Flushing Financial Shares Dip On Analyst Downgrade

BOSTON (AP) — Shares of Flushing Financial Corp. fell on Monday after an analyst downgraded the thrift, saying the company maintains a light financial reserve despite its exposure to troubled loans in the metropolitan New York apartment market.

After Matthew Kelley of Sterne Agee cut his rating to "Neutral" from "Buy," shares of Lake Success, N.Y.-based Flushing Financial fell 86 cents, or 6.2 percent, to $13.08 in afternoon trading.

In a research note, Kelley said shares of Flushing Financial, the parent of Flushing Savings Bank, had risen 16.6 percent year-to-date compared with a 12.2 percent decline for peers in a group of thrifts.

But Kelley said he views Flushing Financial's reserves as "light" at 0.47 percent of its loans, and 24 percent of its non-performing assets.

During the current quarter, total past-due loans have increased 30 percent, to 2.1 percent of loans, Kelley wrote.

Kelley estimates Flushing Financial's reserve will grow to 0.95 percent of loans by the end of 2011, but wrote, "more significant reserve levels could be necessary."