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(Bloomberg) — Commercial real estate lender New York Community Bancorp received an equity investment of more than $1 billion, gaining a vote of confidence in the struggling lender from investors including former US Treasury Secretary Steven Mnuchin.

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The capital injection was led by Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners, NYCB said in a statement Wednesday, confirming an earlier Bloomberg News report. The shares erased an earlier plunge after the announcement.

“In evaluating this investment, we were mindful of the bank’s credit risk profile,” Mnuchin said in the statement. “With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB’s large bank peers.”

NYCB also named Joseph Otting, the former comptroller of the currency, as its new chief executive officer. Otting replaces Alessandro DiNello, who became CEO on Feb. 29. DiNello will stay on as non-executive chairman.

Read More: NYCB Ballooned Despite Real Estate Warnings in Years Before Fall

Liberty, which counts Saudi Arabia’s Public Investment Fund among its backers, will invest $450 million. Other investors include Hudson Bay at $250 million and Reverence at $200 million, according to the statement. Citadel Global Equities, an equities business of Ken Griffin’s hedge fund, is also an investor. In connection with the deal, NYCB will add four new directors to its board, including Mnuchin and Otting.

“The investment community lost confidence in the company. Nothing improves confidence like capital,” Janney Montgomery Scott analyst Chris Marinac, who has a buy rating on the stock, said by phone. The new leadership is exactly what the company needs, he added.

Read this next: NYCB Ballooned Despite Real Estate Warnings in Years Before Fall

Capital Injection

The investors will buy common shares at $2 apiece and get some convertible preferred stock with a conversion price also at $2, to raise $1.05 billion in total. The group will also get warrants with an exercise price of $2.50 per share.

NYCB’s stock closed higher on the day, rising 7.5% to $3.46. Still, the firm’s shares have lost about two thirds of their value this year after the bank slashed its dividend and set aside more provisions than expected for loan losses. Last week, it announced it was replacing its chief executive officer and had identified “material weaknesses” in how it tracks loan risks.

“We are excited to be investing behind this management team with such a strong investor group, and believe NYCB has a great opportunity to reposition the company and return to growth,” Reverence Capital’s Milton Berlinski, who’s joining the board, said in the statement.

NYCB is a major lender to owners of apartment buildings subject to tough New York rent laws, limiting the revenue units can generate. It also financed offices in a region beset by vacancies in the work-from-home era.

Credit-rating firms have slashed the company’s grades to junk, with Moody’s Investors Service predicting the bank may set aside more money for souring loans over the next two years.

What Bloomberg Intelligence Says:

New York Community Bancorp’s $1 billion equity investment from firms led by former Treasury Secretary Steven Mnuchin should ease concerns about the lender’s capital levels and management capabilities. New CEO Joseph Otting was the former head of the OCC. While NYCB’s junk-rated subordinated debt trades at distressed levels, higher capital will help absorb potential loan loss reserve increases if commercial real estate conditions worsen.

Arnold Kakuda and Nick Beckwith, Bloomberg Intelligence

Some of the pressure on NYCB was exacerbated by its rapid growth through acquisitions in recent years. Takeovers of rival lender Flagstar Bancorp and parts of Signature Bank almost doubled the firm’s size. As its assets swelled beyond $100 billion, NYCB faced more stringent capital requirements for so-called Category IV banks in light of their systemic importance.

The equity-investment deal is expected to be completed around March 11. Jefferies is financial adviser and sole placement agent to NYCB, according to the statement.

“While painful for existing shareholders, it should quiet systemic concerns for NYCB,” Keefe, Bruyette & Woods analyst Christopher McGratty wrote in a note. “This should help broader sentiment for the bank group.”

–With assistance from Terrell Holt and Daniel Taub.

(Updates with further details from statement, commentary and closing shares from fifth paragraph.)

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