Flushing Financial Corporation is experiencing after-hours movement following news that the company is seeking to raise $70 million to bolster its capital reserves. The New York-based commercial real estate lender plans to sell low-yielding bonds and loans backed by commercial real estate, including multifamily building loans. This move is expected to generate a loss and necessitate the sale of fresh stock. The pricing for the new equity is anticipated to be between $15 to $15.50 per share, which is below the stock's closing price on Thursday. This development comes as banks with commercial real estate exposure face challenges due to previous interest rate hikes by the Federal Reserve, which have left them with unrealized losses on their balance sheets.
Flushing Financial's decision to raise capital aligns with broader trends in the banking sector, where community banks with assets under $10 billion, like Flushing, are under pressure to improve their capital levels. The bank's CEO, John Buran, has communicated to potential investors the strategic steps being taken to manage the current rate environment and set a foundation for future growth. This capital raise is part of a larger trend where banks are expected to shore up their financial positions amid a rebound in bank stock prices and the start of a Federal Reserve easing cycle.
Flushing Financial's stock is up 0.52% in after-hours trading, reaching $17.34, following a close at $17.25 on December 12, 2024.