FORM 10-QSB/A
                               (Amendment No. One)

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



     [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                     For the period ended December 31, 2002

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

               For the transition period from _______ to _______.


                         Commission file number 0-24848


                       East Texas Financial Services, Inc.
             (Exact name of registrant as specified in its charter)

            Delaware                                          75-2559089
 (State or other jurisdiction of                          (I.R.S. employer
 incorporation or organization                            identification number)

1200 South Beckham, Tyler, Texas                                         75701
(Address of principal executive offices)                              (Zip code)

                                 (903) 593-1767
              (Registrant's telephone number, including area code)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 of 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

                                 [x] Yes [ ] No

         The number of shares of the registrant's common stock ($.01 par value)
outstanding as of December 31, 2002, was 1,162,320.


<PAGE>

<TABLE>
<CAPTION>





                       EAST TEXAS FINANCIAL SERVICES, INC.
                                 AND SUBSIDIARY

                                   FORM 10-QSB

                                December 31, 2002

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


                                      INDEX

                                                                                                                 Page No.

Part I - Financial Information

<S>                                                                                                                  <C>
     Item 1.  Financial Statements

         Consolidated Statements of Financial Condition, December 31, 2002
         (Unaudited) and September 30, 2002
         ........................................................................................................... 4


         Consolidated Statements of Income, (Unaudited) three months ended
         December 31, 2002 and December 31,
         2001....................................................................................................... 5

         Consolidated Statement of Changes in Stockholders' Equity, (Unaudited)
         three months ended December 31,
         2002....................................................................................................... 6


         Consolidated Statements of Cash Flows, (Unaudited) three months ended
         December 31, 2002, and December 31,
         2001....................................................................................................... 7

         Notes to (Unaudited) Consolidated Financial Statements, December 31, 2002.................................. 9

     Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations......................................................................................16

     Item 3.  Controls and Procedures...............................................................................24

Part II - Other Information

     Item 1.  Legal Proceedings.................................................................................... 25

     Item 2.  Changes In Securities................................................................................ 25

     Item 3.  Defaults Upon Senior Securities.......................................................................25

     Item 4.  Submission of Matters To a Vote of Security Holders...................................................25

     Item 5.  Other Information.....................................................................................25

     Item 6.  Exhibits and Reports on Form 8-K......................................................................25

Signature
Page................................................................................................................27
</TABLE>


                                     2 of 30
<PAGE>



                       EAST TEXAS FINANCIAL SERVICES, INC.
                                 AND SUBSIDIARY

                                   FORM 10-QSB

                                December 31, 2002

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

PART I - FINANCIAL INFORMATION

     Item 1 - Financial Statements

East Texas Financial  Services,  Inc. (the "Company") was formed in September of
1994 for the  purpose  of  acquiring  all of the common  stock of First  Federal
Savings and Loan Association of Tyler (the  "Association"),  concurrent with its
conversion from the mutual to stock form of ownership. The Company completed its
initial public stock offering of 1,215,190 shares of $.01 par value common stock
on January 10,  1995.  The Company  utilized  approximately  one half of the net
stock  sale  proceeds  to  acquire  all  of  the  common  stock  issued  by  the
Association.

The financial  statements presented in this Form 10-QSB reflect the consolidated
financial  condition  and  results of  operations  of the Company and its wholly
owned subsidiary, First Federal Savings and Loan Association of Tyler.



                                     3 of 30
<PAGE>
<TABLE>
<CAPTION>


                       EAST TEXAS FINANCIAL SERVICES, INC.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                              ASSETS                                    December 31, 2002  September 30, 2002
                                                                       ------------------  ------------------
                                                                        (Unaudited)

<S>                                                                    <C>                 <C>
Cash and due from banks                                                $       2,244,883   $       2,561,615
Interest-bearing deposits with banks                                          11,623,659           2,883,189
Interest-earning time deposits with financial institutions                       100,000             300,000
Federal funds sold                                                             1,884,783             599,698
Investment securities available-for-sale                                         513,626             516,443
Investment securities held-to-maturity (estimated market value of
    $8,147,454 at December 31, 2002, and $10,134,910 at September
    30, 2002)                                                                  7,713,085           9,723,716
Mortgage-backed securities available-for-sale                                  8,492,616          20,144,942
Mortgage-backed securities held-to-maturity (estimated market
    value of $39,072,474 at December 31, 2002 and $30,822,859 at
    September 30, 2002)                                                       39,005,622          30,591,248
Loans receivable, net of allowance for credit losses of $775,413
    at December 31, 2002 and $756,566 at September 30, 2002                  130,655,659         137,182,965
Accrued interest receivable                                                    1,184,457           1,324,440
Federal Home Loan Bank stock, at cost                                          4,620,300           4,588,500
Premises and equipment                                                         2,828,138           2,868,435
Foreclosed assets, net                                                           319,287             394,210
Goodwill, net                                                                  2,170,381           2,170,381
Mortgage servicing rights                                                        341,796             255,269
Cash value of life insurance owned                                             3,629,937                   0
Other assets                                                                   1,022,796           1,605,326
                                                                       ------------------  ------------------

Total Assets                                                           $     218,351,025   $     217,710,377
                                                                       ==================  ==================

               LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
      Noninterest deposits                                             $       3,270,343   $       3,900,913
      Interest-bearing deposits                                              108,330,046         103,567,616
                                                                       ------------------  ------------------
         Total deposits                                                      111,600,389         107,468,529

      FHLB advances                                                           82,912,688          86,312,294
      Advances from borrowers for taxes and insurance                          (125,301)           1,033,717
      Federal income taxes
         Current                                                                 246,778             847,781
         Deferred                                                                489,197             493,953
      Accrued expenses and other liabilities                                   3,578,922           2,271,637
                                                                       ------------------  ------------------
         Total liabilities                                                   198,702,673         198,427,911
                                                                       ------------------  ------------------
Stockholders' equity:
      Preferred stock, $0.01 par value, 500,000 shares
        authorized, none outstanding
      Common stock, $0.01 par value, 5,500,000 shares authorized,
        1,884,492 shares issued and 1,162,320 outstanding                         18,845              18,845
      Additional paid-in-capital                                              12,525,303          12,525,303
      Unearned employee stock ownership plan shares                            (170,716)           (170,716)
      Retained earnings (substantially restricted)                            16,410,558          16,035,441
      Accumulated other comprehensive income                                   (268,356)           (259,125)
      Treasury stock, 722,172 shares at cost                                 (8,867,282)         (8,867,282)
                                                                       ------------------  ------------------

         Total stockholder's equity                                           19,648,352          19,282,466
                                                                       ------------------  ------------------

Total liabilities and stockholders' equity                             $     218,351,025   $     217,710,377
                                                                       ==================  ==================
</TABLE>






The accompanying notes are an integral part of the consolidated financial
statements.




                                     4 of 30
<PAGE>
<TABLE>
<CAPTION>


                       EAST TEXAS FINANCIAL SERVICES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                                        Three Months
                                                                     Ended December 31,
                                                                     2002          2001
                                                                  -----------    ----------
                  INTEREST INCOME
<S>                                                               <C>           <C>
                      Loans receivable:
                        First Mortgage                            $1,430,857    $1,560,174
                        Consumer and other loans                   1,000,763       782,940
                      Securities available-for-sale:
                        Investment securities                         38,891        83,827
                        Mortgage-backed securities                    54,273       268,562
                      Securities held-to-maturity:
                        Investment securities                        125,812       155,079
                        Mortgage-backed securities                   393,461       526,963
                      Deposits with banks:                            29,746        16,811
                                                                  -----------    ----------

                           Total interest income                   3,073,803     3,394,356
                                                                  -----------    ----------

                  INTEREST EXPENSE

                      Deposits                                       877,002     1,214,415
                      FHLB advances                                  653,017       683,010
                                                                  -----------    ----------

                        Total interest expense                     1,530,019     1,897,425
                                                                  -----------    ----------
                        Net interest income before provision       1,543,784     1,496,931
                          for loan losses

                      Provision for loan losses                      123,643         9,759
                                                                  -----------    ----------

                        Net interest income after  provision
                          for loan losses                          1,420,141     1,487,172
                                                                  -----------    ----------

                  NONINTEREST INCOME
                      Gain (loss) on sale of interest-earning        211,522       408,534
                        assets
                      Loan origination and commitment fees            19,865        49,489
                      Loan servicing fees                              5,745      (36,121)
                      Other                                          181,784       116,468
                                                                  -----------    ----------

                        Total noninterest income                     418,916       538,370
                                                                  -----------    ----------

                  NONINTEREST EXPENSE
                      Compensation and benefits                      745,167       636,771
                      Occupancy and equipment                        106,684       107,239
                      SAIF deposit insurance premium                   4,523         5,194
                      Foreclosed assets, net                          67,512        14,996
                      Other                                          234,871       257,107
                                                                  -----------    ----------

                        Total noninterest expense                  1,158,757     1,021,307
                                                                  -----------    ----------

                  Income (loss) before provision for income          680,300     1,004,235
                    taxes

                  Income tax expense (benefit)                       247,067       351,069
                                                                  -----------    ----------

                  NET INCOME (LOSS)                               $  433,233    $  653,166
                                                                  ===========    ==========


                  Earnings per common share                       $     0.38    $     0.58
                  Earnings per common share - assuming                  0.37          0.58
                    dilution
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                     5 of 30

<TABLE>
<CAPTION>


                                                               EAST TEXAS FINANCIAL SERVICES, INC.
                                                     CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                                           (UNAUDITED)

                                                                                       Net Unearned          Other
                                         Additional                                   Employee Stock      Accumulated
                               Common      Paid-in        Retained      Treasury      Ownership Plan     Comprehensive
Balance at September 30, 2002  Stock       Capital        Earnings        Stock          Shares            Income          Total
                              ------------------------------------------------------ -----------------------------------------------
<S>                           <C>          <C>          <C>             <C>          <C>               <C>              <C>
                              $18,845      12,525,303   $16,035,441     (8,867,282)  $    (170,716)    $     (259,125)   19,282,466
Comprehensive income:

  Net Income                                                433,233                                                     $   433,233
  Net change in unrealized
    gain (loss) on
    securities
    available-for-sale net
    of deferred taxes                                                                                  $       (9,231)       (9,231)
                                                                                                                        ------------
    Total comprehensive                                                                                                 $   424,002
    income

Cash dividends of $0.05 per
  share                                                 $   (58,116)                                                    $   (58,116)
                              --------  --------------  ------------  -------------- ----------------  ---------------   -----------

Balance December 31, 2002     $18,845      12,525,303   $16,410,558     (8,867,282)   $    (170,716)   $     (268,356)   19,648,352
                              ========  ==============  ============  ============== ================ =================  ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                    6 of 30
<PAGE>



                       EAST TEXAS FINANCIAL SERVICES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   For the Three Months Ended
                                                                                         December 31,
                                                                                   2002                2001
                                                                               --------------     --------------
<S>                                                                            <C>                <C>
Cash flows from operating activities:
    Net income                                                                 $     433,233      $      653,164
    Adjustments to reconcile net income to net cash provided by operating
    activities:
      Amortization of deferred loan origination fees                                    (874)               (681)
      Amortization of premiums and discounts on investment securities,
         mortgage-backed securities, and loans                                       106,472             (13,216)
      Depreciation                                                                    46,074              37,207
      Provision for loan losses                                                      123,643               9,759
      Stock dividends on FHLB stock                                                 (31,805)            (32,600)
      Amortization of mortgage servicing rights                                       30,679              72,967
      Increase in cash value of life insurance                                       (29,937)                  0
      Net (gain) loss on sale of:
         Loans held for sale                                                         (94,316)            (40,209)
         Fixed assets                                                                      0                (309)
         Foreclosed assets                                                            64,314              (6,218)
         Interest earning assets                                                           0            (325,503)
      Proceeds from loan sales                                                     6,293,980           4,264,310
      Originations of loans held for sale                                         (6,199,664)         (4,224,101)
      (Increase) decrease in
         Accrued interest receivable                                                 139,983              73,556
         Other assets                                                                582,530             524,624
      Increase (decrease) in:
         Federal income tax payable                                                 (601,003)            312,558
         Accrued expenses and other liabilities                                    1,307,285           2,295,948

                                                                               --------------     --------------
Net cash provided (used) by operating activities                                   2,170,594           3,601,256
                                                                               --------------     --------------
</TABLE>



                                   (Continued)

                                    7 of 30
<PAGE>
<TABLE>
<CAPTION>


                       EAST TEXAS FINANCIAL SERVICES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                                                   For the Three Months Ended
                                                                                         December 31,
                                                                                   2002                2001
                                                                               -------------      --------------
<S>                                                                            <C>                <C>
Cash flows from investing activities
    Net (increase) decrease in fed funds sold                                     (1,285,085)         (2,411,539)
    Proceeds from sale of corporate debt available-for-sale                                0           6,308,899
    Purchase of securities held-to-maturity                                                0          (3,291,949)
    Proceeds from maturities of time deposits                                        200,000                   0
    Proceeds from maturities of securities held-to-maturity                                0          (2,000,000)
    Proceeds from sale of obligations of U.S. Government agencies
      held-to-maturity                                                             2,000,000                   0
    Purchases of mortgage-backed securities  available-for-sale                            0          (1,000,000)
    Purchase of mortgage-backed securities held-to-maturity                      (21,744,955)                  0
    Principal payments on mortgage-backed securities available-for-sale           11,588,542           6,562,852
    Principal payments on mortgage-backed securities held-to-maturity             13,287,358           4,358,852
    Purchases of Bank Owned Life Insurance                                        (3,600,000)                  0
    Net (increase)decrease in loans                                                6,258,722          (7,009,138)
    Proceeds from sale of foreclosed assets                                          162,988             103,133
    Capitalized acquisition cost related to foreclosed real estate                    (6,564)             (2,974)
    Expenditures for premises and equipment                                           (5,776)             (8,484)
    Origination of mortgage servicing rights                                        (117,206)            (42,821)
                                                                               -------------      --------------

Net cash provided (used) by investing activities                                   6,738,024           1,566,831
                                                                               -------------      --------------

Cash flows from financing activities: Net increase (decrease) in:
      Deposits                                                                     4,131,860          (7,699,355)
      Advances from borrowers                                                     (1,159,018)         (1,226,033)
    Proceeds from advances from Federal Home Loan Bank                           134,000,000         242,000,000
    Payment of advances from Federal Home Loan Bank                             (137,399,606)      ( 238,912,936)
    Dividends paid to stockholders                                                   (58,116)            (58,116)
                                                                               -------------      --------------

Net cash provided (used) by financing activities                                    (484,880)         (5,896,440)
                                                                               -------------      --------------

Net increase (decrease) in cash and cash equivalents                               8,423,738            (728,353)

Cash and cash equivalents at beginning of the period                               5,444,804           4,838,011
                                                                               -------------      --------------

                                                                               =============      ==============
Cash and cash equivalents at end of the period                                 $  13,868,542      $    4,109,658
                                                                               =============      ==============


Supplemental disclosure:
    Cash paid for:
      Interest on deposits                                                     $     458,892      $    1,037,841
      Interest on FHLB advances and other borrowed funds                             653,017             683,010
      Income taxes                                                                   847,781                   0

    Transfers from loans to real estate and other assets acquired
      through foreclosures                                                           441,557             234,999
    Loans made to facilitate the sale of foreclosed assets                           150,171              61,613
</TABLE>

The accompanying notes are an integral part of the financial statements.



                                    8 of 30

<PAGE>


                       EAST TEXAS FINANCIAL SERVICES, INC.
                                 AND SUBSIDIARY


             NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002


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

NOTE 1 - BASIS OF PRESENTATION

The  financial  statements  presented  in this report have been  prepared by the
Company  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission for interim  reporting and include all adjustments  which are, in the
opinion  of  management,   necessary  for  fair  presentation.  These  financial
statements  have  not  been  audited  by  an  independent  accountant.   Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed  or  omitted  pursuant  to such  rules  and  regulations  for  interim
reporting.  The Company  believes that the  disclosures are adequate to make the
information not misleading.  However,  these financial statements should be read
in conjunction  with the financial  statement and notes thereto  included in the
Company's  Annual  Report on Form 10-KSB for the year ended  September 30, 2002.
The financial data and results of operations for interim  periods  presented may
not necessarily reflect the results to be anticipated for the complete year.

NOTE 2 - EARNINGS PER SHARE

Earnings per common share for the three months ended December 31, 2002 and 2001,
has been computed based on net income divided by the weighted  average number of
common shares outstanding during the period. For the three months ended December
31, 2002 and 2001,  the weighted  average number of shares  outstanding  totaled
1,136,746 and 1,123,979 shares, respectively.

Earnings  per  common  share - assuming  dilution,  for the three  months  ended
December 31, 2002 and 2001, has been computed based on net income divided by the
weighted average number of common shares outstanding.  In addition,  it includes
the effects of all dilutive potential common shares that were outstanding during
the period.  For the three months ended December 31, 2002 and 2001, the weighted
average number of shares  outstanding for earnings per share - assuming dilution
totaled 1,162,956 and 1,124,126 shares, respectively.

For both  earnings per share and  earnings per common share - assuming  dilution
and as  prescribed  by the American  Institute of Certified  Public  Accountants
Statement of Position  93-6 ("SOP 93-6")  Employer's  Accounting  for  Employees
Stock Ownership Plans,  the weighted  average number of shares  outstanding does
not include unallocated Employee Stock Ownership Plan ("ESOP") shares.

See Part II, Item 6 - Exhibits for a detailed  presentation  of the earnings per
share calculation for the three-month periods ended December 31, 2002 and 2001.

                                    9 of 30
<PAGE>


NOTE 3 - SECURITIES

The carrying values and estimated market values of investment securities
available-for-sale as of December 31, 2002, by type of security are as follows:
<TABLE>
<CAPTION>

                       Principal         Unamortized          Unearned           Unrealized          Carrying
                        Balance            Premiums           Discounts         Gain/(Loss)           Value
                     --------------     ---------------     --------------     ---------------    ---------------

<S>                <C>                <C>                 <C>                <C>                <C>
Municipal bonds    $       490,000    $              0    $         2,101    $         25,727   $        513,626
                     --------------     ---------------     --------------     ---------------    ---------------

                   $       490,000    $              0    $         2,101    $         25,727   $        513,626
                     --------------     ---------------     --------------     ---------------    ---------------
</TABLE>

The amortized cost and estimated market values of investment securities
held-to-maturity as of December 31, 2002, are as follows:
<TABLE>
<CAPTION>

                                                             Gross              Gross             Estimated
                                        Amortized         Unrealized          Unrealized           Market
                                          Cost               Gains              Losses              Value
                                      --------------     --------------     ---------------     --------------
Debt securities:

<S>                                 <C>                <C>                <C>           <C>   <C>
      U. S. government agency       $     1,488,101    $        58,930    $            -0-    $     1,547,031

      Corporate Debt                      6,224,984            379,567               4,128          6,600,423
                                      --------------     --------------     ---------------     --------------

           Total debt securities    $     7,713,085    $       438,497    $          4,128    $     8,147,454
                                      --------------     --------------     ---------------     --------------
</TABLE>

The amortized cost and estimated market values of investment securities
held-to-maturity as of December 31, 2002, by contractual maturity are shown
below:
<TABLE>
<CAPTION>

                                                                              Estimated
                                                           Amortized            Market
                                                             Cost               Value
                                                         --------------     ---------------

              <S>                                      <C>                <C>
              Due in one year through two years        $     1,000,000    $      1,018,750

              Due in two years through three years             998,211           1,067,812

              Due in three years through six years           2,564,045           2,674,374

              Due after six years                            3,150,829           3,386,518
                                                         --------------     ---------------

                     Total debt securities             $     7,713,085    $      8,147,454
                                                         --------------     ---------------
</TABLE>


                                    10 of 30
<PAGE>


The carrying values and estimated market values of mortgage-backed and related
securities available-for-sale as of December 31, 2002, by type of security are
as follows:
<TABLE>
<CAPTION>

                        Principal         Unamortized          Unearned          Unrealized           Carrying
                         Balance            Premiums           Discounts         Gain/(Loss)           Value
                      --------------     ---------------     --------------     --------------     ---------------

<S>                 <C>                <C>                 <C>                <C>                <C>
  Fixed Rate        $       645,139    $              0    $         1,964    $        24,502    $        667,677

  Adjustable Rate         7,752,546              33,816              1,174             39,751           7,824,939
                      --------------     ---------------     --------------     --------------     ---------------

                    $     8,397,685    $         33,816    $         3,138    $        64,253    $      8,492,616
                      --------------     ---------------     --------------     --------------     ---------------
</TABLE>


The carrying values and estimated market values of mortgage-backed and related
securities held-to-maturity as of December 31, 2002, by type of security are as
follows:
<TABLE>
<CAPTION>
                                                                                                      Estimated
                        Principal         Unamortized          Unearned            Carrying             Market
                         Balance            Premiums           Discounts            Value               Value
                      --------------     ---------------     --------------     --------------     ---------------

<S>                 <C>                <C>                 <C>                <C>                <C>
  Fixed Rate        $    35,328,356    $        221,879    $         9,867    $    35,540,368    $     35,542,104

  Adjustable Rate         3,457,023               9,550              1,319          3,465,254           3,530,370
                      --------------     ---------------     --------------     --------------     ---------------

                    $    38,785,379    $        231,429    $        11,186    $    39,005,622    $     39,072,474
                      --------------     ---------------     --------------     --------------     ---------------

</TABLE>


                                    11 of 30
<PAGE>


NOTE 4 - STOCK OPTION AND INCENTIVE PLAN

 The 1995 Stock Option and Incentive Plan (the "Stock Option Plan") provides for
awards in the form of stock options, stock appreciation rights, limited stock
appreciation rights, and restricted stock.

Options to purchase shares of common stock of the Company may be granted to
selected directors, officers and key employees. The number of shares of common
stock reserved for issuance under the stock option plan was equal to 182,278 or
10% of the total number of common shares issued pursuant to the conversion. The
option exercise price cannot be less than the fair market value of the
underlying common stock as of the date of the option grant, and the maximum
option term cannot exceed ten years. Awards generally vest at a rate of 20% per
year beginning at the date of the grant. The Company uses treasury stock for the
exercise of options. The following is a summary of changes in options
outstanding:
<TABLE>
<CAPTION>

<S>                                                                                <C>
     Balance, September 30, 2000                                                    151,776
         Granted                                                                        -0-
         Exercised                                                                      -0-
         Forfeited and expired                                                          -0-
                                                                                   ---------

     Balance, September 30, 2001                                                    151,776
         Granted                                                                        -0-
         Exercised                                                                      -0-
         Forfeited and expired                                                          -0-
                                                                                   ---------

     Balance, September 30, 2002                                                    151,776
                                                                                   =========


Options exercisable at December 31, 2002 under stock option plan                    150,277
                                                                                   =========

Shares available for future grants                                                   22,662
                                                                                  ==========
</TABLE>

During the three months ended December 31, 2002, no options were exercised,
issued, or forfeited.

                                    12 of 30

<PAGE>


NOTE 5 - ADVANCES FROM FEDERAL HOME LOAN BANK

The outstanding advances from the FHLB consisted of the following at December
31, 2002:
<TABLE>
<CAPTION>

                      Maturity                         Balance                         Rate
                ----------------------        --------------------------         ----------------

<S>                   <C>                     <C>                                    <C>
                      01/13/03                $             28,000,000               1.44%
                      02/15/03                $                100,000               6.00%
                      03/10/03                $              2,000,000               5.00%
                      03/10/03                $              2,000,000               2.78%
                      09/01/03                $                411,803               6.25%
                      12/01/03                $              1,000,000               3.12%
                      12/05/03                $              5,000,000               3.57%
                      12/05/03                $              2,000,000               1.66%
                      02/12/04                $              5,000,000               2.09%
                      02/15/04                $                100,000               6.01%
                      05/18/04                $              5,000,000               1.95%
                      11/30/04                $              1,000,000               3.93%
                      12/31/04                $                226,360               6.09%
                      01/03/05                $                 47,983               6.03%
                      02/15/05                $                100,000               6.04%
                      06/06/05                $              3,000,000               2.83%
                      02/15/06                $                150,000               6.05%
                      04/11/11                $              5,000,000               3.73%
                      04/11/11                $              5,000,000               3.91%
                      04/11/11                $              5,000,000               4.25%
                      06/07/11                $              5,000,000               4.38%
                      01/01/13                $                382,987               6.09%
                      01/01/13                $                364,105               6.13%
                      02/01/13                $                360,980               5.91%
                      03/03/14                $                636,251               5.45%
                      04/01/14                $                617,536               5.97%
                      05/01/14                $                839,588               5.66%
                      06/01/14                $                641,918               5.90%
                      07/01/14                $                596,935               6.38%
                      08/01/14                $                433,962               6.37%
                      09/01/14                $                549,517               6.59%
                      10/01/14                $                483,591               6.86%
                      11/03/14                $              1,194,143               6.77%
                      12/01/14                $                407,674               6.57%
                      01/01/15                $                267,354               6.73%
                   Total Advances             --------------------------
                                              $             82,912,688
</TABLE>

Pursuant to collateral agreements with the Federal Home Loan Bank (FHLB),
advances are secured by all stock and deposit accounts in the FHLB, mortgage
collateral, securities collateral, and other collateral.

                                    13 of 30
<PAGE>


NOTE 6 - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

The following table sets forth an analysis of the Company's allowance for loan
losses.
<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                                                   December 31, 2002
                                                               ---------------------------
                                                                 (Dollars in Thousands)

<S>             <C>                                            <C>
                Balance at beginning of period                 $                      757

                Charge-offs:
                   One-to-four family                                                   0
                   Consumer and other loans                                          (148)
                                                               ---------------------------
                       Total charge-offs                                             (148)
                                                               ---------------------------

                Recoveries:
                   One-to-four family                                                   0
                   Consumer and other loans                                            42
                                                               ---------------------------
                       Total recoveries                                                42
                                                               ---------------------------


                Net (charge-offs)/recoveries                                         (106)

                Additions charged to income                                           124
                                                               ---------------------------

                Balance at end of period                       $                      775
                                                               ===========================


                Ratio of net charge-offs/recoveries during
                    the period to average loans outstanding
                    during the period                                               (0.08)%
                                                               ===========================


                Ratio of net charge-offs/recoveries during
                    the period to average non-performing
                    assets                                                          (5.33)%
                                                               ===========================

</TABLE>





The distribution of the Company's allowance for losses on loans at the dates
indicated is summarized as follows:

<TABLE>
<CAPTION>

                                  December 31, 2002                    September 30, 2002
                          ------------------------------------   ---------------------------------
                                                  Percent                                 Percent
                                                  Of Loans                                Of Loans
                                         Loan     In Each                       Loan      In Each
                           Amount of     Amounts  Category        Amount of    Amounts   Category
                           Loan Loss       by     To Total        Loan Loss      by      To Total
                           Allowance    Category   Loans          Allowance   Category    Loans
                           ----------    -------  ---------      ----------   --------  ---------
              (Dollars in
               Thousands)

<S>                              <C>   <C>           <C>         <C>           <C>         <C>
       One-to four-family        121   $ 52,775      39.15%      $     108     61,396      43.07 %
       Other residential           0      3,741       2.78               0      2,679       1.88
       Home equity and
         Improvement               0     12,620       9.37               2     10,845       7.61
       Non-residential             0     17,916      13.30               0     17,185      12.05
       Construction               12      7,510       5.57               9      8,592       6.03
       Commercial and
         Consumer                269     40,193      29.83             272     41,845      29.36
       Unallocated               373          0       0.00             366          0       0.00
                          -----------  ---------  ---------      ----------   --------  ---------
          Total                  775   $134,755     100.00%      $     757    $142,542     100.00%
                          ===========  =========  =========      ==========   ========  =========
</TABLE>




                                    14 of 30
<PAGE>


NOTE 7 - BANK OWNED LIFE INSURANCE



During the quarter ended December 31, 2002, the  Association  elected to make an
investment  in Bank Owned Life  Insurance  ("BOLI").  The BOLI purchase was made
with excess cash that was held by the Association that would have otherwise been
invested  in  securities.  The  purpose of the BOLI  investment  is to  increase
earnings  and  thereby  offset  increased   compensation  and  benefit  expenses
associated  with  the  Association's   defined  benefit  pension  plan,  medical
insurance  benefits,  and other  similar  expenses.  A total  BOLI  purchase  of
approximately  $3.6  million in premiums was  invested  with two  separate  life
insurance companies. The premiums are invested in the general assets of the life
insurance companies. Crediting rates are set by the life insurance companies and
are based on the  overall  performance  of the assets  under  management  by the
insurance company. Earnings on the policies are tax deferred for the life of the
insured under Internal Revenue Service guidelines. As part of the BOLI purchase,
the  Association  identified 17 key employees  that were given an opportunity to
participate in the program. The $3.6 million in BOLI premiums were divided among
the 17  participants  and life  insurance  contracts  were  purchased  on the 17
individual employees.  All participants in the program were given an opportunity
to decline to participate in the program.  The  Association is the owner and the
beneficiary of the life insurance  contracts.  As part of the BOLI program,  the
Association  expects to enter into separate death benefit agreements with the 17
employees.  The death benefit  agreements  provide for a lump-sum payment to the
participant's  beneficiary  in the event of the death of the  participant  while
employed by the Association and, in certain instances,  beyond the participant's
employment with the Association.  The Association worked in conjunction with the
Meyer-Chatfield  Company,  a firm  specializing  in  compensation  and  benefits
consulting,  to design and implement the BOLI program.  Meyer-Chatfield assisted
the Association in its due diligence efforts in analyzing  prospective insurance
carriers  and in the  Association's  efforts to comply with all  regulatory  and
legal aspects of the BOLI program.  The Association  also employed legal counsel
with expertise in  compensation  and benefit  planning and BOLI  transactions to
adopt  board of  director  resolutions  and draft  the  employee  death  benefit
agreements.


                                    15 of 30
<PAGE>


                       EAST TEXAS FINANCIAL SERVICES, INC.
                                 AND SUBSIDIARY

                                   FORM 10-QSB

                                December 31, 2002

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


Item 2 - Management's Discussion and Analysis of Financial Condition and Results
         of Operations

GENERAL

The  principle  business  of the  Company  is that of a  holding  company  for a
community-oriented  financial  institution  attracting deposits from the general
public and using such  deposits  to  originate  one-to-four  family  residential
loans,  commercial real estate,  one-to-four family construction,  multi-family,
commercial  and  consumer  loans.  These  funds have also been used to  purchase
mortgage-backed  securities,  U. S. government and agency  obligations and other
permissible  investments.  The Company also borrows  funds from the Federal Home
Loan Bank of Dallas  ("FHLB")  to fund  loans and to  purchase  securities.  The
ability of the Company to attract deposits is influenced by a number of factors,
including interest rates paid on competing  investments,  account maturities and
levels of personal income and savings. The Company's cost of funds is influenced
by interest rates on competing investments and general market rates of interest.
Lending  activities are influenced by the demand for real estate loans and other
types of loans,  which is in turn  affected by the interest  rates at which such
loans  are  made,  general  economic  conditions   affecting  loan  demand,  the
availability of funds for lending activities, economic conditions and changes in
real estate values.

The  Company's  results of operations  are  dependent  primarily on net interest
income,  which is the  difference  between  the  income  earned  on its loan and
investment portfolios and the interest paid on deposits and borrowings.  Results
of operations  are also affected by the Company's  provision for loan losses and
the net gain  (loss) on sales of  interest  earning  assets and loan  fees.  The
Company's  results of  operations  are also  significantly  affected  by general
economic and  competitive  conditions,  particularly  changes in interest rates,
government policies and actions of regulatory authorities.

As previously  disclosed in the Company's  Form 10-KSB for the fiscal year ended
September  30,  2002,  the  Company  has  been  notified  by the  OTS  that  the
Association has been deemed to be in "troubled  condition" as a result of a lack
of compliance with regulatory  requirements  involving oversight of its interest
rate risk  program.  The  Association  was required to take a number of steps to
comply with the OTS directive.  The  Association is in the process of addressing
each of the deficiencies.

FINANCIAL CONDITION

Total assets were $218.4 million at December 31, 2002, a $641,000  increase from
the $217.7  million  reported at September 30, 2002,  the Company's  most recent
fiscal year end.  The increase in total assets was the result of an $8.7 million
increase in interest  bearing  deposit with banks,  an $8.4 million  increase in
mortgage-backed securities held-to-maturity, and a $3.6 million increase in cash
value of life insurance owned. [See Note 7 for a discussion of the cash value of
life insurance  owned.] The increases  were partially  offset by a $11.7 million
decrease  in  mortgage-backed  securities  available-for-sale,  a  $6.5  million
decrease  in  loans  receivable,  and a  $2.0  million  decrease  in  investment
securities held-to-maturity.

The changes in the composition of the balance sheet were primarily related to an
increase  in  cash  flow  from  the  Company's   mortgage  loan   portfolio  and
mortgage-backed  securities portfolio.  With continued lower interest rates, the
Company  received,  and expects to continue to receive,  significant  amounts of
cash flow from  these  portfolios  as  customers  choose to  refinance  existing
mortgage loans.  Also, the Company  expects to sell, into the secondary  market,
the majority of the loans it is currently  originating or refinancing.  With the
cash flow from its mortgage-backed  securities portfolio increasing as the loans
underlying those  securities are refinanced,  the Company expects to continue to
receive significant amounts of cash to reinvest. The result would be a continued
reduction in the




                                    16 of 30

<PAGE>

Company's loan portfolio  balance  outstanding and an increase in the investment
portfolio or the  mortgage-backed  securities  portfolio at rates that are lower
than those currently in the portfolio.

At December 31, 2002,  loans  receivable  totaled $130.7 million,  a decrease of
$6.5 million or 4.8% over the $137.2 million at September 30, 2002. The decrease
in loans  receivable was primarily the result of the refinanced  loans discussed
above. In addition,  the Company elected to tighten the  underwriting  standards
and  loan-to-value  limits on its indirect auto lending  program which decreased
the production of these type of loans.

Interest  bearing deposits with banks increased to $11.6 million at December 31,
2002, an $8.7 million  increase from the $2.9 million  reported at September 30,
2002. The increase was due to the additional  cash flow from the Company's loans
receivable and  mortgage-backed  securities  portfolios as discussed  above. The
Company  expects to  systematically  reinvest  the excess cash flow into various
investment and mortgage-backed securities.

Investment securities held-to-maturity were reported as $7.7 million at December
31, 2002, a decrease of $2.0 million from the $9.7 million reported at September
30, 2002.  The decrease was the result of the maturity of a security  during the
three months  ended  December 31,  2002.  At December 31, 2002,  this  portfolio
consisted of approximately $1.5 million of debt issued by governmental  agencies
such as  Federal  National  Mortgage  Corporation,  Federal  Home Loan  Mortgage
Corporation,  and the Federal  Home Loan Bank  System,  and  approximately  $6.2
million of corporate debt securities.  All securities in the portfolio are fixed
rate and term.

Mortgage-backed  securities  available-for-sale totaled $8.5 million at December
31, 2002, a decrease of $11.7  million from the $20.1  million at September  30,
2002.  The decrease was  primarily  the result of  principle  repayments  on the
securities  during  the  three  months  ended  December  31,  2002,  due  to the
refinancing activity previously discussed.

Mortgage-backed  securities  held-to-maturity portfolio totaled $39.0 million at
December 31, 2002, an increase of $8.4 million from the $30.6  million  reported
at September 30, 2002.  The increase was primarily due to additional  securities
added to the portfolio, during the quarter ended December 31, 2002.

Total deposits were $111.6 million at December 31, 2002, a $4.1 million increase
from the $107.5  million  reported at  September  30,  2002.  The  increase  was
primarily  the result of increases  in  certificate  of deposit  balances as the
Company paid  competitive  interest  rates on renewing  certificates  of deposit
during the period.

The Company  reported  $82.9  million in borrowed  funds at December 31, 2002, a
decrease of $3.4 million from the $86.3 million  reported at September 30, 2002.
The decrease was primarily due to the Company's  decision to reduce its reliance
on short  term  advances  from the FHLB and to  replace  them with  longer  term
certificates of deposits.

Stockholder's  equity totaled $19.6 million at December 31, 2002, an increase of
$366,000 from the $19.3 million reported at September 30, 2002. The increase was
primarily  attributable to a net increase in retained earnings of $375,000.  The
increase in retained earnings was due to the $433,000 in net income less $58,000
in cash dividends paid during the three months ended December 31, 2002.


RESULTS OF OPERATIONS

The Company's net income is dependent  primarily upon net interest  income,  the
difference or spread  between the average yield earned on loans and  investments
and the average rate paid on deposits,  as well as the relative  amounts of such
assets and liabilities.  The Company,  like other financial  intermediaries,  is
subject  to  interest  rate  risk  to  the  degree  that  its   interest-bearing
liabilities  mature or reprice at different times, or on a different basis, than
its interest earning assets.

COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 2002
         AND DECEMBER 31, 2001

General. Net income for the three months ended December 31, 2002 was $433,000 or
$.38 per share and $.37 per share-assuming dilution, a decrease of $220,000 from
the $653,000, or $.58 per share and $.58 per share-assuming


                                    17 of 30


dilution, reported for the three months ended December 31, 2001. The decrease in
net income was  attributable  to a $119,000  decrease  in  non-interest  income,
$137,000  increase  in  non-interest  expense,  and a  $67,000  decrease  in net
interest income after provision for loan losses.  These were partially offset by
a $104,000 decrease in income tax expense.

The decrease in  non-interest  income was primarily due to a decline in gains on
the sale of interest  earning  assets from  $409,000  for the three months ended
December  31, 2001 to $212,000  for the three  months  ended  December 31, 2002.
During the three months ended December 31, 2001,  the Company  elected to sell a
portion   of  its   corporate   debt   available-for-sale   portfolio   and  its
mortgage-backed securities available-for-sale portfolio. The gain on the sale of
these securities was  approximately  $326,000 on a pre-tax basis. By comparison,
if the  one-time  gain of the sale of  securities  for the  three  months  ended
December 31, 2001 were excluded,  total non-interest  income would have shown an
increase of $206,000 for the three months ended  December 31, 2002 over the same
period in 2001. See non-interest income.

Net Interest  Income.  For the quarter  ended  December  31, 2002,  net interest
income  before  provision for loan losses  totaled $1.5 million,  an increase of
$47,000 over the $1.5 million  reported for the quarter ended December 31, 2001.
On an annualized  basis, the $1.5 million in net interest income for the current
quarter was approximately 2.98% of average  interest-earning assets and 2.83% of
average total assets.  For the quarter ended December 31, 2001, the $1.5 million
in net interest income before provisions for loan losses was approximately 3.00%
of average  interest-earning  assets and 2.85% of average total assets.  Average
interest-earning  assets were approximately $207.4 million for the quarter ended
December 31, 2002, compared to $200.0 million for the quarter ended December 31,
2001.

Total interest  income was $3.1 million for the quarter ended December 31, 2002,
compared to $3.4 million for the quarter ended  December 31, 2001.  The decrease
in  total  interest  income  was  due  to a  $214,000  decline  in  interest  on
mortgage-backed securities available-for-sale, a $134,000 decline in interest on
mortgage-backed securities held-to-maturity,  and a $129,000 decline in interest
on mortgage loans. The decline in interest on mortgage-backed securities was the
partially  the  result of a  decline  in the  balances  of the  securities  from
December 31, 2001 to December 31, 2002. In addition,  the  reinvestment  of cash
flow from these  securities  back into similar  securities  with lower  interest
rates during the year contributed to the overall decline in interest income from
this portfolio.  The decline in interest on mortgage loans receivable was due to
an overall  decline in the balance in the  portfolio  as the Company  elected to
sell the majority of its mortgage loan  production  during the past year.  Also,
the  decline  in yields on the loans that were  placed  into the  mortgage  loan
portfolio during the year contributed to the overall decrease in interest income
on mortgage  loans.  However,  interest on consumer and other loans increased to
$1.0 million for the three months ended  December 31, 2002 from $783,000 for the
three  months  ended  December  31,  2001.  The  increase in interest  income on
consumer and other loans was due to the  increased  balances in the consumer and
other loan portfolio during the past year. In addition,  interest rates on these
types of loans are not as sensitive to overall movements in the general level of
interest  rates,  which  allowed the Company to continue to originate  and place
into the loan  portfolio  loans  with  higher  yields  than those  available  on
mortgage loans.

Interest  income on loans  receivable  was $2.4  million for the  quarter  ended
December 31, 2002,  compared to $2.3 million for the quarter ended  December 31,
2001.  On an  annualized  basis,  the $2.4  million was  approximately  7.26% of
average loans receivable balances outstanding for the quarter ended December 31,
2002,  compared to approximately  7.86% for the quarter ended December 31, 2001.
The increase in total  interest  income on the loan  portfolio was primarily the
result of an increase in consumer,  commercial and  commercial  real estate loan
balances.  The overall decline in interest rates over the past 12 months and the
refinance  of mortgage  loans held in  portfolio  contributed  to the decline in
overall yield on the loan portfolio.

Interest  income  from  mortgage-backed  securities  available-for-sale  totaled
$54,000 for the quarter  ended  December 31, 2002,  compared to $269,000 for the
quarter ended  December 31, 2001. The decrease in income was due to a decline in
the balance of the  portfolio  from $21.8  million at December  31, 2001 to $8.5
million at December 31, 2002.

Interest income from the investment  securities  held-to-maturity  portfolio was
$126,000 for the quarter ended  December 31, 2002,  compared to $155,000 for the
quarter ended  December 31, 2001.  The decrease in income from the portfolio was
due to a decline in the average  yield on the  portfolio and due to a decline in
the balance in the portfolio.



                                    18 of 30



<PAGE>

Interest income on mortgage-backed securities  held-to-maturity totaled $393,000
for the quarter  ended  December  31,  2002,  a decrease  of  $134,000  from the
$527,000  reported for the quarter ended December 31, 2001. The decrease was due
primarily  to a  decline  of the  overall  yield of the  portfolio.  Despite  an
increase in the balance in the portfolio from $34.8 million at December 31, 2001
to $39.0  million at  December  31,  2002,  the overall  yield on the  portfolio
declined.  As previously  discussed,  the Company received  excessive amounts of
cash flow from its mortgage  loans  receivable and mortgage  related  securities
portfolios  during the past year.  The Company chose to reinvest the majority of
this excess cash flow into mortgage-backed securities held-to-maturity.  The new
securities were at substantially lower interest rates than those previously held
in the portfolio.  The result was an overall decline in the yield and an overall
decrease in interest income on the portfolio.


Interest paid to depositors  totaled $877,000 for the quarter ended December 31,
2002,  a decrease of $337,000  from the $1.2  million  reported  for the quarter
ended  December  31,  2001.  On an  annualized  basis,  the $877,000 in interest
expense on deposits was  approximately  3.31% for the quarter ended December 31,
2002. The decline in interest on deposits was  attributable  to a decline in the
marginal rate paid to renewing certificate of deposit  accountholders during the
past  year.  During  2000 and  2001,  as the  general  level of  interest  rates
declined,  many  certificate  of deposit  holders chose to renew  certificate of
deposit  accounts for shorter  terms,  anticipating  that  interest  rates would
increase again in 2002. Interest rate subsequently  remained at historically low
levels  throughout 2002. The result was that many  certificate  accounts matured
during 2002 and were renewed at lower  interest  rates.  This  contributed to an
overall  decline in the average  cost of  certificate  deposit  accounts for the
Company,  despite an increase in the balance in certificate of deposit  accounts
from $105.4 million at December 31, 2001 to $108.3 million at December 31, 2002.

Interest on FHLB advances was $653,000 for the quarter ended  December 31, 2002,
compared to $683,000 for the quarter  ended  December 31, 2001.  The decrease in
interest  expense was  primarily the result of declining  interest  rates during
2001 and 2002. At December 31, 2001, the Company had approximately $33.0 million
in advances which re-priced  approximately every 30 days. As short-term interest
rates  declined in 2002,  the Company  benefited  from an overall  lower cost of
borrowing as the rate of interest on the advances declined substantially.

Provision  for Loan  Losses.  The Company made  $124,000 in  provision  for loan
losses for the quarter  ended  December  31,  2002,  compared to $10,000 for the
quarter ended  December 31, 2001.  The increase in provision for loan losses was
the result of the Company's decision to establish additional allowances for loan
losses,  primarily due to the increase in losses on its consumer loan portfolio.
[See "Asset Quality" and "Note 6".]

Noninterest  Income.  Non-interest income totaled $419,000 for the quarter ended
December 31, 2002, compared to $538,000 for the quarter ended December 31, 2001.
The  decrease  was  primarily  due to a  decline  in gains on sales of  interest
earning assets from $409,000 for the quarter ended December 31, 2001 to $212,000
for the quarter  ended  December  31,  2002.  The Company  sold a portion of its
investment and  mortgage-backed  securities  portfolios during the quarter ended
December  31, 2001.  The gain on the sale of the  securities  was  approximately
$326,000.  The Company would have reported an overall  increase in  non-interest
income for the current  quarter as compared to the same quarter last year if not
for the securities that were sold during the prior year. The Company has elected
to sell  the  majority  of its  one-to  four-family  loan  production  into  the
secondary  market during 2002. The result is an increase in gains on the sale of
loans for the quarter  ended  December 31, 2002,  compared to the same period in
2001.

Noninterest Expense.  Noninterest expense was $1.2 million for the quarter ended
December 31, 2002, an increase of $137,000 from the $1.0 million for the quarter
ended December 31, 2001.  The increase in noninterest  expense was primarily the
result of a $108,000  increase in  compensation  and  benefits  expense,  mainly
associated with the Company's  defined benefit pension plan and normal increases
in employee  compensation.  The increase in defined benefit plan expense was due
to the performance of plan assets in 2000 and 2001 and the additional  employees
gained in the Gilmer acquisition.  Approximately two-thirds of the assets in the
defined  benefit plan trust are invested in various equity mutual funds.  As the
overall equity market  declined in 2000 and 2001, the value of the assets in the
plan  decreased.  The result  was,  on an  actuarial  basis,  an increase in the
pension plan expense to offset the decrease in the value of the plan assets.  In
addition,  net expenses associated with the Company's foreclosed asset portfolio
increased  by $53,000 for the quarter  ended  December  31,  2002  compared  the
quarter ended December 31, 2001.  The increase in expenses on foreclosed  assets
was directly attributable to the increase in repossessed



                                    19 of 30

<PAGE>

consumer loan collateral,  primarily autos. The increase in repossessed consumer
loan  collateral  was  primarily  associated  with the  Company's  indirect auto
lending program.

Provision for Income Taxes.  The Company  incurred federal income tax expense of
$247,000 or 36.3% or pre-tax  income for the quarter  ended  December  31, 2002,
compared to $351,000 or 35.0% or pre-tax  income for the quarter ended  December
31, 2001.

ASSET QUALITY

At December 31, 2002, the Company's  non-performing assets (non-performing loans
plus foreclosed assets) totaled $2.3 million or 1.07% of total assets,  compared
to $1.6 million or .75% of total assets at September  30, 2002.  At December 31,
2002,  non-performing  assets were comprised of non-accruing  one-to-four family
loans, consumer and other loans delinquent more than 90 days and still accruing,
foreclosed one-to-four family, and foreclosed consumer and other loans.

Non-performing loans at December 31, 2002 equaled $2.0 million or 1.53% of loans
receivable,  compared to $1.2 million or .90% of loans  receivable  at September
30, 2002.  The increase in  non-performing  loans was  primarily  related to its
consumer  lending  portfolio.  The Company  attributes  the increased  number of
non-performing  consumer loans to a general decline in the economy in its market
area, particularly in its Gilmer market. As a result, the Company has instigated
additional collection efforts on such loans,  primarily by the loan officers. In
addition,  senior  management has established more frequent past due meetings in
order  to  more  closely  monitor  collection   efforts.   The  Company  defines
non-performing  loans as any loan past due for 90 days or more.  All such  loans
are  accounted  for on a nonaccrual  basis by reserving  for 100% of the accrued
interest or placing  the loan in a  nonaccrual  status when the loan  reaches 90
days  delinquent.  At  December  31,  2002,  the Company had no loans which were
contractually  past due 90 days or more  and for  which  it was  still  accruing
interest.   At  December   31,  2002,   the  Company  had  no   "troubled   debt
restructurings" as defined in Statement of Financial Accounting Standards No. 15
"Accounting  by Debtors and Creditor for Troubled Debt  Restructurings",  or any
other loans for which the Company has information about possible credit problems
of  borrowers  that would  cause  management  to have  serious  doubts as to the
ability of such borrowers to comply with the preset loan repayment terms.

Classified  assets totaled $3.0 million or 1.38% of total assets at December 31,
2002, compared to $2.6 million or 1.18% of total assets at September 30, 2002.

Classified assets and non-performing assets differ in that classified assets may
include  loans  less  than  90  days  delinquent.  Also,  assets  guaranteed  by
government agencies such as the Veterans  Administration and the Federal Housing
Administration  are not  included  in  classified  assets  but are  included  in
non-performing  assets.  At December 31, 2002, $2.8 million of classified assets
were deemed to be substandard and $196,000 assets were classified as doubtful.

The  Company's  allowance for loan and lease losses was $775,000 at December 31,
2002,  which  included  $619,000  in general  loan loss  reserves,  $136,000  in
specific loan loss reserves,  and $20,000  checking  account loss reserves.  The
total allowance was $757,000 at September 30, 2002. The total allowance for loan
losses as a percentage of loans receivable equaled .59% at December 31, 2002 and
0.55% at September 30, 2002.

The  Company  uses a  methodology  for  estimating  the  adequacy of its general
allowance for loan losses that  encompasses two separate  components.  The first
component is an estimate of losses on the Company's list of currently classified
assets. A percentage, generally ranging from 5% to 50% of each classified asset,
is  applied  to the  balance  of the  asset.  The  percentage  for each asset is
combined to determine the calculated  allowance  amount for this component.  The
second component is a combined inherent risk and historical loss component. This
component  recognizes  the  changes  in the  levels  of  loan  balances  and the
historical  loss  levels of  various  classes  of the loan  portfolio.  The loan
portfolio is segregated  into various classes of loans  exhibiting  similar risk
characteristics.  Each of the classes of loans is multiplied by a risk factor to
determine  the required  allowance  for the class of loans.  The risk factor for
each class of loans is determined by analyzing actual  historical  losses on the
particular  class of loans.  The  historical  loss analysis takes into account a
period of time that is indicative of the current risks associated with the class
of the loan  portfolio  being  analyzed.  The  balance of loans in each class is
reduced for any loans  specifically  reviewed by the Company and any  classified
assets, before applying the percentage amounts. The


                                    20 of 30


<PAGE>

calculated  allowance  amount for each class is summed  together  to achieve the
estimated  allowance for the inherent risk and  historical  loss  component.  To
determine a final  estimate of the  allowance  for loan losses,  the  classified
asset and inherent risk and historical loss component are summed  together.  The
resulting  calculated minimum allowance is compared to the actual balance in the
allowance at the end of the period analyzed. A shortfall in the actual amount as
compared to the calculated  amount is charged against  provision for loan losses
in the  period  analyzed  in order  to bring  the  allowance  up to the  minimum
calculated  amount.  Any  excess in the  actual  allowance  as  compared  to the
calculated  amount may remain in the allowance or may be reduced by applying the
overage amount back against the provision for loan losses.

At December 31, 2002, the classified  asset component was calculated at $418,000
while  the  inherent  risk and  historical  loss  component  was  calculated  at
$202,000.  At  December  31,  2002,  the Company had  identified  four  separate
components  of  the  loan  portfolio   that  it  deemed   necessary  to  analyze
individually  under the inherent risk and historical  loss  component.  The four
components were mortgage  loans,  sub-prime  indirect auto loans,  unsecured and
miscellaneous collateral consumer loans, and all other non-mortgage loans.

The classified asset component  increased by  approximately  $100,000 during the
quarter  ended  December 31, 2002 from  approximately  $319,000 at September 30,
2002 to $418,000 at December 31, 2002.  The inherent  risk and  historical  loss
component  decreased  from  approximately  $209,000  at  September  30,  2002 to
$202,000 at December 31, 2002.  The increase in the classified  asset  component
was  directly  related  to the  increase  in the  balance of  classified  assets
identified  by the Company at December  31,  2002 as compared to  September  30,
2002. The three months ended December 31, 2002 was the first  quarter-end  where
the  Company  had  segregated  the loan  portfolio  into  separate  classes  for
allowance  analysis.  The Company  believes that the recent actual losses in its
loan portfolio are primarily associated with its indirect auto loan program and,
to a lesser  degree,  its  unsecured  and  miscellaneous  collateral  loans.  In
estimating the adequacy of its allowance for loan losses,  the Company applied a
higher  risk  factor to the  balances  in these  particular  types of loan.  The
Company did not separate its loan portfolio for allowance for loan loss analysis
at September  30, 2002 in the same manner as December 31,  2002.  Therefore,  no
comparison  of these  specific  components  can be made at  December  31,  2002.
Nevertheless, the Company believes that the calculated allowance amounts for its
sub-prime  indirect  auto loan  balances  and its  unsecured  and  miscellaneous
collateral  loans have  increased over the last three months as evidenced by the
actual experience of losses in its loan portfolio.

The  Company   believes  that  segregating  its  loan  portfolio  into  specific
categories  of loan for allowance  analysis will provide a more accurate  method
for  estimating   the  adequacy  of  the   allowance.   Also,  the  Company  has
significantly  decreased  the  volume  of its  indirect  auto  loan  program  by
substantially  tightening  credit  and loan to value  limits on such  loans.  In
addition,  the  Company  has  placed  additional  restrictions  on the  types of
unsecured and  miscellaneous  collateral loans that its individual loan officers
can make.

The  Company  establishes  a  specific  loan  loss  allowance  of  100%  of  the
outstanding  balance of loans that are severely past due and deemed  unlikely to
be collected in a timely manner.  Generally,  the Company establishes a specific
reserve when a real estate  secured loan is 180 days or more past due and when a
consumer loan is 120 days or more past due. The Company may establish a specific
reserve sooner than these general guidelines in the case of a bankruptcy.  Also,
the Company may choose not to establish a specific  reserve for loans that would
otherwise  warrant doing so, if there is sufficient  value  supporting  the loan
balance.

At December 31, 2002,  the Company had $136,000 in specific  loan loss  reserves
established,  compared to $71,000 at  September  30,  2002.  The increase in the
specific  reserve was due to an increase in the balance of loans  exceeding  the
past due limits.

The Company  believes  that the overall  quality of its loan  portfolio is good.
However, the Company did record $124,000 in provision for loan losses during the
three months ended December 31, 2002, compared to $10,000 for the same period in
2001. [See "Note 6".]

The Company anticipates that the general trend in the level of the allowance for
loan loss will be to remain in a range that is close to the  current  balance in
the allowance. By tightening  loan-to-value and credit standards on its indirect
auto loan program and its unsecured and miscellaneous collateral consumer loans,
the Company  believe that the balance in such loans will decline over time.  The
result should be a reduction in the calculated amount of the


                                    21 of 30

<PAGE>

allowance for loan loss reserves for these  specific  components.  However,  the
Company  can not  predict  the affect  that  outside  factors  such as  economic
conditions  in the  Company's  market and other factors may have on a borrower's
ability to repay their  loans.  In general,  the  estimated  allowance  for loan
losses  could  increase  under the  classified  asset  component  if the Company
experiences an increase in its classified  assets.  The allowance could increase
under the inherent risk and historical loss component if the Company experiences
additional  losses on its loan portfolio that are charged  against the allowance
for loan loss account.

LIQUIDITY AND CAPITAL RESOURCES

The Company's  principal sources of funds are deposits from customers,  advances
from  the  FHLB,  amortization  and  prepayment  of  loan  principal  (including
mortgage-backed  securities),  maturities  of  securities,  sales of  loans  and
operations.

The Company uses its liquidity and capital resources principally to meet ongoing
commitments  to fund  maturing  certificates  of deposit  and loan  commitments,
maintain liquidity and pay operating expenses. At December 31, 2002, the Company
had outstanding  commitments to extend credit on approximately  $10.0 million of
loans.

Management  believes that present levels of liquid assets are sufficient to meet
anticipated future loan commitments as well as deposit withdrawal demands.

Total  stockholders'  equity  equaled  $19.6  million at December 31,  2002,  an
increase of $366,000 from the $19.3 million  reported at September 30, 2002. The
increase was  primarily the result of a $375,000  increase in retained  earnings
that resulted from the $433,000 net income less $58,000 in cash  dividends  paid
during the three  months ended  December 31, 2002.  These were offset by a $9000
decrease in unrealized gains on available-for-sale securities.

As of December 31, 2002,  the  Company's  reported  book value per share,  using
total  stockholders'  equity of $19.6  million (net of the cost of unearned ESOP
shares)  and  1,162,320  outstanding  shares of common  stock (the total  issued
shares including unearned ESOP shares, less treasury shares), equaled $16.90 per
share.  Subsequent to the quarter ended December 31, 2002, the Company announced
its  intention to pay a cash  dividend of $.05 per share on February 5, 2002, to
stockholders  of record as of February 19, 2002. The Company paid $.05 per share
in cash  dividends  in the  three  months  ended  December  31,  2002,  which is
approximately  13.2% of the $.38 in  reported  earnings  per share.  The Company
reported an equity to assets ratio of approximately 9.00% at December 31, 2002.

Federally insured savings  associations,  such as First Federal, are required to
maintain a minimum level of regulatory capital.  The OTS has established capital
standards,  including a tangible capital requirement,  a leverage ratio (or core
capital)  requirement and a risk-based  capital  requirement  applicable to such
savings associations.  These capital requirements must be generally as stringent
as the  comparable  capital  requirements  for national  banks.  The OTS is also
authorized  to impose  capital  requirements  in excess  of these  standards  on
individual associations on a case-by-case basis.

The capital  regulations  require  tangible capital of at least 1.5% of adjusted
total assets (as defined by regulation).  Tangible  capital  generally  includes
common  stockholders'  equity and retained  income,  and certain  non-cumulative
perpetual  preferred  stock and related  income.  In  addition,  all  intangible
assets, other than a limited amount of purchased mortgage-servicing rights, must
be deducted from total capital for calculating compliance with this requirement.
At December 31, 2002, First Federal had approximately $2.2 million of intangible
assets  and other  required  regulatory  adjustments  that were  required  to be
deducted from total capital.

At December 31, 2002,  First Federal had tangible  capital of $17.0 million,  or
7.9% of adjusted total assets,  which is  approximately  $13.8 million above the
minimum requirement of 1.5% of adjusted total assets in effect on that date.

The capital  standards  also  require  Tier 1 capital  equal to at least 4.0% of
adjusted total assets.  Tier 1 capital  generally  consists of tangible  capital
plus certain intangible  assets,  including a limited amount of purchased credit
card receivables.



                                    22 of 30



At December 31, 2002,  First Federal had Tier 1 capital equal to $17.0  million,
or 7.9% of  adjusted  total  assets,  which is $8.4  million  above the  minimum
requirement for capital adequacy purposes of 4.0% as in effect on that date.

The OTS  risk-based  requirement  requires  savings  associations  to have total
capital of at least  8.0% of  risk-weighted  assets.  Total  risk-based  capital
consists  of  core  capital,   as  defined  above  and  supplementary   capital.
Supplementary  capital  consists  of  certain  permanent  and  maturing  capital
instruments  that do not qualify as core capital and general  valuation loan and
lease  loss  allowances  up to a  maximum  of  1.25%  of  risk-weighted  assets.
Supplementary capital may be used to satisfy the risk-based  requirement only to
the  extent of core  capital.  The OTS is also  authorized  to require a savings
association  to maintain an  additional  amount of total  capital to account for
concentration  of credit  risk and the risk of  non-traditional  activities.  At
December  31, 2002,  First  Federal had no capital  instruments  that qualify as
supplementary  capital and $635,000 of loss reserves,  which was less than 1.25%
of risk-weighted assets.

Certain  exclusions  from  capital  and assets are  required  to be made for the
purpose of  calculating  total  risk-based  capital.  First  Federal had no such
exclusions from capital and assets at December 31, 2002.

In determining the amount of risk-weighted assets, all assets, including certain
off-balance sheet items, will be multiplied by a risk weight, ranging from 0% to
100%, based on the risk inherent in the type of asset. For example,  the OTS has
assigned a risk of 50% for prudently  underwritten  permanent one-to-four family
first lien mortgage loans not more than 90 days  delinquent and having a loan to
value ratio of not more than 80% at origination  unless insured to such ratio by
a insurer approved by Fannie Mae or Freddie Mac.

On  December  31,  2002,  First  Federal  had total risk based  capital of $17.6
million  (including  $17.0  million in Tier 1 capital and  $635,000 in loan loss
reserves)  and  risk-weighted  assets of  $119.5  million,  or total  risk-based
capital of 14.8% of risk-weighted assets. This amount was $8.1 million above the
8.0% requirement in effect on that date.

At December 31, 2002,  First  Federal was also  considered a "well  capitalized"
institution  under the prompt  corrective  action  requirements  of the  Federal
Deposit Insurance Corporation Improvement Act of 1991.

FORWARD-LOOKING STATEMENTS

When  used in this  Form  10-QSB  or  future  filings  by the  Company  with the
Securities and Exchange Commission, the Company's press releases or other public
or shareholder communications or in oral statements made with the approval of an
authorized  executive officer,  the words or phrases "will likely result",  "are
expected  to",  "will  continue",  "is  anticipated",   "estimate",   "project",
"believe"  or similar  expressions  are  intended to  identify  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995.  The Company  wishes to caution  readers not to place undue reliance on
any such forward-looking  statements,  which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions,  changes in levels of market interest rates, credit risks of lending
activities,  and competitive and regulatory factors,  could affect the Company's
financial  performance  and could cause the Company's  actual results for future
periods to differ materially from those anticipated or projected.

The Company does not undertake,  and specifically  disclaims any obligation,  to
publicly  release  the  result  of  any  revisions,  which  may be  made  to any
forward-looking   statements  to  reflect  the   occurrence  of  anticipated  or
unanticipated events or circumstances after the date of such statements.


                                    23 of 30
<PAGE>

Item 3.  Controls and Procedures.

     (a) Evaluation of Disclosure Controls and Procedures:  An evaluation of the
         -------------------------------------------------
Company's disclosure controls and procedures (as defined in Rule 13a-14(c) under
the  Securities  Exchange  Act of 1934 (the  "Act"))  was  carried out under the
supervision and with the participation of the Company's Chief Executive Officer,
Chief  Financial  Officer  and several  other  members of the  Company's  senior
management  within the 90-day period preceding the filing date of this quarterly
report.  The  Company's  Chief  Executive  Officer and Chief  Financial  Officer
concluded that the Company's  disclosure controls and procedures as currently in
effect are effective in ensuring that the  information  required to be disclosed
by the  Company  in the  reports  it  files  or  submits  under  the  Act is (i)
accumulated and  communicated to the Company's  management  (including the Chief
Executive  Officer and Chief  Financial  Officer) in a timely  manner,  and (ii)
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's rules and forms.

     (b) Changes in Internal  Controls:  In the fiscal year ended  September 30,
         ------------------------------
2002, there were no significant changes in the Company's internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their evaluation.

                                    24 of 30
<PAGE>


                       EAST TEXAS FINANCIAL SERVICES, INC.
                                 AND SUBSIDIARY

                                   FORM 10-QSB

                                DECEMBER 31, 2002

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

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

     There  are no  material  legal  proceedings  to which  the  Company  or the
     Association is a party or of which any of their  property is subject.  From
     time-to-time,  the  Association  is a party to  various  legal  proceedings
     incident to the conduct of its business.

Item 2.  Changes In Securities
         ---------------------

     None

Item 3.  Defaults Upon Senior Securities
         -------------------------------

     None

Item 4.  Submissions Of Matters To A Vote Of Security Holders
         ----------------------------------------------------

     On January 29, 2003, the Company's Annual Stockholders' Meeting was held to
     elect directors and ratify the appointment of independent  auditors for the
     current  fiscal year. The following are the voting results of each of these
     matters submitted to stockholders.

     The election of Jack W. Flock                   For                 733,881
     and Charles R. Halstead                         Withheld            127,010
     as directors for a three year term              Abstain                   0
     ending January 2006.                            Broker Non-Votes          0

     Ratification of the appointment of              For                 854,996
     Bryant & Welborn, L.L.P. as                     Against               5,150
     independent auditors for the                    Abstain                 754
     fiscal year ending
     September 30, 2003.

     The text of the  matters  referred  to in this  Item 4 is set  forth in the
     Proxy  Statement  dated  December  27,  2002,  previously  filed  with  the
     Securities and Exchange Commission.

Item 5.  Other Information.
         -----------------

     None

Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

        The following exhibits are filed herewith:

         Exhibit 11.0 - Computation of Earnings Per Share

      (b) Reports on Form 8-K



                                    25 of 30


<PAGE>

     During the quarter ended  December 31, 2002,  the Company filed a report on
     Form 8-K on October  18,  2002 to report the  issuance  of a press  release
     dated October 18, 2002,  announcing a cash dividend for the quarter  ending
     September 31, 2002 and the annual stockholders' meeting.


                                    26 of 30
<PAGE>


                                   SIGNATURES
                                   ----------

Pursuant to the  requirement  of the  Securities  and Exchange Act of 1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    East Texas Financial Services, Inc.


Date:  February 14, 2003            /s/ Gerald W. Free
                                    -------------------------------------------
                                    Vice Chairman, President and CEO
                                    (Principal Executive Officer)


Date: February 14, 2003             /s/  Derrell W. Chapman
                                     -------------------------------------------
                                    Executive Vice President/COO/CFO
                                    (Principal Financial and Accounting Officer)







                                  CERTIFICATION

Each of the undersigned  hereby  certifies in his capacity as an officer of East
Texas Financial Services,  Inc. (the "Company") that the Quarterly Report of the
Company on Form 10-QSB for the period  ended  December  31, 2002 fully  complies
with the  requirements of Section 13 (a) of the Securities  Exchange Act of 1934
and that the  information  contained  in such  report  fairly  presents,  in all
material  respects,  the  financial  condition of the Company at the end of such
period and the results of operations of the Company for such period.





Date: February 14, 2003



                                    /s/ Gerald W. Free
                                    --------------------------------------------
                                    Vice Chairman, President and CEO
                                    (Principal Executive Officer)




                                    /s/ Derrell W. Chapman
                                    --------------------------------------------
                                    Executive Vice President/COO/CFO
                                    (Principal Financial and Accounting Officer)



                                    27 of 30


<PAGE>

                                 CERTIFICATIONS
                                 --------------

     I, Gerald W. Free, certify that:

     1. I have  reviewed  this  quarterly  report on Form  10-QSB of East  Texas
Financial Services, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a) designed  such  disclosure  controls and  procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

     5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board of  directors  (or  persons  performing  the  equivalent
functions):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     controls; and

     6. The registrant's  other certifying  officer and I have indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: February 14, 2003

/s/ Gerald W. Free
------------------
Gerald W. Free
President and Chief Executive Officer




                            28 of 30
<PAGE>


     I, Derrell W. Chapman, certify that:

     1. I have  reviewed  this  quarterly  report on Form  10-QSB of East  Texas
Financial Services, Inc.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officer and I are  responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

          a) designed  such  disclosure  controls and  procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries,  is  made  known  to  us by  others  within  those  entities,
     particularly  during  the period in which  this  quarterly  report is being
     prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
     effectiveness  of the  disclosure  controls  and  procedures  based  on our
     evaluation as of the Evaluation Date;

     5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board of  directors  (or  persons  performing  the  equivalent
functions):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the  registrant's  ability to record,
     process,  summarize and report  financial data and have  identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
     other employees who have a significant  role in the  registrant's  internal
     controls; and

     6. The registrant's  other certifying  officer and I have indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: February 14, 2003

/s/ Derrell W. Chapman
----------------------
Derrell W. Chapman
Executive Vice President, Chief Financial Officer
  and Chief Operating Officer


                                    29 of 30
<PAGE>


                                  CERTIFICATION
           (Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)


     Each of the undersigned  hereby  certifies in his capacity as an officer of
East Texas Financial Services, Inc. (the "Registrant") that the Quarterly Report
of the  Registrant  on Form 10-QSB for the fiscal year ended  September 30, 2002
fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934 and that the information  contained in such report fairly  presents,
in all material respects, the consolidated financial condition of the Registrant
at the end of such period and the results of  operations of the  Registrant  for
such period.

Date: February 14, 2003        /s/ Gerald W. Free
                               ------------------
                               Gerald W. Free
                               President and Chief Executive Officer


Date: February 14, 2003        /s/ Derrell W. Chapman
                               ----------------------
                               Derrell W. Chapman
                               Executive Vice President, Chief Financial Officer
                               and Chief Operating Officer







                                    30 of 30