despite the consternation surrounding surrounding tariffs, things feel at least at this point in time to be relatively stable. Certainly the New York market is still looking is still looking pretty good for us. And the commercial real estate space as, as you know, we see some potential opportunities in things move on. From the American Bankers , this is the A BA Banking Journal podcast. Welcome back.
Today's episode is presented by the Intrafi Banking with Interest Podcast, and i'm here today with John Buran. John is president and CEO of Flushing Financial in Queens, New York. And it's a $9 billion bank holding company, parent of Flushing Bank, and I'm really delighted to have John on the show today. So welcome to the podcast, John. Thank you, Evan. Good to be here.
I'd love it if before we get into some of the issues we're gonna dig into today, if you could tell me a little bit more about your background in banking and and about Flushing Bank. Sure. So I started my career in banking in 19 77 after completing graduate school and got into their training program. Spent 17 years there. Went to a couple of other, larger, larger banks Nat West, Fleet Bank and then in 2000 2001 ended up in flushing Financial, where I was recruited as the chief Operating Officer.
And after a few years as Chief Operating Officer, I was elected president and and CEO and I've been in that job since 2005. Right. And, and, and tell us a little more about Flushing, flushing Financial and your subsidiary. What kind of business lines are you in? Where does your market footprint extend to? Give us the lay of the land on the bank. Sure. As you noted, we're a $9 billion bank. We operate out of the New York metropolitan area.
Most of our lending and most of our deposit gathering takes place within the five boroughs of New York. Also in Nassau Suffolk County. And a little bit into close in New Jersey, close in Connecticut. So we kind of think of us as the, the kind of the 10 county, 10 county areas surrounding surrounding New York is where we, we do our business. Predominantly though in the in the boroughs and and also in on Long Island.
Okay. Now, and, and I know you know, y'all have a focus on small business lending. And one of the things that's obviously top of mind for small businesses today is managing the volatility related to trade policy and changes in tariffs, managing supply chains. And obviously banks are right there if, if their if their customers are having challenges the banks are trying to help solve those challenges and trying to address that.
Can you talk a little bit about the scale about how trade policy affects your client base at Flushing Financial? So it, it is predominantly uncertainty and you know, the regional banking sector's been dealing with the commercial customer uncertainty for the past past couple of months. It started somewhat with the, with the rate increases and the increases in longer term short-term and long-term rates as a matter of fact.
And then on top of it, the tariffs have just added a degree of a degree of uncertainty. What do you expect businesses need, that businesses need to prepare for amid this uncertainty? What are the key things that the kind of business clients you work with, need to be prepared for in order to manage through this time of uncertainty? So I, I think it's a a degree of degree of caution. We, you know, certainly we're not seeing a good deal of of investment taking taking place.
We are seeing minimal loan growth as a result. I think everybody's trying to be very, very conservative. So we'll be watchful for any changes in in pricing with respect to our customers and, and their, their ability to secure the goods and services they need for resale. We're clearly dealing with again, a, lack of of focus in terms of investing, investing in the business. People are staying on the sidelines. They're not buying new plant.
Although some of the interest rate changes that recently, recently happened are are. Are motivating some of our customers to begin to look at the possibility of buying their lease real estate plans. And that, that represents just a trend that's just beginning to beginning to come about. But clearly the market and customers have been concerned about the economic environment for some time and have had a less aggressive posture than than in the past.
How have you been seeing your client businesses respond in terms of inventory management? Are you seeing folks accelerate purchases or are you seeing folks adjust their supply chains to account for some of the changes that are out there? Yes. With without a doubt. We did see increases in inventory in order to get ahead of possible possible changes in the with respect, with respect to the tariffs.
And we're also seeing a, a concern over or let, let's say advanced ordering associated with potential supply chain issues that may be you know, that may be coming, coming about as a result of tariffs. And the other thing is that small businesses are trying to find let's say substitutions that where. You know, one, one item might be a, a tariff item and or potentially tariff item. And another item may be a a, a more local, local item or, or a lower, lower tariff item.
They'll go in that direction. We're seeing that in the construction space. Yeah. I wanna take a quick moment here to thank our sponsor for this episode. So, today's episode is presented by Intrafi Banking with Interest Podcast, and it is a podcast from Intrafi that features in-depth analysis and insight into the policy changes reshaping the banking industry with insightful interviews and previews of pending policy challenges.
The podcast is an essential listen for anyone connected to the financial services industry. Banking with Interest is hosted by Rob Blackwell, a former, an award-winning former journalist with more than two decades of experience as an expert on financial services policy, who is now. Chief Content Officer and head of External Affairs at Intrafi. You can find out more about the podcast and listen to listen to current and previous episodes@intrafi.com. That's I-N-T-R-A-F i.com.
And thanks to the Banking with Interest Podcast for sponsoring this episode. So back to the conversation with John Buran. It is you know, fascinating to see this some of not only how businesses are responding to the some of the challenges that they are facing with their supply chains, but also how banks are responding. And I'm curious, , what are you recommending?
What are you seeing in terms of the need for risk mitigation for banks that are that whose clients may be affected by some of this tariff induced volatility? Well, I think it's the same. It, it's a parallel to what the what our businesses are are seeing. We are we're being very cautious in terms of in terms of lending. Certainly we have not seen as a result of what's happened with interest rates over the past couple of years.
We had not seen anything near the robust lending that we that we had seen in prior years. Although I do have to say that the first quarter of this year. Lending improved from the first quarter of last year. So there's a little bit of economic activity that maybe is starting to come about and possibly associated with the Fed keeping rates stable since the middle of the middle of last year. So I think that that has that has helped somewhat.
And, and I think that, banks are staying very close to their customers and, you know, situations reacting to both positive and negative situations that come about to to work with customers so that they can come out the other side in in a in a favorable position as we go through. You know, difficulties in the in the economic environment.
I have to say though, locally the local economy still appears to be in pretty good shape with no real significant areas of of weakness other than the office market. You know, that continues to be problematic. But you know, nothing, you know, nothing new there. The multifamily market is quite stable. No no real major issues on the community banking side. And we're really not seeing significant tariff impact on the in the local market yet.
I'm curious about how businesses are thinking ahead, and not just in terms of how they're adjusting their supply chains, not just in terms of how they're, you know, making investment decisions, but the practice of precautionary loans. What are you seeing in that marketplace? And and is that a, is that a sound strategy for, for the businesses that are affected by this volatility?
So I, you know, in, in terms of in, in terms of going out there and and securing additional debt, it's never really a great idea unless you have a, unless you have a use for it. Yeah. And you know, even, even with respect to the lines of credit, we're not seeing people draw down their lines of credit and increasing the the leverage, the the leverage on their own business. You don't know where this is going to end and you, you, you really want to keep a you know, keep stable.
I know some businesses have looked to to pre borrow, so to speak, or increase lines or things of that nature. But we recommend being being somewhat cautious in, in an environment like this where you don't want to over-leverage yourself. You, you want to be very cautious with your hiring decisions. Very cautious with your investment decisions. And wait it out, you know, clearly this this situation with the tariffs has been going on for some period of time.
It certainly looked more dire a couple of months ago. It looks like it's proceeding to a more reasonable you know, more reasonable inclusion. Of course now we, you know, we have controversies taking place in the, in the Middle East. I think this is a time for the prudent businesses are not over leveraging. They're taking a very cautious approach to hiring, cautious approach to in, to investing. And this is this, you know, we're clearly supportive of that.
Yeah. You know, we've talked a lot about kind of the, the cautious response to volatility. I'm curious at Flushing Financial, flushing Bank, where are you seeing, where are you seeing the most opportunity and you know, areas for growth right now in your, in your business? So oddly enough, there's been a quite a pull, quite a pullback in with some of the large competitors in New York away from commercial real estate.
And that has created opportunities for community banks like flushing to to gain market share. You know, in addition the interest rate volatility and the regulatory regulatory changes will continue to provide, ongoing opportunities for community banks. And then I, I think a very important thing that, that is probably a little bit longer term, but the appointment of the federal Reserve, federal Reserve head of supervision.
Michelle Bowman, obviously very clearly a pro community bank individual, I think could could mean very, very important changes in the regulatory environment for community banks. Yeah, we, we absolutely agree at ABA and our Daily Newsbytes email has been covering her, her her agenda and the, the things she's outlined. She spoke at our conference for community bankers back in February and outlined her vision for financial services supervision
. It'll be interesting to see how she reshapes the, the supervisory function at the Fed over the next over the, over the coming coming months incorporating both that community bank perspective and that supervisory experience and her experience of being one of the longest tenured members of the Fed Board. Yes, yes, yes. I, I think we're, we're, we're really anticipating some positive results here in community banking.. All right.
Well, John, anything else, anything else you'd like to share with, with our audience that I haven't, that I haven't touched on yet? Yeah, look, I, I think the despite the consternation surrounding surrounding tariffs, things feel at least at this point in time to be relatively stable. Certainly the New York market is still looking is still looking pretty good for us. And you know, we see some potential opportunities in the commercial real estate space as, as things move on. Wonderful.
John, thank you so much for being on the show today. For our listeners, you can find this in previous episodes at aba.com/banking journal podcast. You can also find us on any of your favorite podcast apps or platforms. Thanks so much for listening. Thanks to Intrafi Banking with Interest podcast for sponsoring this episode, and we'll be back with you again very soon.