APPENDIX D
[Lehman Letterhead]
June 27, 2000
Board of Directors
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
Members of the Board:
We understand that Haven Bancorp, Inc. (the "Company") and Queens
County Bancorp, Inc. ("Queens County") will enter into a definitive merger
agreement pursuant to which the Company will be merged with and into Queens
County and each share of common stock of the Company will be converted into the
right to receive 1.04 shares (the "Exchange Ratio") of common stock of Queens
County (the "Merger"). The terms and conditions of the Merger are set forth in
more detail in the Agreement and Plan of Merger dated as of June 27, 2000 by and
between the Company and Queens County (the "Merger Agreement"). We further
understand that, concurrently with the announcement of the Merger, Queens County
will announce that it is prepared to repurchase up to 20.0% of the shares to be
issued to the stockholders of the Company in the transaction to support the
price of Queens County's common stock following the announcement of the Merger.
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the fairness, from a financial point of view,
to the Company of the Exchange Ratio to be offered by Queens County to the
stockholders of the Company in the Merger. We have not been requested to opine
as to, and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Merger.
In arriving at our opinion, we reviewed and analyzed: (1) the Merger
Agreement and the specific terms of the Merger, (2) publicly available
information concerning the Company and Queens County that we believe to be
relevant to our analysis including without limitation annual reports on Form
10-K for the year ended December 31, 1999, quarterly reports on Form 10-Q for
the quarter ended March 31, 2000 and recent press releases for the Company and
Queens County, (3) financial and operating information with respect to the
business, operations and prospects of the Company furnished to us by the
Company, including without limitation projections prepared by management of the
Company and the master license agreement, as well as the individual supermarket
branch license agreements, entered into by the Company with Pathmark, Inc., (4)
financial and operating information with respect to the business, operations and
prospects of Queens County furnished to us by Queens County, (5) the trading
histories of the common stock of the Company and Queens County and a comparison
of these trading histories with those of other companies that we deemed
relevant, (6) a comparison of the historical financial results and present
financial condition of the Company and Queens County with those of other
companies that we deemed relevant, including without limitation historical
operating performance of the Company in terms of profitability as measured by
ROAA and ROAE and efficiency ratio as compared to its peer group, (7) current
third party research analyst estimates of the future financial performance of
the Company and Queens County, (8) a comparison of the financial terms of the
Merger with the financial terms of certain other recent transactions that we
deemed relevant, (9) the potential pro forma impact of the Merger on the
expected future financial performance of Queens County, (10) the relative
contributions of the Company and Queens County to the assets, equity, earnings
and overall financial performance of the combined company on a pro forma basis,
(11) the results of efforts to solicit indications of interest from various
other potential buyers with respect to an acquisition of all or part of the
Company, and (12) the increase in dividends expected to be received by the
Company's stockholders as a consequence of the Merger. In addition, we have had
discussions with the managements of the Company and Queens County concerning
their respective businesses, operations, assets, liabilities, financial
conditions and prospects, and the potential cost savings, operating synergies
and strategic benefits expected to result
D-1
from a combination of the businesses of the Company and Queens County, and have
undertaken such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of the
Company and Queens County that they are not aware of any facts or circumstances
that would make such information inaccurate or misleading. With respect to the
financial projections of the Company and Queens County, upon advice of the
Company and Queens County, we have assumed that such projections have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the respective managements of the Company and Queens County as
to the future financial performance of the Company and Queens County (including,
without limitation, with respect to projected cost savings and operating
synergies expected to result from a combination of the businesses of the Company
and Queens County) However, in arriving at our opinion, we also used consensus
estimates of future financial performance of the Company and Queens County from
third party research analysts and, with respect to the Company, made certain
adjustments to such estimates based on various assumptions as to the future
operations of the Company. We have discussed these adjusted estimates for the
future financial profitability of the Company with management of the Company and
they have agreed with the appropriateness of the use of such adjusted estimates
in performing our analysis. In arriving at our opinion, we have not conducted a
physical inspection of the properties and facilities of Queens County or the
Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of Queens County or the Company. In addition, we are not
experts in the evaluation of loan portfolios or allowances for loan and real
estate owned losses and, upon advice of the Company and Queens County, we have
assumed that the Company's and Queens County's current allowances for loan and
real estate owned losses (including for off-balance sheet items) are in the
aggregate adequate to cover all such losses. Our opinion necessarily is based
upon market, economic and other conditions as they exist on, and can be
evaluated as of, the date of this letter.
Upon advice of the Company and its legal and accounting advisors, we
have assumed that the Merger will qualify for purchase accounting treatment and
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and therefore as a tax-free transaction to the
stockholders of the Company.
Based upon and subject to the foregoing, we are of the opinion as of
the date hereof that, from a financial point of view, the Exchange Ratio to be
offered by Queens County to the stockholders of the Company in the Merger is
fair to the Company.
We have acted as financial advisor to the Company in connection with
the Merger and will receive a fee for our services, a significant portion of
which is contingent upon the consummation of the Merger. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out of
the rendering of this opinion. We also have performed and continue to perform
various investment banking services for Queens County and have received and will
receive customary fees for such services.
D-2
This opinion is for the use and benefit of the Board of Directors of
the Company and is rendered to the Board of Directors in connection with its
consideration of the Merger. This opinion is not intended to be and does not
constitute a recommendation to any stockholder of the Company as to how such
stockholder should vote with respect to the Merger.
Very truly yours,
LEHMAN BROTHERS
By: /s/ Mark H. Burton
------------------
Mark H. Burton
Managing Director
D-3
