(NYCB) has successfully closed a deal to raise over $1 billion in capital through an equity investment led by former US Treasury Secretary, Steven Mnuchin. The troubled commercial real estate lender announced the agreement last week, stating that Mnuchin has been appointed as the lead independent director.

The investment, anchored by Mnuchin's Liberty Strategic Capital, as well as Hudson Bay Capital and Reverence Capital Partners, is expected to strengthen NYCB's balance sheet and liquidity position, bringing in a renewed sense of value for shareholders. Mnuchin expressed confidence in the transaction, stating, "We believe that this transaction has strengthened the company's balance sheet and liquidity position and look forward to working with management and the dedicated workforce of NYCB to deliver shareholder value."

The capital infusion includes the issuance of common stock at $2 per share to the investors, along with convertible preferred stock. This transaction will give the cohort a stake of approximately 40% in the firm on a fully diluted basis. Additionally, the investors will receive warrants as part of the deal.

To attract a broader group of institutional and retail investors, NYCB plans to request shareholders to amend its certificate of incorporation to allow for a minimum reverse stock split of three for one. This move aims to make the bid price more appealing to potential investors. Currently, the stock closed at $3.25 on Monday.

Joseph Otting, a former comptroller of the currency, will take on the role of NYCB's chief executive officer, replacing Alessandro DiNello, who will resume his position as non-executive chairman. Alongside Mnuchin, Otting, and two other investors, will join the company's board.

This capital infusion comes at a critical time for NYCB, which has faced significant pressure since its earnings report in January highlighted a surprise dividend cut and provision build-up. The company also disclosed "material weaknesses" in its loan risk tracking process. As a result, NYCB's stock has seen a downturn of 68% this year through Monday.

However, the completion of this major equity raise has instilled confidence in both analysts and investors. Keefe, Bruyette & Woods analyst, Christopher McGratty, noted that the capital raise, though expensive and dilutive to existing shareholders, was necessary to strengthen the balance sheet and restore investor confidence. Nonetheless, McGratty emphasized that the new management still has significant work ahead.

Despite the challenges faced, NYCB's shares rose 2.2% in early New York trading on Tuesday, showing positive market response to the completed capital infusion. NYCB remains committed to executing its turnaround strategy from a position of strength. Alessandro DiNello expressed his confidence, stating, "The completion of this major equity raise demonstrates the confidence these strategic investors have expressed in the turnaround currently underway at the Company and allows us to execute on our strategy from a position of strength."

With the infusion of capital and a new management team, NYCB is hopeful that it can overcome its obstacles and rebuild investor trust, paving the way for a more stable and prosperous future.