EXHIBIT 10.2


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                       EAST TEXAS FINANCIAL SERVICES, INC.

                         RECOGNITION AND RETENTION PLAN


         1. Plan  Purpose.  The purpose of the Plan is to promote the  long-term
interests  of the  Corporation  and its  stockholders  by  providing a means for
attracting and retaining  executive  employees and directors of the  Corporation
and its Affiliates.

         2. Definitions. The following definitions are applicable to the Plan:

                  "Award"  -  means  the  grant  of  Restricted   Stock  by  the
Committee, as provided in the Plan.

                  "Affiliate" - means any "parent  corporation"  or  "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.

                  "Association"   -  means  First   Federal   Savings  and  Loan
Association, a savings institution and its predecessors and successors.

                  "Code" - means the Internal Revenue Code of 1986, as amended.

                  "Committee"  - means the  Committee  referred  to in Section 7
hereof.

                  "Continuous  Service" - means the absence of any  interruption
or termination of service as a director,  advisory director,  director emeritus,
executive officer or employee of the Corporation or any Affiliate. Service shall
not be considered  interrupted in the case of sick leave,  military leave or any
other leave of absence  approved by the  Corporation  or any Affiliate or in the
case of transfers  between  payroll  locations of the Corporation or between the
Corporation,  its  subsidiaries  or its successor.  With respect to any advisory
director or director  emeritus,  continuous  service shall mean  availability to
perform  such  functions  as  may be  required  of  the  Association's  advisory
directors or directors emeritus, respectively.

                  "Corporation" - means East Texas Financial  Services,  Inc., a
Delaware corporation.

                  "ERISA" - means the Employee Retirement Income Security Act of
1974, as amended.

                  "Non-Employee  Director"  -  means  a  director  who a) is not
currently an officer or employee of the Corporation; b) is not a former employee
of the Corporation who receives compensation for prior services (other than from
a tax-qualified retirement plan); c) has not been an officer of the Corporation;
d) does not receive remuneration from the Corporation in any capacity other than
as a director;  and e) does not possess an interest in any other transactions or
is not engaged in a business relationship for which disclosure would be required
under Item 404(a) or (b) of Regulation S-K.

                  "OTS" - means the Office of Thrift Supervision.

                  "OTS  Regulations"  - means the rules and  regulations  of the
OTS.
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                  "Participant"  -  means  any  director,   advisory   director,
director  emeritus,  executive  officer or  employee of the  Corporation  or any
Affiliate who is selected by the Committee to receive an Award.

                  "Plan"  - means  the  Recognition  and  Retention  Plan of the
Corporation.

                  "Restricted Period" - means the period of time selected by the
Committee for the purpose of determining  when  restrictions are in effect under
Section 3 hereof with respect to Restricted Stock awarded under the Plan.

                  "Restricted Stock" - means Shares which have been contingently
awarded to a Participant by the Committee  subject to the restrictions  referred
to in Section 3 hereof, so long as such restrictions are in effect.

                  "Shares" - means the common stock,  par value $0.01 per share,
of the Corporation.

         3. Terms and Conditions of Restricted  Stock.  The Committee shall have
full and  complete  authority,  subject to the  limitations  of the Plan and OTS
Regulations,  to grant awards of Restricted  Stock and, in addition to the terms
and  conditions  contained in  paragraphs  (a) through (f) of this Section 3, to
provide  such other  terms and  conditions  (which need not be  identical  among
Participants)  in  respect  of such  Awards,  and the  vesting  thereof,  as the
Committee shall determine.

                  (a) At the time of an award of Restricted Stock, the Committee
shall establish for each Participant a Restricted Period, during which or at the
expiration  of which,  as the  Committee  shall  determine  and  provide  in the
agreement  referred to in paragraph (d) of this Section 3, the Shares awarded as
Restricted  Stock shall vest, and subject to any such other terms and conditions
as the Committee  shall  provide,  shares of  Restricted  Stock may not be sold,
assigned,   transferred,   pledged,   voted  or  otherwise   encumbered  by  the
Participant,  except as  hereinafter  provided,  during the  Restricted  Period.
Except for such  restrictions,  and  subject to  paragraphs  (c) and (e) of this
Section 3 and Section 4 hereof,  the  Participant  as owner of such shares shall
have all the rights of a stockholder.

                  No director who is not an employee of the Corporation shall be
granted  Awards with respect to more than 5% of the total shares  subject to the
Plan. All non-employee directors of the Corporation,  in the aggregate,  may not
be granted  Awards with respect to more than 30% of the total shares  subject to
the Plan and no individual shall be granted Awards with respect to more than 25%
of the total shares  subject to the Plan. No Awards shall begin vesting  earlier
than  one  year  from the date  the  Plan is  approved  by  stockholders  of the
Corporation  and shall  not vest at a rate in excess of 20% per year,  beginning
from the date of grant.  In the event OTS  Regulations are amended (the "Amended
Regulations") to permit shorter vesting periods, any Award made pursuant to this
Plan,  which Award is subject to the  requirements of such Amended  Regulations,
may vest, at the sole  discretion  of the  Committee,  in  accordance  with such
Amended Regulations.

                  Subject to  compliance  with OTS  Regulations,  the  Committee
shall have the authority, in its discretion, to accelerate the time at which any
or all of the restrictions shall lapse with respect thereto, or to remove any or
all of  such  restrictions,  whenever  it may  determine  that  such  action  is
appropriate  by reason  of  changes  in  applicable  tax or other  laws or other
changes in  circumstances  occurring  after the  commencement of such Restricted
Period.
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                  (b) Except as provided in Section 5 hereof,  if a  Participant
ceases to  maintain  Continuous  Service  for any  reason  (other  than death or
disability),  unless the  Committee  shall  otherwise  determine,  all Shares of
Restricted Stock  theretofore  awarded to such Participant and which at the time
of such  termination  of  Continuous  Service  are  subject to the  restrictions
imposed  by  paragraph  (a) of this  Section 3 shall  upon such  termination  of
Continuous  Service  be  forfeited  and  returned  to  the  Corporation.   If  a
Participant  ceases  to  maintain  Continuous  Service  by  reason  of  death or
disability,  Restricted  Stock then still  subject  to  restrictions  imposed by
paragraph (a) of this Section 3 will be free of those restrictions in proportion
to the portion of the restricted  period which shall have elapsed at the time of
such termination of Continuous Service.

                  (c) Each  certificate in respect of Shares of Restricted Stock
awarded under the Plan shall be registered  in the name of the  Participant  and
deposited by the  Participant,  together  with a stock power  endorsed in blank,
with the Corporation and shall bear the following (or a similar) legend:

                  "The  transferability  of this  certificate  and the shares of
         stock  represented  hereby  are  subject  to the terms  and  conditions
         (including  forfeiture) contained in the Recognition and Retention Plan
         of East Texas Financial Services,  Inc. Copies of such Plan are on file
         in the offices of the Secretary of East Texas Financial Services, Inc.,
         1200 S. Beckham Avenue, Tyler, Texas 75701-3319."

                  (d) At the time of any Award, the Participant shall enter into
an Agreement with the Corporation in a form specified by the Committee, agreeing
to the  terms  and  conditions  of the  Award  and  such  other  matters  as the
Committee,  in its sole  discretion,  shall  determine  (the  "Restricted  Stock
Agreement").

                  (e) At the time of an award of shares of Restricted Stock, the
Committee  shall  determine  that the payment to the  Participant  of  dividends
declared or paid on such shares by the  Corporation  shall be deferred until the
lapsing of the  restrictions  imposed under paragraph (a) of this Section 3, and
shall be held by the Corporation  for the account of the Participant  until such
time.  There  shall be  credited  at the end of each year (or  portion  thereof)
interest  at a  market  rate per  annum  on the  amount  of the  account  at the
beginning  of the  year.  Payment  of  deferred  dividends  to the  Participant,
together with interest accrued thereon,  shall be made upon the earlier to occur
of the lapsing of the restrictions imposed under paragraph (a) of this Section 3
or upon death or disability of the Participant.

                  (f) At the expiration of the restrictions imposed by paragraph
(a) of this Section 3, the  Corporation  shall  redeliver to the Participant (or
where the relevant  provision of paragraph  (b) of this Section 3 applies in the
case of a deceased  Participant,  to his legal  representative,  beneficiary  or
heir) the certificate(s) and stock power deposited with it pursuant to paragraph
(c) of this Section 3 and the Shares represented by such certificate(s) shall be
free of the restrictions referred to in paragraph (a) of this Section 3.

         4.  Adjustments  Upon  Changes in  Capitalization.  In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan by
reason of any  reorganization,  recapitalization,  stock split,  stock dividend,
combination or exchange of shares,  merger,  consolidation  or any change in the
corporate  structure or Shares of the Corporation,  the maximum aggregate number
and class of shares as to which  Awards  may be  granted  under the Plan and the
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number and class of shares with  respect to which Awards  theretofore  have been
granted under the Plan shall be appropriately  adjusted by the Committee,  whose
determination  shall be  conclusive.  Any  shares  of stock or other  securities
received, as a result of any of the foregoing,  by a Participant with respect to
Restricted   Stock   shall  be  subject  to  the  same   restrictions   and  the
certificate(s)  or other  instruments  representing or evidencing such shares or
securities  shall be legended and deposited  with the  Corporation in the manner
provided in Section 3 hereof.

         5. Effect of Change in  Control.  Each of the events  specified  in the
following  clauses (i) through (iii) of this Section 5 shall be deemed a "change
of  control":  (i) any third  person,  including a "group" as defined in Section
13(d)(3) of the  Securities  Exchange Act of 1934,  shall become the  beneficial
owner of  Shares of the  Corporation  with  respect  to which 25% or more of the
total  number  of votes  which  may be cast  for the  election  of the  Board of
Directors of the  Corporation,  (ii) as a result of, or in connection  with, any
cash tender offer, exchange offer, merger or other business combination, sale of
assets or contested election,  or combination of the foregoing,  the persons who
were  directors of the  Corporation  shall cease to constitute a majority of the
Board  of  Directors  of the  Corporation,  or  (iii)  the  stockholders  of the
Corporation  shall approve an agreement  providing  either for a transaction  in
which the Corporation  will cease to be an independent  publicly owned entity or
for a sale or other  disposition of all or  substantially  all the assets of the
Corporation or the Association.  If the Continuous Service of any Participant of
the Corporation is involuntarily  terminated for any reason other than cause, at
any time within 12 months after a change in control,  unless the Committee shall
have otherwise provided,  any Restricted Period with respect to Restricted Stock
theretofore  awarded to such  Participant  shall lapse upon such termination and
all  Shares  awarded  as  Restricted  Stock  shall  become  fully  vested in the
Participant to whom such Shares were awarded.

         6.  Assignments and Transfers.  No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned,  encumbered or transferred except, in the event of the death of
a Participant,  by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of ERISA or
the rules thereunder.

         7.  Administration.  The Plan  shall  be  administered  by a  Committee
consisting  of two or  more  members,  each  of  whom  shall  be a  Non-Employee
Director.  The  members  of the  Committee  shall be  appointed  by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan,  the  Committee  shall have sole and complete  authority  and  discretion,
subject to OTS Regulations,  to (i) select  Participants and grant Awards;  (ii)
determine  the number of shares to be subject to types of Awards  generally,  as
well as to individual  Awards granted under the Plan;  (iii) determine the terms
and conditions upon which Awards shall be granted under the Plan; (iv) prescribe
the form and terms of instruments evidencing such grants; and (v) establish from
time to time regulations for the administration of the Plan, interpret the Plan,
and make all determinations deemed necessary or advisable for the administration
of the Plan.

         A majority of the Committee shall constitute a quorum,  and the acts of
a majority of the  members  present at any meeting at which a quorum is present,
or acts  approved in writing by a majority of the  Committee  without a meeting,
shall be acts of the Committee.
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         8. Shares  Subject to Plan.  Subject to  adjustment by the operation of
Section 4 hereof,  the maximum number of Shares with respect to which Awards may
be made under the Plan is 48,608 shares,  subject to the  Association's  capital
level  meeting  OTS  regulatory  requirements  at  the  time  of  submission  to
stockholders. The shares with respect to which Awards may be made under the Plan
may be either  authorized  and unissued  shares or issued  shares  heretofore or
hereafter  reacquired  and  held as  treasury  shares.  An  Award  shall  not be
considered  to have been made under the Plan with  respect to  Restricted  Stock
which is forfeited  and new Awards may be granted under the Plan with respect to
the number of Shares as to which such forfeiture has occurred.

         9.  Employee  Rights Under the Plan.  No director,  officer or employee
shall have a right to be selected as a Participant nor, having been so selected,
to be selected  again as a  Participant  and no director,  officer,  employee or
other person shall have any claim or right to be granted an Award under the Plan
or  under  any  other  incentive  or  similar  plan  of the  Corporation  or any
Affiliate.  Neither the Plan nor any action taken  thereunder shall be construed
as  giving  any  employee  any  right  to be  retained  in  the  employ  of  the
Corporation, the Association or any Affiliate.

         10. Withholding Tax. Upon the termination of the Restricted Period with
respect to any shares of Restricted  Stock (or at any such earlier time, if any,
that an election is made by the Participant  under Section 83(b) of the Code, or
any successor  provision thereto, to include the value of such shares in taxable
income),  the  Corporation  shall have the  right,  in its sole  discretion,  to
withhold from any payment or distribution made under this Plan sufficient Shares
or withhold  sufficient cash to cover any applicable  withholding and employment
taxes.  The  Corporation  shall have the right to deduct from all dividends paid
with  respect to shares of  Restricted  Stock the amount of any taxes  which the
Corporation is required to withhold with respect to such dividend  payments.  No
discretion or choice shall be conferred upon any Participant with respect to the
form, timing or method of any such tax withholding.

         11. Amendment or Termination. The Board of Directors of the Corporation
may amend,  suspend or  terminate  the Plan or any portion  thereof at any time,
subject to OTS  Regulations,  but  (except as  provided  in Section 4 hereof) no
amendment shall be made without  approval of the stockholders of the Corporation
which shall (i) materially  increase the aggregate number of Shares with respect
to which  Awards  may be made  under  the Plan,  (ii)  materially  increase  the
aggregate  number of Shares  which may be subject to Awards or (iii)  change the
class of persons eligible to participate in the Plan; provided, however, that no
such  amendment,  suspension  or  termination  shall  impair  the  rights of any
Participant,  without his consent, in any Award theretofore made pursuant to the
Plan.

         12. Term of Plan. The Plan shall become  effective upon its approval by
the stockholders of the  Corporation.  It shall continue in effect for a term of
ten years unless sooner terminated under Section 11 hereof.
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         13. Initial Grants. By, and  simultaneously  with, the approval of this
Plan by the  stockholders  of the  Corporation,  each  member  of the  Board  of
Directors of the Corporation who is not a full-time Employee,  is hereby granted
an Award of 2,066  Shares.  Each Award shall be evidenced by a Restricted  Stock
Agreement in a form  approved by the Board of Directors  and shall be subject in
all respects to the terms and  conditions of this Plan,  which are  controlling.
Each  of  the  Awards  granted   hereunder  shall  vest  in  five  equal  annual
installments,  with the first installment vesting on the one-year anniversary of
the date of grant. Awards granted pursuant to this Section 13 are subject to the
conditions of the Plan,  including the  requirement  that the Director  maintain
Continuous Service with the Association from the date of grant, provided that no
Awards shall be earned in any fiscal year in which the Association fails to meet
all of its fully phased-in capital requirements.