IBS FINANCIAL CORP, PRER14A, 1997-06-30

IBS FINANCIAL CORP
PRER14A, 1997-06-30
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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[IBSF LETTERHEAD]

July , 1997

Dear Stockholder:

The Annual Meeting of Stockholders of IBS Financial Corp. (the "Company")
will be held at the Four Points Hotel (Sheraton), 1450 Route 70 East, Cherry
Hill, New Jersey 08034, on Monday, August 4, 1997 at ____ ___.m., Eastern Time.
As more fully described in the accompanying materials, the purpose of the
meeting is to elect one director (and, depending upon the outcome of pending
litigation, possibly a second director) and to ratify the appointment of
independent auditors. We strongly urge you to support your Company's nominees
and to sign, date and return the enclosed BLUE proxy card today. Your vote is
important, even if you only hold a few shares.

Unfortunately, Mr. Lawrence B. Seidman and his group are once again
conducting a proxy contest this year. Last year, Mr. Seidman's two nominees each
lost by more than a two-to-one margin. Mr. Seidman's group, under the name
"Committee to Maximize Shareholder Value," is soliciting white proxy cards for
its nominees. Please DO NOT return any white proxy cards sent to you by Mr.
Seidman's group. If you have already done so, you may revoke the white proxy
card by signing, dating and returning the enclosed BLUE proxy card. Remember,
your last dated proxy card is the only one that counts.

For the reasons set forth below, we urge you to support your Board of
Directors and vote the enclosed BLUE proxy card in favor of Messrs. Auchter and
Abramowitz.

YOUR BOARD OF DIRECTORS BELIEVES IN STOCKHOLDER REPRESENTATION

Each member of your current Board of Directors (other than Mr. Lockhart, who
is retiring) has purchased with his own personal funds more shares of the
Company's common stock than Messrs. Seidman and Whitman combined. Each member of
your current Board of Directors has invested between $100,000 and $1.5 million
of his own funds into the Company's common stock, for an aggregate cash
investment by your Board of $3.0 million. By contrast, Messrs. Seidman and
Whitman have used other people's money to accumulate the positions held by their
respective companies. See "Beneficial Ownership of Common Stock by Certain
Beneficial Owners and Management" in the attached Proxy Statement.

Your Board of Directors has a substantial investment in the Company and
represents all stockholders, not just a small group.

MR. SEIDMAN AND HIS GROUP ARE NOT SATISFIED WITH ONE BOARD SEAT

In an attempt to avoid an expensive proxy contest this year, and in response
to a letter from Mr. Whitman, on November 1, 1996 your Board of Directors was
willing to
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support the nomination of a person that would be mutually agreeable to the
Company and Messrs. Seidman and Whitman, provided that Mr. Seidman agree to
dismiss his libel suit against your Board with prejudice and without
reimbursement of any expenses by the Company (the court subsequently granted the
Company's motion for summary judgment because Seidman failed to state a claim)
and that Messrs. Seidman and Whitman agree to support the Board's nominees next
year. No agreement could be reached because Messrs. Seidman and Whitman insisted
that they be able to wage or support yet another proxy contest at next year's
annual meeting. Your Board does not believe that Messrs. Seidman and Whitman
should be entitled to multiple Board representation, and your Board does not
--------
believe that expensive and disruptive proxy contests each year are in the best
interests of stockholders.

In two other companies in which Mr. Seidman conducted a proxy contest, he
subsequently purchased a controlling interest in such companies through open
market purchases, without paying any control premium to existing stockholders.
------------------------------------------------------------

Your Board of Directors does not believe it is in the best interests of the
Company and all stockholders for a small group to continually seek multiple
representation on the Board or, as Mr. Seidman has done in the past in other
companies, to purchase a controlling interest without paying an appropriate
control premium to all stockholders.

YOUR BOARD OF DIRECTORS DOES NOT TRUST MR. SEIDMAN

As you may recall from last year's proxy contest, on November 8, 1995 the
Office of Thrift Supervision ("OTS"), our primary federal regulator, issued a
cease and desist order against Mr. Seidman in which the OTS found Mr. Seidman
violated an OTS regulation and recklessly engaged in unsafe and unsound
practices when he was at another savings institution in New Jersey. THE OTS
FURTHER FOUND THAT MR. SEIDMAN DEMONSTRATED BOTH PERSONAL DISHONESTY AND A
FLAGRANT DISREGARD OF HIS DUTIES AND THAT HE ENGAGED IN A PATTERN OF MISCONDUCT.

This year, Mr. Seidman and his group refused the Company's request to
disclose various agreements and the identities of their financial backers. As a
result, on November 12, 1996 the Company sued Mr. Seidman and his group. See
"Litigation Against the Seidman Group" in the attached Proxy Statement.

Six days after the Company's lawsuit was filed, Mr. Seidman's group amended
its Schedule 13D to disclose for the first time an 18 month old agreement
involving 96,025 shares of the Company's common stock. Your Board of Directors
believes, based upon the advice of its counsel, that the failure by Mr.
Seidman's group to previously disclose this agreement in its Schedule 13D
constituted a violation of the federal securities laws.
- -------------------------------------------------------

After a preliminary litigation conference on December 2, 1996, Mr. Seidman's
group further amended its Schedule 13D a mere four days later to publicly
disclose for the first

2
<PAGE>
time various limited partnership and operating agreements and the identities of
the persons who had invested in the four members of the group formed directly or
indirectly by Mr. Seidman. Your Board of Directors believes, based upon the
advice of its counsel, that the failure by Mr. Seidman's group to previously
provide such disclosure in its Schedule 13D constituted a violation of the
-------------------------------
federal securities laws.
- ------------------------

On January 23, 1997, the district court judge held that the additional
Schedule 13D amendments filed by Mr. Seidman's group after the litigation was
commenced mooted the Company's claims regarding the deficient disclosures
initially provided by Mr. Seidman's group and that the amended Schedule 13Ds
were adequate. Because the judge noted that "(a)n amendment which cures a
violation of the Exchange Act moots a claim that arises from the failure to file
a proper Schedule 13D," the court did not find it necessary to expressly rule
that the prior Schedule 13Ds violated the securities laws. The district court
also held that the Company did not meet its burden of proof in demonstrating
that entities or persons which held majority interests in the limited liability
companies formed by Mr. Seidman either controlled such companies, had arranged
for financing, or are participants in the Seidman group's proxy solicitation. In
addition, the court indicated that because the nominating materials were similar
to those received by the Company the prior year and because the court believed
the Company was not prejudiced by the failure of the Seidman group to provide
proper disclosures in a timely manner, the court declined to enforce the
disclosure requirements in the Company's Certificate of Incorporation and held
that the Company could not reject the defendants' nominations as deficient or
untimely and that the defendants could receive a stockholder list. In addition,
the court set aside the July 1996 reduction in the size of the Board when Mr.
Lockhart tendered his resignation. The Company believes that the Seidman group's
disclosures are still inadequate and has taken an appeal to the United States
Court of Appeals for the Third Circuit.

Your Board of Directors believes that a savings and loan holding company,
which is entrusted with the funds deposited by depositors and the moneys
invested by stockholders, is no place for a person who has violated federal
banking laws (and, as your Board believes, federal securities laws) -or for his
nominees.

YOUR BOARD OF DIRECTORS HAS TAKEN STEPS TO ENHANCE STOCKHOLDER VALUE

During fiscal 1996, your Company completed three separate stock repurchase
programs of 5% each, which is three times the amount permitted by OTS
regulations under normal circumstances. Stock repurchases reduce our excess
capital and will help improve the Company's return on equity and earnings per
share in the long run. In the short run the stock repurchases reduce our
interest-earning assets and interest income, as well as depress our book value
per share (because our market price per share exceeds our book value per share).
Despite the short-term effects, however, we note that even Mr. Seidman and his
group are able to agree with us that continuing stock repurchases are in the
best interests of our stockholders.

3
<PAGE>

In December 1996, your Board of Directors declared a special cash dividend
of $.25 per share, which was paid to stockholders on January 3, 1997. This
special dividend is in addition to the 10% stock dividend paid in March 1996,
the 15% stock dividend paid on May 6, 1997 and our regular quarterly cash
dividends. As a result of our stock dividends and increased cash dividends, our
most recent cash dividend of $.08 per share represents an increase of over 100%
in our quarterly dividend rate since fiscal 1995.

During fiscal 1996, your Board of Directors terminated a defined benefit
pension plan and a related supplemental agreement. As a result, the costs
associated with these plans, which amounted to $1.1 million in fiscal 1996 as a
result of the termination, will not be incurred in periods subsequent to
September 30, 1996.

The Company's subsidiary recently opened two new branches in Camden County,
New Jersey, thus expanding our presence in this market area.

MANAGEMENT'S COMPENSATION IS ALIGNED WITH THE COMPANY'S PERFORMANCE

In fiscal 1996, the Company eliminated all bonuses to senior management in
light of the decline in the Company's net income from fiscal 1995 to fiscal
1996. See "Executive Compensation--Report of the Compensation Review Committee."
In addition, in fiscal 1996 the Board of Directors adopted a resolution
expressing its intent to not grant further stock options to those executive
officers who received grants when the plan was approved by stockholders in
January 1995. The aggregate of base salary, bonus and fees for Messrs. Ochman
and Sharp decreased by 9.2% and 9.3%, respectively, from fiscal 1995 to fiscal
1996.

YOUR VOTE IS IMPORTANT!

Your Board believes the best way to discourage the Seidman group from
further harassment of your Company through a steady stream of costly and
needless proxy contests is to elect the Board's nominees. It is very important
that you be represented at the Annual Meeting regardless of the number of shares
you own or whether you are able to attend the meeting in person. We urge you to
mark, sign, and date your BLUE proxy card today and return it in the envelope
provided, even if you plan to attend the Annual Meeting. Please do not sign any
white proxy card sent to you by the Seidman group.

4
<PAGE>
Your continued support of and interest in IBS Financial Corp. are sincerely
appreciated.

Sincerely,

Joseph M. Ochman, Sr.
Chairman of the Board, President and
Chief Executive Officer

5
<PAGE>
IBS FINANCIAL CORP.
1909 ROUTE 70 EAST
CHERRY HILL, NEW JERSEY 08003
(609) 424-1000

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 4, 1997

------------------------

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of IBS Financial Corp. (the "Company") will be held at the Four Points
Hotel (Sheraton), 1450 Route 70 East, Cherry Hill, New Jersey, on Monday, August
4, 1997 at ____ ___.m., Eastern Time, for the following purposes, all of which
are more completely set forth in the accompanying Proxy Statement:

(1) To elect one director and, depending upon the outcome of pending
litigation, possibly a second director, in each case for a four-year term or
until a successor is elected and qualified;

(2) To ratify the appointment by the Board of Directors of Deloitte &
Touche L.L.P. as the Company's independent auditors for the fiscal year
ending September 30, 1997; and

(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any other
such business.

The Board of Directors has fixed June 27, 1997 as the voting record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. Only those stockholders of record as of the close of business on
that date will be entitled to vote at the Annual Meeting.

BY ORDER OF THE BOARD OF DIRECTORS
Chiara Eisennagel
Corporate Secretary

Cherry Hill, New Jersey
July , 1997

YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED BLUE PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE
----
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE
REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
<PAGE>
IBS FINANCIAL CORP.

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

AUGUST 4, 1997

This Proxy Statement and BLUE proxy card are being furnished to holders of
common stock, $.01 par value per share ("Common Stock"), of IBS Financial Corp.
("IBSF" or the "Company"). BLUE proxies are being solicited on behalf of your
Board of Directors to be used at the Annual Meeting of Stockholders ("Annual
Meeting") to be held at the Four Points Hotel (Sheraton), 1450 Route 70 East,
Cherry Hill, New Jersey, on Monday, August 4, 1997 at ____ ___.m., Eastern Time,
for the purposes set forth in the Notice of Annual Meeting of Stockholders. This
Proxy Statement is first being mailed to stockholders on or about July ,
1997.

LITIGATION AGAINST THE SEIDMAN GROUP

In October 1996, Mr. Seidman's group nominated two director candidates and
provided certain information to the Company pursuant to the Company's
Certificate of Incorporation. In July 1996, the Board of Directors had approved
a reduction in the size of the Board when a director tendered his resignation in
July 1996, and as a result of this reduction, the Company initially informed Mr.
Seidman's group by letter dated October 16, 1996 that only one director was to
be elected at the annual meeting. Mr. Seidman's group then indicated by letter
dated October 21, 1996 who its one nominee would be. The Company provided Mr.
Seidman's group with a letter dated October 31, 1996 specifying in detail the
numerous deficiencies in the group's nominating materials. On November 1, 1996,
the Company granted in full the request made by Messrs. Seidman and Whitman for
an extension of the time period given to them to cure their deficiencies.

On November 8, 1996, Mr. Seidman's group cured some of the deficiencies but
refused to provide the identities of the various persons or entities who (1)
assisted in organizing the limited liability companies and limited partnerships
used to purchase IBSF's Common Stock, (2) provided the funds used by members of
Mr. Seidman's group to purchase IBSF's Common Stock, or (3) are otherwise deemed
by the federal securities laws, in the opinion of the Company, to be
"participants" in the proxy contest then being threatened by Mr. Seidman's
group. Mr. Seidman's group also failed to amend its Schedule 13D to include the
various limited partnership agreements and operating agreements as exhibits or
to provide a description of such agreements.

2
<PAGE>
In light of the positions taken by Mr. Seidman's group, on November 12, 1996
the Company sued each of the members of Mr. Seidman's group in the United States
District Court for the District of New Jersey. The Company sought a declaratory
judgment that each member of Mr. Seidman's group is required under the federal
securities laws to disclose the identities of its investors, limited partners,
members and other participants and to describe the contracts, understandings and
arrangements between members of the group and such undisclosed persons and
entities. The Company also sought a declaratory judgment that, because of the
deficiencies in the nominating materials submitted by Mr. Seidman's group, the
Company could reject the nominations made by Mr. Seidman's group and the group's
request for a stockholder list. In addition, the Company sought to enjoin Mr.
Seidman's group from further violations of the federal securities laws and from
purchasing additional shares or soliciting proxies until it complied with such
laws. Some of the members of Mr. Seidman's group counterclaimed, challenging the
action of the Company's Board, in July 1996, to reduce the number of directors
from seven to six, which was first disclosed to the group in October 1996.

A mere six days after the Company's lawsuit was filed, Mr. Seidman's group
amended its Schedule 13D to disclose for the first time an 18 month old
agreement involving 96,025 shares of IBSF's Common Stock. The amended Schedule
13D also corrected some of the deficiencies noted in the Company's lawsuit, but
still did not include the limited partnership and operating agreements or
disclose the names of the investors in such companies.

After a preliminary litigation conference on December 2, 1996, Mr. Seidman's
group further amended its Schedule 13D a mere four days later to publicly
disclose for the first time various limited partnership and operating
agreements, to disclose for the first time the identities of the persons or
entities who had invested in the four members of the group formed directly or
indirectly by Mr. Seidman, and to disclose for the first time the identities of
five individuals who had entered into agreements with Mr. Seidman regarding the
voting of their shares.

As a result of the expedited discovery conducted by IBSF and the amended
Schedule 13Ds filed by the Seidman group, IBSF discovered that Seidcal
Associates, L.L.C. ("Seidcal") owns 71.4% of Seidman and Associates, L.L.C.
("SAL") and 75.0% of Seidman and Associates II, L.L.C. ("SAL II"). IBSF also
discovered for the first time that Charisma Partners, L.P. ("Partners") owns
54.5% of Federal Holdings L.L.C. ("Holdings"), that 8th Floor Realty Corp.
("Realty Corp.") is the sole general partner of Partners, and that Kevin Moore
is a Vice President of Realty Corp., the organizer of Holdings and the
Administrative Manager of Holdings. To date, no information regarding the
members of Seidcal, the directors and executive officers of Realty Corp., or the
business, source of funds or controlling persons of Seidcal, Partners or Realty
Corp. has been publicly disclosed by the Seidman group.

On January 23, 1997, the district court judge held that the additional
Schedule 13D amendments filed by Mr. Seidman's group after the litigation was
commenced mooted the

3
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Company's claims regarding the deficient disclosures initially provided by Mr.
Seidman's group and that the amended Schedule 13Ds were adequate. Because the
judge noted that "(a)n amendment which cures a violation of the Exchange Act
moots a claim that arises from the failure to file a proper Schedule 13D," the
court did not find it necessary to expressly rule that the prior Schedule 13Ds
violated the securities laws. The district court also held that the Company did
not meet its burden of proof in demonstrating (1) Seidcal's control over SAL and
SAL II, (2) the control of Partners, Realty Corp. and Kevin Moore over Holdings,
(3) that Seidcal, Partners and Realty Corp. had arranged for financing, or (4)
that Seidcal, Partners and Realty Corp. are participants in the Seidman group's
proxy solicitation. In addition, the court indicated that because the nominating
materials were similar to those received by the Company the prior year and
because the court believed the Company was not prejudiced by the failure of the
Seidman group to provide proper disclosures in a timely manner, the court
declined to enforce the disclosure requirements in the Company's Certificate of
Incorporation and held that the Company could not reject the defendants'
nominations as deficient or untimely and that the defendants could receive a
stockholder list. Furthermore, the court set aside the July 1996 reduction in
the size of the Board when Mr. Lockhart tendered his resignation in July 1996,
even though such reduction occurred prior to the submission of nominees by the
Seidman group (although the reduction was first disclosed to the Seidman group
in October 1996).

On January 31, 1997, the Company filed an appeal of the district court's
decision with the United States Court of Appeals for the Third Circuit, and the
Company requested that the Third Circuit review the appeal on an expedited
basis. On February 7, 1997, Mr. Seidman's group opposed the request for an
----------------------------------------------
expedited appeal.
- -----------------

Rather than trying to get the appeal decided expeditiously, Mr. Seidman
asked the Superior Court of New Jersey Chancery Division: Passaic County to set
the annual meeting date. On February 24, 1997, the Passaic County judge orally
ordered that the Annual Meeting be held on April 18, 1997, and the Company
promptly set the voting record date. In March 1997, the Passaic County judge
stayed his order after the Court of Appeals granted the Company's motion for an
expedited appeal as set forth below.

On February 28, 1997, the United States Court of Appeals for the Third
Circuit granted the Company's motion for an expedited appeal, despite the
attempt by Mr. Seidman's group to delay the appeal being considered. For reasons
known only to the Seidman group and its counsel, they have resisted all attempts
to expedite the appeal. The Company's brief was filed on March 24, 1997, and Mr.
Seidman's reply brief was filed April 28, 1997. The Company's reply brief was
filed on May 5, 1997, and oral argument was presented to the Third Circuit on
May 23, 1997. Your Board of Directors looks forward to a prompt decision from
the Court of Appeals.

On May 30, 1997, the Passaic County judge ordered that the meeting be held
on August 4, 1997, on the assumption that the Third Circuit decision would be
received in June.

4
<PAGE>

On June 27, 1997, the Passaic County judge re-affirmed his order, even though
the Third Circuit decision has not yet been received.

The Company believes that there are still legitimate issues with respect to
the timeliness, accuracy and completeness of the disclosures provided by Mr.
Seidman's group and the validity of such group's nominations. Your Board of
Directors believes, based upon the advice of its counsel, that the failure by
Mr. Seidman's group to previously disclose the various agreements and to name
the parties thereto in the group's Schedule 13Ds constituted a violation of the
federal securities laws. Since the Company's lawsuit was first commenced, Mr.
Seidman's group has amended its Schedule 13D three separate times, and each time
has provided a little bit more of the disclosures that the Company has claimed
should have been provided no later than October 1996. The Company believes that
the Seidman group's disclosures are still inadequate, particularly since his
Schedule 13Ds fail to provide any disclosure regarding persons or entities who
control in excess of 50% of one or more of the limited liability companies
formed by Mr. Seidman. Even though these persons or entities generally "have
full, exclusive and complete discretion with respect [to all] decisions,
consents, authorizations and rights in connection with the business and affairs"
of the limited liability company, other than the daily affairs of the company
and investment decisions, Mr. Seidman has argued that these majority holders are
not control persons. As a result, this issue has been appealed to the Third
Circuit. Your Board regrets the need for the lawsuit, but believes that it had
no other choice in order to ensure compliance with the federal securities laws
by Mr. Seidman and his group and to inform the Company's stockholders of the
identities of Mr. Seidman's secret backers.

VOTING

Only stockholders of record at the close of business on June 27, 1997
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 11,011,897 shares of Common Stock outstanding and
the Company had no other class of equity securities outstanding. All references
in this Proxy Statement to share amounts, prices per share and other per share
figures have been adjusted for the 10% stock dividend paid by the Company to all
of its stockholders in March 1996 and for the 15% stock dividend paid by the
Company on May 6, 1997.

The BLUE proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted FOR the nominees for director described herein, FOR
ratification of the appointment of Deloitte & Touche L.L.P. for fiscal 1997 and,
upon the transaction of such other business as may properly come before the
meeting, in accordance with the best judgment of the persons appointed as
proxies. Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Chiara Eisennagel, Secretary, IBS Financial Corp.); (ii)
submitting a duly executed proxy

5
<PAGE>
bearing a later date; or (iii) appearing at the Annual Meeting and giving the
Secretary notice of his or her intention to vote in person. Proxies solicited
hereby may be exercised only at the Annual Meeting and any adjournment thereof
and will not be used for any other meeting.

Each share of Common Stock is entitled to one vote at the Annual Meeting on
all matters properly presented at the meeting. Directors are elected by a
plurality of the votes cast with a quorum present. A quorum consists of
stockholders representing, either in person or by proxy, a majority of the
outstanding Common Stock entitled to vote at the meeting. Abstentions are
considered in determining the presence of a quorum but will not affect the
plurality vote required for the election of directors.

The number of directors to be elected and the validity of the nominations
submitted by Mr. Seidman's group are dependent upon the outcome of pending
litigation. Because one director will definitely be elected, the person who
receives the greatest number of votes of the holders of Common Stock represented
in person or by proxy at the Annual Meeting will be elected a director of the
Company, if such person was validly nominated. If the pending litigation as to
whether a second director is to be elected is not decided prior to the Annual
Meeting, the Company reserves the right to not seat the nominee with the second
highest number of votes until the appeal has been decided. If the appeal is
decided prior to the Annual Meeting, which is currently expected, the Company
intends to supplement the proxy materials and, if appropriate, seek a
postponement of the Annual Meeting so that stockholders have sufficient time to
consider the decision of the United States Court of Appeals for the Third
Circuit.

The affirmative vote of the holders of a majority of the total votes present
in person or by proxy is required to ratify the appointment of the independent
auditors. Under rules applicable to broker-dealers, the proposal for
ratification of the auditors, unless contested by the Seidman group, is
considered a "discretionary" item upon which brokerage firms may vote in their
discretion on behalf of their clients if such clients have not furnished voting
instructions and for which there will not be "broker non-votes." Because of the
solicitation in opposition to the election of the Company's nominees, the
election of directors will be considered a "non-discretionary" item and there
will be broker non-votes at the meeting. However, broker non-votes will have no
effect on the voting of the election of directors.

6
<PAGE>
INFORMATION WITH RESPECT TO THE NOMINEE FOR DIRECTOR,
DIRECTORS WHOSE TERM CONTINUES
AND EXECUTIVE OFFICERS

ELECTION OF DIRECTORS

The Certificate of Incorporation of the Company provides that the Board of
Directors of the Company shall be divided into four classes which are as equal
in number as possible, and that members of each class of directors are to be
elected for a term of four years. One class is to be elected annually.
Stockholders of the Company are not permitted to cumulate their votes for the
election of directors. When Frank G. Lockhart, a director of the Company,
tendered his resignation from the Board of Directors of the Company on July 19,
1996 for personal reasons, effective as of the day prior to the Annual Meeting,
the Board of Directors reduced the number of authorized directors from seven to
six, also effective as of the day prior to the Annual Meeting. If the reduction
in Board size is permitted, only one director will be elected this year. The
actual number of directors to be elected--one or two--is dependent upon the
outcome of the appeal to the United States Court of Appeals for the Third
Circuit. See "Litigation Against the Seidman Group" and "Voting."

No director, director nominee or executive officer of the Company is related
to any other director, director nominee or executive officer of the Company by
blood, marriage or adoption.

Unless otherwise directed, each proxy executed and returned by a stockholder
will be voted for the election of the nominees for director listed below. If any
person named as a nominee should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxies will nominate and vote for a
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why either of the nominees listed below
may not be able to serve as a director if elected, other than that the number of
directors to be elected is dependent upon the outcome of pending litigation.

The following tables present information concerning the nominees for
director of the Company and each director whose term continues, including tenure
as a director of the Company's subsidiary, Inter-Boro Savings and Loan
Association (the "Association").

7
<PAGE>
NOMINEES FOR DIRECTOR FOR FOUR-YEAR TERM EXPIRING IN 2001

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE(1) THE PAST FIVE YEARS SINCE
- ----------------------------------------------- ----------- ----------------------------------------------- -----------
<S> <C> <C> <C>

Thomas J. Auchter 70 Director; President of Investment 2010, a 1967
private investment company, since 1991.
Formerly Director of Finance and Treasurer,
Delaware River Port Authority, Camden, New
Jersey, from 1960 to 1991.

Arthur J. Abramowitz 49 Stockholder and director in Davis, Reberkenny & --
Abramowitz, P.C., a law firm located in Cherry
Hill, New Jersey.
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR.

MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE

DIRECTORS WHOSE TERMS EXPIRE IN 1998

John A. Borden 78 Director; engaged in real estate related 1966
activities since 1937 and independent real
estate appraiser since 1953.

Joseph M. Ochman, Sr. 66 Chairman of the Board of the Association since 1971
1976 and of the Company since 1994; President
and Chief Executive Officer of the Association
since 1971 and of the Company since 1994.
</TABLE>

8
<PAGE>
DIRECTOR WHOSE TERM EXPIRES IN 1999

Paul W. Gleason 77 Director; currently retired. Formerly Chairman 1976
of the Board and principal stockholder of
Formigli Corporation, a concrete business,
Berlin, New Jersey.
</TABLE>

DIRECTORS WHOSE TERMS EXPIRE IN 2000

Francis X. Lorbecki, Jr. 74 Director; currently retired. Formerly Senior 1968
Vice President and loan officer of the
Association until 1981.

Albert D. Stiles, Jr. 69 Director; founder and Presi-dent of Wills and 1977
Stiles, Inc., an electrical contractor,
Medford, New Jersey; self-employed builder and
developer of residential and commercial
properties in the South Jersey area.
</TABLE>

- ------------------------

(1) As of March 31, 1997.

9
<PAGE>
STOCKHOLDER NOMINATIONS

Article 9.3 of the Company's Certificate of Incorporation governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder who
has complied with the notice provisions in that section. Stockholder nominations
must be made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not later than
60 days prior to the anniversary date of the immediately preceding annual
meeting.

Each written notice of a stockholder nomination shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or
re-election as a director and as to the stockholder giving the notice (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of Company stock which are beneficially owned by such person on the date
of such stockholder notice, and (iv) any other information relating to such
person that is required to be disclosed in solicitations of proxies with respect
to nominees for election as directors, pursuant to the proxy rules under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
Company's books, of such stockholder and any other stockholders known by such
stockholder to be supporting such nominees and (ii) the class and number of
shares of Company stock which are beneficially owned by such stockholder on the
date of such stockholder notice and, to the extent known, by any other
stockholders known by such stockholder to be supporting such nominees on the
date of such stockholder notice. The presiding officer of the meeting may refuse
to acknowledge the nomination of any person not made in compliance with the
foregoing procedures. For a description of pending litigation with respect to
the validity of the nominations by Mr. Seidman's group, see "Litigation Against
the Seidman Group."

COMMITTEES AND MEETINGS OF THE BOARD OF THE COMPANY AND THE ASSOCIATION

The Board of Directors of the Company currently meets on a quarterly basis
and may have additional special meetings upon the request of the President or a
majority of the Directors. During the fiscal year ended September 30, 1996, the
Board of Directors of the Company met 13 times. No director attended fewer than
75% of the total number of Board meetings and meetings of committees on which he
served that were held during this period. The Board of Directors of the Company
has established the following committees:

EXECUTIVE COMMITTEE. The Executive Committee consists of Messrs. Ochman
(Chairman), Auchter, Borden and Lockhart. Additional members of the Board also
serve as alternates. The Committee has the authority to act on general matters
between Board meetings. The Executive Committee met once during fiscal 1996.

10
<PAGE>
AUDIT AND EXAMINATION COMMITTEE. The Audit and Examination Committee
consists of Messrs. Stiles (Chairman), Gleason and Lorbecki. The Audit and
Examination Committee recommends engagement of the Company's independent
auditors and reviews their audit reports. The Audit and Examination Committee
met once during fiscal 1996.

NOMINATING COMMITTEE. The Nominating Committee consists of Messrs. Stiles
(Chairman), Borden and Lorbecki. The Nominating Committee, which makes director
nominations for service on the Board of Directors, met once in fiscal 1996.

The Board of Directors of the Association met 12 times during fiscal 1996.
In addition, the Board of Directors of the Association has established the
following committees:

GENERAL LOAN COMMITTEE. The General Loan Committee consists of Messrs.
Ochman (Chairman), Borden and Lorbecki. Additional senior officers of the
Association also alternate on the Committee. The Committee has the authority to
approve loans up to $1.0 million. The Committee met 24 times during fiscal 1996.

COMPENSATION REVIEW COMMITTEE. The Compensation Review Committee consists
of Messrs. Borden (Chairman), Gleason and Stiles. The Compensation Review
Committee, which reviews and recommends compensation and benefits for the
Association's employees, met once in fiscal 1996.

In addition to the committees described above, the Association has also
established other committees which consist of members of the Board and which
meet as required. These committees include, among others: a Nominating
Committee, an Advertising Committee, an Investment Committee, a Site Committee,
a Pension Committee and an Asset/Liability Management Committee.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

Set forth below is information with respect to the principal occupations
during the last five years for the six executive officers of the Company and the
Association who do not serve as directors.

RICHARD G. SHARP. Mr. Sharp has served as Executive Vice President and
Chief Financial Officer of the Association since 1984 and of the Company since
1994, and has been employed in various capacities at the Association since 1972.
Mr. Sharp is a past President of the Philadelphia Chapter of the Financial
Managers Society and a past District Director of the Financial Managers
Society's national organization. Mr. Sharp is currently

11
<PAGE>
a member of the Pennsylvania Institute of Certified Public Accountants, the
American Institute of Certified Public Accountants and the Financial Managers
Society. Mr. Sharp is 62 years old as of March 31, 1997.

ANTHONY C. CHIGOUNIS. Mr. Chigounis has served as Senior Vice President,
Operations and Administration of the Association since 1984, and has been
employed in various capacities at the Association since 1971. Mr. Chigounis has
been active in a number of civic organizations, including the United Way of both
Burlington and Camden County, New Jersey. Mr. Chigounis served as President of
the Camden County Council of Boy Scouts of America and is currently a member of
the Executive Council. Mr. Chigounis is 60 years old as of March 31, 1997.

ANDREW A. COSENZA. Mr. Cosenza has served as Senior Vice President, Savings
Officer of the Association since 1984, and has been employed in various
capacities at the Association since 1970. Mr. Cosenza is a member and past
Director of the Philadelphia Chapter of the Financial Managers Society, and a
member of the Delaware Valley Chapter of the Institute for Financial Education.
Mr. Cosenza has also been affiliated with the United Way of Camden County since
1980. Mr. Cosenza is 55 years old as of March 31, 1997.

LORRAINE H. O'HARA. Ms. O'Hara has served as Senior Vice President, Human
Resources of the Association since 1987, and has served in various capacities at
the Association since 1966. Ms. O'Hara is a member and past President of the
Philadelphia Chapter of the Financial Managers Society and is a member of the
New Jersey State League Human Resource Committee and the South Jersey Human
Resources Group. Ms. O'Hara has also been active in several United Way annual
campaigns. Ms. O'Hara is 71 years old as of March 31, 1997.

MATTHEW J. KENNEDY. Mr. Kennedy has served as Executive Vice President and
Treasurer of the Company and the Association since April 1996 and prior thereto
as Senior Vice President and Assistant Treasurer since September 1995. He joined
the Association in February 1995 as a Vice President. Mr. Kennedy was previously
employed by Valley Federal Savings and Loan Association, Easton, Pennsylvania,
where he served as Executive Vice President and Chief Financial Officer from
1985 to November 1993. Prior thereto, Mr. Kennedy served as Vice President and
Controller of Valley Federal from 1977 to 1985. Mr. Kennedy is 52 years old as
of March 31, 1997.

CHIARA EISENNAGEL. Ms. Eisennagel has served as Corporate Secretary of the
Association since 1993 and of the Company since 1994. From October 1992 to
December 1992, Ms. Eisennagel served as Assistant Secretary of the Association,
and she has been employed at the Association since 1990. Ms. Eisennagel was
previously employed by Amstar Corporation, Philadelphia, Pennsylvania, where she
served as Employee Benefits Administrator and Human Resources Professional from
1974 to 1982. She also served in similar capacities with Westinghouse Electric
Company and General Accident Insurance Company. Ms. Eisennagel is 49 years old
as of March 31, 1997.

12
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
1934 Act, who or which was known to the Company to be the beneficial owner of
more than 5% of the issued and outstanding Common Stock, (ii) the directors and
director nominees of the Company, (iii) certain executive officers of the
Company, and (iv) all directors executive officers of the Company and the
Association as a group.

<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED AS OF
JUNE 27, 1997(1)(2)
------------------------------
<S> <C> <C>
NAME OF BENEFICIAL OWNER NO. %
- -------------------------------------------------- ------------ ------
IBS Financial Corp. Employee
Stock Ownership Plan Trust
1909 E. Route 70
Cherry Hill, New Jersey 08003 1,220,790(3) 11.1%
Lawrence B. Seidman, Richard Whitman, and their
companies, investors and clients
1235A Route 23 South
Wayne, New Jersey 07470 983,421(4) 8.9%
Directors:
Thomas J. Auchter 164,534(3)(5)(6) 1.5%
John A. Borden 123,904(3)(5)(7) 1.1%
Paul W. Gleason 116,027(5) 1.0%
Frank G. Lockhart 106,229(5)(8) 1.0%
Francis X. Lorbecki, Jr. 115,515(5)(9) 1.0%
Joseph M. Ochman, Sr. 434,436(3)(10) 3.9%
Albert D. Stiles, Jr. 199,051(5)(11) 1.8%
Director nominee:
Arthur J. Abramowitz 575 *
Certain other executive officers:
Richard G. Sharp 149,691(12) 1.4%
All directors, nominees and executive officers of
the Company and the Association as a group (14
persons) 1,679,348(3)(13) 14.4%
</TABLE>

(FOOTNOTES ON FOLLOWING PAGES)

13
<PAGE>
- ------------------------

* Represents less than .5% of the outstanding Common Stock.

(1) For purposes of this table, pursuant to rules promulgated under the 1934
Act, an individual is considered to beneficially own shares of Common Stock
if he or she directly or indirectly has or shares (1) voting power, which
includes the power to vote or to direct the voting of the shares; or (2)
investment power, which includes the power to dispose or direct the
disposition of the shares. Unless otherwise indicated, an individual has
sole voting power and sole investment power with respect to the indicated
shares.

(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Common Stock which may be acquired within 60 days
of the Voting Record Date pursuant to the exercise of outstanding stock
options. Shares of Common Stock which are subject to stock options are
deemed to be outstanding for the purpose of computing the percentage of
outstanding Common Stock owned by such person or group but not deemed
outstanding for the purpose of computing the percentage of Common Stock
owned by any other person or group.

(3) The IBS Financial Corp. Employee Stock Ownership Plan Trust ("Trust") was
established pursuant to the IBS Financial Corp. Employee Stock Ownership
Plan ("ESOP") by an agreement between the Company and Messrs. Ochman,
Auchter and Borden, who act as trustees of the plan ("Trustees"). As of the
Voting Record Date, 895,030 shares of Common Stock held in the Trust were
unallocated and 325,760 shares had been allocated to the accounts of
participating employees. Under the terms of the ESOP, the Trustees must vote
the allocated shares held in the ESOP in accordance with the instructions of
the participating employees. Unallocated shares held in the ESOP will be
voted by the ESOP Trustees in the same proportion for and against proposals
to stockholders as the ESOP participants and beneficiaries actually vote
shares of Common Stock allocated to their individual accounts. Any allocated
shares which either abstain on the proposal or are not voted will be
disregarded in determining the percentage of stock voted for and against
each proposal by the participants and beneficiaries. The amount of Common
Stock beneficially owned by directors who serve as trustees of the ESOP and
by all directors and executive officers as a group does not include the
unallocated shares held by the Trust.

(4) Based on a Schedule 13D filed pursuant to the 1934 Act by Lawrence B.
Seidman, SAL, SAL II, Holdings, Seidman Investment Partnership, L.P.
("SIP"), The Benchmark Company, Inc. ("TBCI"), Benchmark Partners, LP
("Partners"), Richard Whitman, Lorraine Di Paolo, Dennis Pollack, and Ernest
Beier, Jr. (collectively, the "Reporting Persons"), which have formed a
"group" pursuant to Rule 13d-5 under the 1934 Act. Mr. Seidman beneficially
owns and has the right to vote and dispose of 4,117 shares of Common Stock
owned by his retirement account, and he has sole investment discretion and
voting authority with respect to 96,025 shares of Common Stock which Mr.
Seidman purchased in the name of Michael J. Mandelbaum pursuant to an April
24, 1995 agreement. Mr. Seidman also claims sole investment discretion and
voting authority over an additional 8,976 shares of

14
<PAGE>

Common Stock held by Jeffrey Greenberg (3,105 shares), Steven Greenberg (3,105
shares), Richard Baer (730 shares), Brent Wolmer (690 shares) and Sonia Seidman
(1,346 shares). The Schedule 13D filed by Mr. Seidman's group indicates that
these last five individuals have agreed to sell and vote their shares as
directed by Mr. Seidman. In addition, Mr. Seidman, in his capacity as the
President of Veteri Place Corporation, the sole general partner of SIP, which is
an investment partnership, and a manager of SAL, SAL II and Holdings, companies
organized to invest in securities, may be deemed to beneficially own 418,674
shares of Common Stock owned beneficially by such companies. Mr. Whitman and Ms.
Di Paolo, the President and Executive Vice President, respectively, of TBCI, a
broker-dealer and investment advisor, and each a general partner of Partners, an
investment partnership, have sole dispositive and voting power as to 3,542
shares and 32,677 shares, respectively, of Common Stock. In addition, Mr.
Whitman and Ms. DiPaolo may be deemed to have shared dispositive and voting
power as to the 250,504 shares and the 143,750 shares of Common Stock held by
TBCI and Partners, respectively, except that one or both of these companies sold
an aggregate of 2,875 shares subsequent to the Schedule 13D amendment dated
January 23, 1997. Messrs. Pollack and Beier own 13,081 shares and 14,950 shares,
respectively, of Common Stock. The above amounts exclude shares held by
relatives of Messrs. Pollack and Beier, as to which shares they disclaim
beneficial ownership.

(5) Includes 18,946 unvested shares granted to each non-employee director
pursuant to the Company's Recognition and Retention Plan and Trust
("Recognition Plan"), which shares may be voted by each director, and 73,431
shares (67,681 shares for Mr. Gleason) which may be acquired upon the
exercise of stock options exercisable within 60 days of the Voting Record
Date.

(6) Includes 31,625 shares held by Mr. Auchter's wife.

(7) Includes 1,897 shares held by Mr. Borden's wife.

(8) Includes 1,075 shares held jointly with Mr. Lockhart's wife and 2,352 shares
held by Mr. Lockhart's wife.

(9) Includes 63 shares held by Mr. Lorbecki's wife.

(10) Includes 105,495 shares held jointly with Mr. Ochman's wife, 88,116
unvested shares granted to Mr. Ochman pursuant to the Company's Recognition
Plan which may be voted by Mr. Ochman, 15,034 shares allocated to Mr. Ochman
pursuant to the Company's ESOP, 6,325 shares held by Mr. Ochman's wife,
3,232 shares held in trust for the benefit of Mr. Ochman's grandchildren and
87,977 shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.

(11) Includes 10,120 shares held by Mr. Stiles' wife.

15
<PAGE>

(12) Includes 12,650 shares held jointly with Mr. Sharp's wife, 8,133 shares
held by Mr. Sharp's wife, 35,245 unvested shares granted to Mr. Sharp
pursuant to the Company's Recognition Plan which may be voted by Mr. Sharp,
15,454 shares allocated to Mr. Sharp pursuant to the Company's ESOP and
59,188 shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.

(13) Includes 65,120 shares allocated to all executive officers as a group
pursuant to the Company's ESOP, 293,701 unvested shares granted to all
executive officers and directors as a group pursuant to the Company's
Recognition Plan which may be voted by such persons, and 680,697 shares
which may be acquired by all executive officers and directors as a group
upon the exercise of stock options exercisable within 60 days of the Voting
Record Date.

ADDITIONAL INFORMATION WITH RESPECT TO THE COMPANY'S DIRECTORS, DIRECTOR
NOMINEES AND EXECUTIVE OFFICERS

The following table sets forth information with respect to those directors,
nominees for director and executive officers of the Company who have purchased
Common Stock of the Company in the two years preceding the date of this Proxy
Statement. The table below does not include information with respect to stock
grants made under the Company's Recognition Plan nor shares that have been
allocated under the Company's ESOP, which information is set forth in the
preceding table.

<TABLE>
<CAPTION>
NAME DATE PURCHASED AMOUNT PURCHASED
- ------------------------------------------------------------------------------ -------------- -----------------
<S> <C> <C>
Joseph M. Ochman, Sr.......................................................... 3/29/95 6,325
3/31/95 3,795
10/25/95 12,650
4/26/96 4,600
6/28/96 5,750
12/10/96 575
1/6/97 276
3/11/97 58,884(1)
6/20/97 500
Thomas J. Auchter............................................................. 4/17/95 18,975
John A. Borden................................................................ 2/26/96 253
Matthew J. Kennedy............................................................ 4/25/95 253
6/21/96 1,150
Albert D. Stiles.............................................................. 9/20/95 2,530
11/3/95 15,180
1/29/96 25,300
Arthur J. Abramowitz.......................................................... 5/21/96 575
</TABLE>

- ------------------------

(1) Represents the exercise of stock options.

16
<PAGE>

None of the holdings of the directors, director nominees and executive
officers of the Company set forth herein are held of record but not
beneficially, nor are any of such securities owned beneficially by associates of
such persons, except as set forth herein. As of the date of this Proxy
Statement, no director, director nominee or executive officer of the Company has
purchased the Company's Common Stock with funds that were borrowed or otherwise
obtained for the purpose of acquiring such shares of Common Stock. However, Mr.
Lockhart (who is retiring) holds his shares in a brokerage account which had an
outstanding margin balance of $62,897 as of May 31, 1997. As of the date hereof,
no director, director nominee or executive officer of the Company has sold any
shares of the Company's Common Stock in the two years preceding the date of this
Proxy Statement, except that Lorraine O'Hara and Richard G. Sharp sold 2,290 and
4,581 shares, respectively, on January 22, 1996, and 2,290 and 4,582 shares,
respectively, on February 20, 1997. The sales by Ms. O'Hara and Mr. Sharp were
made to fund certain tax withholding obligations owed by them. In addition, on
November 15, 1995 Mr. Abramowitz sold 2,898 shares and on September 12, 1996
Paul W. Gleason exercised a stock option for 5,750 shares and sold such shares.

In addition, no director, director nominee or executive officer of the
Company is or was during the past year a party to any contracts, arrangements or
understandings with any person with respect to the Common Stock of the Company
other than in connection with the Company's stock benefit plans, and no
director, director nominee or executive officer of the Company beneficially
owns, directly or indirectly, any securities of the Association, the Company's
wholly-owned subsidiary. Other than as set forth herein, no director, director
nominee or executive officer of the Company or any associates thereof has any
arrangement or understanding with any person: (i) with respect to any future
employment by the Company or its affiliates; or (ii) with respect to any future
transactions to which the Company or any of its affiliates will or may be a
party. Finally, no director, director nominee or executive officer has, during
the past 10 years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).

For purposes of the solicitation of proxies by the Company's Board of
Directors, the business address of each of the Company's directors, director
nominees and executive officers is IBS Financial Corp., 1909 Route 70 East,
Cherry Hill, New Jersey 08003.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth a summary of certain information concerning
the compensation paid by the Company and the Association for services rendered
in all capacities during the three years ended September 30, 1996 to the
President and Chief Executive Officer of the Company and the Association and
each other executive officer of

17
<PAGE>
the Company and its subsidiaries whose total compensation during the fiscal year
exceeded $100,000.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AWARDS PAYOUTS
OTHER ----------------------- -------
NAME AND FISCAL ANNUAL STOCK NUMBER OF LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) GRANTS(4) OPTIONS(5) PAYOUTS COMPENSATION
- ------------------------------ ---- --------- --------- ---------- ---------- ----------- ------- ------------
Joseph M. Ochman, Sr. 1996 $ 523,882 $ -- -- $ -- -- -- $311,338(6)
President and Chief 1995 482,750 90,000 -- $1,204,506 367,157 -- 86,896
Executive Officer 1994 453,875 89,000 -- -- -- -- 46,885

Richard G. Sharp 1996 $ 119,060 $ -- -- $ -- -- -- $ 65,682(6)
Executive Vice 1995 113,295 18,000 -- $ 481,794 147,969 -- 10,676
President and CFO........... 1994 107,809 17,200 -- -- -- -- --
</TABLE>

- ------------------------

(1) Includes $16,000, $62,500 and $57,000 accrued on behalf of Mr. Ochman
pursuant to a deferred compensation plan in fiscal 1996, 1995 and 1994,
respectively.

(2) The Company did not pay its senior executive officers a bonus for fiscal
1996. The fiscal 1995 bonus was paid in September 1995 for services rendered
in fiscal 1995. The fiscal 1994 bonus was paid in September 1994 for
services rendered in fiscal 1994.

(3) Does not include amounts attributable to miscellaneous benefits received by
the named executive officers. In the opinion of management of the
Association, the costs to the Association of providing such benefits to each
named executive officer during the year ended September 30, 1996 did not
exceed the lesser of $50,000 or 10% of the total of annual salary and bonus
reported for the individual.

(4) Represents the grant of 146,863 and 58,744 shares of restricted Common Stock
to Messrs. Ochman and Sharp, respectively, pursuant to the Company's
Recognition Plan, which were deemed to have had the indicated value at the
date of grant. The restricted Common Stock awarded to Messrs. Ochman and
Sharp which had not yet vested as of September 30, 1996 had a fair market
value of $1.5 million and $608,000 at September 30, 1996, respectively,
based on the $12.93 per share closing market price on such date. The awards
vest 20% each year beginning January 19, 1996, and dividends are paid on the
restricted shares.

(5) Consists of stock options granted pursuant to the Company's 1995 Stock
Option Plan which are exercisable at the rate of 20% each year beginning
January 19, 1996.

(6) Includes $27,000 for fees paid for service as Chairman of the Board of
Directors, $9,510 in premiums paid on certain life insurance policies,
$205,007 of stock units allocated to Mr. Ochman's account under the
Company's Excess Benefit Plan, $1,900 for fees paid for service as trustee
of the Association's pension plan to Mr. Ochman in fiscal 1996, and an
$1,800 annual retainer for service as a director of the Company. Also
includes $66,121 and $65,682 for 5,191 shares and 5,156 shares

18
<PAGE>
allocated on behalf of Messrs. Ochman and Sharp, respectively, in fiscal
1996 under the Company's ESOP.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Review Committee of the Board of Directors recommends
compensation for the Association's employees, which is then ratified by the full
Board of Directors. During the fiscal year ended September 30, 1996, the members
of the Committee were Messrs. Borden (Chairman), Gleason and Stiles. During
fiscal 1996, no member of the Compensation Review Committee was a former or
current full-time officer or employee of the Company or the Association. The
report of the Compensation Review Committee with respect to compensation for the
Chief Executive Officer and all other executive officers for the fiscal year
ended September 30, 1996 is set forth below.

REPORT OF THE COMPENSATION REVIEW COMMITTEE

The goals of the Committee are to assist the Company and its subsidiary in
attracting and retaining qualified management, motivating executives to achieve
performance goals established by the Board of Directors, and to ensure that the
financial interests of the Company's management and shareholders are closely
aligned. The financial results of the Company are a direct function of the
achievement of the goals set forth in the Company's long-term strategic plan.
The executive officers are compensated for their contribution to the achievement
of these goals, which benefits the Company's stockholders, customers and
employees as well as the communities in which the Association operates.

Prior to fiscal 1995, the compensation of the executive officers consisted
primarily of salary, bonus and deferred compensation. When the Association was a
mutual institution, the most effective way of rewarding the executive officers
for the Association's success was through the payment of bonuses. Following the
successful completion of the Association's conversion from mutual to stock form
in October 1994 (the "Conversion"), the Company adopted an ESOP for the benefit
of all full-time employees and a Stock Option Plan and a Recognition Plan for
the benefit of directors, officers and key employees. During fiscal 1995, the
Committee used these stock benefit plans to supplement cash compensation and
provide appropriate incentives to the executive officers and other key
employees. The Committee further believes that these stock-based incentives
cause the interests of the executive officers to be more closely aligned with
those of the stockholders of the Company. The Stock Option Plan and the
Recognition Plan were approved by the Company's stockholders at the 1995 annual
meeting, and stock options and Recognition Plan awards were granted to Mr.
Ochman and other executive officers in January 1995 in the amounts disclosed to
stockholders in the proxy statement for the 1995 annual meeting.

The Committee meets near the end of each fiscal year to determine whether
any bonuses or other incentive compensation should be paid for that year and to
set the base salaries for the following fiscal year. In making such
determinations, the Committee reviews the most recent operating results then
available (generally through the June 30 immediately preceding the meeting) and
other data as of the latest available date. The Committee

19
<PAGE>
considered the following factors in setting the bonuses of the Chief Executive
Officer and the other executive officers of the Company for fiscal 1995 and the
base salaries of such persons for fiscal 1996:
(1) The overall performance of the Company for the 12 months ended June 30,
1995. The Company's accomplishments are best illustrated by comparing it
with other thrifts of similar or comparable size in the general
MidAtlantic--New England area on the basis of the following factors:

<TABLE>
<CAPTION>
THE COMPANY PEER GROUP
--------------- -------------
<S> <C> <C>
Ratio of compensation and benefits expense to total revenue....... 26.38% 30.73%
Return on average assets.......................................... 1.28% .78%
Return on average equity.......................................... 6.72% 8.83%
Non-interest expense to average assets............................ 1.55% 2.28%
</TABLE>

Source: SNL Securities, L.P.
(2) The individual performance appraisals of the officers and their
contributions toward the Company's overall profitability;
(3) The compensation paid to executive officers at other financial institutions
comparable in size in the Company's general market area, as shown by
compensation surveys; and
(4) The performance of the Company's Common Stock from the completion of its
initial public offering in mid-October 1994, as shown in the performance
graph immediately following this section.

The Company's net income increased by $4.4 million or 89.9% from the 12
months ended June 30, 1994 to the 12 months ended June 30, 1995, and the market
value of the Company's Common Stock increased by over 38.5% on a per share basis
(including cash dividends) from the Association's Conversion in October 1994
through June 30, 1995. Based on the Company's record performance and the
Company's favorable comparison to the peer group on three of the four ratios set
forth in the table in clause (1) above, the Committee believed it was
appropriate to pay a bonus to Mr. Ochman for fiscal 1995 and to increase his
salary by 4.3% for fiscal 1996 to a base amount of $509,620, effective October
1995.

In fiscal 1996, the Company eliminated all bonuses to senior management,
including Messrs. Ochman and Sharp). This action was taken in light of the
decline in the Company's net income from fiscal 1995 to fiscal 1996. In
addition, in the third quarter of fiscal 1996 the Board of Directors of the
Company determined that the fees paid to Mr. Ochman as Chairman of the Board
were in effect an integral part of his salary, and the Board decided

20
<PAGE>

to eliminate these fees and to increase Mr. Ochman's base salary by a comparable
amount, which increased the base amount to $548,000. Also in the third quarter,
the Board split Mr. Ochman's employment agreement with both the Company and the
Association into two separate agreements--one with the Company and one with the
Association. The main reason for the change was to have the new agreement with
the Company provide that Mr. Ochman would receive the full benefit of his stock
options and Recognition Plan awards in the event a change in control occurred
prior to such options and awards becoming fully vested. See "--Employment
Agreements." In the following quarter, the Board of Directors of the Company
adopted a resolution expressing its intent to not grant further stock options or
Recognition Plan shares to those executive officers (including Messrs. Ochman,
who was at the limits set forth in the plans, and Sharp) who received grants
when the Company's Stock Option Plan and Recognition Plan were approved by
stockholders in January 1995. At September 30, 1996, there were 117,210 and 0
shares, respectively, available for future grant under the Stock Option Plan and
the Recognition Plan, assuming no outstanding grants are forfeited or expire. In
this regard, the Committee notes that the stock options and Recognition Plan
shares granted in fiscal 1995 vest over a five-year period. As an additional
cost savings measure and in light of the Company's ESOP, in fiscal 1996 the
Association terminated its Retirement Plan for employees and the related
agreement for Mr. Ochman.

At the end of fiscal 1996, the Committee set the base salaries of the
executive officers for fiscal 1997 and overall provided nominal increases. Mr.
Ochman received no increase, Mr. Sharp received a 2.1% increase, and all seven
executive officers as a group received an aggregate increase of $20,852 or 2.1%.
The Committee reviewed the same factors as it had the prior year and noted the
decline in the Company's net income in fiscal 1996. In addition, for the 12
months ended June 30, 1996, the Company compared favorably to the peer group on
two of the four ratios set forth in the following table, as compared to three of
the four ratios the preceding year:

<TABLE>
<CAPTION>
THE COMPANY PEER GROUP
--------------- -------------
<S> <C> <C>
Ratio of compensation and benefits expense to total revenue....... 33.43% 31.37%
Return on average assets.......................................... 1.05% .97%
Return on average equity.......................................... 4.99% 10.48%
Non-interest expense to average assets............................ 1.82% 2.21%
</TABLE>

Source: SNL Securities, L.P.

In reviewing Mr. Ochman's compensation compared to the compensation of other
chief executive officers, the committee reviewed several surveys and determined
that the most relevant comparison was with financial institutions in New Jersey
with assets of $500 million or more. The 1995 survey showed an average base
salary and bonus of $345,500, with a high of $666,600. The average base salary
and bonus increased to $384,147 in the

21
<PAGE>
1996 survey, with a high of $599,000. As noted above, Mr. Ochman did not receive
a bonus in fiscal 1996. In placing Mr. Ochman's compensation in both fiscal 1995
and 1996 in between the average and the high amounts, the committee recognized
Mr. Ochman's outstanding service and performance to the Company for a quarter of
a century during a most difficult period for financial institutions and
recognized the leadership qualities and expertise provided by him as President
and Chief Executive Officer since 1971.

As a result of the above actions, Mr. Ochman's combined salary, bonus and
fees decreased by $56,000 or 9.2% from fiscal 1995 to fiscal 1996 and Mr. Ochman
received no long-term compensation in fiscal 1996, as compared to 367,157 stock
options and 146,863 restricted Recognition Plan shares in fiscal 1995. The
Committee believes that the decline in Mr. Ochman's total compensation in fiscal
1996 is substantially greater than the decline in the Company's performance in
fiscal 1996, and the Committee notes that fiscal 1995 was a record year for the
Company in terms of net income.

Based on the first half of fiscal 1997, the Company currently does not
anticipate paying any bonuses to Mr. Ochman or the other executive officers for
fiscal 1997, and as of May 31, 1997 no amount has been accrued for bonuses to
executive officers. In the absence of any subsequent increase or bonus payment
for fiscal 1997, neither of which is presently anticipated, Mr. Ochman's
combined salary, bonus and fees will decrease by $4,700 or .8% in fiscal 1997,
which will be the second consecutive year of a decrease in Mr. Ochman's cash
compensation.

As noted above, several stock benefit plans were implemented in fiscal 1995.
The allocation of stock under the ESOP to the Chief Executive Officer's account
as well as to the accounts of all employees was calculated in accordance with
the Employee Retirement Income Security Act of 1974, and such allocations will
continue on an annual basis. The stock allocated to these accounts will only be
distributed upon the employees' retirement, death or disability. The stock
options granted to Mr. Ochman, as with all employees, become exercisable at the
rate of 20% per year commencing on the first annual anniversary of the date of
grant. Because the stock options become valuable only as the per share price of
the Company's Common Stock appreciates in value, they are designed to cause Mr.
Ochman's interests (and those of all employees) in the future performance and
success of the Company to be aligned closely with the interests of the Company's
stockholders. The Recognition Plan shares granted to Mr. Ochman are primarily in
recognition for his past performance and service to the Association since 1971,
and these shares as well as the Recognition Plan shares granted to all other
persons also vest at the rate of 20% per year commencing on the first annual
anniversary of the date of grant. Because the Recognition Plan shares also
increase in value as the per share price of the Company's Common Stock
increases, this grant was also designed to cause Mr. Ochman's interests (and
those of all other recipients) in the future performance of the Company to be
aligned closely with the interests of the Company's stockholders.

The Committee considered the stock-based benefits allocated or granted in
fiscal 1995 to be appropriate in light of the Company's increase in stockholder
value. The market value of the Common Stock increased by over 75% on a per share
basis (including cash

22
<PAGE>
dividends) from the Association's conversion from mutual to stock form in
October 1994 through September 30, 1996. This performance is further highlighted
on the following Performance Graph, which compares the Company's stock
performance with the stock performance of other companies as measured by broad
indices.

The peer groups used for purposes of the stock performance graph are broader
both geographically and in terms of number of institutions in comparison to the
peer group for compensation purposes. In the performance graph immediately
following this section, the Company has compared the performance of its stock
price to 73 financial institutions of comparable size located throughout the
country, to all financial institutions included in the SNL Thrift Index
(regardless of size or location), and to all companies included in the Nasdaq
Stock Market Index (regardless of industry, size or location), as the Company
believes that these indexes are relevant from a stock investment standpoint. As
noted above, for purposes of determining compensation, the committee believes
that the most relevant comparison was with the 15 financial institutions in New
Jersey with assets of $500 million or more.

Following review and approval by the Committee, all issues pertaining to
executive compensation are submitted to the full Board of Directors for their
approval. Mr. Ochman does not participate in the review of his compensation.

John A. Borden, Chairman
Paul W. Gleason
Albert D. Stiles, Jr.

23
<PAGE>
PERFORMANCE GRAPH

The following graph demonstrates comparison of the cumulative total returns
for the Common Stock of the Company, the SNL Securities $500 million to $1
Billion Thrift Asset Size Index, the SNL Thrift Index and the Nasdaq Stock
Market Index since the Company's initial public offering in October 1994.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
IBS FINANCIAL CRP-NJ NASDAQ TOTAL RETURN SNL THRIFT INDEX SNL $500M-$1B THRIFT
<S> <C> <C> <C> <C>
10/13/94 100.00 100.00 100.00 100.00
03/31/95 123.07 107.23 102.77 106.38
09/30/95 172.06 137.43 134.83 134.03
03/31/96 161.23 145.60 143.74 140.51
09/30/96 168.23 163.08 163.23 157.87
</TABLE>

The above graph represents $100 invested in the Company's initial public
offering of Common Stock on October 13, 1994 at $7.91 per share (as adjusted for
stock splits). The Common Stock commenced trading on the Nasdaq National Market
on October 13, 1994. The cumulative total returns include the payment of cash
dividends by the Company.

24
<PAGE>
STOCK OPTIONS

The following table discloses certain information regarding the options held
at September 30, 1996 by the Chief Executive Officer and each other named
executive officer. No options were exercised by such persons during the year
ended September 30, 1996.

<TABLE>
<CAPTION>
NUMBER OF OPTIONS AT VALUE OF OPTIONS AT
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
-------------------------- --------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
Joseph M. Ochman, Sr...................................... 73,431 293,726 $ 347,680 $ 1,390,729
Richard G. Sharp.......................................... 29,594 118,375 140,122 560,481
</TABLE>

- ------------------------

(1) Based on a per share market price of $12.93 at September 30, 1996.

DIRECTORS' FEES

Directors of the Company received an annual fee of $2,400 from the Company
during fiscal 1996. Directors of the Association are paid a monthly fee for
attendance at each Board of Directors' meeting. The amount of the fee was $1,325
during fiscal 1996. Two paid absences are permitted. For service on the
Executive Committee, which generally meets once a month, directors received fees
of $575 per meeting attended in fiscal 1996. For service on the General Loan
Committee, which generally meets twice each month, directors received fees of
$500 per meeting attended in fiscal 1996. For all other meetings of committees,
which meet as needed, directors received fees of $475 per meeting attended
during fiscal 1996. Those directors who serve as trustees of the Association's
Retirement Plan receive a fee, which amounted to $475 per quarter during fiscal
1996. In lieu of receiving other directors' fees, the Chairman of the Board of
Directors received a fee for service as Chairman, which amounted to $9,000 per
quarter through June 30, 1996, at which time such fee was terminated.

EMPLOYMENT AGREEMENTS

The Company and the Association (the "Employers") during October 1994
entered into employment agreements with each of Messrs. Ochman, Sharp,
Chigounis, Cosenza and Ms. O'Hara. The Employers agreed to employ Messrs. Ochman
and Sharp for a term of three years and the other officers for a term of two
years, in each case in their current respective positions. The agreements with
Messrs. Chigounis and Cosenza and Ms. O'Hara expired in October 1996. On April
22, 1996, Mr. Ochman's joint agreement with both the Company and the Association
was replaced by two separate three-year employment

25
<PAGE>
agreements--one with the Company and one with the Association. Mr. Ochman's new
agreements are substantially similar to his prior agreement, except that his
agreement with the Company includes different provisions regarding Section 280G
of the Internal Revenue Code of 1986 (the "Code") as described below. The
compensation and expenses of Messrs. Ochman and Sharp (the "Executives") are
paid by the Company and the Association in the same proportion as the time and
services actually expended by the Executives on behalf of each respective
Employer. The term of Mr. Ochman's employment agreements with the Company and
the Association shall be extended each year for a successive additional one-year
period upon approval of the respective Board of Directors unless Mr. Ochman
elects, not less than 30 days prior to the annual anniversary date, not to
extend the employment term.

The Executives' employment agreements are terminable with or without cause
by the respective Employer(s). The Executive has no right to compensation or
other benefits pursuant to the employment agreement for any period after
voluntary termination or termination by the respective Employer(s) for cause,
disability, retirement or death, provided, however, that (i) in the event that
(a) the Executive terminates his employment because of failure of the respective
Employer(s) to comply with any material provision of the employment agreement or
the respective Employer(s) change the Executive's title or duties, or (b) the
employment agreement is terminated by the respective Employer(s) other than for
cause, disability, retirement or death or by the Executive as a result of
certain adverse actions which are taken with respect to the Executive's
employment following a Change in Control of the Company, as defined, the
Executive will be entitled to a cash severance amount equal to three times the
Executive's base salary, and (ii) Mr. Ochman's employment agreements provide for
certain death, disability and medical benefits as set forth below. In addition,
Mr. Ochman will be entitled to a continuation of benefits similar to those he is
receiving at the time of such termination for the remaining term of the
agreement or until he obtains full-time employment with another employer.

A Change in Control is generally defined in the employment agreements to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 25% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any two-year period without the
approval of at least two-thirds of the persons who were directors of the Company
at the beginning of such period.

Each employment agreement with the Association provides that if the payments
and benefits to be provided thereunder or otherwise upon termination of
employment are deemed to constitute a "parachute payment" within the meaning of
Section 280G of the Code, then such payments and benefits payable thereunder
shall be reduced, in the manner determined by the Executive, by the amount, if
any, which is the minimum necessary to result in no portion of the payments and
benefits being non-deductible by the Employers for federal income tax purposes.
Parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual

26
<PAGE>
compensation from the employer includible in the recipient's gross income during
the most recent five taxable years ending before the date on which a change in
control of the employer occurred. Recipients of parachute payments are subject
to a 20% excise tax on the amount by which such payments exceed the base amount,
in addition to regular income taxes, and payments in excess of the base amount
are not deductible by the employer as compensation expense for federal income
tax purposes. Under Mr. Ochman's employment agreement with the Company, Mr.
Ochman could receive payments and benefits that constitute a parachute payment,
in which event the Company has agreed to pay the 20% excise tax that would
otherwise be owed by Mr. Ochman and such additional amounts as may be necessary
to reimburse Mr. Ochman for the state and federal income and excise taxes on
such amounts. Because the amount of the payments and benefits that could
constitute a parachute payment is dependent upon the timing, price and structure
of any change in control that may occur in the future, it is not possible at
this time to quantify the dollar impact of this change in Mr. Ochman's
employment agreement.

Consistent with past practice, Mr. Ochman is provided with the use of an
automobile and the Employers pay the annual membership dues at two clubs. Under
Mr. Ochman's employment agreements, the Employers will provide coverage for Mr.
Ochman and his spouse under the Employers' health insurance plan until Mr.
Ochman attains age 70. In the event of Mr. Ochman's death or disability during
the term of the agreements, his spouse, estate, legal representative or named
beneficiaries will receive payments equal to the balance due to Mr. Ochman for
the remaining term of the agreements and Mr. Ochman's spouse will continue to be
covered under the Employers' health insurance plan for three years.

Although the above-described employment agreements could increase the cost
of any acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.

BENEFITS

RETIREMENT PLAN. The Association previously maintained a defined benefit
pension plan ("Retirement Plan") for all full time employees who had attained
the age of 21 years and had completed one year of service with the Association.
In general, the Retirement Plan provided for annual benefits payable monthly
upon retirement at age 65 in an amount equal to between 1.35% and 2.00% of an
employee's average earnings, which was the average compensation paid to him or
her over the five consecutive years of service which produced the highest
average during the 10 years preceding the participant's retirement or
termination of employment, excluding overtime, commissions and bonuses,
multiplied by his or her years of service (to a maximum of 35 years). Under the
Retirement Plan, an employee's benefits were fully vested after five years of
service. During the year ended September 30, 1996, the Association's pension
expense under the Retirement Plan amounted to $291,000.

27
<PAGE>

At September 30, 1996, Messrs. Ochman and Sharp had 27 and 24 years,
respectively, of credited service under the Retirement Plan. The Association
terminated the Retirement Plan effective September 1, 1996 and provided the
participants with their benefits in March 1997. Messrs. Ochman and Sharp
received in the first half of 1997 cumulative benefits under the Retirement Plan
in lump sum distributions of approximately $1.15 million and $543,000,
respectively, which cumulative benefits reflect 27 and 24 years, respectively,
of credited service.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT. In September 1987, the
Association entered into a Supplemental Executive Retirement Agreement ("SERP")
with Mr. Ochman in order to supplement the retirement benefits to be received by
him pursuant to the Association's Retirement Plan. Under the SERP, upon
retirement from the Association after attaining age 65, Mr. Ochman shall be
entitled to receive an annual supplemental retirement benefit equal to 1.35% of
his final average earnings, as defined in the Retirement Plan, up to the social
security covered compensation, plus 2% of final average earnings in excess of
such amount multiplied by Mr. Ochman's years of service (to a maximum of 35
years), and reduced by the benefit payable under the Retirement Plan. The
obligation to make payments pursuant to the SERP was unfunded, and the
Association annually credited to an account an amount which was projected to be
sufficient to defray the Association's obligation under the SERP. During the
year ended September 30, 1996, the Association recognized an expense of $824,000
in connection with the SERP. The Association terminated the SERP effective
September 1, 1996 and provided cumulative SERP benefits of approximately $1.7
million to Mr. Ochman in March 1997. This amount represents cumulative benefits,
including the earnings thereon, since 1987.

DEFERRED COMPENSATION AGREEMENT. In January 1977, the Association and Mr.
Ochman entered into a deferred compensation agreement which was restated as of
December 1988 (the "Agreement"), pursuant to which Mr. Ochman is permitted to
defer a discretionary percentage of the total compensation otherwise payable to
him. The payment of deferred compensation pursuant to the Agreement is unfunded,
and the Association credits to a deferred compensation account the amounts of
compensation deferred by Mr. Ochman. Amounts held pursuant to the Agreement are
required to be paid to Mr. Ochman within 60 days following the date of the
termination of his employment with the Association, or as may be permitted at an
earlier date by the Board of Directors with Mr. Ochman abstaining from voting.
Mr. Ochman deferred $16,000 of compensation during fiscal 1996. The Association
and Mr. Ochman terminated the agreement in January 1996, at which time the
remaining cumulative deferred amount of $202,000 was distributed to Mr. Ochman.

LIFE INSURANCE ARRANGEMENTS. In October 1981, the Association and Mr.
Ochman entered into a supplemental deferred compensation agreement (the
"Supplemental Agreement") pursuant to which the Association agreed to maintain
certain life insurance policies on Mr. Ochman's life with an aggregate face
amount of approximately $389,600 until Mr. Ochman's retirement after having
attained the age of 65. Life insurance policies that were previously owned by
the Association's Retirement Plan were purchased from the

28
<PAGE>
Retirement Plan by the Association pursuant to the Supplemental Agreement for an
amount equal to their then cash value. The policies were amended to provide that
the beneficiary of the policies shall be Mr. Ochman's spouse and her heirs, and
the Association agreed to continue to pay the required premium payments. During
the year ended September 30, 1996, the Association paid total premiums of $9,510
with respect to these insurance contracts. The Supplemental Agreement provides
that, following Mr. Ochman's retirement or disability, the Association will
commence payment to Mr. Ochman of the cash value of the insurance contracts in
monthly installments over a period of ten years.

EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Company has established the
ESOP for employees of the Company and the Association. Full-time employees of
the Company and the Association who have been credited with at least 1,000 hours
of service during a twelve month period and who have attained at least age 21
are eligible to participate in the ESOP.

In connection with the mutual to stock conversion of the Association, the
ESOP borrowed funds from the Company to purchase 8% of the Common Stock issued
in the conversion. The loan to the ESOP is being repaid principally from the
Company's and the Association's contributions to the ESOP over a period of 10
years, and the collateral for the loan is the Common Stock purchased by the
ESOP. The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired through the purchase of outstanding shares
in the market or from individual stockholders, upon the original issuance of
additional shares by the Company or upon the sale of treasury shares by the
Company. Such purchases, if made, would be funded through additional borrowings
by the ESOP or additional contributions from the Company. The timing, amount and
manner of future contributions to the ESOP will be affected by various factors,
including prevailing regulatory policies, the requirements of applicable laws
and regulations, and market conditions.

Shares purchased by the ESOP with the proceeds of the loan are held in a
suspense account and released on a pro rata basis as debt service payments are
made. Discretionary contributions to the ESOP and shares released from the
suspense account are allocated among participants on the basis of compensation.
Forfeitures are reallocated among remaining participating employees and may
reduce any amount the Company might otherwise have contributed to the ESOP.
Participants will vest in their right to receive their account balances within
the ESOP at the rate of 20% per year, starting with completion of their third
year of service. In the case of a "change in control," as defined, however,
participants will become immediately fully vested in their account balances.
Benefits may be payable upon retirement, early retirement, disability or
separation from service. The Company's contributions to the ESOP are not fixed,
so benefits payable under the ESOP cannot be estimated. Messrs. Ochman, Auchter
and Borden serve as trustees of the ESOP.

The Board of Directors of the Company has authorized an excess benefit plan
("EBP") to provide certain additional retirement benefits to Mr. Ochman. The EBP

29
<PAGE>

provides that Mr. Ochman shall receive an annual allocation of stock units
representing shares of Common Stock of the Company. The number of stock units
allocable to his benefit each year shall be equal to the difference between the
annual allocation of shares that would have been made to him in the ESOP,
without regard to the $150,000 limitation as set forth in Section 401(a)(17) of
the Code, minus the number of shares actually allocated to his ESOP account in a
particular year. The Company allocated 15,849 stock units having an aggregate
value of $205,007 as of September 30, 1996 to the EBP in fiscal 1996.

TRANSACTIONS WITH CERTAIN RELATED PERSONS

The Association's policy provides that all loans made by the Association to
its directors and officers are made in the ordinary course of business, are made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons and
do not involve more than the normal risk of collectability or present other
unfavorable features. During the fiscal year ended September 30, 1996, none of
the Association's directors and executive officers had aggregate loan balances
in excess of $60,000, and no such individual had engaged in any transaction with
the Association with a value in excess of $60,000.

Arthur J. Abramowitz, a director nominee, is a stockholder and director in
Davis, Reberkenny & Abramowitz, P.C., which serves as general counsel to the
Association. The amount of fees paid by the Association to the law firm were
less than 5% of the law firm's gross revenues for the firm's last full fiscal
year.

RATIFICATION OF APPOINTMENT OF AUDITORS

The Board of Directors of the Company has appointed Deloitte & Touche
L.L.P., independent certified public accountants, to perform the audit of the
Company's financial statements for the year ending September 30, 1997, and
further directed that the selection of auditors be submitted for ratification by
the stockholders at the Annual Meeting.

The Company has been advised by Deloitte & Touche L.L.P. that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Deloitte & Touche L.L.P. will have one
or more representatives at the Annual Meeting who will have an opportunity to
make a statement, if they so desire, and who will be available to respond to
appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE L.L.P. AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 1997.

30
<PAGE>
STOCKHOLDER PROPOSALS

Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is expected to be held on or about August 4, 1998, must be
received at the principal executive offices of the Company, 1909 East Route 70,
Cherry Hill, New Jersey 08003, Attention: Chiara Eisennagel, Corporate
Secretary, no later than March 5, 1998. If such proposal is in compliance with
all of the requirements of Rule 14a-8 under the 1934 Act, it will be included in
the proxy statement and set forth on the form of proxy issued for such annual
meeting of stockholders. It is urged that any such proposals be sent by
certified mail, return receipt requested.

Stockholder proposals which are not submitted for inclusion in the Company's
proxy materials pursuant to Rule 14a-8 under the 1934 Act may be brought before
an annual meeting pursuant to Article 9.4 of the Company's Certificate of
Incorporation, which provides that business at an annual meeting of stockholders
must be (a) properly brought before the meeting by or at the direction of the
Board of Directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not later than 60 days prior to the anniversary date of the immediately
preceding annual meeting. A stockholder's notice must set forth as to each
matter the stockholder proposes to bring before an annual meeting (a) a brief
description of the business desired to be brought before the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business and, to the extent known, any other stockholders known
by such stockholder to be supporting such proposal, (c) the class and number of
shares of Common Stock of the Company which are beneficially owned by the
stockholder and, to the extent known, by any other stockholders known by such
stockholder to be supporting such proposal, and (d) any financial interest of
the stockholder in such business.

ANNUAL REPORTS

A copy of the Company's Annual Report to Stockholders for the year ended
September 30, 1996 either preceded or accompanies this Proxy Statement. Such
annual report is not part of the proxy solicitation materials.

UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1996 AND A LIST OF THE EXHIBITS THERETO
REQUIRED TO BE FILED UNDER THE 1934 ACT. SUCH WRITTEN REQUESTS SHOULD BE
DIRECTED TO CHIARA EISENNAGEL, CORPORATE SECRETARY, IBS FINANCIAL CORP., 1909
EAST ROUTE 70, CHERRY HILL, NEW JERSEY 08003. THE FORM 10-K IS NOT PART OF THE
PROXY SOLICITATION MATERIALS.

31
<PAGE>
OTHER MATTERS

Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not aware
of any business that may properly come before the Annual Meeting other than the
matters described above in this Proxy Statement. However, if any other matters
should properly come before the meeting, it is intended that the proxies
solicited hereby will be voted with respect to those other matters in accordance
with the judgment of the persons voting the proxies.

The Company may solicit proxies by mail, advertisement, telephone,
facsimile, telegraph and personal solicitation. Directors and executive officers
of the Company and the Association may solicit proxies personally or by
telephone without additional compensation. The Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy solicitation materials to the
beneficial owners of the Company's Common Stock.

The Company has retained D.F. King & Co., Inc., 77 Water Street, New York,
New York 10005, a professional proxy solicitation firm, to assist in the
solicitation of proxies and for related services. The Company will pay D.F. King
& Co., Inc. a fee of $30,000 and has agreed to reimburse it for its reasonable
out-of-pocket expenses. The Company has agreed to indemnify D.F. King & Co.,
Inc. and its controlling persons, officers, directors, employees and agents from
and against any and all losses, claims, damages, liabilities and expenses
relating to its engagement, including liabilities and expenses under the federal
securities laws, but excluding matters relating to the indemnified person's
negligence, bad faith or willful misconduct. Approximately 50 persons will be
used by D.F. King & Co., Inc. in its solicitation efforts.

The Company will bear the cost of soliciting proxies on behalf of the Board
of Directors of the Company. The cost of such solicitation, which includes the
fees of the Company's attorneys, solicitors, advertising, printing and mailing
and other costs incidental to the solicitation, including litigation fees and
expenses, cannot be stated with precision at this time. However, after excluding
the normal costs of solicitation for an election of directors in the absence of
a proxy contest, the Company estimates that the total expenditures relating to
this proxy solicitation will be approximately $550,000, of which approximately
$450,000 has been incurred as of May 31, 1997. Of the total estimate,
approximately $375,000 relates to fees and expenses necessitated by the refusal
of Mr. Seidman and his group to disclose the identities of their investors and
provide other information, which disclosure was not provided until the Company
was forced to sue Mr. Seidman and the other members of his group. See
"Litigation Against the Seidman Group."

32
<PAGE>
YOUR VOTE IS IMPORTANT! WE URGE YOU TO SIGN AND DATE THE ENCLOSED BLUE PROXY
----
CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

33
<PAGE>
IMPORTANT

Your vote is important. Regardless of the number of shares of IBS Financial
common stock you own, please vote as recommended by your Board of Directors by
taking these two simple steps:

1. PLEASE SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED BLUE PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.

2. PLEASE DO NOT RETURN ANY WHITE PROXY CARDS SENT TO YOU BY SEIDMAN.

IF YOU VOTED SEIDMAN'S PROXY CARD BEFORE RECEIVING YOUR IBS FINANCIAL BLUE
PROXY CARD, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE SIMPLY BY SIGNING, DATING
AND MAILING THE ENCLOSED BLUE PROXY CARD. THIS WILL CANCEL YOUR EARLIER VOTE
SINCE ONLY YOUR LATEST DATED PROXY CARD WILL COUNT AT THE ANNUAL MEETING.

If you own shares in the name of a brokerage firm, only your broker can vote
your shares on your behalf and only after receiving your specific instructions.
Please call your broker and instruct him/her to execute a BLUE card on your
behalf. You should also promptly sign, date and mail your BLUE card when you
receive it from your broker. Please do so for each separate account you
maintain.

You should return your BLUE proxy card at once to ensure that your vote is
counted. This will not prevent you from voting in person at the meeting should
you attend.

IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE
CALL D.F. KING & CO., INC., WHICH IS ASSISTING US, TOLL-FREE AT 1-800-714-3306.

<PAGE>

REVOCABLE PROXY

IBS FINANCIAL CORP.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF IBS
FINANCIAL CORP. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON AUGUST 4, 1997 AND AT ANY ADJOURNMENT THEREOF.

The undersigned, being a stockholder of the Company as of June 27, 1997,
hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held
at the Four Points Hotel (Sheraton), 1450 Route 70 East, Cherry Hill, New
Jersey, on Monday, August 4, 1997 at ________ __.m., Eastern Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes
that the undersigned would be entitled to cast, if then personally present,
as follows:

1. ELECTION OF DIRECTOR

/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as marked for all nominees listed
to the contrary below) below

Nominees for a four-year term: Thomas J. Auchter and Arthur J. Abramowitz

(INSTRUCTION: To withhold authority to vote for only one of the nominees,
write the name of the nominee in the space provided.)
_____________________________________

2. PROPOSAL to ratify the appointment of Deloitte & Touche L.L.P. as the
Company's independent auditors for the fiscal year ending September 30,
1997.

/ / FOR / / AGAINST / / ABSTAIN

In their discretion, the proxies are authorized to vote with respect to
approval of the minutes of the last meeting of stockholders, the election of
any person as a director if a nominee is unable to serve or for good cause
will not serve, matters incident to the conduct of the meeting, and upon such
other matters as may properly come before the meeting.

The Board of Directors recommends that you vote FOR the Board of
Directors' nominees listed above and FOR Proposal 2. Shares of common stock
of the Company will be voted as specified. IF NO SPECIFICATION IS MADE,
SHARES WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO
THE BOARD OF DIRECTORS, FOR PROPOSAL 2, AND OTHERWISE

<PAGE>

AT THE DISCRETION OF THE PROXIES. This proxy may not be voted for any person
who is not a nominee of the Board of Directors of the Company. THIS PROXY MAY
BE REVOKED AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING.

The undersigned hereby acknowledges receipt of a Notice of Annual Meeting
of the Stockholders of the Company called for August 4, 1997, a Proxy
Statement for the Annual Meeting and the 1996 Annual Report to Stockholders
(which may have been previously mailed).

Dated: _________________________, 1997

______________________________________

______________________________________
Signature(s)

PLEASE SIGN THIS EXACTLY AS YOUR
NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY,
PLEASE GIVE TITLE. WHEN SHARES ARE
HELD JOINTLY, ONLY ONE HOLDER NEED
SIGN.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.