Flushing Bank in New York City.
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Flushing financially, a New York-based commercial real estate lender is seeking to raise $70 million to shore up its capital, CNBC has learned.
The bank's CEO John Buran has told potential investors that he plans to sell low-yield bonds and loans backed by commercial real estate, including multifamily properties. These actions would result in losses and necessitate the sale of new shares. the deal told CNBC.
Bankers working on the deal have yet to finalize the price, but one of the people said it would likely be between $15 and $15.50 per share, below the $17.25 level at which the stock closed on Thursday.
The bank declined to comment to CNBC earlier Thursday, but later issued a press release confirming the stock sale.
Banks with exposure to commercial real estate have struggled after the Federal Reserve raised interest rates through 2023, leaving unrealized losses on their balance sheets. Community Bank of New York was forced to raise capital earlier this year after shares fell on concerns about its commercial loan portfolio.
Most of the U.S. banks under pressure are community banks with less than $10 billion in assets, such as Flushing, which had about $9.3 billion in assets as of September.
With bank stock prices rebounding this year and a Fed easing cycle set to begin in September, investors expect more banks to raise capital in the coming months. Behind the scenes, regulators have urged banks with confidential orders to improve capital levels.
“The interest rate environment is still challenging, 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 are up about 5% this year through Thursday, following the 18% rise in the KBW Regional Banking Index.
