A New Jersey thrift that's been trying to keep two activist shareholders off its board of directors has found a way to keep at least one of them at bay.

IBS Financial Corp., Cherry Hill, notified a shareholders group by letter last week that it's reducing the size of its board from seven to six. That means only one of two shareholders seeking a spot on the board could be elected at the company's next annual meeting.

The Oct. 16 letter was in response to the nominations by the Committee to Maximize Shareholder Value of Richard Whitman and Ernest Beier Jr. to IBS Financial's board. The committee is led by 7.7% stakeholder Lawrence B. Seidman, the former chairman of another New Jersey thrift.

Mr. Seidman's stated goal is to force the sale of the $750 million-asset IBS Financial.

In replying to the board's letter on Monday, Mr. Whitman demanded that management maintain board membership at seven and asked that at least Mr. Beier be given a seat. He suggested that the thrift forgo a costly proxy fight.

"That doesn't seem to be an outrageous request," Mr. Seidman said of the group's demands.

The upcoming election will be Mr. Seidman's second attempt to install his group's nominees on the board. At the annual meeting last December, he lost a proxy fight seeking election of two committee members as directors.

So far, IBS, the parent of Inter-Boro Savings and Loan Association, has not set a date for this year's annual meeting.

Joseph M. Ochman Sr., IBS' chairman and chief executive officer, did not return telephone calls seeking comment.

Mr. Seidman, who has owned his stake for about 18 months, said he's angry about what he called mediocre earnings. IBS "isn't setting the world on fire," he said.

In its third quarter, which ended June 30, IBS reported $1.9 million of profits, down from $2.2 million for the same period last year. Also, earnings for the first nine months dropped 28%, from $7.6 million in fiscal 1995 to $5.4 million this year.

But Mr. Seidman said he was especially displeased by Mr. Ochman's total compensation, including stock options, which exceeds $1.8 million.

Mr. Seidman sued Mr. Ochman last year, alleging slander.

The pending lawsuit is based on a letter written by Mr. Ochman to shareholders, allegedly implying that the OTS might take further action against Mr. Seidman, whom it had removed as chairman and banned from banking in 1992. The agency said its case, in which Mr. Seidman was charged with trying to block an OTS investigation, is closed.

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