Flushing Financial is looking to raise $70 million

Flushing Finance, A New York-based commercial real estate lender is looking to raise $70 million to shore up its capital, CNBC has learned.

The bank’s chief executive, John Buran, has told potential investors it plans to sell low-yield bonds and loans backed by commercial real estate, including multifamily buildings, a move that would generate losses and require fresh stock sales, people with knowledge of the matter said. deal told CNBC.

Bankers working on the deal have yet to set a price, but it is likely to be between $15 and $15.50 per share, according to one of the people, below the $17.25 level at which the shares closed on Thursday.

The bank declined to comment to CNBC earlier Thursday, but later issued a let go confirming the sale of property.

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 it was forced to raise capital earlier this year after its shares sank amid concerns about its commercial loan portfolio.

Most US banks under pressure are community banks with less than $10 billion in assets, like Flushing, which had about $9.3 billion in assets in September.

Now, with bank share prices rebounding this year and the start of the Fed easing cycle in September, investors expect more banks to raise capital in the coming months. Behind the scenes, regulators have given banks secret orders to improve capital levels.

“The rate environment is still a challenge, but we are controlling what we can control and laying the foundations for a better future,” Buran told analysts in October.

Shares of Flushing Financial are up about 5% this year through Thursday, trailing an 18% rise in the KBW Regional Banks Index.