That's because New York Community's payout ratio of cash dividends to net income before extra items has exceeded 100% over the past three full years and the first half of 2009.

The company has been able to maintain the generous dividend on common shares through the credit crisis because loan losses have been minimal and it raised $339 million in common equity in an oversubscribed offering in May 2008. New York Community also declined to apply for an infusion of government money via the Troubled Asset Relief Program, or TARP.

New York Community wants to exchange trust-preferred shares for common shares because the preferred shares aren't included in tangible common equity or tier 1 capital, two important ratios for investors and regulators. According to company filings, New York Community Bancorp's tangible common equity ratio was 5.59 as of June 30. The company's tier 1 leverage ratio was 7.74% and its total risk-based capital ratio was 11.57%, well ahead of the 5% and 10% required for most banks to be considered well-capitalized.

Another reason for the exchange offer is that a small number of investors control a majority of the BONUS units and have also sold New York Community's common shares short. These investors requested the company do the exchange, which New York Community determined would be good for the company as well as these investors, since the short-sellers would cover their short positions. Chief Executive Joseph R. Ficalora told TheStreet.com that the exchange might not be compelling for long-term investors holding the BONUS units.

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