PDL in N.Y. seeks $225M in capital from federal program

PDL Community Bancorp in Bronx, N.Y., has applied for $225 million in capital through a new program handled by the Treasury Department. 

The $1.5 billion-asset parent of Ponce Bank disclosed in a regulatory filing Tuesday that it had applied on Aug. 31 for funds from the Emergency Capital Investment Program. PDL has not yet been approved for the funds.

Under the program, created by the Consolidated Appropriations Act of 2021, the Treasury is authorized to provide up to $9 billion in capital directly to community development financial institutions and or minority depository institutions. 

The funds would allow CDFIs and MDIs to provide loans, grants and forbearance to small businesses, minority-owned businesses and consumers – especially in low-income and underserved communities – that may be disproportionately impacted by the economic effects of the pandemic. 

The Treasury’s investment would be exchanged for senior perpetual noncumulative preferred stock. PDL is in the process of converting to a fully stock-owned company to be called Ponce Financial Group. 

PDL said the Treasury has indicated that the funding would be treated as Tier 1 capital.

There would be no dividends in the first two years after issuance. The dividend rate for the next seven years could range from 0.5% to 2%, “depending on the level of qualified and/or deep impact lending made in targeted communities,” the filing said.