in PRLP 2011 Holdings, LLC, including the impact of intra-company eliminations, is presented in the table which follows and is included as part of “other assets” in the consolidated statements of financial condition.

(In thousands)		June 30, 2013		December 31, 2012
Equity investment in PRLP 2011 Holdings, LLC	$	25,980	$	22,747
Intra-company eliminations (detailed in next table)		6,903		13,222
Equity investment in PRLP 2011 Holdings, LLC , net of eliminations	$	32,883	$	35,969

The Corporation had the following financial condition accounts outstanding with PRLP 2011 Holdings, LLC at June 30, 2013 and 2012. 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 June 30, 2013						At December 31, 2012
(In thousands)		100%	Popular's 24.9% interest (eliminations)			75.1% majority interest		100%	Popular's 24.9% interest (eliminations)			75.1% majority interest
Loans	$	31,872	$	7,936	$	23,936	$	60,040	$	14,950	$	45,090
Accrued interest receivable		83		21		62		163		41		122
Deposits (non-interest bearing)		(4,232)		(1,054)		(3,178)		(7,103)		(1,769)		(5,334)
Net total	$	27,723	$	6,903	$	20,820	$	53,100	$	13,222	$	39,878

The Corporation's proportionate share of income or loss from PRLP 2011 Holdings, LLC is included in other operating income in the consolidated statements of operations. The following table presents the Corporation's proportionate share of income (loss) from PRLP 2011 Holdings, LLC for the quarters and six months ended June 30, 2013 and 2012.

		Quarter ended		Six months ended
		June 30,		June 30,
(In thousands)		2013		2013
Share of income from the equity investment in PRLP 2011 Holdings, LLC	$	733	$	2,730


		Quarter ended		Six months ended
		June 30,		June 30,
(In thousands)		2012		2012
Share of (loss) income from the equity investment in PRLP 2011 Holdings, LLC	$	(1,162)	$	5,348

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 quarters and six months ended June 30, 2013 and 2012.

As indicated in Note 22 to the consolidated financial statements, effective March 2013 the Corporation holds a 24.9% equity interest in PR Asset Portfolio 2013-1 International, LLC and currently provides certain financing to the joint venture as well as holds certain deposits from the entity.

The Corporation's equity in PR Asset Portfolio 2013-1 International, LLC, including the impact of intra-company eliminations, is presented in the table which follows and is included as part of “other assets” in the consolidated statements of financial condition.

(In thousands)		June 30, 2013
Equity investment in PR Asset Portfolio 2013-1 International, LLC	$	28,828
Intra-company eliminations (detailed in next table)		41,310
Equity investment in PR Asset Portfolio 2013-1 International, LLC , net of eliminations	$	70,138

The Corporation had the following financial condition accounts outstanding with PR Asset Portfolio 2013-1 International, LLC, at June 30, 2013. 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 June 30, 2013
(In thousands)		100%	Popular's 24.9% interest (eliminations)			75.1% majority interest
Loans	$	183,478	$	45,686	$	137,792
Accrued interest receivable		114		29		85
Deposits (non-interest bearing)		(17,689)		(4,405)		(13,284)
Net total	$	165,903	$	41,310	$	124,593

The Corporation's proportionate share of income or loss from PR Asset Portfolio 2013-1 International, LLC is included in other operating income in the consolidated statements of operations. The following table presents the Corporation's proportionate share of income (loss) from PR Asset Portfolio 2013-1 International, LLC for the quarter and six months ended June 30, 2013.

The following table presents transactions between the Corporation and PR Asset Portfolio 2013-1 International, LLC and their impact on the Corporation's results of operations for the quarter and six months ended June 30, 2013.

		Quarter ended	Six months ended
(In thousands)		June 30, 2013	June 30, 2013		Category
Interest income on loan to PR Asset Portfolio 2013-1 International, LLC	$	116	$	116	Interest income
Servicing fee paid by PR Asset Portfolio 2013-1 International, LLC		45		45	Other service fees
Total	$	161	$	161