Flushing Financial Seeks to Raise $70 Million

Flushing Bank in New York City: Seeking to Raise $70 Million to Shore Up Capital

Capital Raising Efforts

Flushing Financial, a New York-based commercial real estate lender, is seeking to raise $70 million to bolster its capital, according to CNBC. The bank’s CEO, John Buran, plans to sell low-yielding bonds and loans backed by commercial real estate, including multifamily buildings. This move would generate a loss and require the sale of fresh stock.

Pricing and Details

Bankers working on the deal have yet to finalize pricing, but it will likely be between $15 to $15.50 per share, according to one of the people with knowledge of the deal. This is below the $17.25 level the stock closed at on Thursday.

Background

The bank’s decision to raise capital comes as banks with commercial real estate exposure struggle after the Federal Reserve hiked interest rates through 2023. This has left them with unrealized losses on their balance sheet. New York Community Bank was forced to raise capital earlier this year after its stock sank amid concerns over its portfolio of commercial loans.

Industry Trends

Most of the U.S. banks under pressure are community banks with under $10 billion in assets, like Flushing, which had about $9.3 billion in assets as of September. With a rebound in bank stock prices this year and the start of a Fed easing cycle in September, investors expect more banks to raise capital in the coming months. Behind the scenes, regulators have been prodding banks with confidential orders to improve capital levels.

CEO’s Comment

"The rate environment is still a challenge, but we’re controlling what we can control and setting the foundation for a better future," Buran told analysts in October.

Stock Performance

Shares of Flushing Financial have risen about 5% this year through Thursday, trailing the 18% rise in the KBW Regional Banking Index.

Conclusion

Flushing Bank’s decision to raise capital highlights the challenges faced by banks with commercial real estate exposure. The bank’s CEO is taking steps to shore up its capital, which is likely to impact the company’s stock performance in the coming months.

FAQs

Q: What is Flushing Financial seeking to raise?
A: The bank is seeking to raise $70 million to bolster its capital.

Q: What is the pricing range for the deal?
A: The pricing range is between $15 to $15.50 per share.

Q: What is the background behind Flushing Financial’s decision to raise capital?
A: The bank is struggling after the Federal Reserve hiked interest rates through 2023, leaving it with unrealized losses on its balance sheet.

Q: Are other banks also seeking to raise capital?
A: Yes, most U.S. banks under pressure are community banks with under $10 billion in assets, and regulators are prodding banks with confidential orders to improve capital levels.