Financial firm aims to secure $70 million in funding to bolster capital while selling off submerged debt.

• Flushing Financial, a New York-based commercial real estate lender, is looking to raise $70 million to strengthen its capital, according to CNBC.
• John Buran, CEO of the bank, informed potential investors that he plans to sell low-yielding bonds and loans backed by commercial real estate, including multifamily building loans, which would result in a loss and require the sale of new stock, according to sources.
• Flushing had about $9.3 billion in assets as of September.

A commercial real estate lender based in New York is looking to obtain $70 million in funding to strengthen its capital, according to CNBC.

John Buran, CEO of the bank, informed potential investors that he plans to sell low-yielding bonds and loans backed by commercial real estate, including multifamily buildings, which would result in a loss and require the sale of new stock, according to sources.

The bankers have not yet finalized the pricing for the deal, but it is expected to be between $15 to $15.50 per share, which is below the $17.25 closing price of the stock on Thursday.

The bank initially declined to comment on the equity sale to CNBC earlier Thursday, but later released a statement confirming the sale.

Banks with commercial real estate exposure have been struggling after the Federal Reserve raised interest rates through 2023, resulting in unrealized losses on their balance sheet. One such bank was forced to raise capital earlier this year due to concerns over its portfolio of commercial loans.

Community banks with under $10 billion in assets, such as Flushing with about $9.3 billion in assets as of September, are the most U.S. banks under pressure.

With a rebound in bank stock prices and the start of a Fed easing cycle in September, investors anticipate that more banks will increase their capital in the near future. Regulators have been secretly urging banks to enhance their capital levels through private directives.

In October, Buran informed analysts that although the rate environment remains a challenge, we are managing what we can control and establishing a solid foundation for a brighter future.

The KBW Regional Banking Index has risen by 18% this year, while Flushing Financial's shares have increased by approximately 5% through Thursday.