<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ISB Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[ISB FINANCIAL CORPORATION LETTERHEAD]
March 17, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
ISB Financial Corporation. The meeting will be held at the main office of
Iberia Savings Bank located at 1101 East Admiral Doyle Drive, New Iberia,
Louisiana, on Wednesday, April 16, 1997 at 3:00 p.m., Central Time. The matters
to be considered by stockholders at the Annual Meeting are described in the
accompanying materials.
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 proxy card today
and return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in ISB Financial Corporation are
sincerely appreciated.
Sincerely,
/s/ LARRY G. MOUTON
Larrey G. Mouton
President and Chief Executive Officer
<PAGE>
ISB FINANCIAL CORPORATION
1101 E. Admiral Doyle Drive
New Iberia, Louisiana 70560
(318) 365-2361
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 16, 1997
-------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of ISB Financial Corporation (the "Company") will be held at the main
office of Iberia Savings Bank located at 1101 East Admiral Doyle Drive, New
Iberia, Louisiana, on Wednesday, April 16, 1997 at 3:00 p.m., Central Time, for
the following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect four directors for a three-year term expiring in 2000, and
until their successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Castaing,
Hussey & Lolan, L.L.P. as the Company's independent auditors for the fiscal year
ending December 31, 1997; and
(3) To consider a stockholder's proposal to amend the Company's Bylaws to
require that a majority of the members of its Board of Directors be legal
residents of Iberia Parish, Louisiana; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 10, 1997 as the voting record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ HENRY J. DAUTERIVE, JR.
Henry J. Dauterive, Jr.
Chairman of the Board
New Iberia, Louisiana
March 17, 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 RETURN THE ENCLOSED 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>
ISB FINANCIAL CORPORATION
-------------
PROXY STATEMENT
-------------
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1997
This Proxy Statement is furnished to holders of common stock, $1.00 par
value per share ("Common Stock"), of ISB Financial Corporation (the "Company"),
the parent holding company of Iberia Savings Bank ("Iberia Savings" or the
"Bank") and Jefferson Bank, Gretna, Louisiana ("Jefferson Bank"). Proxies are
being solicited on behalf of the Board of Directors of the Company to be used at
the Annual Meeting of Stockholders ("Annual Meeting") to be held at the main
office of the Bank located at 1101 East Admiral Doyle Drive, New Iberia,
Louisiana, on Wednesday, April 16, 1997 at 3:00 p.m., Central Time, and at any
adjournment thereof 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 March 17, 1997.
The 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 Castaing, Hussey & Lolan, L.L.P. for fiscal
1997 and against the stockholder's proposal regarding an amendment to the
Company's Bylaws. The proxy solicited hereby also confers authority upon the
Board of Directors, as proxy, to exercise discretionary authority and vote in
accordance with their best judgment with respect to, among other things, matters
which they do not know, a reasonable time prior to the distribution of this
Proxy Statement, are to be presented at the Annual Meeting. 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 (through
Guyton H. Watkins, Secretary, ISB Financial Corporation); (ii) submitting a
duly-executed proxy 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.
VOTING
Only stockholders of record at the close of business on March 10, 1997
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 7,001,260 shares of Common Stock issued and
outstanding and the Company had
2
<PAGE>
no other class of equity securities outstanding. 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. Abstentions are considered in determining the
presence of a quorum but will not affect the plurality vote required for the
election of directors. The affirmative vote of a majority of the total votes
present in person and by proxy is required to ratify the appointment of the
independent auditors. The affirmative vote of the holders of a majority of
the shares entitled to vote in the election of directors is required to
approve the stockholder's proposal. Under rules of the New York Stock
Exchange, the proposal for ratification of the auditors 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, accordingly, there will be no "broker non-votes" with
respect to the ratification of independent auditors. The stockholder's
proposal, however, is considered a "non-discretionary" item and brokerage
firms which have received no instructions from their clients will have no
discretion with respect to voting on such item.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR
AND EXECUTIVE OFFICERS
Election of Directors
The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes as nearly equal in number as the
then total number of directors constituting the Board of Directors permits. The
directors shall be elected by the stockholders of the Company for staggered
terms, or until their successors are elected and qualified.
At the Annual Meeting, stockholders of the Company will be asked to elect
one class of directors, consisting of four directors, for a three-year term
expiring in 2000, and until their successors are elected and qualified.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption. Each nominee currently
serves as a director of the Company and of Iberia Savings.
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 any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
3
<PAGE>
The following tables present information concerning the nominees for
director of the Company, including tenure as a director. All of the
below-listed directors, with the exception of Karen L. Knight, also serve as
directors of Iberia Savings.
Nominees for Director for Three-Year Terms Expiring in 2000
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
- ------------------ -------- --------------------------- ---------
Cecil C. Broussard 65 Self-employed investor. 1967
Ray Himel 69 Owner of Himel Motor 1963
Supply Corp., a chain
of auto supply stores
located throughout
southern Louisiana;
Himel Marine, a marine
dealership located in
New Iberia and
Lafayette, Louisiana;
and several Ace
Hardware stores
located throughout
southern Louisiana.
Larrey G. Mouton 55 President and Chief 1985
Executive Officer of
the Company and Iberia
Savings. Mr. Mouton
also is a director of
Jefferson Bank.
Emile J. Plaisance, Jr. 69 Retired since August 1981
1992; previously
President of the Bank.
The Board of Directors recommends that you vote FOR election of the
nominees for director.
(Footnotes on page 7)
4
<PAGE>
DIRECTORS WHOSE TERMS ARE CONTINUING
Directors with a Term Expiring in 1998
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
- ------------------ -------- --------------------------- ---------
William R. Bigler 73 Retired. 1986
Henry J. Dauterive, Jr. 71 Retired since 1991; 1958
previously in private
practice as an attorney.
Louis J. Tamporello 75 Retired. 1980
Guyton H. Watkins 73 In private practice as 1959
of counsel to the law
firm of Landry &
Watkins in New Iberia,
Louisiana; counsel to
the Bank.
(Footnotes on page 7)
5
<PAGE>
Directors with a Term Expiring in 1999
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
- ------------------ -------- --------------------------- ---------
Elaine D. Abell 55 Attorney in private 1993(2)
practice in Lafayette,
Louisiana. Ms. Abell
also serves as a
director of Jefferson
Bank.
Harry V. Barton, Jr. 42 Certified public 1993(2)
accountant in private
practice in Lafayette,
Louisiana.
William H. Fenstermaker 48 President and Chief 1990(2)
Executive Officer of
C.H. Fenstermaker and
Associates, Inc.,
Lafayette, Louisiana,
which provides oil and
gas surveying,
mapping, municipal
engineering, environmental
consulting and
computer information
system services. Mr.
Fenstermaker also
serves as a Chairman
of the Board of
Jefferson Bank.
E. Stewart Shea, III 45 Vice President of 1990(2)
Bayou Management
Services, New Iberia,
Louisiana, a provider
of contractor services
to the oil field
industry; President of
Bayou Pipe Coating
Company and Vice
President of Bayou
Coating, LLC,
affiliates of Bayou
Management Services.
(Table continued and footnotes on next page)
6
<PAGE>
(Continued from prior page)
Karen L. Knight 56 Ms. Knight previously 1996
served as Chairman of
the Board, President
and Chief Executive
Officer of Jefferson
Bancorp, Inc. and its
subsidiary Jefferson
Savings Bank.
Pursuant to the terms
of an Agreement and
Plan of Merger and
reorganization, upon
the Company's
acquisition of
Jefferson Bancorp,
Inc. in October 1996,
Ms. Knight was elected
as a director of the
Company. Ms. Knight
continues to serve as
a director and
consultant to
Jefferson Bank.
__________________
(1) As of March 10, 1997.
(2) Includes service as a director of the Bank.
Committees and Meetings of the Board; Director Nominations
The Board of Directors of the Company has established an Audit Committee
and a Compensation Committee. The Board of Directors of the Company meets on a
monthly basis and may have additional special meetings. Nominations for
director of the Company are made by the full Board of Directors. During the
fiscal year ended December 31, 1996, the Board of Directors met 12 times. No
director attended fewer than 75% of the total number of Board meetings or
committee meetings on which he served that were held during this period.
Audit Committee. The Audit Committee consists of Messrs. Barton, Jr., Himel
and Tamporello. The Audit Committee supervises the Company's Internal Auditor
and is responsible for reviewing the performance, and overseeing the engagement,
of the Company's independent certified public accountants. The Audit Committee
met seven times during fiscal 1996.
Compensation Committee. The Compensation Committee consists of Messrs.
Broussard, Fenstermaker and Shea. The Compensation Committee reviews the
7
<PAGE>
compensation of the Company's executive officers. The Compensation Committee
met five times during fiscal 1996. No member of the Compensation Committee is a
current or former employee of the Company or any of its subsidiaries. The
report of the Compensation Committee with respect to compensation for the Chief
Executive Officer and all other executive officers for the fiscal year ended
December 31, 1996 is set forth below.
In addition to the committees described above, Iberia Savings and Jefferson
Bank has established committees which include members of the Board and senior
management and which meet as required. These committees include, among others,
an Audit Committee, Budget and Planning Committee, Executive Committee,
Compensation Committee, Investment Committee, Commercial Loan Committee and Loan
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 five executive officers of the Company,
Iberia Savings and Jefferson Bank who do not serve as directors.
William M. Lahasky, Age 37, is Vice President and Chief Financial Officer of
the Company and Vice President and Treasurer of Iberia Savings, and has served
as such since 1993. He previously has served in various capacities since
joining the Bank in 1984 including as Treasurer, Controller, and as a staff
accountant.
Ronnie J. Foret, Age 46, is Executive Vice President - Commercial and Retail
Division, Iberia Savings. Prior to joining the Bank in March 1996, he served as
Executive Vice President from 1994 to March 1996, and Senior Vice President of
First Commerce Corporation in New Orleans, Louisiana.
Wayne Robideaux, Age 61, is Executive Vice President of Iberia Savings, and
has served as an Executive Vice President of the Bank since March 1991. Prior
to joining the Bank, he was a Managing Agent with the RTC in Baton Rouge,
Louisiana. From April 1989 to March 1990, he worked as a financial consultant
and broker for Shearson Lehman Hutton in Lafayette, Louisiana. From June 1982
to January 1989 he served as Chief Executive Officer of Citizens National Bank
in Breaux Bridge, Louisiana.
Scott T. Sutton, Age 43, is Executive Vice President - Bank Operations of
Iberia Savings. Mr. Sutton joined the Bank in 1991 as a Senior Vice President
and was promoted to Executive Vice President in January 1995.
Boyd R. Boudreaux, Age 40, is President of Jefferson Bank, a position he has
held since the Company's acquisition of Jefferson in October 1996. Previously,
Mr. Boudreaux served as Senior Vice President and Compliance Manager of Iberia
Savings from July 1994 to October 1996; he was a business manager for Rehab
Xcel, a physical therapy company in Lafayette, Louisiana, during May and June
1994; from October 1992 through April 1994,
8
<PAGE>
Mr. Boudreaux was employed as an insurance agent for Rob Eddy & Associates
and as a mortgage broker and President of Apex Mortgage Co., Lafayette,
Louisiana, and prior thereto, he was Executive Vice President of LBA Savings
Bank, Lafayette, Louisiana.
Compliance with Section 16(a) of the 1934 Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the officers and directors, and persons who own more than 10% of
the Company's Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. Officers, directors and greater than 10% stockholders
are required by regulation to furnish the Company with copies of all Section
16(a) forms they file. The Company knows of no person who owns 10% or more of
the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, 1996, the Company's officers and
directors complied in all respects with the reporting requirements promulgated
under Section 16(a) of the 1934 Act with the exception of (i) Boyd R. Boudreaux,
who was late filing his initial report, (ii) Karen L. Knight, who was late
filing her initial report and (iii) Ronnie J. Foret, who, on two occasions with
respect to two transactions, was late in filing reports. All of such reports
were subsequently filed.
9
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) the only persons or
entities, 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 of
the Company, (iii) certain executive officers of the Company, and (iv) all
directors and executive officers of the Company as a group.
Common Stock
Beneficially Owned as of
Name of Beneficial Owner March 10, 1997(1)
- ------------------------ ---------------------------
No. %
----------- -------
Franklin Resources, Inc. 510,000(2) 7.3%
777 Mariners Island Blvd.
San Mateo, California 94404
ISB Financial Corporation 590,069(3) 8.4%
Employee Stock Ownership Plan Trust
1101 E. Admiral Doyle Drive
New Iberia, Louisiana 70560
John Hancock Mutual Life 500,000(4) 7.1%
Insurance Company
Directors:
Elaine D. Abell 9,130(5) *
Harry V. Barton, Jr. 7,564(6) *
William R. Bigler 7,500 *
Cecil C. Broussard 25,919(7) *
Henry J. Dauterive, Jr. 11,994(8) *
William H. Fenstermaker 9,820(9) *
Ray Himel 9,992 *
Karen L. Knight 4,020 *
Larrey G. Mouton 21,968(10) *
Emile J. Plaisance, Jr. 15,000(11) *
E. Stewart Shea, III 14,252(12) *
Louis J. Tamporello, Sr. 8,100(13) *
Guyton H. Watkins 10,355(14) *
Executive officers who are not Directors:
Boyd R. Boudreaux 1,162(15)
Ronnie J. Foret -- *
William M. Lahasky 6,060(16) *
Wayne Robideaux 10,748(17) *
Scott T. Sutton 12,777(18) *
All directors and executive officers of the 189,891(2) 2.7%
Company and the Bank as a group (18 persons)
(Footnotes on following page)
10
<PAGE>
* Represents less than 1% 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) A Schedule 13G, dated January 29, 1997, indicates that Franklin Mutual
Advisers, Inc., an investment adviser and subsidiary of Franklin Resources,
Inc., has sole voting and dispositive power over the subject shares of
Common Stock. The Mutual Discovery Fund, a series of Franklin Mutual
Series Fund Inc., which is a registered investment company, has an interest
in more than 5.0% of the Common Stock.
(3) The ISB Financial Corporation Employee Stock Ownership Plan Trust was
established pursuant to the ISB Financial Corporation Employee Stock
Ownership Plan ("ESOP") by an agreement between the Company and Messrs.
Broussard, Fenstermaker and Shea, who act as trustees of the plan
("Trustees"). As of the Voting Record Date, 56,469 shares held in the ESOP
Trust had been allocated to the accounts of participating employees. Under
the terms of the ESOP, the Trustees must vote all allocated shares held in
the ESOP in accordance with the instructions of the participating
employees, and allocated shares for which employees do not give
instructions, and unallocated shares, will be voted in the same ratio on
any matter as to those shares for which instructions are given. The amount
of Common Stock beneficially owned by each individual trustee or all
directors and executive officers as a group does not include the
unallocated shares held by the ESOP Trust.
(4) Pursuant to a Schedule 13G, dated January 29, 1997, John Hancock Advisers,
Inc., a registered investment adviser and subsidiary of John Hancock Mutual
Life Insurance Company, has sole voting and dispositive power pursuant to
advisory agreements with the following: the John Hancock Bank and Thrift
Opportunity Fund, which holds 140,000 shares of Common Stock, the John
Hancock Bank Regional Fund, which holds 335,000 shares of Common Stock, and
the Southeastern Thrift and Bank Fund, Inc., which holds 25,000 shares of
Common Stock.
(5) Includes 4,971 shares held by Ms. Abell's spouse, which Ms. Abell may be
deemed to beneficially own.
(6) Includes 1,741 shares held by Mr. Barton's spouse, which Mr. Barton may be
deemed to beneficially own, and 1,229 shares held by Mr. Barton as
custodian for his children.
(Footnotes continued on next page)
11
<PAGE>
(7) Includes a total of 406 shares held by Mr. Broussard's spouse as custodian
for his children, which Mr. Broussard may be deemed to beneficiary own.
Excludes the shares held by the ESOP, of which Mr. Broussard is one of
three trustees.
(8) Includes 1,997 shares held by Mr. Dauterive's spouse, which Mr. Dauterive
may be deemed to beneficially own.
(9) Includes 1,820 shares held by Mr. Fenstermaker's 401(k) retirement plan.
Excludes the shares held by the ESOP, of which Mr. Fenstermaker is one of
three trustees.
(10) Includes 606 shares held by Mr. Mouton's spouse, which Mr. Mouton may be
deemed to beneficially own, 2,169 shares which have been allocated to Mr.
Mouton's account in the ESOP and 10,576 shares held by Mr. Mouton's 401(k)
retirement plan.
(11) Consists of 5,000 shares held by Mr. Plaisance's spouse, which Mr.
Plaisance may be deemed to beneficially own, and 10,000 shares held by Mr.
Plaisance's 401(k) retirement plan.
(12) Includes 3,000 shares held by Mr. Shea's spouse and 1,000 shares held by
Mr. Shea as custodian for his children. Excludes the shares held by the
ESOP, of which Mr. Shea is one of three trustees.
(13) Includes 4,000 shares held by Mr. Tamporello's spouse, which Mr. Tamporello
may be deemed to beneficially own.
(14) Includes 102 shares held by Mr. Watkins' spouse as her separate paraphernal
property, which Mr. Watkins may be deemed to beneficially own, under the
1934 Act, 150 shares held by Mr. Watkins' spouse as custodian for Mr.
Watkins' grandchildren in which Mr. Watkins disclaims beneficial ownership,
and 10,253 shares held by Mr. Watkins and his spouse as community property.
(15) Includes 1,092 shares which have been allocated to Mr. Boudreaux's account
in the 401(k) retirement plan.
(16) Includes 200 shares held by Mr. Lahasky as custodian for his children,
2,298 shares held by Mr. Lahasky's 401(k) retirement plan, and 932 shares
which have been allocated to Mr. Lahasky's account in the ESOP.
(17) Includes 1,434 shares held by Mr. Robideaux's 401(k) retirement plan and
1,314 shares which have been allocated to Mr. Robideaux's account in the
ESOP.
(18) Includes 1,966 shares held by Mr. Sutton's spouse, which Mr. Sutton may be
deemed to beneficially own, 50 shares held by Mr. Sutton as custodian for
his children, 1,381
18
<PAGE>
shares held by Mr. Sutton's 401(k) retirement plan and 1,209 shares which
have been allocated to Mr. Sutton's account in the ESOP.
EXECUTIVE COMPENSATION
Summary Compensation Table
Directors and officers do not receive separate compensation directly from
the Company. All compensation is paid either by Iberia Savings or Jefferson
Bank. The following table sets forth a summary of certain information
concerning the compensation paid for services rendered in all capacities during
the years ended December 31, 1996, 1995 and 1994 to the President and Chief
Executive Officer of the Company, who was the only officer of the Company and
its subsidiaries whose total compensation during the fiscal year exceeded
$100,000.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------- ----------------------------------
Awards Payouts
------------------------ --------
Other Securities All Other
Name and Annual Restricted Underlying LTIP Compensation
Principal Position Year Salary Bonus Compensation(1) Stock Options Payouts
- ------------------- ----- ------- ------ -------------- ----------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larrey G. Mouton 1996 $207,696 $ 475 $-- 29,523 184,516 -- $ 1,428
President and Chief 1995 $196,158 $33,690 -- -- -- -- $ 3,996
Executive Officer (2) 1994 99,239 40,455 -- -- -- -- 28,057(2)
</TABLE>
_______________
(1) Does not include amounts attributable to miscellaneous benefits received by
the named executive officer. In the opinion of management of the Bank, the
costs to the Bank of providing such benefits to the named executive officer
during the individual periods did not exceed the lesser of $50,000 or 10%
of the total of annual salary and bonus reported for the individual.
(2) Consists of amounts received as a director of the Bank as well as
contributions to a 401(k) retirement plan which Mr. Mouton received from
the Bank in 1994.
13
<PAGE>
Stock Options
The following table sets forth certain information concerning grants of
stock options awarded to the named executive officers during the year ended
December 31, 1996.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
% of Total Options for Option Term(4)
Options Granted to Exercise Expiration ----------------------------
Name Granted Employees(1) Price(2) Date(3) 5% 10%
- ------------------ --------- ------------------- ----------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Larrey G. Mouton 184,516 43.14% $15.875 May 24, 2006 $1,615,438 $3,977,242
</TABLE>
(1) Percentage of options granted to all employees during fiscal 1996.
(2) The exercise price was based on the fair market value of a share of Common
Stock on the date of grant.
(3) The stock options were granted on May 24, 1996 and vest and become
exercisable over seven years, 14.29% per year commencing one year from the
date of grant.
(4) Assumes compounded rates of return for the remaining life of the options
and future stock prices of $24.63 and $37.43 at compounded rates of return
of 5% and 10%, respectively.
The following table sets forth certain information concerning exercises of
stock options granted by the named executive officers during the year ended
December 31, 1996 and stock options held at December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised
Acquired on Value Options at Year End Options at Year End
Name Exercise Realized ------------------------- -------------------------------
- ---------------- ------------- ------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Larrey G. Mouton -- $-- -- 184,516 $-- $392,097
</TABLE>
(1) Based on an assumed market price of $18.00 of a share of Common Stock at
December 31, 1996.
14
<PAGE>
Director's Compensation
During 1996, members of the Board of Directors of Iberia Savings received
fees of $2,000 per month for their services as directors of the Bank, except for
the Chairman, who received fees of $2,300 per month, and Mr. Mouton, who was not
compensated for such service. In addition, during 1996 upon stockholder
approval of the Company's 1996 Stock Option Plan ("Option Plan") and the
Recognition and Retention Plan and Trust ("Recognition Plan"), each non-employee
director of the Company, except Ms. Knight who was not a director of the Company
at the time, was granted options to acquire 20,129 shares of Common Stock and
awards under the Recognition Plan of 8,051 restricted shares of Common Stock.
Such options and restricted share grants generally vest over a 7-year period.
For her services as director of Jefferson Bank, Ms. Knight received $4,000
during 1996. None of the other directors of the Company who also serve as
directors of Jefferson Bank received any additional compensation for such
services. Members of the Board of Directors receive no additional compensation
for their participation in any of the Committees or for services as directors of
the Company.
Employment and Severance Agreements
The Company and the Bank (collectively the "Employers") in February 1995
entered into an employment agreement with Mr. Mouton. The Employers have agreed
to employ Mr. Mouton for a term of three years in his current position at an
initial base salary of $200,000. The agreement is terminable with or without
cause by the Employers. The officer shall have no right to compensation or
other benefits pursuant to the employment agreement for any period after
voluntary termination or termination by the Employers for cause, disability or
retirement, provided, however, that (i) in the event that the officer terminates
his employment because of failure of the Employers to comply with any material
provision of the employment agreement he shall be entitled to severance payments
equal to the greater of the amount of his base salary for the remaining term of
the agreement or his base salary multiplied by 1.0 or (ii) the employment
agreement is terminated by the Employers other than for cause, disability,
retirement or death or by the officer as a result of certain adverse actions
which are taken with respect to the officer's employment following a Change in
Control of the Company, as defined, Mr. Mouton will be entitled to cash
severance payments equal to the greater of the amount of his base salary for the
remaining term of the agreement or his base salary at the date of termination
multiplied by 2.0. In addition, Mr. Mouton will be entitled to a continuation
of benefits similar to those he is receiving at the time of such termination for
the period otherwise remaining under the term of the agreement or until he
obtains full-time employment with another employer, whichever occurs first. A
Change in Control is generally defined in the employment agreement to include
any change in control required to be reported under the federal securities laws,
as well as the acquisition by any person of 25% or more of the Company's
outstanding voting securities. Mr. Mouton's employment agreement provides that
in the event that any payments to be paid thereunder are deemed to constitute
"excess parachute payments" and, therefore, subject to an excise tax under
Section 4999 of the Code, the Employers may (i) contest the liability and
exhaust all administrative and judicial appeals to that end, and/or (ii) pay Mr.
Mouton an amount equal to the excise tax for which he is liable plus an amount
equal to any additional federal, state, or local taxes that may result because
of such additional payment. Mr. Mouton's agreement also provides
15
<PAGE>
that in the event of Mr. Mouton's death during the term of the agreement, his
estate will receive payments equal to the amount of compensation for 12
months at his current salary at the time of his death.
The Employers have also entered into severance agreements with Messrs.
Boudreaux, Foret, Lahasky, Robideaux and Sutton. Under the terms of such
severance agreements, the Employers have agreed that in the event that such
officer's employment is terminated as a result of certain adverse actions which
are taken with respect to the officer's employment following a Change in Control
of the Company, as defined, such officer will be entitled to a cash severance
amount equal to his base salary multiplied by 2.0.
Although the above-described employment and severance 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.
Transactions With Certain Related Persons
The Bank's policy provides that all loans made by the Bank 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 collectibility or present other unfavorable
features. As of December 31, 1996, six of the Bank's directors and executive
officers had aggregate loan balances in excess of $60,000, which amounted to
$740,294 in the aggregate, or approximately 0.6% of the Company's equity as of
such date. All such loans were made by the Bank in the ordinary course of
business and were not made with favorable terms nor did they involve more than
the normal risk of collectibility. As of December 31, 1996, all such loans were
current.
The firm of Landry & Watkins is general counsel to the Bank. Guyton H.
Watkins, a director and Secretary of the Bank, is of counsel to Landry &
Watkins. C.H. Fenstermaker and Associates, Inc., of which William H.
Fenstermaker, a director of the Company and the Bank, is President and Chief
Executive Officer, also provided professional services to the Bank. Karen L.
Knight, a director of the Company and Jefferson Bank, receives compensation for
certain consulting services provided to the Company.
Report of the Compensation Committee
The goals of the Committee are to assist the Bank in attracting and
retaining qualified management, motivating executives to achieve performance
goals, rewarding management for outstanding performance and to ensure that the
financial interests of the Company's management and shareholders are satisfied.
During 1996, Mr. Mouton's base salary was $200,000 and was determined on an
arms'-length basis when the Company and the Bank entered into an employment
agreement with Mr. Mouton. In determining Mr. Mouton's base salary, the
compensation considered the above-referenced factors,
16
<PAGE>
including the compensation analyses prepared by the referenced third parties.
Under the terms of his employment agreement, Mr. Mouton's salary may be
increased, but not decreased, by the Board of Directors and Mr. Mouton may
receive bonuses, when, as, and if determined in the sole discretion of the
Board of Directors. The Committee also considers the factors described in
the immediately preceding paragraph in establishing compensation for the
other executive officers of the Bank. Executive officers of the Bank, except
for Mr. Mouton, also are eligible to participate in the Bank's bonus plan
provided that certain pre-determined performance criteria are satisfied. In
determining the awards granted to Mr. Mouton and the Bank's other executive
officers under the Option Plan and Recognition Plan, the Committee considered
the contributions made by such officer to the Company and the Bank and such
officer's responsibilities. The awards granted under the Option Plan and
Recognition Plan were also designed to provide an incentive to executive
officers to contribute to the Company's continued success in the future.
The Committee considered several financial and non-financial
accomplishments in setting the compensation of the Chief Executive Officer and
other executive officers, including but not limited to, net income of the Bank,
profitability ratios, satisfactory regulatory examinations, and market value of
the Bank. In addition, other objectives such as growth and the successful stock
conversion and reorganization were reviewed. The committee reviewed and
considered the SNL Executive Compensation Review for a comparison of
compensation paid by the Bank's peer group. The Committee also reviewed a
selected peer group compensation analysis prepared by Charles Webb & Co.
Following review and approval by the Committee, all issues pertaining to
executive compensation are submitted to the full Board of Directors for their
approval.
Cecil C. Broussard
William H. Fenstermaker
E. Stewart Shea, III
17
<PAGE>
Performance Graph
The following graph compares the cumulative total return on the Common
Stock over a measurement period since the Company's initial issuance of Common
Stock in April 1995 with (i) the cumulative total return on the stocks included
in the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") Total Return Index (for United States companies) and (ii) the
cumulative total return on the stocks included in the SNL Peer Group Index. All
of these cumulative returns are computed assuming the reinvestment of dividends
which were paid during the applicable time period.
[GRAPH]
Period Ending
-----------------------------------------------
Index 4/7/95 6/30/95 12/31/95 6/30/96 12/31/96
- -------------------------------------------------------------------------------
ISB Financial Corporation 100.00 116.52 117.64 116.28 144.13
Nasdaq Total Return Index 100.00 114.86 130.26 147.47 160.23
SNL $500M-$1B Thrifts Index 100.00 109.55 127.81 133.44 158.49
SNL $500M-$1B Banks Index 100.00 105.30 126.91 134.67 158.66
18
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Castaing, Hussey &
Lolan, L.L.P., independent certified public accountants, to perform the audit of
the Company's financial statements for the year ending December 31, 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 Castaing, Hussey & Lolan, 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. Castaing, Hussey
& Lolan, 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 will be
available to respond to appropriate questions.
The Board of Directors recommends that you vote FOR the ratification of the
appointment of Castaing, Hussey & Lolan, L.L.P. as independent auditors for the
fiscal year ending December 31, 1997.
STOCKHOLDER'S PROPOSAL CONCERNING AN
AMENDMENT TO THE COMPANY'S BYLAWS
Mr. Charles A. Dorsey, P.O. Box 9008, New Iberia, Louisiana, 70502, who has
represented to the Company that he is the beneficial owner of 40,000 shares of
Common Stock, has presented the following proposal for stockholder consideration
at the Annual Meeting:
Stockholder's Proposal
That the by-laws of the Company be changed to require that the majority of
the members of the board of directors be legal residents of Iberia Parish.
Stockholder's Supporting Statement
Iberia Savings Bank has drawn its strength from Iberia Parish for over 100
years. The purpose of this proposal is to insure that the bank continue to
recognize its position in the community. It is felt that this can be
accomplished by a board that consists primarily of residents of Iberia Parish.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote AGAINST the
foregoing proposal.
19
<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 scheduled to be held in April 1998, must be received at
the principal executive offices of the Company, 1101 E. Admiral Doyle Drive, New
Iberia, Louisiana, Attention: Guyton H. Watkins, Secretary, no later than
November 17, 1997. 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 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.B. of the Company's
Articles of Incorporation. One stockholder of the Company has indicated that,
in addition to the items previously described herein, he may request that a
proposal to amend the Company's Bylaws (which would require the affirmative vote
of the holders of a majority of the shares entitled to vote in the election of
directors in order to be implemented) to require advance written notification to
stockholders of all items of new business to be discussed at a meeting of
stockholders, and, perhaps, certain other proposals, be considered at the Annual
Meeting to be held on April 16, 1997.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
OTHER MATTERS
If any matters should properly come before the meeting other than those
which are described in this Proxy Statement, 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.
20
<PAGE>
\/ PLEASE MARK VOTES REVOCABLE PROXY
/\ AS IN THIS EXAMPLE ISB FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1997
The undersigned, being a stockholder of ISB Financial Corporation ("Company")
as of March 10, 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 main office of Iberia Savings Bank, located at 1101
East Admiral Doyle Drive, New Iberia, Louisiana, on Wednesday, April 16, 1997
at 3:00 p.m., Central 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 DIRECTORS
For Withhold For All
Except
----- ----- -----
Nominees for three-year term:
Cecil C. Broussard, Ray Himel, Larrey G. Mouton
and Emile J. Plaisance, Jr.
INSTRUCTION: To withhold authority to vote for an individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
Unless authority to vote for all of the foregoing nominees is withheld, this
Proxy will be deemed to confer authority to vote for each nominee whose name
is not written below.
- ------------------------------------------------------------------------------
RECOMMENDATION: The Board of Directors recommends that you vote "FOR" all
of the nominees listed above.
2. PROPOSAL to ratify the appointment by the Board of Directors of Castaing,
Hussey & Lolan, L.L.P as the Company's independent auditors for the fiscal
year ending December 31, 1997.
For Against Abstain
----- ----- -----
RECOMMENDATION: The Board of Directors recommends that you vote "FOR" the
ratification of Castaing, Hussey & Lolan, L.L.P..
3. STOCKHOLDER'S PROPOSAL to amend the Company's Bylaws to require that a
majority of the members of its Board of Directors be legal residents of
Iberia Parish, Louisiana.
For Against Abstain
----- ----- -----
RECOMMENDATION: The Board of Directors recommends that you vote "AGAINST"
The Stockholder's Proposal to amend the Company's Bylaws.
Please be sure to sign and date this Proxy in the box below.
Date
------------------------
- ------------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
Detach above card, date and mail in postage paid envelope provided.
ISB FINANCIAL CORPORATION
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF RETURNED
BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR RATIFICATION OF
THE COMPANY'S INDEPENDENT AUDITORS, AGAINST THE STOCKHOLDER PROPOSAL TO AMEND
THE COMPANY'S BYLAWS AND OTHERWISE AT THE DISCRETION OF THE PROXIES. YOU MAY
REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL
MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 16, 1997
AND AT ANY ADJOURNMENT THEREOF.
PLEASE SIGN THIS EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY CARD. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE FULL TITLE, WHEN SHARES ARE
HELD JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
