East Texas Financial Services, Inc. (the ?Company?), (OTCBB: ETFS), the holding company for First Federal Bank Texas (?Firstbank? or the ?Bank?), Tyler, Texas, today reported that the Company has engaged Commerce Street Capital (?Commerce?) to provide strategic advice to the Company.

Chairman of the Board Lee Kidd stated, ?Subsequent to the termination of the merger agreement with Steele Financial Corporation earlier this year, the Board held several meetings to discuss the status of the Company and its alternatives and made the decision to engage Commerce. The Board believes Commerce's experience in Texas in providing strategic advice to banks on merger and acquisitions, capital plans, problem asset resolution, and other matters will help the Company in making strategic decisions.?

In its Thrift Financial Report for the quarter ended September 30, 2010 filed with the Office of Thrift Supervision, Firstbank reported total assets of $230.0 million, total deposits of $127.3 million and total capital of $20.2 million. Firstbank also reported that non-performing assets were $7.2 million or 3.1% of total assets and that substandard classified assets, including the non-performing assets, were $11.6 million or 5.1% of total assets. After reporting net income of $685,000 for the first nine months of the fiscal year, the Bank reported a net loss of $1,405,000 for the quarter ended September 30, 2010 and a net loss of $720,000 for the fiscal year ended September 30, 2010. The Company expects to report its consolidated financial results for the fiscal year ended September 30, 2010 after the completion of its fiscal year-end audit. The financial information for the Bank provided in this press release is preliminary and could differ materially from the final results to be reported after the completion of the fiscal year-end audit.

Company President and CEO, Derrell W. Chapman, CPA, stated, ?During the quarter ended September 30, 2010, the Bank identified some larger credits that were considered impaired under accounting guidance. We made an estimate of the net realizable value on the credits and established what we believe to be appropriate reserves. The additional reserves on these specific credits increased the need for additional general loan loss reserves which negatively impacted our results for the quarter and fiscal year ended September 30, 2010 and our capital position at September 30, 2010.?

At September 30, 2010 and after the additional reserves, the Bank reported a Tier 1 Capital ratio of 8.3%, a risk- based capital ratio of 13.5%, and a Tier 1 risk- based capital ratio of 12.4% and remained a well-capitalized institution under regulatory guidelines.

The Company also announced that in order to preserve capital, its Board of Directors decided to suspend the payment of the Company's quarterly cash dividend. President Chapman stated, ?We have a 15-year history of consecutive quarterly dividend payments. The decision to suspend the dividend payment for the quarter ended September 30th was given careful consideration by the Board. Based on the sources of funds available to the Company, which are primarily derived from dividends from the Bank, and the current level of classified assets at the Bank, the Board made the decision to suspend the payment of a quarterly dividend until additional capital levels at the Bank can be established and an appropriate dividend from the Bank to the Company would allow the resumption of a cash dividend by the Company.?

East Texas Financial Services, Inc. is the holding Company for First Federal Bank Texas, Tyler, Texas, which operates three full service locations in the Tyler area and one full service location in Gilmer, Texas. The Company's stock is traded under the symbol ?ETFS? on the OTC Electronic Bulletin Board.

Forward-Looking Statements

When used in this press release, in other press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases ?believe,? ?could,? ?would,? ?will,? ?will likely result,? ?are expected to,? ?will continue,? ?is anticipated,? ?estimate,? ?project,? ?plans,? or similar expressions are intended to identify ?forward-looking statements? within the meaning of the federal securities laws. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made. These statements may relate to future financial performance, strategic plans or objectives, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (i) the possibility that after the audit of the Company's consolidated financial statements for the fiscal year ended September 30, 2010 is completed, the Company's actual reported results will be materially different than the preliminary results for the Bank provided in this press release; (ii) the credit risks of lending activities, including changes in the level of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (iii) changes in the quality or composition of the Bank's loan and investment portfolios; (iv) competitive pressures among depository institutions; (v) interest rate movements and their impact on customer behavior and net interest margin; (vi) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (vii) the ability to adapt successfully to technological changes to meet customers' needs and developments in the marketplace; (viii) the ability to access cost-effective funding; (ix) changes in financial markets; (x) changes in economic conditions in general and in the Company's market area in particular; (xi) the costs, effects and outcomes of litigation; (xii) new legislation or regulatory changes and other governmental initiatives affecting the financial services industry; and (xiii) changes in accounting principles, policies or guidelines.

The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

East Texas Financial Services, Inc.
Derrell W. Chapman, 903-593-1767
President, and CEO
www.ffbtx.com