Palmer Square Capital BDC Inc. Announces Fourth Quarter and Full Year 2024 Financial Results

Rhea-AI Summary

Palmer Square Capital BDC (NYSE: PSBD) reported its Q4 and full-year 2024 financial results, with total investment income of $34.9 million in Q4 2024, up from $29.8 million year-over-year. Net investment income was $14.8 million ($0.45 per share), compared to $15.4 million ($0.58 per share) in Q4 2023.

The company's net asset value stood at $16.50 per share as of December 31, 2024, slightly down from $16.61 in Q3. Total assets reached $1.4 billion with net assets of $537.8 million. The debt-to-equity ratio improved to 1.50x from 1.52x in Q3 2024.

PSBD declared a Q1 2025 base dividend of $0.36 per share, payable April 10, 2025, with an additional supplemental dividend expected to be announced in March. The portfolio consisted of 85.7% first lien senior secured debt, with 99% of long-term investments at floating rates and 99.92% income-producing.

Positive

• Total investment income increased 17% YoY to $34.9M in Q4 2024
• 99.92% of portfolio is income-producing
• Strong liquidity position with $199.7M available
• 99% of long-term investments at floating rates
• Improved debt-to-equity ratio to 1.50x from 1.52x

Negative

• Net investment income decreased to $14.8M ($0.45/share) from $15.4M ($0.58/share) YoY
• Net asset value declined to $16.50 from $16.61 per share QoQ
• Net realized and unrealized losses of $2.9M in Q4 2024 vs gains of $6.6M in Q4 2023
• Two loans on non-accrual status

Insights

Financial Analyst

Palmer Square Capital BDC (PSBD) delivered solid Q4 2024 results with total investment income reaching $34.9 million, representing a 17% increase year-over-year. However, net investment income (NII) decreased to $0.45 per share from $0.58 in Q4 2023, primarily reflecting the dilutive effect of additional shares following the company's IPO rather than deteriorating performance.

The portfolio quality remains exceptional with 99.92% of investments generating income and only two loans on non-accrual status. Notably, PSBD reported minimal PIK (payment-in-kind) income at just 1.96% of total investment income - significantly lower than the BDC sector average of 5-10%, indicating high-quality cash flows and conservative income recognition practices.

PSBD's differentiated investment approach combining broadly syndicated loans with large private credit positions appears to be working effectively. The 85.7% allocation to first lien senior secured debt and 99% floating rate exposure demonstrates a conservative risk posture. With a debt-to-equity ratio of 1.50x, PSBD maintains moderate leverage compared to the BDC sector average of approximately 1.2x, while still generating attractive yields.

The declared Q1 2025 base dividend of $0.36 per share represents an 80% payout ratio based on Q4 NII, leaving room for the anticipated supplemental dividend. The company's substantial liquidity position of $199.7 million against just $21.6 million in undrawn commitments provides significant dry powder for opportunistic investments in a potentially volatile credit environment.

As interest rate cuts become increasingly likely in 2025, PSBD's floating rate portfolio may face yield pressure, but its focus on larger, more stable borrowers should provide greater credit resilience than BDCs concentrated in middle-market loans if economic conditions deteriorate.

Credit Analyst

Palmer Square Capital BDC's Q4 results demonstrate a distinctive credit strategy that sets it apart in the BDC landscape. Their hybrid portfolio approach - combining broadly syndicated loans with large private credit positions - creates an unusual risk/return profile with enhanced liquidity compared to traditional middle-market focused BDCs.

The credit quality metrics are particularly impressive, with non-accruals representing just two loans in a 262-investment portfolio. This ~0.8% non-accrual rate (by count) compares favorably to the BDC industry average of approximately 1.5-2%. The minimal PIK income at 1.96% of total investment income is remarkably low for the sector, where 5-10% is common. This indicates exceptional cash flow quality and conservative income recognition practices that reduce phantom income risk.

The portfolio's 10.65% weighted average yield to maturity reflects PSBD's focus on larger, more established borrowers rather than higher-yielding but riskier middle-market companies. While this yield positions PSBD in the lower-middle quartile among BDCs, the quality-for-yield tradeoff appears deliberate and prudent given current late-cycle credit conditions.

The $2.9 million in net realized and unrealized losses this quarter (compared to $6.6 million in gains a year ago) warrants attention but appears to reflect broader market valuation adjustments rather than specific credit deterioration, given the strong performing loan percentage. The slight NAV decrease from $16.61 to $16.50 (-0.66%) demonstrates relative stability in a volatile credit environment.

PSBD's balanced investment activity - $171.8 million deployed versus $176.4 million in sales/repayments - suggests disciplined portfolio management rather than aggressive growth. With potential interest rate cuts on the horizon, their predominantly floating-rate portfolio may face some yield compression, but their focus on larger, more stable borrowers should provide greater credit resilience than peers concentrated in middle-market loans if economic conditions deteriorate.

Declares First Quarter 2025 Base Dividend of $0.36 Per Share with Supplemental Dividend Expected to be Announced in March

MISSION WOODS, Kan.--(BUSINESS WIRE)-- Palmer Square Capital BDC Inc. (NYSE: PSBD) (“PSBD” or the “Company”), an externally managed business development company, today announced its financial results for the fourth quarter and full year ended December 31, 2024.

Financial and Operating Highlights

• Total investment income of $34.9 million for the fourth quarter of 2024, compared to $29.8 million for the prior year period
• Net investment income of $14.8 million or $0.45 per share for the fourth quarter of 2024, as compared to $15.4 million or $0.58 per share for the comparable period last year
• Net asset value of $16.50 per share as of December 31, 2024, compared to $16.61 per share as of September 30, 2024
• Total net realized and unrealized losses of $2.9 million for the fourth quarter of 2024, compared to gains of $6.6 million in the fourth quarter of 2023
• As of December 31, 2024, total assets were $1.4 billion and total net assets were $537.8 million
• Debt-to-equity as of December 31, 2024 was 1.50x, compared to 1.52x as of September 30, 2024
• Paid cash distributions to stockholders totaling $0.48 per share for the fourth quarter of 2024
• Declared a first quarter regular base dividend distribution of $0.36 per share payable on April 10, 2025, to shareholders of record as of March 28, 2025. In accordance with our dividend policy, we expect to announce a supplemental dividend in March
• In the fourth quarter, we had only $685 thousand of PIK income, or 1.96% of total investment income

“In 2024, Palmer Square Capital BDC drove strong financial performance through its differentiated portfolio strategy composed of both liquid and private credit investments,” said Christopher D. Long, Chairman and Chief Executive Officer of PSBD. “Against a market backdrop characterized by ongoing rate uncertainty and tightening credit spreads, we grew our portfolio of broadly syndicated public debt and large private credit borrowers in a disciplined, credit-specific fashion. Looking ahead, we believe the PSBD portfolio will continue to deliver attractive returns while maintaining exceptional credit quality.”

$ in thousands, except per share data			For the Quarter Ended
		12/31/24			9/30/24			12/31/23
Financial Highlights
Net Investment Income Per Share1		$	0.45		$	0.48		$	0.58
Net Investment Income		$	14,796		$	15,729		$	15,391
NAV Per Share		$	16.50		$	16.61		$	17.04
Dividends Earned Per Share2		$	0.48		$	0.47		$	0.54
			12/31/24			9/30/24			12/31/23
Portfolio Highlights
Total Fair Value of Investments		$	1,407,131		$	1,389,801		$	1,108,811
Number of Industries			38			39			38
Number of Portfolio Companies			207			212			191
Portfolio Yield3			10.65%			10.48%			10.51%
Senior Secured Loan4			96%			96%			96%
Investments on Non-Accrual5			0.08%			0.26%			0.00%
Total Return6			2.36%			1.43%			4.88%
Debt-to-Equity			1.50x			1.52x			1.39x

1.		Net investment income for the period divided by the weighted average share count for the period.
2.		Dividend amount reflects dividend earned in period.
3.		Weighted average total yield of debt and income producing securities at fair value.
4.		As a percentage of long-term investments, at fair value.
5.		As a percentage of total investments, at fair value.
6.		Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. Total return is not annualized. Assumes reinvestment of distributions.

Portfolio and Investment Activity

As of December 31, 2024, we had 262 investments in 207 portfolio companies with an aggregate fair value of approximately $1.3 billion. Based on a total fair value of $1.4 billion, including short term investments, the portfolio consisted of 85.7% first lien senior secured debt investments, 5.5% second lien senior secured debt investments, 4.9% short-term investments, 3.4% collateralized loan obligation structured credit funds (“CLOs”) mezzanine and equity investments, 0.3% corporate bond investments, and 0.1% equity investments.

As of December 31, 2024, 99% of the long-term investments based on fair value in our portfolio were at floating rates. At the end of the fourth quarter, 99.92% of the portfolio at fair value was income producing. There were two loans on non-accrual status. As of December 31, 2024, the weighted average total yield to maturity of debt and income producing securities at fair value was 10.65%, and weighted average total yield to maturity of debt and income producing securities at amortized cost was 9.06%. For the fourth quarter of 2024, the principal amount of new investments funded was $171.8 million which included 28 investments at an average value of approximately $4.5 million. For this period, the Company had $176.4 million aggregate principal amount in sales and repayments.

Liquidity and Capital Resources

As of December 31, 2024, the Company had $2.8 million in cash and cash equivalents and approximately $804.2 million in total aggregate principal amount of debt outstanding. Subject to borrowing base and other restrictions, the Company had available liquidity, consisting of cash and undrawn capacity on credit facilities of approximately $199.7 million compared to $21.6 million of undrawn investment commitments as of December 31, 2024.

Recent Developments

On February 27, 2025, PSBD’s Board of Directors announced that it had declared a first quarter regular base dividend distribution of $0.36 per share payable on April 10, 2025, to shareholders of record as of March 28, 2024. We expect to announce an additional quarterly supplemental dividend distribution for the first quarter of 2025 in March.

Earnings Conference Call

The Company will host a conference call on Thursday, February 27, 2025, at 1:00 pm ET to review its financial performance and conduct a question-and-answer session. To participate in the earnings call, participants should register online at the Palmer Square Investor Relations website. To avoid potential delays, please join at least 10 minutes prior to the start of the call. The conference call can be accessed through the following links:

• United States: +1 (888) 596-4144
• International: +1 (646) 968-2525
• Event Plus Entry Passcode: 1803382#
• Live Audio Webcast

A replay of the live conference call will be available shortly after the conclusion of the event and accessible on the events and presentations section of the Palmer Square Investor Relations website.

About Palmer Square Capital BDC Inc.

Palmer Square Capital BDC Inc. (NYSE: PSBD) is an externally managed, non-diversified closed-end management investment company that primarily lends to and invests in corporate debt loans, including but not limited to large private U.S. companies in the broadly syndicated loan market, as well as the direct large cap private credit market. PSBD has elected to be regulated as a business development company under the Investment Company Act of 1940. PSBD’s investment objective is to maximize total return, comprised of current income and capital appreciation. PSBD’s current investment focus is guided by two strategies that facilitate its investment opportunities and core competencies: (1) investing in corporate debt loans and, to a lesser extent, (2) investing in other debt securities which may include collateralized loan obligation debt and equity. PSBD’s investment activities are managed by its investment adviser, Palmer Square BDC Advisor LLC, an affiliate of Palmer Square Capital Management LLC.

Forward-Looking Statements

Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. The forward-looking statements may include statements as to our future base and supplemental dividend distributions and the prospects of our portfolio companies. These and other forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in PSBD’s filings with the SEC. PSBD undertakes no duty to update any forward-looking statement made herein unless required by law. All forward-looking statements speak only as of the date of this press release. Although PSBD undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that PSBD may make directly to you or through reports that in the future may be filed with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Financial Highlights
										For the Period January 23, 2020 (Commencement of Operations) through
		For the Year Ended December 31,								December 31,
		2024		2023		2022		2021		2020
Per Common Share Operating Performance
Net Asset Value, Beginning of Period		$17.04		$14.96		$20.06		$20.15		$20.00
Results of Operations:
Net Investment Income(1)		1.93		2.26		1.78		1.47		1.32
Net Realized and Unrealized Gain (Loss) on Investments(4)		(0.56)		1.98		(5.00)		(0.18)		(0.19)
Net Increase (Decrease) in Net Assets Resulting from Operations		1.37		4.24		(3.22)		1.29		1.13
Distributions to Common Stockholders
Distributions from Net Investment Income		(1.91)		(2.16)		(1.85)		(1.01)		(0.98)
Distributions from Realized Gains		-		-		(0.03)		(0.37)		-
Net Decrease in Net Assets Resulting from Distributions		(1.91)		(2.16)		(1.88)		(1.38)		(0.98)
Net Asset Value, End of Period		$16.50		$17.04		$14.96		$20.06		$20.15
Shares Outstanding, End of Period		32,600,193		27,102,794		24,286,628		22,750,331		12,562,805
Ratio/Supplemental Data
Net assets, end of period		$537,844,969		$461,955,393		$363,443,482		$452,797,588		$253,144,971
Weighted-average shares outstanding		32,353,615		25,700,603		23,130,666		15,494,614		11,156,932
Total Return(3)		8.74%		29.21%		(16.51)%		8.10%		4.29%
Portfolio turnover		36%		25%		27%		53%		63%
Ratio of operating expenses to average net assets without waiver(2)		14.68%		13.15%		8.28%		5.54%		5.69%
Ratio of operating expenses to average net assets with waiver(2)		14.67%		12.90%		8.03%		5.29%		5.44%
Ratio of net investment income (loss) to average net assets without waiver(2)		11.34%		13.54%		9.61%		6.92%		7.18%
Ratio of net investment income (loss) to average net assets with waiver(2)		11.35%		13.79%		9.86%		7.17%		7.43%

1.		The per common share data was derived by using weighted average shares outstanding.
2.		The ratios reflect an annualized amount.
3.		Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share (if any), divided by the beginning NAV per share. Total return is not annualized. Assumes reinvestment of distributions.
4.		Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statements of Operations due to share transactions during the period.

Palmer Square Capital BDC Inc. Consolidated Statement of Assets and Liabilities
		December 31, 2024				December 31, 2023
Assets:
Non-controlled, non-affiliated investments, at fair value (amortized cost of $1,454,611,467 and $1,159,135,422, respectively)		$	1,407,130,945			$	1,108,810,753
Cash and cash equivalents			2,766,409				2,117,109
Receivables:
Receivable for sales of investments			7,799,523				97,141
Receivable for paydowns of investments			1,347,516				344,509
Due from investment adviser			248,110				1,718,960
Dividend receivable			259,625				301,637
Interest receivable			11,458,267				8,394,509
Prepaid expenses and other assets			32,364				30,100
Total Assets		$	1,431,042,759			$	1,121,814,718
Liabilities:
Credit facilities (net of deferred financing costs of $5,375,986 and $3,211,510, respectively) (Note 6)		$	501,650,602			$	641,828,805
Notes (net of deferred financing costs of $1,748,822) (Note 6)			302,505,057				-
Payables:
Payable for investments purchased			67,460,523				14,710,524
Distributions payable			15,649,925				-
Management fee payable			2,413,798				2,252,075
Incentive fee payable			2,149,132				-
Accrued other general and administrative expenses			1,368,753				1,067,921
Total Liabilities		$	893,197,790			$	659,859,325
Commitments and contingencies (Note 9)
Net Assets:
Common Shares, $0.001 par value; 450,000,000 shares authorized; 32,600,193 and 27,102,794 as of December 31, 2024 and December 31, 2023, respectively issued and outstanding		$	32,600			$	27,103
Additional paid-in capital			611,122,164				520,663,106
Total distributable earnings (accumulated deficit)			(73,309,795	)			(58,734,816	)
Total Net Assets		$	537,844,969			$	461,955,393
Total Liabilities and Net Assets		$	1,431,042,759			$	1,121,814,718
Net Asset Value Per Common Share		$	16.50			$	17.04

The accompanying notes are an integral part of these consolidated financial statements.
(Note 6)		See Note 6 to the consolidated financial statements for a description of the Company’s borrowings, including its revolving credit facility with Bank of America, N.A., its credit facility with Wells Fargo Bank, National Association, and its term debt securitization (CLO transaction).
(Note 9)		As of December 31, 2024 and December 31, 2023, the Company had an aggregate of $21.6 million and $20.1 million, respectively, of unfunded commitments to provide debt financing to its portfolio companies. As of each of December 31, 2024 and December 31, 2023, there were no capital calls or draw requests made by the portfolio companies to fund these commitments. Such commitments are generally up to the Company’s discretion to approve or are subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and are not reflected in the Company’s consolidated statements of assets and liabilities.

Palmer Square Capital BDC Inc. Consolidated Statement of Operations
		For the Year Ended December 31,
		2024				2023				2022
Income:
Investment income from non-controlled, non-affiliated investments:
Interest income		$	137,508,964			$	107,739,382			$	73,705,450
Dividend income			3,315,849				4,066,745				610,203
Payment-in-kind interest income			1,123,611				-				-
Other income			1,564,875				417,480				184,247
Total investment income from non-controlled, non-affiliated investments			143,513,299				112,223,607				74,499,900
Total Investment Income			143,513,299				112,223,607				74,499,900
Expenses:
Incentive fees			8,553,414				-				-
Interest expense			58,006,112				44,483,152				23,452,169
Management fees			9,704,528				8,408,074				8,328,713
Professional fees			1,451,419				792,645				741,961
Directors fees			150,000				75,000				75,000
Other general and administrative expenses			3,097,955				1,528,225				1,862,314
Total Expenses			80,963,428				55,287,096				34,460,157
Less: Management fee waiver (Note 3)			(50,511	)			(1,051,009	)			(1,041,089	)
Net expenses			80,912,917				54,236,087				33,419,068
Net Investment Income (Loss)			62,600,382				57,987,520				41,080,832
Realized and unrealized gains (losses) on investments and foreign currency transactions
Net realized gains (losses):
Non-controlled, non-affiliated investments			(17,778,119	)			(2,715,413	)			(8,130,187	)
Total net realized gains (losses)			(17,778,119	)			(2,715,413	)			(8,130,187	)
Net change in unrealized gains (losses):
Non-controlled, non-affiliated investments			2,843,502				52,563,544				(107,432,980	)
Total net change in unrealized gains (losses)			2,843,502				52,563,544				(107,432,980	)
Total realized and unrealized gains (losses)			(14,934,617	)			49,848,131				(115,563,167	)
Net Increase (Decrease) in Net Assets Resulting from Operations		$	47,665,765			$	107,835,651			$	(74,482,335	)
Per Common Share Data:
Basic and diluted net investment income per common share		$	1.93			$	2.26			$	1.78
Basic and diluted net increase (decrease) in net assets resulting from operations		$	1.47			$	4.20			$	(3.22	)
Weighted Average Common Shares Outstanding - Basic and Diluted			32,353,615				25,700,603				23,130,666

The accompanying notes are an integral part of these consolidated financial statements.
(Note 3)		Prior to the IPO, the base management fee was 2.00% of the average value of the weighted average (based on the number of shares outstanding each day in the quarter) of the Company’s total net assets at the end of the two most recently completed calendar quarters. The Investment Advisor, however, during any period prior to the IPO, agreed to waive its right to receive management fees in excess of an annual rate of 1.75% of the average value of the weighted average total net assets at the end of each of our two most recently completed calendar quarters. The Investment Advisor will not be permitted to recoup any base management fees waived for any period of time prior to the IPO.

Palmer Square Capital BDC Inc. Portfolio and Investment Activity
		For the Year Ended December 31,
		2024				2023				2022
New investments:
Gross investments		$	773,809,544			$	273,733,424			$	278,951,054
Less: sold investments			(468,762,595	)			(247,083,117	)			(314,355,643	)
Total new investments			305,046,949				26,650,307				(35,404,589	)
Principal amount of investments funded:
First-lien senior secured debt investments		$	687,351,131			$	267,272,174			$	247,233,397
Second-lien senior secured debt investments			46,287,869				3,858,750				19,102,118
Corporate bonds			4,095,000				2,602,500				-
Convertible bonds			-				-				3,728,288
Collateralized securities and structured products - debt			34,817,350				-				-
CLO Equity			-				-				8,887,251
Common stock			1,258,194				-				-
Total principal amount of investments funded			773,809,544				273,733,424				278,951,054
Principal amount of investments sold or repaid:
First-lien senior secured debt investments		$	416,686,491			$	233,535,659			$	292,852,517
Second-lien senior secured debt investments			24,881,614				8,013,549				11,938,325
Corporate Bonds			4,020,000				-				987,500
Convertible bonds			-				-				4,504,808
CLO Equity			11,174,490				2,533,909				1,976,080
Collateralized securities and structured products - debt			12,000,000				3,000,000				1,501,875
Common Stock			-				-				594,538
Total principal amount of investments sold or repaid		$	468,762,595				247,083,117				314,355,643

		For the Year Ended December 31,
		2024				2023				2022
Number of new investment commitments			94				67				38
Average new investment commitment amount		$	4,419,385			$	3,802,624			$	4,784,093
Weighted average maturity for new investment commitments		5.6 years				5.19 years				5.95 years
Percentage of new debt investment commitments at floating rates			100.00	%			98.82	%			100.00	%
Percentage of new debt investment commitments at fixed rates			0.00	%			1.18	%			0.00	%
Weighted average interest rate of new investment commitments(1)			9.12	%			10.22	%			9.17	%
Weighted average spread over reference rate of new floating rate investment commitments(2)			4.62	%			4.87	%			4.80	%
Weighted average interest rate on long-term investments sold or paid down			9.68	%			9.56	%			5.45	%

1.		New CLO equity investments do not have an ascribed interest rate and are therefore excluded from the calculation.
2.		Variable rate loans bear interest at a rate that may be determined by reference to either a) LIBOR (which can include one-, two-, three- or six-month LIBOR) or b) the CME Term Secured Overnight Financing Rate (“SOFR” or “S”) (which can include one-, three-, or six-month SOFR), which resets periodically based on the terms of the loan agreement. At the borrower’s option, loans may instead reference an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), which also resets periodically based on the terms of the loan agreements. Loans that reference SOFR may include a Credit Spread Adjustment (“CSA”), where the CSA is a defined additional spread amount based on the tenor of SOFR the borrower selects (making the reference rate S+CSA).

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250226374735/en/

Investors

Matt Bloomfield and Jeremy Goff

Palmer Square Capital BDC Inc.

Investors@palmersquarebdc.com

Media

Josh Clarkson

Prosek Partners

PSBD@prosek.com

Source: Palmer Square Capital BDC Inc.

FAQ

What was PSBD's Q4 2024 investment income and how did it compare to last year?

PSBD's Q4 2024 total investment income was $34.9 million, up from $29.8 million in Q4 2023.

What is Palmer Square BDC's (PSBD) current dividend payment and record date?

PSBD declared a Q1 2025 base dividend of $0.36 per share, payable April 10, 2025, to shareholders of record as of March 28, 2025.

How did PSBD's portfolio composition look as of December 31, 2024?

PSBD's portfolio was 85.7% first lien senior secured debt, 5.5% second lien debt, 4.9% short-term investments, 3.4% CLO investments, and 0.4% in corporate bonds and equity.

What was PSBD's net asset value per share at the end of 2024?

PSBD's net asset value was $16.50 per share as of December 31, 2024, down from $16.61 per share in Q3 2024.

What is PSBD's current debt-to-equity ratio and available liquidity?

PSBD's debt-to-equity ratio was 1.50x with available liquidity of $199.7 million as of December 31, 2024.