-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IjqAPhlSjuXqmZ+IspUGRv3uUE6pOrC9Mc9DH6al779pOUjh7sJYN5oHRBM5BTeJ xZN0ahOn9lnHbZPVy3H9Rg== 0000897069-99-000451.txt : 19990901 0000897069-99-000451.hdr.sgml : 19990901 ACCESSION NUMBER: 0000897069-99-000451 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19990831 GROUP MEMBERS: BETH LASHLEY GROUP MEMBERS: FINANCIAL EDGE - STRATEGIC FUND, L.P. GROUP MEMBERS: FINANCIAL EDGE FUND L P GROUP MEMBERS: IRVING SMOKLER GROUP MEMBERS: JOHN W. PALMER GROUP MEMBERS: RICHARD J. LASHLEY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HAVEN BANCORP INC CENTRAL INDEX KEY: 0000900741 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 113153802 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-42947 FILM NUMBER: 99703861 BUSINESS ADDRESS: STREET 1: 615 MERRICK AVE CITY: WESTBURY STATE: NY ZIP: 11590 BUSINESS PHONE: 5166834100 MAIL ADDRESS: STREET 1: 93 22 JAMAICA AVE CITY: WOODHAVEN STATE: NY ZIP: 11421 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FINANCIAL EDGE FUND L P CENTRAL INDEX KEY: 0001008845 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 440 SOUTH LASALLE STREET 2: ONE FINANCIAL PL SUITE 1021 CITY: CHICAGO STATE: IL ZIP: 60605 BUSINESS PHONE: 3126633458 MAIL ADDRESS: STREET 1: 440 S LASALLE ST STREET 2: ONE FINANCIAL PL SUITE 1021 CITY: CHICAGO STATE: IL ZIP: 60605 SC 13D 1 SCHEUDLE 13D CUSIP No. 419352-10-9 Page 1 of 31 Pages UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 HAVEN BANCORP, INC. (Name of Issuer) Common Stock, $.01 par value (Title of Class of Securities) 419352-10-9 (CUSIP Number) Phillip M. Goldberg Foley & Lardner One IBM Plaza 330 North Wabash Avenue Suite 3300 Chicago, Illinois 60611 (312) 755-2549 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 25, 1999 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. CUSIP No. 419352-10-9 Page 2 of 31 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification Number of Above Person (optional) Financial Edge Fund, L.P. 2 Check The Appropriate Box If a Member of a Group (a)[X] (b)[ ] 3 SEC Use Only 4 Source of Funds: WC, OO 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power 0 shares Number of Shares 8 Shared Voting Power Beneficially 463,200 shares Owned By Each Reporting 9 Sole Dispositive Power Person With 0 shares 10 Shared Dispositive Power 463,200 shares 11 Aggregate Amount Beneficially Owned by Each Reporting Person 463,200 shares 12 Check Box If The Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13 Percent of Class Represented By Amount in Row (11) 5.2% 14 Type of Reporting Person PN CUSIP No. 419352-10-9 Page 3 of 31 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification Number of Above Person (optional) Financial Edge - Strategic Fund, L.P. 2 Check The Appropriate Box If a Member of a Group (a)[X] (b)[ ] 3 SEC Use Only 4 Source of Funds: WC, OO 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power 0 shares Number of Shares 8 Shared Voting Power Beneficially 463,200 shares Owned By Each Reporting 9 Sole Dispositive Power Person With 0 shares 10 Shared Dispositive Power 463,200 shares 11 Aggregate Amount Beneficially Owned by Each Reporting Person 463,200 shares 12 Check Box If The Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13 Percent of Class Represented By Amount in Row (11) 5.2% 14 Type of Reporting Person PN CUSIP No. 419352-10-9 Page 4 of 31 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification Number of Above Person (optional) John W. Palmer 2 Check The Appropriate Box If a Member of a Group (a)[X] (b)[ ] 3 SEC Use Only 4 Source of Funds: PF, OO 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America 7 Sole Voting Power 6,000 shares Number of Shares 8 Shared Voting Power Beneficially 463,200 shares Owned By Each Reporting 9 Sole Dispositive Power Person With 6,000 shares 10 Shared Dispositive Power 463,200 shares 11 Aggregate Amount Beneficially Owned by Each Reporting Person 469,200 shares 12 Check Box If The Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13 Percent of Class Represented By Amount in Row (11) 5.2% 14 Type of Reporting Person IN CUSIP No. 419352-10-9 Page 5 of 31 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification Number of Above Person (optional) Richard J. Lashley 2 Check The Appropriate Box If a Member of a Group (a)[X] (b)[ ] 3 SEC Use Only 4 Source of Funds: PF, OO 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America 7 Sole Voting Power 4,500 shares Number of Shares 8 Shared Voting Power Beneficially 466,200 shares Owned By Each Reporting 9 Sole Dispositive Power Person With 4,500 shares 10 Shared Dispositive Power 466,200 shares 11 Aggregate Amount Beneficially Owned by Each Reporting Person 470,700 shares 12 Check Box If The Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13 Percent of Class Represented By Amount in Row (11) 5.2% 14 Type of Reporting Person IN CUSIP No. 419352-10-9 Page 6 of 31 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification Number of Above Person (optional) Irving Smokler 2 Check The Appropriate Box If a Member of a Group (a)[X] (b)[ ] 3 SEC Use Only 4 Source of Funds: PF, OO 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America 7 Sole Voting Power 0 shares Number of Shares 8 Shared Voting Power Beneficially 65,200 shares Owned By Each Reporting 9 Sole Dispositive Power Person With 0 shares 10 Shared Dispositive Power 65,200 shares 11 Aggregate Amount Beneficially Owned by Each Reporting Person 65,200 shares 12 Check Box If The Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13 Percent of Class Represented By Amount in Row (11) 0.7% 14 Type of Reporting Person IN CUSIP No. 419352-10-9 Page 7 of 31 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification Number of Above Person (optional) Beth Lashley 2 Check The Appropriate Box If a Member of a Group (a)[X] (b)[ ] 3 SEC Use Only 4 Source of Funds: PF 5 Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization United States of America 7 Sole Voting Power 0 shares Number of Shares 8 Shared Voting Power Beneficially 3,000 shares Owned By Each Reporting 9 Sole Dispositive Power Person With 0 shares 10 Shared Dispositive Power 3,000 shares 11 Aggregate Amount Beneficially Owned by Each Reporting Person 3,000 shares 12 Check Box If The Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13 Percent of Class Represented By Amount in Row (11) 0.1% 14 Type of Reporting Person IN CUSIP No. 419352-10-9 Page 8 of 31 Pages Item 1. Security and Issuer This Schedule 13D is being filed jointly by Financial Edge Fund, L.P., a Delaware limited partnership ("Financial Edge Fund"), Financial Edge - Strategic Fund, L.P., a Delaware limited partnership ("Financial Edge Strategic"), Irving Smokler, John W. Palmer, Richard J. Lashley and Beth Lashley (collectively, the "Group") and relates to the common stock, $.01 par value ("Common Stock"), of Haven Bancorp, Inc. (the "Issuer"). The address of the principal executive offices of the Issuer is 615 Merrick Avenue, Westbury, New York 11590. The joint filing agreement of the members of the Group is filed herewith as Exhibit 1. Item 2. Identity and Background (a)-(c) This statement is filed by Mr. John Palmer and Mr. Richard Lashley, with respect to the shares of Common Stock beneficially owned by Mr. Palmer and Mr. Lashley, including (i) shares of Common Stock held in their names and/or their spouses and minor children, (ii) shares of Common Stock held in the name of Dr. Smokler and (iii) shares of Common Stock held in the name of Financial Edge Fund and Financial Edge Strategic, in Mr. Palmer's and Mr. Lashley's capacities as the general partners of PL Capital, LLC, a Delaware limited liability company ("PL Capital"), the general partner of Financial Edge Fund and Financial Edge Strategic. The business address of Mr. Palmer and Mr. Lashley is 2015 Spring Road, Suite 290, Oak Brook, Illinois 60523. Mr. Palmer and Mr. Lashley serve as the Managing Members of PL Capital, which is the General Partner of Financial Edge Fund and Financial Edge Strategic. The principal employment of Mr. Palmer and Mr. Lashley is investment management. Dr. Irving Smokler is filing this statement with respect to the shares of Common Stock beneficially owned by Dr. Smokler. Dr. Smokler's principal employment is real estate investment; his business address is 505 East Huron, Suite 303, Ann Arbor, Michigan 48104. Ms. Lashley is filing this statement with respect to the shares of Common Stock beneficially owned by Ms. Lashley. Ms. Lashley is not employed; her address is c/o PL Capital, LLC, 2015 Spring Road, Suite 290, Oak Brook, Illinois 60523. (d) During the past five years, no member of the Group been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the past five years, no member of the Group (a) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was, or is subject to, a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. (f) All of the individuals who are members of the Group are citizens of the United States. CUSIP No. 419352-10-9 Page 9 of 31 Pages Item 3. Source and Amount of Funds or Other Consideration The amount of funds expended to date by Financial Edge Fund to acquire the 367,500 shares of Common Stock it holds in its name is $6,089,800. Such funds were provided in part from Financial Edge Fund's available capital and, from time to time, in part by margin account loans from subsidiaries of The Bear Stearns Companies, Inc. ("Bear Stearns"), extended in the ordinary course of business. The amount of funds expended to date by Financial Edge Strategic to acquire the 30,500 shares of Common Stock it holds in its name is $439,900. Such funds were provided in part from Financial Edge Strategic's available capital and, from time to time, in part by margin account loans from subsidiaries of Bear Stearns, extended in the ordinary course of business. The amount of funds expended to date by Mr. Palmer to acquire the 6,000 shares of Common Stock he holds in his name is $77,196. Such funds were provided from Mr. Palmer's personal funds. The amount of funds expended to date by Mr. Lashley to acquire the 4,500 shares of Common Stock he holds in his name (including shares held in a custodian account for Mr. Lashley's minor daughter) is $61,580. Such funds were provided from Mr. Lashley's personal funds. The amount of funds expended to date by Dr. Smokler to acquire the 65,200 shares he holds in his name is $934,300. Such funds were provided in part from Dr. Smokler's personal funds and, from time to time, in part by margin account loans from subsidiaries of Bear Stearns, extended in the ordinary course of business. The amount of funds expended to date by Ms. Lashley to acquire the 3,000 shares of Common Stock she holds in her name is $37,900. Such funds were provided from Ms. Lashley's IRA account held at Bear Stearns. All purchases of Common Stock made by members of the Group using funds borrowed from Bear Stearns were made in margin transactions on Bear Stearns' usual terms and conditions. All or part of the shares of Common Stock owned by members of the Group may from time to time be pledged with one or more banking institutions or brokerage firms as collateral for loans made by such entities to members of the Group. Such loans generally bear interest at a rate based upon the broker's call rate from time to time in effect. Such indebtedness, if any, may be refinanced with other banks or broker-dealers. Item 4. Purpose of Transaction The purpose of the acquisition of the shares of Common Stock by members of the Group is to profit from the appreciation in the market price of the Common Stock through the assertion of shareholder rights. The Group expects to actively assert shareholder rights, in CUSIP No. 419352-10-9 Page 10 of 31 Pages the manner described below, with the intent to influence the policies of the Issuer. The members of the Group have and will continue pursue discussions with management to maximize short and long-term value for shareholders. By letter dated June 16, 1999, Mr. Lashley requested that the Issuer increase the size of the Issuer's Board of Directors and proposed that he be nominated to fill the new position. A copy of that letter is attached as Exhibit 2. By letter dated June 28, 1999, the Issuer informed Mr. Lashley of its refusal to increase the size of the Board of Directors. A copy of that letter is attached as Exhibit 3. By letter dated July 28, 1999, Messrs. Lashley and Palmer reiterated to the Issuer their desire to add Mr. Lashley to the Issuer's Board and of their intention to explore all available options to obtain representation on the Board. That letter also criticized Haven's performance, particularly the results for the second quarter of 1999. That letter also stated the Group's belief that the only way for Haven to maximize the potential of its franchise is to seek a sale to a larger bank or thrift. A copy of that letter is attached as Exhibit 4. A copy of the Issuer's response to that letter, informing Messrs. Palmer and Lashley that the Issuer will discuss the contents of the July 28 letter at its next meeting of the Board of Directors, is attached as Exhibit 5. By letter dated August 16, 1999, attached as Exhibit 6, Messrs. Palmer and Lashley called the Issuer's Board of Director's and Management's attention to the announced acquisition of JSB Financial, Inc. (a Long Island, New York thrift that operates in the same market area as Haven's eight traditional branches) by North Fork Bancorporation, Inc. for a 17.5% deposit premium. Applying this premium to ONLY Haven's approximate $1.24 billion of deposits within its eight traditional branches would equate to a value of $36.50 per outstanding common share. Additionally, applying the same premium to ALL of Haven's deposits, which would include approximately an additional $700 million of supermarket deposits, would result in a value of $50.25 per outstanding common share. Additionally, Messrs. Palmer and Lashley cited an August 10, 1999 American Banker article which cited a research report from Mr. Thomas R. Hain, a thrift analyst with Lehman Brothers & Co., which stated "The deposits of $2.6 Billion - asset New York - based Haven Bancorp are worth $36.93 ...". By this letter Messrs. Palmer and Lashley requested Haven's Board of Directors review their fiduciary duty to explore a merger transaction in the near term. They also recommended Haven hire an independent, qualified investment banking firm as soon as practical to explore all of Haven's strategic options. By letter dated August 30, 1999, Messrs. Lashley and Palmer encouraged the Issuer's Board of Directors to contact the Issuer's shareholders to determine whether the shareholders support the sale of the Issuer. A copy of that letter is attached as Exhibit 7. If the Issuer's Board does not choose to add Mr. Lashley to the Board of Directors in the near future, members of the Group intend to explore all of their available options to obtain representation on the Issuer's Board, including seeking election to the Board of Directors by shareholders at the Issuer's next scheduled annual meeting. The members of the Group plan to take a number of actions in order to insure that the Issuer and its Board of Directors weigh shareholder interests appropriately in CUSIP No. 419352-10-9 Page 11 of 31 Pages determining the Issuer's future. The members of the Group plan to communicate and discuss its views with other shareholders of the Issuer and members of the Board of Directors. The members of the Group may communicate with financial institutions concerning their interests in possibly acquiring the Issuer. They may retain an investment banker to help evaluate their options or to solicit interest and/or bids from potential acquirors. The members of the Group may make proposals to the Board of Directors (including with regard to a possible sale of the Issuer), seek representation on the Board of Directors, and solicit proxies or written consents from other shareholders of the Issuer with respect to board representation or proposals for shareholder action. The members of the Group may make further purchases of shares of Common Stock. The Group may dispose of any or all of the shares of Common Stock held by them, although they have no current intention to do so. Except as noted in this Schedule 13D, no member of the Group has any present plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (b) through (j), inclusive of Item 4 of Schedule 13D. Such entities may, at any time and from time to time, review or reconsider their positions and formulate plans or proposals with respect thereto. Item 5. Interest in Securities of the Issuer The percentages used in this Schedule 13D are calculated based upon the number of outstanding shares of Common Stock, 8,960,357 reported on the Issuer's Quarterly Report on Form 10-Q for the period ended June 30, 1999. As of the close of business on August 30, 1999, the Group owned beneficially an aggregate of 476,700 shares of the Issuer's Common Stock. All purchases and sales of Common Stock reported herein were made in open market transactions on the Nasdaq National Market System. (A) Financial Edge Fund (a) Aggregate number of shares beneficially owned: 463,200 Percentage: 5.2% (b) 1. Sole power to vote or to direct vote: 0 2. Shared power to vote or to direct vote: 463,200 3. Sole power to dispose or to direct the disposition: 0 4. Shared power to dispose or to direct disposition: 463,200 (c) On July 21, 1999, Financial Edge Fund purchased 5,000 shares of Common Stock at a price of $15.63 per share for a total cost of $78,125. On July 22, Financial Edge Fund purchased 7,500 shares of Common Stock at a price of $16.00 per share for a total cost of $120,025. On August 25, Financial Edge Fund purchased 4,000 shares of Common Stock at a price of $16.50 per share for a total cost of $66,025. On August 26, Financial Edge Fund purchased 6,000 shares of Common Stock at a price of $16.50 per share for a total cost of CUSIP No. 419352-10-9 Page 12 of 31 Pages $99,025. On August 30, Financial Edge Fund purchased 3,000 shares of Common Stock at a price of $16.70 per share for a total cost of $50,087. (d) Because they are the Managing Members of PL Capital, which is the general partner of Financial Edge Fund, Mr. Palmer and Mr. Lashley have the power to direct the affairs of Financial Edge Fund, including the voting and disposition of shares of Common Stock held in the name of Financial Edge Fund. Therefore, Mr. Palmer and Mr. Lashley are deemed to share voting and disposition power with Financial Edge Fund with regard to those shares of Common Stock. (B) Financial Edge Strategic (a) Aggregate number of shares beneficially owned: 463,200 Percentage: 5.2% (b) 1. Sole power to vote or to direct vote: 0 2. Shared power to vote or to direct vote: 463,200 3. Sole power to dispose or to direct the disposition: 0 4. Shared power to dispose or to direct disposition: 463,200 (c) On July 20, 1999, Financial Edge Strategic purchased 1,100 shares of Common Stock at a price of $15.75 per share for a total cost of $17,325. On July 21, 1999, Financial Edge Strategic purchased 3,900 shares of Common at a price of $15.75 per share for a total cost of $61,425. On August 25, 1999, Financial Edge Strategic purchased 2,000 shares of Common at a price of $16.50 per share for a total cost of $32,975. On August 27, 1999, Financial Edge Strategic purchased 500 shares of Common at a price of $16.56 per share for a total cost of $8,280. On August 30, 1999, Financial Edge Strategic purchased 8,500 shares of Common at a price of $16.64 per share for a total cost of $141,430. (d) Because they are the Managing Members of PL Capital, which is the general partner of Financial Edge Strategic, Mr. Palmer and Mr. Lashley have the power to direct the affairs of Financial Edge Strategic, including the voting and disposition of shares of Common Stock held in the name of Financial Edge Strategic. Therefore, Mr. Palmer and Mr. Lashley are deemed to share voting and disposition power with Financial Edge Strategic with regard to those shares of Common Stock. (C) Mr. John Palmer (a) Aggregate number of shares beneficially owned: 469,200 Percentage: 5.2% CUSIP No. 419352-10-9 Page 13 of 31 Pages (b) 1. Sole power to vote or to direct vote: 6,000 2. Shared power to vote or to direct vote: 463,200 3. Sole power to dispose or to direct the disposition: 6,000 4. Shared power to dispose or to direct disposition: 463,200 (c) None. (D) Mr. Richard Lashley (a) Aggregate number of shares beneficially owned: 470,700 Percentage: 5.2% (b) 1. Sole power to vote or to direct vote: 4,500 2. Shared power to vote or to direct vote: 466,200 3. Sole power to dispose or to direct the disposition: 4,500 4. Shared power to dispose or to direct disposition: 466,200 (c) On August 27, 1999, Mr. Lashley purchased 1,000 shares of Common at a price of $16.66 per share for a total cost of $16,650. (E) Dr. Irving Smokler (a) Aggregate number of shares beneficially owned: 65,200 Percentage: 0.7% (b) 1. Sole power to vote or to direct vote: 0 2. Shared power to vote or to direct vote: 65,200 3. Sole power to dispose or to direct the disposition: 0 4. Shared power to dispose or to direct disposition: 65,200 (c) On July 16, 1999, Dr. Smokler purchased 5,000 shares of Common Stock at a price of $16.00 per share for a total cost of $80,000. On August 18, 1999, Dr. Smokler purchased 500 shares of Common Stock at a price of $15.69 per share for a total cost of $7,850. On August 27, 1999, Dr. Smokler purchased 3,100 shares of Common Stock at a price of $16.53 per share for a total cost of $51,230. On August 30, 1999, Dr. Smokler purchased 4,000 shares of Common Stock at a price of $16.56 per share for a total cost of $66,250. (d) Pursuant to an Operating Agreement dated April 29, 1999 between Dr. Smokler and PL Capital, Dr. Smokler has made certain agreements regarding Common Stock with PL Capital and its managing members, Mr. Palmer and Mr. Lashley. Because of this arrangement, PL Capital and its managing members are deemed to share voting and disposition power with Dr. Smokler with regard to those shares of Common Stock. CUSIP No. 419352-10-9 Page 14 of 31 Pages (F) Ms. Beth Lashley (a) Aggregate number of shares beneficially owned: 3,000 Percentage: 0.1% (b) 1. Sole power to vote or to direct vote: 0 2. Shared power to vote or to direct vote: 3,000 3. Sole power to dispose or to direct the disposition: 0 4. Shared power to dispose or to direct disposition: 3,000 (c) None. (d) Ms. Lashley shares with Mr. Lashley the power to direct the disposition of the shares of Common Stock beneficially owned by Ms. Lashley, pursuant to a trading authorization granted by Ms. Lashley to Mr. Lashley for her account with Bear Stearns, under that company's usual terms and conditions. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Other than the Joint Filing Agreement filed as Exhibit 1 to this statement, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 hereof and between such persons and any person with respect to any securities of the Company, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies, except for sharing of profits. PL Capital and Dr. Smokler have entered into an Investment Partnership Agreement which allocates to PL Capital a portion of any realized profit with respect to the shares owned by Dr. Smokler. PL Capital, as General Partner of the Financial Edge Fund and Financial Edge Strategic, is entitled to receive an allocation of profits with respect to the shares owned by those partnerships. Item 7. Material to be Filed as Exhibits No. Description --- ----------- 1 Joint Filing Agreement 2 Letter from Mr. Lashley to Haven Bancorp, dated June 16, 1999. 3 Letter from Haven Bancorp to Mr. Lashley, dated June 28, 1999. 4 Letter from Messrs. Lashley and Palmer to Haven Bancorp, dated July 28, 1999. 5 Letter from Haven Bancorp to PL Capital, LLC, dated July 30, 1999. 6 Letter from Messrs. Lashley and Palmer to Haven Bancorp, dated August 16, 1999. 7 Letter from Messrs. Lashley and Palmer to Haven Bancorp, dated August 30, 1999. CUSIP No. 419352-10-9 Page 15 of 31 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 30, 1999 FINANCIAL EDGE FUND, L.P. By: PL CAPITAL, LLC General Partner By: /s/ John Palmer /s/ Richard Lashley John Palmer Richard Lashley Managing Member Managing Member FINANCIAL EDGE - STRATEGIC FUND, L.P. By: PL CAPITAL, LLC General Partner By: /s/ John Palmer /s/ Richard Lashley John Palmer Richard Lashley Managing Member Managing Member By: /s/ John Palmer By: /s/ Richard Lashley John Palmer Richard Lashley By: /s/ Irving Smokler By: /s/ Beth Lashley Dr. Irving Smokler Beth Lashley EX-99.1 2 JOINT FILING AGREEMENT CUSIP No. 419352-10-9 Page 16 of 31 Pages EXHIBIT 1 JOINT FILING AGREEMENT Pursuant to Rule 13d-1(f)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree that the Schedule 13D to which this Joint Filing Agreement is being filed as an exhibit shall be a joint statement filed on behalf of each of the undersigned. Date: August 30, 1999 Date: August 30, 1999 FINANCIAL EDGE FUND, L.P. By: PL CAPITAL, LLC General Partner By: /s/ John Palmer /s/ Richard Lashley John Palmer Richard Lashley Managing Member Managing Member FINANCIAL EDGE - STRATEGIC FUND, L.P. By: PL CAPITAL, LLC General Partner By: /s/ John Palmer /s/ Richard Lashley John Palmer Richard Lashley Managing Member Managing Member By: /s/ John Palmer By: /s/ Richard Lashley John Palmer Richard Lashley By: /s/ Irving Smokler By: /s/ Beth Lashley Dr. Irving Smokler Beth Lashley EX-99.2 3 LETTER FROM MR. LASHLEY TO HAVEN BANCORP CUSIP No. 419352-10-9 Page 16 of 31 Pages EXHIBIT 2 [On PL Capital Letterhead] June 16, 1999 VIA TELEFAX Mr. Philip Messina Chairman, President and CEO Haven Bancorp, Inc. 615 Merrick Avenue Westbury, NY 11590 Dear Phil: As you know, on several occasions during the preceding five months we have discussed my willingness and desire to serve on Haven Bancorp's Board. In January, coincident with the retirement and resignation of two of Haven's nine Board members, I submitted my resume to the Company and the Board's nominating committee. Several weeks later, in response to my query, you stated that the Board was undecided on the issue of filling the two vacant seats, but my interest in serving was appreciated and would be duly considered, along with other candidates, if and when a decision was made regarding additional board members. Prior to Haven's Annual Meeting on April 21, having not heard from you, my partner, John Palmer, and I contacted you regarding this matter. At that time, John and I noted that the investment partnerships we manage were collectively one of Haven's largest shareholders. We stated that we believed that the Board should contain outside members, drawn from the investment community, who are significant direct owners of the Company's stock. At that time, you responded that you and the Board do not believe size of ownership is a relevant criteria for admission to the Board. We strongly disagreed with that position and consequently, asked for a timely response to our request for board representation. Since that time, we have not received a response from you or the Board. We did subsequently note in an exhibit to Haven's March 31, 1999 Form 10-Q filed with the SEC in mid-May, that the Board amended Haven's By-Laws to reduce its size to seven members. We are disappointed the Company has not responded to our request. We still strongly believe Haven's Board would benefit from adding qualified representation from the institutional investment community which owns a significant majority of Haven's stock. As of this date, in fact, the investment entities we manage own approximately 50% more Haven stock than the entire Haven Board and senior management team combined (based upon the most recent proxy, excluding options). As you know, at any time, Haven's Board has the ability to amend the By-Laws to increase the size of the Board. Therefore, we are once again requesting that the Company place me on its CUSIP No. 419352-10-9 Page 18 of 31 Pages Board, effective immediately, subject of course to regulatory requirements. Another copy of my resume is attached. I would also be pleased to meet with the Board nominating committee at their earliest convenience, to further discuss my qualifications. Please feel free to call me at (973) 635-1177, or John Palmer at (630) 928-0231, at any time. We look forward to hearing from you. Sincerely, PL Capital, LLC /s/Richard Lashley Richard Lashley Principal EX-99.3 4 LETTER FROM HAVEN BANCORP TO MR. LASHLEY CUSIP No. 419352-10-9 Page 19 of 31 Pages EXHIBIT 3 [On Haven Bancorp Letterhead] June 28, 1999 Mr. Richard Lashley Principal PL Capital, LLC 323 Main Street Chatham, New Jersey 07928 Dear Richard, As we discussed on several occasions and in response to your letter of June 16th, the issue of Board size and make up is quite dynamic. Haven's Nominating Committee is charged with the responsibility of assessing the Board's make up and when appropriate, in its judgment, to nominate qualified candidates. As I previously informed you, even though I am not aware of any sense of urgency to expand our Board at this time, your resume has been included with others that have been given to our Committee for their consideration. I'm sure contact will be made if and whenever the Committee deems it appropriate. Thank you for your continuing support and interest in Haven's success. Sincerely, /s/ Philip S. Messina Philip S. Messina Chairman, President and Chief Executive Officer PSM:dlm 615 Merrick Avenue Westbury, NY 11590 EX-99.4 5 LETTER FROM MESSRS. ET. ALL TO HAVEN BANCORP CUSIP No. 419352-10-9 Page 20 of 31 Pages EXHIBIT 4 [On PL Capital Letterhead] July 28, 1999 Mr. Philip Messina Chairman, President and CEO Haven Bancorp, Inc. 615 Merrick Avenue Westbury, NY 11590 Dear Phil: We were disappointed to receive your letter of June 28, 1999, in which you once again rejected our request to obtain representation on Haven's Board. We do not understand the resistance to increasing the size of the Board, particularly given the two vacancies created in January 1999 upon the retirement of two of Haven's original nine Board members. As a public company with a high percentage (50%+) of institutional owners, we would think that Haven would be more supportive of a request of a large shareholder from the outside investment community. We believe Mr. Lashley would be a positive addition to Haven's Board, given his qualifications and experience as a CPA, investment banker and investment manager focusing exclusively on the banking industry. We also have a significant vested interest in Haven's success. Collectively, the various entities we manage currently own approximately 4.9% of Haven's stock. We believe our request is now even more urgent and timely in light of recent events and the disappointing second quarter earnings released by Haven on July 23rd: o Second quarter core operating EPS (excluding one-time gains on sales of assets) was $.28, up only $.01 from $.27 core EPS in the first quarter and below analyst's estimates, which ranged from $.30 to $.36; On Haven's quarterly conference call you stated you were extremely pleased by the second quarter results and that they validated the supermarket strategy. Considering how depressed Haven's prior earnings have been, we are dumbfounded that you think a $.01 improvement in quarterly core operating EPS is satisfactory or validates the strategy. 1999 is half over, yet core earnings to date are only $.55, well below the amount needed to reach analyst's Fiscal 1999 consensus earnings estimate of $1.36 (and the $1.36 consensus estimate has already been reduced numerous times over the past 12-18 months); CUSIP No. 419352-10-9 Page 21 of 31 Pages o The $.28 quarterly core EPS only equates to a 0.36% Return on Assets (ROA) (annualized), significantly below thrift peer group averages, which consistently range between 0.80% to 1.10%; If Haven's earnings were comparable to even the low end of its peer group (i.e. 0.80% ROA), Haven's quarterly EPS would be $.60 per share ($2.40 EPS per year), over two times current levels; o In our estimation, the current core earnings are also significantly below the earnings capacity of Haven's "traditional" franchise (i.e. the 8 traditional full service branches, excluding supermarket branches). We estimate that the "traditional" franchise would have core earnings power of approximately 1.00% ROA, three times Haven's current ROA. In short, we estimate that Haven's earnings and stock price would likely be at least twice current levels if Haven had done nothing but stick to its traditional franchise and strategy. Contrary to your opinion that Haven's performance is on track, industry experts and the investment community appear to have a different view, as evidenced by the following: o Haven's stock declined 65% from a high of $29.75 (April 3, 1998) in the second quarter of 1998, to a low of $10.50 (April 9, 1999) in the second quarter of 1999, a loss of over $170 million of shareholder value. Haven's decline was far more severe than its peer banks and thrifts (e.g. the NASDAQ Bank Index declined only 21% for the same period); o During the second quarter, Haven was only able to sell $25 million of newly issued Trust Preferred Stock, down from an initial filing amount of $35 million, despite the interest rate being raised to 10.25%; o As a result of Haven's stock price decline over the past year and other performance related factors, Haven was one of only five poor performing thrifts in the U.S. dropped from the Russell 2000 Index and Russell 3000 Index, two leading benchmarks for institutional investors, potentially eliminating a large source of potential purchasers of Haven's stock; o The July 1999 issue of Thrift Investor, a leading thrift industry publication, ranked the 100 Largest Publicly Traded Thrifts based upon performance for the one and three year periods ended 12-31-98. Of the 18 thrifts on the list which operate in the New York metro area, Haven was the lowest ranked (#86 out of 100). The article specifically pointed out Haven as a poor performer, despite operating in the same "strong local Queens economy" as the two top ranked thrifts in the U.S. (#1 ranked Queens County Savings Bank and #2 ranked JSB Financial). We believe that Haven's decision to build a supermarket banking franchise has significantly diminished Haven's earnings and franchise value and consequently, depressed Haven's stock CUSIP No. 419352-10-9 Page 22 of 31 Pages price and destroyed shareholder value. Over the past three years, while most banks and thrifts have produced record earnings and results, Haven has produced mediocre results. Haven's quarterly earnings have never exceeded the $.40 per share earned in the 4th quarter of 1996, the quarter Haven began their supermarket banking strategy. While the majority of bank and thrift shareholders have enjoyed significant share price appreciation over the past three years, Haven has produced only a 17% total return (approximately 5% annualized) for its shareholders. This is significantly below the peer NASDAQ Bank Index (total return of 85%, or 23% annualized) and the S&P 500 Index (total return of 125%, or 32% annualized). Haven shareholders have had no dividend increases in 3 years, a period during which almost every bank and thrift in the U.S. raised their dividend. It appears that you and the Board have consistently failed to understand the significant negative impact the supermarket banking initiative would have on Haven's performance. For example, Haven's September 25, 1996 Form 8-K filed with the Securities & Exchange Commission, stated the following in an exhibit to such filing: "The Registrant's management believes that the operation of in-store branches will have a nominal impact on the Registrant's earnings in 1996 and 1997 and is expected to be substantially accretive to earnings in the years thereafter". According to research analysts who follow Haven, the supermarket banking initiative has been significantly dilutive to earnings in 1997, 1998 and 1999, to date. Almost three years after beginning the supermarket banking initiative, it is still unclear to us when the supermarket banking franchise will break even, no less be accretive or provide an adequate return on investment. You are now telling shareholders and analysts that "1999 will be the year". Based upon Haven's forecasting track record and the actual results for the first half of 1999, we are very skeptical that your predictions merit any credence. We believe that Haven needs to take drastic action to cut its operating expenses, which for the six months ended June 30, 1999 equaled 3.15% of average assets, one of the worst ratios of any thrift in the United States. Haven spent $87 million on G&A expenses for the 12 months ended June 30, 1999, an extraordinary amount for a thrift of Haven's asset size and equity capital base. To our knowledge, no other thrift in the U.S. spends as much on operating expenses relative to its equity capital base. In addition to depressing earnings, that level of overhead burden has caused Haven to not raise the quarterly dividend in over 3 years, eliminates Haven's ability to repurchase stock and reduced Haven's equity capital to asset ratio to 4%, a low amount by traditional banking "safety and soundness" standards. Interestingly, in our estimation, the cause of Haven's excessive operating expenses are not entirely due to the supermarket franchise. Rather, it appears that Haven's corporate headcount and overhead, not just the supermarket branch system, are a primary source of the excess. One glaring example is the corporate headquarters. While we believe that a properly executed supermarket banking strategy in the NY metro market can be viable, Haven's supermarket banking strategy is flawed because Haven's "traditional" franchise is too small and too concentrated geographically to properly support CUSIP No. 419352-10-9 Page 23 of 31 Pages such a large supermarket banking franchise. Haven's 8 "traditional" full service branches are located in a relatively small geographic area, primarily in the borough of Queens, New York, while the supermarket banking franchise (60 branches) is widely dispersed throughout the five boroughs of New York, Long Island, New Jersey, Connecticut and several areas north of New York City. To the best of our knowledge, no other bank or thrift in the U.S. has attempted to build a comparable supermarket banking franchise outside of its traditional core market area. We believe that a large supermarket banking franchise, such as Haven's, can be significantly more effective and profitable as a smaller part of a larger banking entity which can operate the supermarket branches as satellite offices of the traditional branch network. In addition to not having a supporting "hub" of traditional branches in the markets it has supermarket branches in, in our opinion neither Haven (or its CFS Bank subsidiary) has meaningful brand name recognition in the greater NY metro market and no realistic prospect of creating a brand name in a competitive New York market dominated by larger competitors. At Haven's Annual Shareholders' meeting on April 21, 1999 an individual shareholder questioned why you, the Board and senior members of management had not purchased more Haven stock as it declined during the past year. At that time, you indicated due to the SEC mandated "quiet period" surrounding the recent trust preferred offering, all insiders were prohibited from engaging in any transactions. However, you clearly indicated that once outside of the quiet period, you and other members of the organization had a strong desire to purchase additional shares because Haven's stock was so attractive. Contrary to your statements, not only have we not seen any insider purchases of Haven's stock since the Annual Meeting, you and three other insiders filed to sell shares at prices below $14.00 per share. What message does that convey to your shareholders? Why are insiders selling Haven's stock at these depressed prices unless they don't believe in Haven's strategy? These sales are especially disconcerting given your statements at the Annual Meeting. When we inquired as to the purpose of these sales we were told they were to fund quarterly estimated tax payments. We do not accept this rationale. You and the other members of senior management who filed to sell are very well compensated. If the insiders truly believe in Haven's prospects, additional funds could have easily been borrowed by margining the stock. Quite frankly, given the magnitude of shareholder value lost by Haven's shareholders over the past year, we and other shareholders have every right to expect that Haven's insiders would at least be "putting their money where their mouth is" by buying Haven stock. We also do not understand why Haven insiders are not taking advantage of Haven's depressed stock price by exercising their stock options at these lower prices, thereby subjecting potential future appreciation to favorable capital gains treatment, not ordinary income. This would also better align insiders' interests with outside shareholders' interests, since, unlike insider stock options and free stock grants, outside shareholders have to pay for their stock in full. For all of the reasons noted above, we believe that the only effective way for Haven to fully realize the potential of the supermarket banking franchise and reduce its excessive operating expenses is to merge with a larger bank or thrift in the NY metro market. CUSIP No. 419352-10-9 Page 24 of 31 Pages We feel that outside shareholders have a right to be represented on Haven's Board. For that reason, we once again request that Mr. Lashley be placed on Haven's Board as soon as practical. If Haven's Board does not choose to add Mr. Lashley to the Board at this time, we intend to explore all of our available options to obtain representation on Haven's Board, including seeking election to the Board at Haven's next scheduled annual meeting. Mr. Lashley looks forward to meeting with the Board's nominating committee, at their convenience, to discuss his qualifications and interest in serving on Haven's Board. We would also be pleased to meet with Haven's entire Board to discuss our views and analyses. Please contact either of us at your earliest convenience to discuss this further. Sincerely, /s/John Palmer /s/Richard Lashley John Palmer Richard Lashley Principal Principal cc: Mr. William J. Jennings, EVP Haven Bancorp, Inc. Mr. Michael J. Fitzpatrick c/o Haven Bancorp, Inc. Msgr. Thomas J. Hartman Diocese of Rockville Centre for Telicare Television 1200 Glen Curtis Blvd. Uniondale, NY 11553 Mr. Michael J. Levine Norse Realty Group, Inc. 2001 Marcus Avenue Suite W-183 Lake Success, NY 11042 Mr. Robert M. Sprotte Schmelz Bros. Inc. 7102 Myrtle Avenue Flushing, NY 11385 Mr. George S. Worgul c/o Haven Bancorp, Inc. EX-99.5 6 LETTER FROM HAVEN BANCORP TO PL CAPITAL CUSIP No. 419352-10-9 Page 25 of 31 Pages EXHIBIT 5 [On Haven Bancorp Letterhead] July 30, 1999 *via first class mail and certified mail, RRR* PL Capital, LLC 323 Main Street Chatham, New Jersey 07928 Attn: John Palmer and Richard Lashley Dear John and Richard, We are in receipt of your letter dated July 28, 1999 and will discuss its contents at our next regularly scheduled Board meeting on August 26, 1999. We will provide the Board's response to your letter shortly after our meeting. Very truly yours, /s/ Philip S. Messina Philip S. Messina Chairman, President & CEO 615 Merrick Avenue Westbury, NY 11590 EX-99.6 7 LETTER FROM MESSRS. ET. ALL TO HAVEN BANCORP CUSIP No. 419352-10-9 Page 26 of 31 Pages EXHIBIT 6 [On PL Capital Letterhead] August 16, 1999 VIA TELEFAX Mr. Philip Messina Chairman, President and CEO Haven Bancorp, Inc. 615 Merrick Avenue Westbury, NY 11590 Dear Phil: John and I look forward to hearing the results of Haven's upcoming Board meeting, at which you pledged to discuss our letter of July 28th. With this morning's announcement of North Fork Bancorporation's acquisition of JSB Financial, Inc. (JSB) a peer thrift operating in the same market area as Haven, we presume that you and the Board will take into consideration that transactions implication for Haven's value in a current merger transaction. As measured by the 17.5% deposit premium* paid by North Fork, Haven's implied value in a merger transaction ranges from $36.50 per share (including no value for the supermarket deposits) to $50.25 (including the supermarket deposits), as derived below:
In millions $ Per Share ------------- --------- Haven's Tangible Book Value (6-30-99) $107 $12.00 Plus: Deposit Premium-"Traditional" Branches only ($1.244 billion x 17.5%) 218 24.50 ---- ------ Haven's merger value (excluding supermarket deposits) 315 $36.50 -- Plus: Deposit Premium-Supermarket Deposits ($700 million x 17.5%) 122 13.75 ---- ------ Haven's merger value (including supermarket deposits) $437 $50.25 -- * We believe that the deposit premium is the most relevant measure in this instance since JSB has significantly more tangible equity than Haven and JSB's earnings are normalized, versus Haven's current earnings which are distorted by excessive overhead and investments in the supermarket franchise
CUSIP No. 419352-10-9 Page 27 of 31 Pages An August 10, 1999 article in the American Banker (copy attached) provides additional evidence of these values. The article cited a research report from a thrift industry analyst from Lehman Brothers, which calculated that Haven's deposit franchise value is worth $36.93 per share. Since you stated that the supermarket deposits have positive deposit premium value (per your comment on the second quarter conference call with analysts and investors) you must agree that Haven's current merger value is in the range noted above. If anything, I would assume you believe the supermarket deposits are worth even more than the traditional deposits, given the huge investment you and the Board have made in building the supermarket franchise. Frankly, if you don't believe the current supermarket deposit franchise has these values, then we would question why the huge investments were made in the first place. In our view, if the supermarket franchise has not yet created these types of franchise values, after three years of huge outlays, and if Haven can't realize a merger value comparable to JSB in a current transaction, then Haven's Board has to call into question Haven's entire business plan and senior management's credibility and right to remain in place. Haven's business plan appears to have created a meaningful deposit franchise in a rapidly consolidating market. It is time for Haven's shareholders to enjoy the rewards of that strategy. If the value is not there, it is time to stop wasting shareholder's money. Because we do not believe Haven can achieve anywhere near the values noted above by remaining as an independent entity, we believe Haven's Board has a fiduciary duty to explore a merger transaction in the near term. We recommend Haven hire an independent, qualified investment banking firm as soon as practical to explore all of Haven's strategic options. We look forward to a thoughtful response from the Board. Please call us at anytime if you have any comments or would like to discuss this further. Sincerely, /s/John Palmer /s/Richard Lashley John Palmer Richard Lashley Principal Principal cc: Mr. William J. Jennings, EVP Mr. Michael J. Fitzpatrick Mr. George Worgul c/o Haven Bancorp, Inc. Msgr. Thomas J. Hartman Diocese of Rockville Centre for Telicare Television 1200 Glen Curtis Blvd. Uniondale, NY 11553 Mr. Michael J. Levine CUSIP No. 419352-10-9 Page 28 of 31 Pages Norse Realty Group, Inc., Suite W-183 2001 Marcus Avenue Lake Success, NY 11042 Mr. Robert M. Sprotte Schmelz Bros. Inc. 7102 Myrtle Avenue Flushing, NY 11385 EX-99.7 8 LETTER FROM MESSRS. ET. ALL TO HAVEN BANCORP CUSIP No. 419352-10-9 Page 29 of 31 Pages EXHIBIT 7 [On PL Capital Letterhead] August 30, 1999 VIA TELEFAX Mr. Philip Messina Chairman, President and CEO Haven Bancorp, Inc. 615 Merrick Avenue Westbury, NY 11590 Dear Phil: We are sure you noted this morning's announcement of North Fork Bancorporation's acquisition of Reliance Bancorp, the second Long Island thrift merger announced in the past two weeks. Reliance's management should be applauded for realizing a significant premium for their shareholders and enhancing the products and services available to their customers, while retaining an interest in the future prospects of Reliance and the Long Island banking market through ownership of North Fork's stock. Since Haven operates in the same market area and faces the same competitive forces as Reliance, we presume you and the Board must recognize that Haven's strategic alternatives are no different. The strategic landscape is crystal clear. The Long Island thrift market is mature. There are too many institutions operating with too much capital. Smaller thrifts such as JSB Financial, Reliance and Haven need to consolidate with the larger, stronger franchises, such as North Fork, in order to squeeze excess costs out of the system. Since Haven does not have enough capital or size to be an acquirer, it should be a seller. There is an accepted axiom in the banking business that you either "acquire or be acquired". On top of the thrift market issues noted above, the rationale for Haven to sell is even more compelling than for its peers. Haven's earnings are severely depressed because Haven is currently spending approximately $90 million per year on operating expenses. That level of expenses for a thrift of Haven's asset size and capital base is almost inconceivable. For comparison purposes, Reliance, a thrift approximately the same size as Haven, only spends approximately $36 million per year on operating expenses and has approximately 425 employees (Haven has approximately 1,000 employees and, as noted above, spends approximately $90 million per year). CUSIP No. 419352-10-9 Page 30 of 31 Pages Quite frankly, we can't figure out what Haven is spending that much money on. Haven discloses it is spending approximately $25 million per year on the direct costs of the supermarket branches. If you exclude those costs, that leaves approximately $65 million per year for the 8 traditional branches, other business lines and corporate overhead. Given that Reliance runs their entire company on $36 million of operating expenses per year, we are perplexed how Haven can spend so much money on overhead. Either the actual costs of the supermarket strategy are significantly higher than disclosed, which begs the question how that strategy will ever make a profit, or the corporate overhead is out of control. It is also interesting to note that in 1996, the last full year prior to adoption of the supermarket strategy, Haven only spent $31 million per year on operating expenses. Three years and $60 million extra operating expenses per year later, what has Haven accomplished? In our estimation, in the past three years, Haven has spent over $120 million on additional operating expenses above the base level expended in 1996. Where is the value of these "investments in the future"? Why is Haven wasting corporate assets while the vast majority of banks and thrifts are furiously paring expenses and gaining efficiencies? In our opinion, if Haven's operating expenses were comparable to its peers, Haven's earnings would be in excess of $2.50 per share per year. In our opinion, the only way Haven's expenses will ever be reduced to an appropriate level is through a sale to an efficient, larger competitor. Haven's shareholders will continue to suffer until that happens. We also assume you and the Board are cognizant of the proposed changes to the "pooling accounting" rules, which appear likely to be adopted for mergers closing after the end of next year. Industry experts are almost unanimous that bank and thrift merger activity will be compressed into the next 12 months as acquirers try to complete acquisitions prior to the pooling deadline. If Haven doesn't sell prior to the pooling deadline, the number of potential acquirers of Haven, and it's acquisition value, will likely decline. We believe that our conclusion that Haven should be sold is an opinion shared by the majority of Haven's shareholders and industry analysts. We encourage you to reach out to your shareholders in the next few weeks in order to hear their opinions. In 1996, Haven's shareholders never got the chance to vote on Haven's rejection of takeover overtures from North Fork Bank (as disclosed in North Fork's public filings) or on the supermarket strategy. It's time for Haven's management and Board to listen to its owners. Once again, we would be pleased to meet with you and the Board to discuss our views. We also look forward to receiving a response to our previous request for Board representation. Sincerely, /s/Richard Lashley /s/John Palmer Richard Lashley John Palmer Principal Principal CUSIP No. 419352-10-9 Page 31 of 31 Pages cc: Mr. William J. Jennings, EVP Mr. Michael J. Fitzpatrick Mr. George Worgul c/o Haven Bancorp, Inc. Msgr. Thomas J. Hartman Diocese of Rockville Centre for Telicare Television 1200 Glen Curtis Blvd. Uniondale, NY 11553 Mr. Michael Levine Norse Realty Group, Inc. Suite W-183 2001 Marcus Avenue Lake Success, NY 11042 Mr. Robert M. Sprotte Schmelz Bros. Inc. 7102 Myrtle Avenue Flushing, NY 11385 -----END PRIVACY-ENHANCED MESSAGE-----