Flushing Bank in New York City.
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flushing financial, A New York-based commercial real estate lender is looking to raise $70 million to fund its capital increase, CNBC has learned.
The bank’s CEO, John Buran, has told potential investors he wants to sell loans backed by low-yield bonds and commercial real estate, including multi-family buildings, moves that would cause losses and require fresh stock sales, according to people with knowledge. The deal told CNBC.
Bankers working on the deal have yet to set a price, but it will likely be between $15 and $15.50 a share, according to one person, below the $17.25 level at which the stock closed Thursday.
The bank declined to comment to CNBC earlier Thursday, but later issued a release confirming the equity sale.
Banks with commercial real estate exposure have struggled after the Federal Reserve raised interest rates until 2023, leaving them with unrealized losses on their balance sheets. New York Community Bank It was forced to raise capital earlier this year after the stock sank amid concerns over its commercial loan portfolio.
Most U.S. banks under stress are community banks with less than $10 billion in assets, such as Flushing, which had about $9.3 billion in assets as of September.
Now, 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 are prodding banks with secret orders to improve capital levels.
“The rate environment is still a challenge, but we are controlling what we can control and laying the foundation for a better future,” Buran told analysts in October.
Shares of Flushing Financial have risen nearly 5% this year since Thursday, behind an 18% gain in the KBW Regional Banking Index.
