<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
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

                   SOUTHERN INVESTORS SERVICE COMPANY, INC.
   ------------------------------------------------------------------------
               (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>
 
                    SOUTHERN INVESTORS SERVICE COMPANY, INC.
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD ON MAY 21, 1997



To the Stockholders of
 Southern Investors Service Company, Inc.:

     Notice is hereby given that the Annual Meeting of Stockholders of Southern
Investors Service Company, Inc., a Delaware corporation (Company), will be held
in the board room of the Company's corporate offices, 2727 North Loop West,
Suite 200, Houston, Texas  77008, on Wednesday, May 21, 1997 at 3:00 p.m.,
Houston time, for the following purposes:

          (a) To elect three directors to serve until the next annual meeting of
     stockholders or until their respective successors shall be elected and
     qualified;

          (b) To ratify the appointment of Arthur Andersen LLP as independent
     public accountants for the Company for the year ending December 31, 1997;
     and

          (c) To transact such other business as may properly come before the
     meeting or any adjournments thereof.

     Only holders of Common Stock, $1.00 par value, of record on April 25, 1997
are entitled to notice of and to vote at the meeting or any adjournment thereof.

                              By Order of the Board of Directors,



                              WALTER M. MISCHER, SR.
                              Chairman of the Board and
                              Chief Executive Officer


Houston, Texas
April 29, 1997

                                   IMPORTANT

          IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD.  PLEASE COMPLETE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE MEETING.  THIS PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.
<PAGE>
 
                    SOUTHERN INVESTORS SERVICE COMPANY, INC.
                              2727 NORTH LOOP WEST
                                   SUITE 200
                             HOUSTON, TEXAS  77008

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

                                PROXY STATEMENT

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

                              GENERAL INFORMATION

          This Proxy Statement is furnished to the stockholders of Southern
Investors Service Company, Inc. (Company), in connection with the solicitation
by the Board of Directors of the Company of proxies to be used at the Annual
Meeting of Stockholders to be held on May 21, 1997 (Meeting).  It is anticipated
that proxy solicitation materials will be first mailed to stockholders on April
30, 1997.  Proxies in the form enclosed, properly executed by stockholders and
returned to the Company, which are not revoked, will be voted at the Meeting.
Proxies will be voted in accordance with the directions specified thereon, and
otherwise in accordance with the judgment of the persons designated as proxies.
Any proxy on which voting instructions are not specified will be voted for the
nominees for the office of director named herein and in favor of the
ratification of Arthur Andersen LLP as independent public accountants for the
Company for the year ending December 31, 1997.  A proxy may be revoked by giving
written notice of such revocation to the Secretary of the Company at any time
before such proxy is voted at the Meeting.

          The Annual Report to Stockholders with respect to the Company's fiscal
year ended December 31, 1996 is being mailed to stockholders contemporaneously
with the proxy solicitation materials.  The Annual Report does not form a part
of the material for the solicitation of proxies.


                           OUTSTANDING CAPITAL STOCK

          The record date for determining the stockholders of the Company
entitled to notice of and to vote at the Meeting is the close of business on
April 25, 1997.  At the close of business on that date, the Company had issued
and outstanding and entitled to vote at the Meeting 3,168,929 shares of common
stock, $1.00 par value (Common Stock).


                               QUORUM AND VOTING

          The presence, in person or by proxy, of the holders of a majority of
the 3,168,929 shares of Common Stock outstanding is necessary to constitute a
quorum at the Meeting.  In accordance with Delaware law and the Company's
charter and bylaws, each qualifying share of Common Stock is entitled to one
vote on each matter to be acted upon at the Meeting.  In establishing the
presence of a quorum, abstentions and broker non-votes will be included in the
determination of the number of shares represented at the Meeting.  Abstentions
will have the same effect as a vote against a proposal; broker non-votes,
however, are not included in the tally of votes cast and will not affect the
outcome of a proposal.
<PAGE>
 
                           PRINCIPAL SECURITY HOLDERS

          To the best knowledge of the Company, the following table sets forth
all persons beneficially owning more than 5% of the Common Stock at April 25,
1997.  Unless otherwise indicated, each of the following persons may be deemed
to have sole voting and dispositive power with respect to such shares.
<TABLE>
<CAPTION>
                                                AMOUNT AND
                                                 NATURE OF        PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER         BENEFICIAL OWNER    OF CLASS
------------------------------------------  -------------------  ---------
<S>                                         <C>                  <C>
Walter M. Mischer.........................  915,240(a)              28.88%
  2727 North Loop West, Suite 200
  Houston, Texas  77008

Collecting Bank National Association
  (A National Bank in Liquidation)........  805,156                 25.41%
  1001 Main
  Houston, Texas  77002

John D. Weil..............................  335,695(b)              10.59%
  200 North Broadway, Suite 825
  St. Louis, Missouri  63102

Texas Commerce Bank National Association..
  P. O. Box 2558                            307,549                  9.71%
  Houston, Texas  77252
</TABLE>
--------------
(a) The number of shares of the Common Stock set forth as being beneficially
    owned by Mr. Mischer includes 2,250 shares of Common Stock that Mr. Mischer
    holds as custodian for his grandchildren.
(b) The number of shares of Common Stock set forth as being beneficially owned
    by Mr. Weil includes 308,695 shares of Common Stock held by Mr. Weil and
    27,000 shares of Common Stock held by trusts of which Mr. Weil is the
    trustee.

                                       2
<PAGE>
 
                             NOMINEES FOR DIRECTORS

  Each of the following persons is a nominee for election as a director and is
currently a member of the Board of Directors.  Directors will be elected by the
majority vote of the shares of Common Stock represented at the Meeting and
entitled to vote.  The term of office for which the following persons are
nominated will expire at the next annual meeting of stockholders of the Company
or when their respective successors shall have been duly elected and shall have
qualified.  Should any nominee for the office of director named herein become
unable or unwilling to accept nomination or election, the person or persons
acting under the proxies will vote for the election in his stead of such other
persons as the Board of Directors may recommend.  The Board of Directors has no
reason to believe that any of the  nominees will be unable or unwilling to serve
if elected to office and, to the knowledge of management, the nominees intend to
serve the entire term for which election is sought.

  Unless otherwise noted, the information provided in the column below captioned
"Principal Occupation" indicates the principal occupation and employment of each
nominee during the past five years and the name and principal business of any
corporation or other organization in which such occupation or employment was
carried on.
<TABLE>
<CAPTION>
                                                                                   DIRECTOR OF THE
NOMINEES FOR DIRECTOR             AGE             PRINCIPAL OCCUPATION              COMPANY SINCE
--------------------------------  ---  ------------------------------------------  ---------------
<S>                               <C>  <C>                                         <C>
Walter M. Mischer (a)(b)(c)(d)..   74  Chairman of the Board and Chief Executive              1955
                                       Officer, Southern Investors Service
                                       Company, Inc., Houston, Texas

Walter M. Mischer, Jr. (b)(e)...   46  President and Chief Operating Officer,                 1976
                                       Southern Investors Service Company, Inc.,
                                       Houston, Texas

John D. Weil (c)(d).............   56  Private Investor, St. Louis, Missouri                  1992
</TABLE>
--------------
(a) As a result of Mr. Mischer's ownership of the shares of Common Stock as
    described in "Principal Security Holders" above, Mr. Mischer may be deemed
    to be a control person of the Company for reasons other than his position as
    a director of the Company.  Mr. Mischer is the father of Walter M. Mischer,
    Jr.
(b) Member of Executive Committee.
(c) Member of Audit Committee.
(d) Member of Compensation Committee.
(e) Mr. Mischer, Jr. is the son of Walter M. Mischer.

                                       3
<PAGE>
 
   The following table sets forth certain information concerning the ownership
of shares of Common Stock by the nominees for director, the executive officers
named below in the Summary Compensation Table and by all directors and executive
officers of the Company as a group:

                SECURITIES OWNED BENEFICIALLY AT APRIL 25, 1997
<TABLE>
<CAPTION>
 
                                      AMOUNT AND NATURE OF
       DIRECTOR OR NOMINEE            BENEFICIAL OWNER(A)    PERCENT OF CLASS
----------------------------------  -----------------------  -----------------
<S>                                 <C>                      <C>
 
     Walter M. Mischer                          915,240(b)               28.9%
     Walter M. Mischer, Jr.                    19,044(c)(d)                (e)
     John D. Weil                               335,695(f)               10.6%
     All directors and executive
      officers as a group                     1,269,979                  40.1%
</TABLE>
--------------
(a) Except as otherwise described herein, each nominee may be deemed to have
    sole voting and dispositive power with respect to his shares.
(b) Includes 2,250 shares held by Mr. Mischer as custodian for his
    grandchildren.
(c) Includes 50 shares held by Mr. Mischer, Jr. as custodian, and 800 shares
    held by trusts of which Mr. Mischer, Jr. serves as co-trustee and as to
    which he shares voting and dispositive power.
(d) Does not include 120,548 shares of Common Stock held by the Walter M.
    Mischer, Jr. 1972 Trust.  Mr. Mischer, Jr. is the sole beneficiary of such
    trust, but does not exercise any voting or dispositive power with respect to
    any securities held by such trust.
(e) Less than 1%.
(f) Includes 27,000 shares of Common Stock held by trusts of which Mr. Weil is
    trustee.

   The Board of Directors held one meeting during 1996 and each of the directors
attended. Committees of the Board of Directors include the Executive Committee,
the Audit Committee and the Compensation Committee.  The Audit Committee, which
was established in May 1979, did not hold any meetings in 1996; however, the
members thereof communicated informally from time to time in 1996.  The Audit
Committee's function is to recommend an independent auditor for each ensuing
year and to review financial statements, audit results, the scope of audit
procedures and the auditors' evaluation of internal controls.  The Executive
Committee did not hold any meetings during 1996; however, the members thereof
communicated informally from time to time in 1996.  The Compensation Committee,
which was established in January 1982, did not hold any meetings during 1996;
however, the members thereof communicated informally from time to time in 1996.
The Compensation Committee's principal function is to administer the Key
Employee Equity Participation Incentive Plan, as described below.  The Board of
Directors does not have a nominating committee or other committees performing
similar functions.  The directors do not receive any compensation for their
service as directors.

   The following nominees hold directorships (or trusteeships, as indicated) in
the companies indicated, which companies have a class of securities registered
pursuant to the requirements of

                                       4
<PAGE>
 
the Securities Exchange Act of 1934:  Walter M. Mischer - Southwest Airlines Co.
and Howell Corporation; John D. Weil - Physicians Insurance Company of Ohio,
Cliffs Drilling Company, Cleve Trust Realty Investors, Ogelbay Norton Company
and Todd Shipyards Corporation.

                               EXECUTIVE OFFICERS

   Each of the following persons has been chosen to become an executive officer
of the Company.  The term of office for which the following persons are to be
elected will expire at the first Board of Directors meeting following the 1998
Annual Meeting of Stockholders of the Company or when their respective
successors shall have been duly elected and shall have qualified.
<TABLE>
<CAPTION>
                                                              SERVED IN SUCH
          NAME            AGE             OFFICE              CAPACITY SINCE
------------------------  ---  -----------------------------  --------------
<S>                       <C>  <C>                            <C>
Walter M. Mischer.......   74  Chairman of the Board                    1969
                               Chief Executive Officer                  1976

Walter M. Mischer, Jr...   46  President                                1981
                               Chief Operating Officer                  1981

Eric M. Schumann (a)....   46  Senior Vice President-Finance            1992
</TABLE>
--------------
(a) From September 1986 to July 1991, Mr. Schumann served as Executive Vice
    President-Chief Financial Officer of Commonwealth Savings, Houston, Texas.
    Mr. Schumann was self-employed as a merger and acquisition consultant from
    July 1991 until his employment by the Company in May 1992 as Senior Vice
    President-Finance.

                             EXECUTIVE COMPENSATION

COMPENSATION

   The following table sets forth information regarding the compensation of the
Company's chief executive officer.  No other executive officer of the Company
received aggregate direct remuneration from the Company and its subsidiaries in
excess of $100,000 during the calendar year ended December 31, 1996.  The
Company has no stock option, retirement or pension plans.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
        NAME AND                                     ALL OTHER
   PRINCIPAL POSITION        YEAR    SALARY ($)   COMPENSATION ($)
-------------------------  --------  ---------  ------------------
<S>                        <C>       <C>        <C>
 
Walter M. Mischer              1996    $11,097                  $0
Chairman of the Board          1995    $11,097                  $0
Chief Executive Officer        1994    $11,039                  $0
</TABLE>

                                       5
<PAGE>
 
CERTAIN TRANSACTIONS

       In 1982 the Board of Directors instituted a Key Employee Equity
Participation Incentive Plan (Incentive Plan) designed to provide incentive
compensation for certain key employees of Mischer Development, Inc. (MDI), the
Company's former wholly owned subsidiary engaged in developing and managing
office buildings.  To implement the Incentive Plan, the Compensation Committee
of the Board of Directors allocated to the participating employees, in the
aggregate, a 16.25% interest in a limited partnership formed in January 1982
(1982 Partnership).  Through the 1982 Partnership, the Company, as general
partner, currently holds an 86.25% interest.  The limited partners hold the
remaining 13.75%.  Their positions with the Company (if any), and their interest
in the 1982 Partnership are as follows:  Walter M. Mischer, Jr., President,
Chief Operating Officer, and director - 5.0%; C. Ronald Blankenship - 5.0%;
George Ruhlen -2.5%; and Robert E. McDonald - 1.25%.  The limited partners made
capital contributions to the 1982 Partnership at the time of its formation.  The
1982 Partnership owns a 20% equity interest in a ten-story office building in
Houston, Texas completed in 1983.  As of the date of this Proxy Statement, the
value, if any, ultimately realizable from a limited partner's interest in the
1982 Partnership is not ascertainable.

       The Company, as general partner, is solely responsible for determining
when any distribution is to be made to the partners.  All profits, losses and
distributions of the 1982 Partnership are allocated among the partners in
accordance with the partnership agreement.  Under the terms of the limited
partnership agreement, the Company may, at its option, and will, at the option
of the limited partner, purchase the partnership interest of a limited partner
who is no longer employed by the Company or any of its subsidiaries.  The
agreement contains complex provisions regarding the purchase price payable,
which may be substantial, to a limited partner upon exercise of such option.

       During 1992, the Company restructured the debt of one of its
partnerships.  In connection with this restructure, the Company issued a
$300,000 principal amount note payable to the other joint venture partner.  This
note was secured by the Company's 20% equity interest in the venture and was due
September 1995.  Due to the Company's financial condition, it was unable to
retire this note at maturity.  During December 1995, the partnership through
which the Company held its 20% interest in the joint venture admitted a new
class of limited partner (Walter M. Mischer, Trustee) in exchange for a capital
contribution of $306,000.  These funds were used to repay the note and accrued
interest.  In exchange for the capital contribution, the new limited partner
will receive (i) the first $306,000 of any future cash flow, (ii) interest on
the $306,000 at 10% compounded annually, and (iii) 66 2/3% of any remaining cash
flow.  As a result of this transaction, the Company's effective ownership in
this partnership was reduced to 6.7%.

       During 1995, a joint venture in which the Company had a 19.4% ownership
interest had a note payable with an outstanding balance of $5.2 million which
was due and payable.  The joint venture was unable to repay this note at its
maturity.  During January 1996, the venture obtained a new loan from a bank in
the original principal amount of $3.0 million.  The proceeds

                                       6
<PAGE>
 
of this new loan were used to settle the $5.2 million loan plus accrued interest
in full.  As a condition of the new loan, the bank required a ten year lease on
the entire building to be executed by the partners in the ratio of their
ownership interests.  However, due to the financial condition of the Company,
the bank would not accept the Company's lease.  In addition, the building was in
need of repairs and the Company would have been required to make additional
capital contributions to fund these repairs.  The Company also owed the venture
approximately $70,000 in past due rent for periods prior to 1992.  This amount
was forgiven in January 1996.  As a result of these obligations, the Company
sold its partnership interest to Hallmark Residential Group, Inc. (Hallmark), a
company controlled by Mr. Mischer.  In exchange, Hallmark assumed the Company's
obligations in connection with this joint venture and entered into the ten year
lease.  In connection with this sale, the Company retained a 25% cash flow
interest in Hallmark's 20% ownership interest.  The Company recognized an
extraordinary gain on the settlement of these obligations of $408,000 during
1996.  The Company has a month-to-month lease with Hallmark which provides for
aggregate annual payments of approximately $87,000.

       In connection with various debt settlements during the past several
years, Mr. Mischer had loaned or advanced the Company various amounts.  In 1993,
these loans and advances were consolidated into a single note in the principal
amount of $338,000.  This note bears interest at the prime rate plus 1% and is
due May 18, 1997.  This note is secured by approximately 14,720 acres of land
located adjacent to the Company's resort in west Texas.  In addition, during
1996, the Company executed two additional notes to Mr. Mischer.  One note in the
original principal amount of $25,688 is unsecured and is payable in monthly
payments of $640 per month, bears interest at the rate of 9% and is due March
1998.  At December 31, 1996, the outstanding principal balance was $21,546.  The
second note is secured by receivables, is payable monthly as collections on the
related receivables are received, bears interest at the rate of 9%, with a final
maturity of July 2001.  As of December 31, 1996, the outstanding principal
balance was $51,014.

       Due to the Company's lack of adequate resources and its need for
additional employee housing units at its resort in west Texas, a company owned
by Mr. Mischer, contracted with the Company for the construction of additional
employee housing.  During 1995 and 1994, the Company billed and collected
$80,000 and $204,000, respectively, representing the entire cost of these units
from Mr. Mischer.  These units are owned by Mr. Mischer and leased to the
Company for aggregate annual rentals of $25,000.

       The Company received cash distributions of $95,000 and $261,000 and
recognized income of $72,000 and $272,000 during 1996 and 1995, respectively,
relating to its remaining 12.5% equity interest in Heritage Park Venture II
("Heritage Park") and cash flow interest in Fairwood, a Houston subdivision.
Fairwood and the remaining 87.5% of Heritage Park are effectively owned by Mr.
Mischer, Mrs. Walter M. Mischer, Mr. Mischer, Jr. and Mrs. Watson.

                                       7
<PAGE>
 
       During 1992 and 1987 Walter M. Mischer purchased certain notes receivable
of the Company at the face amount of $83,000 and $546,000, respectively.  The
Company is required at Mr. Mischer's election to repurchase, at par, any note
with a payment more than 90 days delinquent.  None of these notes had been
repurchased as of December 31, 1996.

       As a result of a series of transactions occurring during 1989 and 1990,
the Company's effective investment in Jackson Supply Company (Jackson) was
reduced to 10%.  In connection with these transactions, Walter M. Mischer and
the president of Jackson have effective investments in Jackson of 75% and 15%,
respectively.  During 1996, the Company sold a portion of its minority ownership
in a former subsidiary to the former subsidiary's president for a gain of
$116,000.  The Company has guaranteed Jackson's revolving line of credit with a
bank.  At December 31, 1996, the revolving line of credit had an outstanding
principal balance of $1.1 million.

       During 1994, the Company paid $114,000 to Texas Commerce Bank National
Association, to settle a promissory note with a balance of $892,000 including
accrued interest that had matured on September 30, 1993.

       On December 15, 1989, certain debenture holders, including Walter M.
Mischer, Walter M. Mischer, Jr., John D. Weil and John W. Storms, Trustee
(Consenting Holders), representing 84% of the outstanding principal amount of
the debentures as of December 31, 1990, agreed to make loans to the Company
equal to 72% of interest and all principal payments received on such debentures.
In 1991, the Consenting Holders agreed to make loans to the Company equal to
100% of the interest payments received on the debentures on June 1 and December
1, 1991.  Such loans made to the Company bore interest at the same rate as the
applicable 7% or 8.5% debentures and were due on September 30, 1993.  The
Consenting Holders also agreed to modify their debentures pursuant to a Third
Supplemental Indenture dated November 30, 1989 (the "Supplemental Indenture").
Effective from and after December 1, 1989 the Supplemental Indenture eliminated
the requirement that the Company redeem, through the operation of the sinking
fund, any debentures held by Consenting Holders.  The Supplemental Indenture
further directed the Company and the trustee to redeem all debentures held by
persons other than the Consenting Holders prior to soliciting for redemption any
debentures held by Consenting Holders.  The Company continued to make the
required sinking fund payments with respect to debentures held by non-consenting
holders.  Mr. Mischer and Mr. Mischer, Jr. made loans aggregating $133,000
during 1989 which amount was equal to 72% of interest payments received on the
subordinated debentures held by them.  Such loans made to the Company during
1989 bore interest at 6% and 7% per annum and were due on September 30, 1993.
During 1993, in connection with the restructure of the Company's debentures, the
Company issued $3,440,000 in unsecured promissory notes to certain directors,
stockholders and affiliates, including notes to Mr. Mischer, Mr. Mischer, Jr.,
Mr. Weil and John W. Storms, Trustee in the aggregate principal amount of
$2,995,000, to consolidate amounts due for the debenture loans discussed above,
debentures held by them and accrued and unpaid interest.  These notes bear
interest at 6% compounded annually and were due October 2, 1996.  No payments 
have been made on these notes to date.

                                       8
<PAGE>
 
       In January 1990, the Company entered into an agreement with a limited
partnership, in which Mr. Mischer holds an effective interest of 50%, to manage
the development and sales of a residential property for a monthly fee of
$10,000.  In addition, the Company manages real estate projects in which Mr.
Mischer has effective ownership interests ranging from 33% to 100% for an
aggregate monthly management fee of $44,000.  The Company also has management
contracts on the two office buildings in which it has ownership and cash flow
interests which provide for aggregate monthly management fees of $10,000.  In
addition, during 1995, the Company entered into a management agreement with a
partnership in which Mr. Mischer, Jr. has a 50% ownership interest which
provides for monthly payments of $6,000.  The management contracts are
cancelable upon thirty days notice.

       A joint venture in which Mr. Mischer has an ownership interest has
options to purchase lots from a joint venture in which the Company is a
venturer.  A total of 84 lots and 75 lots were purchased by the joint venture
for an aggregate amount of $1,445,000 and $1,286,000 during 1996 and 1995,
respectively.  This joint venture has outstanding option contracts totaling
$1,323,000 covering 75 lots with the Company or its affiliated joint ventures at
December 31, 1996.

       Mr. Mischer and Mr. Mischer, Jr. participate in real estate projects in
the Houston area which may compete with the Company's projects.

       In the opinion of management of the Company, all of the transactions
described above were effected on terms at least as favorable to the Company as
those which could have been obtained from unaffiliated third parties.


                             STOCKHOLDER PROPOSALS

       Stockholders of record desiring to present an appropriate resolution at
the 1998 Annual Meeting of Stockholders must furnish the proposed resolution to
the Company no later than January 13, 1998 for inclusion in the Company's proxy
statement and form of proxy relating to such meeting.  In order to avoid
controversy as to the date on which any such proposal is received by the
Company, it is suggested that stockholders submit their proposals by Certified
Mail-Return Receipt Requested.


                    RATIFICATION OF APPOINTMENT OF AUDITORS

       The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to examine and report upon the financial statements of the
Company and its consolidated subsidiaries for the year ending December 31, 1997,
and unless otherwise directed, the proxy will be voted to ratify such
appointment.  Representatives of Arthur Andersen LLP will be present at the
Meeting and will have the opportunity to make a statement and to respond to
appropriate questions.

                                       9
<PAGE>
 
                                 OTHER MATTERS

       The enclosed proxy is being solicited on behalf of the Board of Directors
of the Company.  The expense of preparing, printing and mailing the form of
proxy and the material used in the solicitation thereof will be borne by the
Company.  In addition to solicitation by mail, certain officers and regular
employees may solicit the return of proxies by telephone, telegram or personal
interview.  The Company has requested brokers, custodians, nominees and other
record holders to forward copies of the proxies and soliciting material to
persons for whom they hold shares of the Company and will reimburse such holders
for their charges or expenses.

       The Board of Directors has no information that any matters other than
those referred to in this Proxy Statement will be brought before the Meeting.
If, however, other matters do come before the Meeting, the proxy confers
discretionary authority on the persons named in the proxy to vote it in
accordance with the recommendations of management.

                                            By Order of the Board of Directors,


                                            WALTER M. MISCHER, SR.
                                            Chairman of the Board and
                                            Chief Executive Officer



Houston, Texas
April 29, 1997


       THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS, SCHEDULES AND THE EXHIBITS THERETO.  WRITTEN REQUESTS FOR
COPIES OF THE REPORT SHOULD BE DIRECTED TO THE ATTENTION OF SECRETARY, SOUTHERN
INVESTORS SERVICE COMPANY, INC., 2727 NORTH LOOP WEST, SUITE 200, HOUSTON, TEXAS
77008.

                                       10
<PAGE>
 
                    SOUTHERN INVESTORS SERVICE COMPANY, INC.
             2727 North Loop West, Suite 200, Houston, Texas  77008
          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

       The undersigned hereby revokes any proxy or proxies heretofore given and
appoints Walter M. Mischer and Walter M. Mischer, Jr., or either of them, the
attorneys and proxies of the undersigned, each with full power of substitution,
to represent and to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of Southern Investors Service Company, Inc., to be held in the
board room of Southern Investors Service Company, Inc., 2727 North Loop West,
Suite 200, Houston, Texas on May 21, 1997 at 3:00 p.m., Houston time, and at any
adjournment of said meeting, all of the shares of Common Stock in the name of
the undersigned in the name of the undersigned or which the undersigned may be
entitled to vote.

       THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE HEREIN BY THE UNDERSIGNED STOCKHOLDER.  IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEMS 1 AND 2, THIS PROXY WILL BE VOTED IN FAVOR OF
SUCH PROPOSALS.

            (Continued, and to be signed and dated, on reverse side)


<TABLE>
<CAPTION>
<S>                            <C>                 <C>                                         <C> 
                                                                                                      [ X ] Please mark
                                                                                                            your votes
                                                                                                             as this
                      ----------------
                           COMMON

1.  ELECTION OF DIRECTORS.      WITHHOLD           Walter M. Mischer, Walter M. Mischer, Jr.   2. PROPOSAL TO RATIFY THE APPOINTMENT
    FOR all nominees listed     AUTHORITY          and John D. Weil                               OF ARTHUR ANDERSON LLP as 
     at right (except as       to vote for         (INSTRUCTION: To withhold authority to         independent public accountants for
       marked to the           all nominees        vote for any individual nominee write          Company the for the calendar year
         contrary)           listed to the right   that nominee's name in the space               ending December 31, 1997.      
                                                   provided below.)                                FOR      AGAINST     ABSTAIN 
          [   ]                    [   ]           _____________________________________          [   ]      [   ]       [   ] 
                                               
 
3.  FOR THE TRANSACTION OF SUCH OTHER BUSINESS as may be
   properly brought before the meeting.
                                                                                           Signatures should agree with name of
                                                                                           stock certificate as shown hereon.  When
                                                                                           shares are held by joint tenants, both
                                                                                           should sign.  When signing as attorney,
                                                                                           executor, administrator, trustee or
                                                                                           guardian, please give full title as
                                                                                           such.  If a corporation, please sign in
                                                                                           full corporate name by President or
                                                                                           other authorized officer.  If a
                                                                                           partnership, please sign in full
                                                                                           partnership name by authorized person.
 
 
                                                                                           Dated:__________________________  , 1997
  
                                                                                           
                                                                                           ________________________________________
                                                                                                   (Stockholder's Signature)
 
                                                                                           ________________________________________ 

                                                                                                   (Stockholder's Signature)
 
</TABLE>

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