In this article, Flushing Financial, a New York-based commercial real estate lender, is looking to raise $70 million to bolster its capital, as reported by CNBC. The bank’s CEO, John Buran, has informed potential investors of plans to sell low-yielding bonds and loans backed by commercial real estate, such as multifamily buildings. This strategy may result in a loss, necessitating the sale of new stock, according to sources familiar with the matter cited by CNBC.
Although the pricing for the offering has not been finalized, it is expected to fall within the range of $15 to $15.50 per share, lower than the closing price of $17.25 per share on Thursday, as indicated by one of the sources.
While the bank initially declined to comment to CNBC, it later released a statement confirming the equity sale. Banks with exposure to commercial real estate have faced challenges following interest rate hikes by the Federal Reserve through 2023, leading to unrealized losses on their balance sheets. Earlier this year, New York Community Bank had to raise capital due to concerns about its commercial loan portfolio.
Many U.S. banks experiencing pressure are community banks with assets under $10 billion, like Flushing, which had approximately $9.3 billion in assets as of September. With a recovery in bank stock prices this year and the Federal Reserve’s easing cycle beginning in September, investors anticipate more banks to raise capital in the upcoming months. Regulators have been privately urging banks to enhance their capital levels.
Buran stated to analysts in October, “The rate environment is still a challenge, but we’re controlling what we can control and setting the foundation for a better future.” Flushing Financial’s shares have increased by about 5% this year until Thursday, lagging behind the 18% gain in the KBW Regional Banking Index.
