A group of institutional investors has come to the rescue of New York Community Bancorp, agreeing to make a more than $1 billion investment in the bank holding company known as a major lender in New York City multifamily housing, notably on rent-regulated apartments.

It’s an ironic twist for New York Community, an institution that played the role of rescuer last year when it stepped in to help calm a lending industry roiled by regional bank failures.

The announcement comes after the company’s stock price plunged following an unexpected loss in the fourth quarter. Its shares traded as high as $10.59 in January and swung sharply Wednesday to a low of $2.73 after The Wall Street Journal reported the company was seeking a cash infusion.

The price then rebounded in the afternoon on news of the $1 billion deal with investors led by Liberty Strategic Capital, headed by former Treasury Secretary Steven Mnuchin. The stock closed the day at $3.46, slightly higher than where it opened.

"In evaluating this investment, we were mindful of the bank's credit risk profile,” Mnuchin said in a 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."

At the heart of New York Community’s $252 million fourth-quarter net loss were increased allowances and provisions for commercial real estate loan losses. The loss was driven mostly by a $552 million provision for credit losses and a $185 million net charge-off fueled by multifamily and office properties.

In December 2022, New York Community completed the acquisition of Flagstar Bank, an institution with more than half its $90 billion in assets in commercial real estate loans. It was the largest share among the 45 major bank lenders to the industry and far higher than the 11.6% average among all banks, according to data from the Federal Deposit Insurance Corp.

Soon after that Flagstar deal closed, New York Community reached a deal to acquire assets and liabilities of the failed Signature Bank from the FDIC.

The transaction added low-cost deposits and new business relationships, but it came at a price. With the deal, New York Community went over $100 billion in total assets, placing it in a category that receives heightened scrutiny from regulators.

Questions from industry analysts during the company’s fourth-quarter earnings call narrowed in on risk for rent-regulated apartments.

Thomas Cangemi, president and CEO of the holding company, said it was a fair topic of inquiry, but declined to go into specifics.

Last week, the Real Estate Board of New York released the results of a survey on the state of New York City’s rent-stabilized housing stock. The findings indicate the opinion of some in the industry that the state’s 2019 Housing Stability and Tenant Protection Act has made it very difficult for many property owners to maintain rent-stabilized apartments.

The trade group surveyed 781 residential property owners and managers of all types representing a total of roughly 242,000 units — about 11% of the city’s rental housing.

Since the law was enacted, owners are struggling to put rent-stabilized units back on the market once they become vacant — especially after long tenancies and particularly among small-property owners with buildings of less than 11 units, according to the report.

The vacancy rate is much higher in small buildings that are predominantly rent-stabilized, REBNY said, adding longer-term vacancies, defined as three or more years, have edged higher from 2018 to 2023.

Other institutional investors joining Liberty include Hudson Bay Capital, Reverence Capital Partners, Citadel Global Equities, and members of New York Community’s management. Liberty is expected to invest $450 million, Hudson Bay will invest $250 million, and Reverence will invest $200 million as part of the transaction.

Their investment is “a positive endorsement of the turnaround that is underway and allows us to execute on our strategy from a position of strength,” Sandro DiNello, nonexecutive chairman of the bank holding company, said in a statement. “We enter this next chapter with a strong balance sheet and liquidity position supported by a diversified and retail focused deposit base.”

In connection with the deal, New York Community will add four new directors to its board, including Mnuchin; Joseph Otting, former U.S. comptroller of the currency; Allen Puwalski of Hudson Bay; and Milton Berlinski, managing partner of Reverence Capital.

In addition, Otting is set to become CEO.

"We decided to make this investment because we believe Sandro, alongside new management, has taken the appropriate actions to stabilize the company and to position NYCB to become a best-in-class $100-plus billion national bank with a diversified and de-risked business model that supports long-term profitability,” Mnuchin added.

The deal is expected to close on or around March 11, subject to the satisfaction of certain closing conditions, and receipt of any regulatory approvals.