Registration No. 333-_______
                                       As filed with the Securities and Exchange
                                       Commission on February 21, 2002

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933


                             Alpena Bancshares, Inc.
             (Exact Name of Registrant as Specified in its Charter)
       Federal                                         38-3567362
(State of Incorporation)                      (IRS Employer Identification No.)

                              100 S. Second Avenue
                             Alpena, Michigan 49707
                    (Address of Principal Executive Offices)


              First Federal Savings and Loan Association of Alpena
                             1996 Stock Option Plan
                       1996 Recognition and Retention Plan
                            (Full Title of the Plans)


                                   Copies to:

          Martin A. Thomson                      Robert B. Pomerenk, Esquire
President and Chief Executive Officer       Luse Lehman Gorman Pomerenk & Schick
       Alpena Bancshares, Inc.                    A Professional Corporation
        100 S. Second Avenue                   5335 Wisconsin Ave., N.W., #400
       Alpena, Michigan  49707                     Washington, D.C.  20015
           (989) 356-9041                              (202) 274-2000

   (Name, Address and Telephone
    Number of Agent for Service)

                               ------------------
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933 check the following box. X
                               ------------------



<PAGE>

<TABLE>
<CAPTION>

                         CALCULATION OF REGISTRATION FEE

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

       Title of                                       Proposed               Proposed
      Securities                Amount                Maximum                 Maximum               Amount of
         to be                  to be              Offering Price            Aggregate            Registration
      Registered            Registered (1)           Per Share            Offering Price               Fee
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------

<S>                     <C>                        <C>                    <C>                    <C>
Common Stock, par
value $1.00 per share      24,148 shares (2)          $10.00(4)            $   241,480              $  22.22

Common Stock, par
value $1.00 per share      15,365 shares (3)         $  9.625(4)           $   147,888              $  13.61

Common Stock, par
value $1.00 per share      24,067 shares(5)           $13.25(6)            $   318,888              $  29.34

Common Stock, par
value $1.00 per share      27,600 shares(7)           $13.25(6)            $   365,700              $  33.64

Total:                     91,180 shares                                    $1,073,956              $  98.81
                           =============                                    ==========              ========
</TABLE>

--------------
     (1)  Together with an indeterminate  number of additional  shares which may
          be  necessary  to adjust the number of shares  reserved  for  issuance
          pursuant to the First Federal  Savings and Loan  Association of Alpena
          1996  Stock  Option  Plan  and the  First  Federal  Savings  and  Loan
          Association  of Alpena  1996  Recognition  and  Retention  Plan as the
          result of a stock split,  stock dividend or similar  adjustment of the
          outstanding  Common Stock of Alpena  Bancshares,  Inc.  pursuant to 17
          C.F.R. ss.  230.416(a).
     (2)  Represents  the  number  of shares  currently  reserved  for  issuance
          underlying options that have already been granted pursuant to the 1996
          Stock  Option  Plan with an  exercise  price of $10.00 per share.
     (3)  Represents  the  number  of shares  currently  reserved  for  issuance
          underlying options that have already been granted pursuant to the 1996
          Stock  Option  Plan with an  exercise  price of $9.625 per share.  (4)
          Determined  by the  exercise  price  of  the  options  pursuant  to 17
          C.F.R.ss.230.457(h)(1).
     (5)  Represents  the  number  of shares  currently  reserved  for  issuance
          pursuant  to awards  available  for grant  pursuant  to the 1996 Stock
          Option Plan.
     (6)  Determined  by  reference  to the last  sales  price  reported  on the
          Over-the-Counter Market on January 23, 2002, pursuant to Rule 457(c).
     (7)  Represents  the maximum number of shares that have been granted or yet
          may still be granted  pursuant to the 1996  Recognition  and Retention
          Plan.

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

     This   Registration   Statement  shall  become  effective  upon  filing  in
accordance  with Section 8(a) of the  Securities  Act of 1933 and 17 C.F.R.  ss.
230.462.



<PAGE>


PART I.

     Items 1 and 2. Plan  Information  and Registrant  Information  and Employee
                    Plan Annual Information

     This Registration Statement relates to the registration of 91,180 shares of
Common Stock of Alpena  Bancshares,  Inc. (the "Company")  reserved for issuance
and delivery  upon the exercise of options  under the 1996 Stock Option Plan and
the 1996  Recognition and Retention Plan.  Documents  containing the information
required by Part I of the  Registration  Statement  have been or will be sent or
given to participants  in the plans, as appropriate,  as specified by Securities
Act Rule  428(b)(1).  Such documents are not being filed with the Securities and
Exchange  Commission (the "Commission" or "SEC"), but constitute (along with the
documents incorporated by reference into this Registration Statement pursuant to
Item 3 of Part II hereof) a prospectus  that meets the  requirements  of Section
10(a) of the Securities Act of 1933, as amended.

PART II.

Item 3.  Incorporation of Documents by Reference

         The following documents previously or concurrently filed by the Company
with the Commission are hereby incorporated by reference in this Registration
Statement:

     a) The  Company's  Annual  Report on Form  10-KSB for the fiscal year ended
     December 31, 2000 (Commission File No.  000-31957),  filed pursuant to Rule
     13a-1 of the  Securities  Exchange Act of 1934,  as amended (the  "Exchange
     Act");

     b) all other  reports  filed by the Company  pursuant  to Section  13(a) or
     15(d) of the  Exchange  Act since the end of the year covered by the Annual
     Report referred to above; and

     c) The  description  of the common  stock of the Company  contained  in the
     Current Report on Form 8-K (Commission File No. 000-31957) originally filed
     by the Company with the Commission on November 15, 2000, and all amendments
     or reports filed for the purpose of updating such description.

     All documents  filed by the Company  pursuant to Sections 13(a) and (c), 14
or 15(d) of the  Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which  deregisters all securities then remaining  unsold,  shall be
deemed to be incorporated by reference into this  Registration  Statement and be
part hereof from the date of filing of such documents.  Any statement  contained
in this  Registration  Statement,  or in a document  incorporated  by  reference
herein,  shall be deemed to be  modified  or  superseded  for  purposes  of this
Registration  Statement to the extent that a statement  contained  herein, or in
any other  subsequently  filed document which also is  incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified or
superseded  shall  not be  deemed,  except  as so  modified  or  superseded,  to
constitute a part of this Registration Statement.

     The  Company  shall  furnish  without  charge  to each  person  to whom the
prospectus is delivered,  on the written or oral request of such person,  a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically  incorporated by reference
to the information that is incorporated).  Requests should be directed to Martin
Thomson,  President and Chief Executive Officer,  Alpena  Bancshares,  Inc., 100
South Second Avenue, Alpena, Michigan 49707, (989) 356-9041.

     All information appearing in this Registration Statement and the prospectus
is qualified in its entirety by the detailed  information,  including  financial
statements,  appearing  in the  documents  incorporated  herein  or  therein  by
reference.

Item 4.  Description of Securities

         Not applicable.


<PAGE>


Item 5.  Interests of Named Experts and Counsel

         None.

Item 6.  Indemnification of Directors and Officers

     Generally,  federal  regulations  define areas for  indemnity  coverage for
federal  savings  associations  and  for  indemnity  coverage  for  federal  MHC
subsidiary holding companies, as follows:

               (a) Any  person  against  whom any action is brought by reason of
          the fact  that such  person is or was a  director  or  officer  of the
          institution shall be indemnified by the institution for:

                           (i) Reasonable costs and expenses, including
                  reasonable attorneys' fees, actually paid or incurred by such
                  person in connection with proceedings related to the defense
                  or settlement of such action;

                           (ii) Any  amount  for which  such  person  becomes
                  liable by reason of any judgment in such action;

                           (iii) Reasonable costs and expenses, including
                  reasonable attorneys' fees, actually paid or incurred in any
                  action to enforce his rights under this section, if the person
                  attains a final judgment in favor of such person in such
                  enforcement action.

               (b)  Indemnification  provided for in  subparagraph  (a) shall be
          made to such  officer or  director  only if the  requirements  of this
          subsection are met:

                           (i) The institution shall make the indemnification
                  provided by subparagraph (a) in connection with any such
                  action which results in a final judgment on the merits in
                  favor of such officer or director.

                           (ii) The institution shall make the indemnification
                  provided by subparagraph (a) in case of settlement of such
                  action, final judgment against such director or officer or
                  final judgment in favor of such director or officer other than
                  on the merits except in relation to matters as to which he
                  shall be adjudged to be liable for negligence or misconduct in
                  the performance of duty, only if a majority of the directors
                  of the institution determines that such a director or officer
                  was acting in good faith within what he was reasonably
                  entitled to believe under the circumstances was the scope of
                  his employment or authority and for a purpose which he was
                  reasonably entitled to believe under the circumstances was in
                  the best interest of the institution or its members.

               (c) As used in this paragraph:

                           (i) "Action" means any action, suit or other judicial
                  or administrative proceeding, or threatened proceeding,
                  whether civil, criminal, or otherwise, including any appeal or
                  other proceeding for review;

                           (ii) "Court" includes,  without limitation,  any
                  court to which or in which any appeal or any proceeding for
                  review is brought;

                           (iii) "Final Judgment" means a judgment, decree, or
                  order which is appealable and as to which the period for
                  appeal has expired and no appeal has been taken;

                           (iv) "Settlement"  includes the entry of a judgment
                  by consent or by confession or upon a plea of guilty or of
                  nolo contendere.


<PAGE>


Item 7.  Exemption From Registration Claimed.

         Not applicable.

Item 8.  List of Exhibits.

     The following exhibits are filed herewith or incorporated by reference into
this Registration Statement on Form S-8:

          4.1  First Federal  Savings and Loan  Association of Alpena 1996 Stock
               Option Plan.

          4.2  First  Federal  Savings  and  Loan  Association  of  Alpena  1996
               Recognition and Retention Plan.

          5    Opinion of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation  as to the  legality of the Common  Stock  registered
               hereby.

          23.1 Consent of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation (contained in the opinion included as Exhibit 5).

          23.2 Consent of Plante & Moran, LLP

          24   Power of Attorney

Item 9.  Undertakings

         The undersigned Registrant hereby undertakes:

     1. To file,  during any period in which  offers or sales are being made,  a
post-effective  amendment to this Registration Statement to include any material
information with respect to the Registration  Statement not previously disclosed
in this  Registration  Statement or any material  change to such  information in
this Registration Statement;

     2. That, for the purpose of determining  any liability under the Securities
Act of 1933,  each  such  post-effective  amendment  shall be deemed to be a new
Registration  Statement  relating to the  securities  offered  therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof;

     3. To remove from  registration by means of a post-effective  amendment any
of the securities being registered which remain unsold at the termination of the
1994 Incentive Stock Option Plan; and

     4. That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section 13(a)
or  15(d)  of the  Securities  Exchange  Act of  1934  that is  incorporated  by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities  offered therein,  and the offering of such
securities  at that time shall be deemed to be the  initial  bona fide  offering
thereof.

     5. Insofar as indemnification  for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the Registrant of expenses
incurred or paid by a director,  officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


<PAGE>



                                   SIGNATURES

     The Registrant. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the  requirements  for  filing  on  Form  S-8 and has  duly  caused  this
Registration Statement to be signed on its behalf by the undersigned,  thereunto
duly authorized,  in the City of Alpena, State of Michigan,  on this 30th day of
January, 2002.

                                 Alpena Bancshares, Inc.

                                 By:      /s/ Martin A. Thomson
                                          --------------------------------------
                                          Martin A. Thomson, President and
                                           Chief Executive Officer

                                POWER OF ATTORNEY

     We,  the  undersigned  Directors  of  Alpena  Bancshares,   Inc.  severally
constitute  and appoint Martin A. Thomson with full power of  substitution,  our
true and lawful  attorney  and  agent,  to do any and all things and acts in our
names in the  capacities  indicated  below which said Martin A. Thomson may deem
necessary  or  advisable to enable  Alpena  Bancshares,  Inc. to comply with the
Securities  Act of 1933,  and any rules,  regulations  and  requirements  of the
Securities  and  Exchange  Commission,   in  connection  with  the  Registration
Statement on Form S-8 relating to the First Federal Savings and Loan Association
of  Alpena  1996  Stock  Option  Plan and the  First  Federal  Savings  and Loan
Association  of  Alpena  1996   Recognition   and  Retention   Plan,   including
specifically,  but not limited to, power and  authority to sign for us or any of
us in our names in the capacities indicated below the Registration Statement and
any and all amendments  (including  post-effective  amendments)  thereto; and we
hereby  ratify and confirm all that said Martin A. Thomson  shall do or cause to
be done by virtue hereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.

By: /s/ Martin A. Thomson                By: /s/ James D. Hubinger
    ---------------------------------        -----------------------------------
    Martin A. Thomson, President and         James D. Hubinger, Treasurer/ Chief
    Chief Executive Officer                  Financial Officer
    (Principal Executive Officer)            (Principal Financial and Accounting
                                              Officer)

Date: February 20, 2002                  Date: February 20, 2002


By: /s/ Gary W. Bensinger                By: /s/ Keith D. Wallace
    ----------------------------------       -----------------------------------
    Gary W. Bensinger, Director              Keith D. Wallace, Director

Date: February 20, 2002                  Date: February 20, 2002


By: /s/ James C. Rapin                   By: /s/ Martin A. Thomson
    ----------------------------------       -----------------------------------
    James C. Rapin, Director                 Martin A. Thomson, Director

Date: February 20, 2002                  Date: February 20, 2002


By: /s/ Duane I. Dickey                  By: /s/ Gary C. Vanmassenhove
    ----------------------------------       -----------------------------------
    Duane I. Dickey, Chairman of the         Gary C. Vanmassenhove, Director
    Board

Date: February 20, 2002                  Date: February 20, 2002




<PAGE>


                                  EXHIBIT INDEX


Exhibit Number             Description
--------------             ------------


          4.1  First Federal  Savings and Loan  Association of Alpena 1996 Stock
               Option Plan.

          4.2  First  Federal  Savings  and  Loan  Association  of  Alpena  1996
               Recognition and Retention Plan.

          5    Opinion of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation  as to the  legality of the Common  Stock  registered
               hereby.
          23.1 Consent of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation (contained in the opinion included as Exhibit 5).

          23.2 Consent of Plante & Moran, LLP.

          24   Power of Attorney


























<PAGE>


                                   EXHIBIT 4.1

<PAGE>


                   FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                     OF ALPENA and ALPENA BANCSHARES, M.H.C.

                             1996 STOCK OPTION PLAN


1.   Purpose

     The purpose of the First Federal Savings and Loan Association of Alpena and
Alpena Bancshares,  M.H.C. 1996 Stock Option Plan (the "Plan") is to advance the
interests of First Federal  Savings and Loan  Association of Alpena (the "Bank")
and its  shareholders by providing  Employees and Outside  Directors of the Bank
and its affiliates,  including  Alpena  Bancshares,  M.H.C.,  the mutual holding
company of the Bank (the "Company"), upon whose judgment, initiative and efforts
the successful  conduct of the business of the Bank and its  affiliates  largely
depends, with an additional incentive to perform in a superior manner as well as
to attract  people of experience and ability to such positions with the Bank and
the Company.

2.   Definitions

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

     "Award"  means an Award of  Nonstatutory  Stock  Options,  Incentive  Stock
Options, and/or Limited Rights granted under the provisions of the Plan.

     "Beneficiary"  means the person or persons  designated  by a  Recipient  to
receive any  benefits  payable  under the Plan in the event of such  Recipient's
death.  Such person or persons shall be designated in writing on forms  provided
for this  purpose  by the  Committee  and may be  changed  from  time to time by
similar  written  notice  to  the  Committee.   In  the  absence  of  a  written
designation,  the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

     "Board of  Directors"  or "Board"  means the Board of Directors of the Bank
and the Company, as applicable.

     "Change in Control" means:

     (1)(i) A reorganization,  merger, merger conversion,  consolidation or sale
of all or  substantially  all of the  assets  of the  Bank or the  Company  or a
similar  transaction in which the Bank or Company is not the resulting entity or
the Stock Holding  Company is not the resulting  entity;  (ii)  individuals  who
constitute  the Board of  Directors of the Bank or the Board of Directors of the
Company as of the date hereof (the "Incumbent  Board"),  cease for any reason to
constitute  at least a majority  thereof,  provided  that any person  becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-fourths of the directors  composing the Incumbent Board or whose
nomination  for  election by the Bank's or  Company's  stockholders  or members,
respectively,  was  approved  by  the  Nominating  Committee  serving  under  an
Incumbent  Board shall be for purposes of this section  considered  as though he
were a member of the Incumbent  Board;  or (iii) an  acquisition of "control" of
the Bank or the Company as defined by the Home Owners Loan Act, as amended,  and
applicable rules and regulations promulgated thereunder as in effect at the time
of the Change in Control  (collectively,  the "HOLA"), or (iv) an acquisition of
the Bank's stock requiring submission of notice under the Change in Bank Control
Act;

     (2) In the event the Company  converts from the mutual form of organization
to the  stock  form of  organization  in a  Conversion  Transaction  at any time
subsequent to the effective  date of this Plan, a "Change in Control" shall mean
a change in control of the Bank or the Stock  Holding  Company of a nature that:
(i) would be  required  to be  reported  in  response  to Item 1a of the current
report on Form 8-K, as in effect on the date  hereof,  pursuant to Section 13 or
15(d) of the  Securities  Exchange  Act of 1934 (the  "Exchange  Act");  or (ii)
results in a change in control of the Bank or the Stock Holding  Company  within
the  meaning  of the  Bank  Holding  Company  Act  ("BHCA");  or  (iii)  without
limitation,  results in (a) any "person" (as such term is used in Section  13(d)
and 14(d) of the Exchange  Act) becoming the  "beneficial  owner" (as defined in

<PAGE>

Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Bank or the Stock  Holding  Company  representing  25% or more of the  Bank's or
Stock Holding Company's  outstanding  securities  ordinarily having the right to
vote at the election of directors,  except for any  securities  purchased by the
Bank's or the Stock Holding  Company's  employee stock benefit plans; or (b) the
Incumbent  Board ceasing for any reason to constitute at least a majority of the
Board of Directors  of the Bank or Stock  Holding  Company;  or (c) results in a
reorganization,  merger, consolidation,  sale of all or substantially all of the
assets of the Bank or the Stock Holding Company or similar transaction.

     Notwithstanding  anything to the contrary  herein,  the  conversion  of the
Company to stock form, on a stand-alone basis, shall not be a Change in Control.

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

     "Committee"  means the Stock Benefits  Committee (or the equivalent) of the
Board of Directors consisting of at least three Outside Directors of the Bank or
the Company,  and all of whom are and must be "disinterested  directors" as that
term is defined under Rule 16b-3 under the Exchange Act.

     "Common  Stock"  means the common  stock of the Bank,  par value  $1.00 per
share.

     "Company" means Alpena Bancshares, M.H.C.

     "Continuous  Service"  means  employment  as an  Employee  or service as an
Outside  Director  without any interruption or termination of such employment or
service.  In the  case  of an  Employee,  employment  shall  not  be  considered
interrupted  in the case of sick  leave,  military  leave or any other  leave of
absence  approved  by the  Bank or in the  case  of  transfers  between  payroll
locations of the Bank or between the Bank, its parent,  its  subsidiaries or its
successor.  For purposes of determining  Continuous Service, an Outside Director
who  terminates  service  on the  Board but who  continues  to serve the Bank or
Company as a Director  Emeritus  will not be deemed to have an  interruption  or
termination of service under the Plan.

     "Conversion  Transaction"  means the  conversion  of the  Company  from the
mutual to stock form of  organization  either on a  stand-alone  basis or in the
context of a merger  conversion  with an unrelated  entity,  as  contemplated by
regulations  of the  Office  of  Thrift  Supervision  ("OTS")  or any  successor
thereof.

     "Date of Grant"  means the actual  date on which an Award is granted by the
Committee.

     "Director" means a member of the Board of Directors.

     "Director  Emeritus"  means a former Director who, in recognition of his or
her past contributions, has been titled as a director emeritus.

     "Disability" means the permanent and total inability by reason of mental or
physical  infirmity,  or both,  of an Employee  to perform the work  customarily
assigned  to him.  Additionally,  a medical  doctor  selected or approved by the
Board of Directors  must advise the Committee  that it is either not possible to
determine when such Disability  will terminate or that it appears  probable that
such  Disability  will be  permanent  during the  remainder  of such  Employee's
lifetime.

     "Effective  Date"  means  the  date  the  Plan is  ratified  by the  Board,
following the approval of stockholders.

     "Employee"  means any person who is  currently  employed by the Bank or the
Company or an Affiliate, including officers.

     "Fair  Market  Value"  means,  with respect to the Common  Stock,  the mean
between the bid and asked price for such Common  Stock on the date the Option is
granted  or, if there be no bid and asked  price on said date,  then on the next
prior business day on which there was a bid and asked price. If no bid and asked
price is  available,  then the  price  per  share  shall  be  determined  by the
Committee,  using a reasonable  valuation  method  consistent  with the Code and
Treasury Regulations.

<PAGE>

     "Incentive  Stock  Option"  means an Option  granted by the Committee to an
Employee  Participant,  which Option is designated as an Incentive  Stock Option
pursuant to Section 8.

     "Limited Right" means the right to receive an amount of cash based upon the
terms set forth in Section 9.

     "Nonstatutory Stock Option" means an Option granted by the Committee to (i)
an Outside  Director or (ii) to any other  Participant and such option is either
(A) not designated by the Committee as an Incentive  Stock Option,  or (B) fails
to satisfy the requirements of an Incentive Stock Option as set forth in Section
422 of the Code and the regulations thereunder.

     "Normal  Retirement"  means,  for an Employee,  retirement at the normal or
early  retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any  successor  plan.  For  an  Outside  Director,  Normal  Retirement  means
retirement from service on the Board.

     "Offering"  means the initial  public  offering of the Common  Stock of the
Bank.

     "Option" means an Award granted under Section 7 or Section 8.

     "Outside Director" means a Director who is not also an Employee.

     "Participant"  means an  Outside  Director  or an  Employee  chosen  by the
Committee to participate in the Plan.

     "Reorganization" means the reorganization of First Federal Savings and Loan
Association of Alpena as a mutual holding company and the  establishment  of the
Bank as its majority-owned subsidiary.

     "Stock Holding  Company" means the holding  company  resulting from a stock
conversion of the Company in a Conversion Transaction.

     "Termination  for Cause" means the  termination  of  employment  or service
caused  by  the  individual's   personal   dishonesty,   incompetence,   willful
misconduct,  any  breach  of a  fiduciary  duty  involving  personal  profit  or
intentional failure to perform stated duties, willful violation of any law, rule
or  regulation  (other than  traffic  violations  or similar  offenses) or final
cease-and-desist  order, or a material breach of a material provision hereof. In
the case of an Outside Director, Termination for Cause means a removal for cause
pursuant to the Bank's Bylaws.

3.   Administration

     The  Plan  shall  be  administered  by  the  Committee.  The  Committee  is
authorized,  subject to the  provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper  administration of the Plan and
to make whatever  determinations and interpretations in connection with the Plan
it deems necessary or advisable.  All determinations and interpretations made by
the Committee  shall be binding and conclusive on all  Participants  in the Plan
and on their legal representatives and beneficiaries.

     The Awards of Nonstatutory Options to Outside Directors under Section 7 are
intended to comply with Rule 16b-3 under the Exchange Act.  Notwithstanding  any
term to the contrary appearing herein, unless permitted by Rule 16b-3(c)(2)(ii),
neither the  Committee  nor the Board of Directors  shall have the  authority to
determine  the amount and price of  securities  to be awarded  and/or  timing of
awards under Section 7 to designated directors or categories of directors, which
terms  shall be set forth  herein.  To the extent any  provision  of the Plan or
action  by Plan  administrators  fails to  comply  with  this  Section  3,  such
provision or action shall be deemed null and void to the extent permitted by law
and deemed advisable by the Board of Directors.

4.   Types of Awards

     Awards  under the Plan may be  granted in any one or a  combination  of (a)
Incentive  Stock  Options;  (b)  Non-Statutory  Stock  Options;  and (c) Limited
Rights.

<PAGE>


5.   Stock Subject to the Plan

     Subject to  adjustment  as provided  in Section  14, the maximum  number of
shares  reserved for issuance  under the Plan is ten percent (10%) of the shares
of Common  Stock of the Bank sold in  connection  with the  Offering  (or 69,000
shares).  The maximum  number of shares  reserved  for  issuance to Employees is
44,852 shares or 2.79% of the shares of Common Stock issued in  connection  with
the  Offering.  The maximum  number of shares  reserved  for issuance to Outside
Directors  is 24,148  shares or 1.50% of the  shares of Common  Stock  issued in
connection with the Offering.

     The  shares of  Common  Stock  represented  by such  options  may be either
authorized-but-unissued shares or shares previously issued and reacquired by the
Bank or the Company.  The Company may use  dividends  received  from the Bank to
fund the purchase of shares  necessary to satisfy the exercise of stock options.
To the extent that options  together with any related  rights and Limited Rights
granted under the Plan  terminate,  expire or are cancelled  without having been
exercised or, in the case of Limited  Rights,  without having been exercised for
cash, new Awards may be made with respect to shares underlying such options.

6.   Eligibility

     Employees   shall  be  eligible  to  receive   Incentive   Stock   Options,
Nonstatutory  Stock  Options  and/or  Limited  Rights  under the  Plan.  Outside
Directors  shall not be eligible to receive  Incentive  Stock  Options under the
Plan.  Outside  Directors shall be eligible to receive only  Nonstatutory  Stock
Options and Limited Rights.

7.   Nonstatutory Stock Options

     7.1      Grant of Nonstatutory Stock Options

     (a) Grants to Outside  Directors.  Each Outside  Director who is serving in
such capacity on the effective date of the Plan (the "Effective Date"), shall be
granted Options to purchase 6,037 shares of Common Stock of the Bank, subject to
adjustment  pursuant to Section 14. Each person who becomes an Outside  Director
subsequent to the Effective Date, shall be granted Nonstatutory Stock Options to
purchase  6,037 shares of the Common Stock,  subject to  adjustment  pursuant to
Section 14, to the extent shares remain  available under the Plan.  Nonstatutory
Stock Options granted under the Plan are subject to the terms and conditions set
forth in this Section 7.

     (b)  Grants to  Employees.  The  Committee  may,  from time to time,  grant
Nonstatutory  Stock Options to Employees  and, upon such terms and conditions as
the Committee may determine,  grant  Nonstatutory  Stock Options in exchange for
and upon  surrender of previously  granted  Awards under the Plan.  Nonstatutory
Stock Options granted under the Plan are subject to the terms and conditions set
forth in this Section 7.

     (c) Option  Agreement.  Each Option shall be evidenced by a written  option
agreement  between the Bank and the Employee  specifying the number of shares of
Common Stock that may be acquired through its exercise and containing such other
terms and conditions that are not inconsistent with the terms of this grant. The
maximum number of shares  subject to a  Nonstatutory  Option that may be awarded
under the Plan to any Employee shall be 17,250.

     (d) Price.  The purchase price per share of Common Stock  deliverable  upon
the  exercise of each  Non-statutory  Stock Option  shall be  determined  by the
Committee  on the date the Option is  granted.  Except as provided  below,  such
purchase  price  shall  not be less than  100% of the Fair  Market  Value of the
Common Stock on the date the Option is granted.  The purchase price per share of
Common Stock  deliverable  upon the exercise of each  Nonstatutory  Stock Option
granted in exchange for and upon surrender of previously granted Awards shall be
not less than 85% of the Fair Market  Value of the Common  Stock on the date the
Option is granted,  but in no event may the purchase  price of any  Nonstatutory
Stock  Option be less  than the par value of the  Common  Stock.  Shares  may be
purchased only upon full payment of the purchase price.  Payment of the purchase
price may be made,  in whole or in part,  through the surrender of shares of the
Common Stock at the Fair Market Value of such shares.

     (e)  Manner of  Exercise.  Nonstatutory  Stock  Options  awarded to Outside
Directors  shall vest in a Participant  at the rate of twenty  percent (20%) per
year commencing from the date of grant.  The vested Option may be exercised from

<PAGE>

time to time, in whole or in part, by delivering a written notice of exercise to
the President or Chief Executive Officer of the Bank. Such notice is irrevocable
and must be  accompanied by full payment of the purchase price in cash or shares
of previously acquired Common Stock of the Bank at the Fair Market Value of such
shares determined on the exercise date.

     (f) Terms of Options.  The term during which each Nonstatutory Stock Option
may be exercised  shall be determined by the Committee,  but in no event shall a
Nonstatutory  Stock Option be exercisable in whole or in part more than 10 years
and one day  from  the  Date of  Grant.  The  Nonstatutory  Options  awarded  to
Employees shall be exercisable in installments,  as determined by the Committee.
The Committee  shall determine the date on which each  installment  shall become
exercisable. The shares comprising each installment may be purchased in whole or
in part at any time after such installment becomes  exercisable.  The Committee,
in its sole discretion,  may accelerate the time at which any Nonstatutory Stock
Option awarded to Employees may be exercised in whole or in part,  provided that
the Committee may not accelerate  the time at which a Nonstatutory  Stock Option
may be exercised due to retirement of such Employee.  Notwithstanding the above,
in the event of a Change in Control, all Nonstatutory Stock Options shall become
immediately exercisable.

     (g)  Termination  of  Employment  or Service.  Upon the  termination  of an
Employee's  employment or upon termination of an Outside  Director's service for
any reason other than Normal Retirement,  Disability,  death, or Termination for
Cause, the Employee's or Outside Director's  Nonstatutory Stock Options shall be
exercisable  only as to those shares that were  immediately  purchasable  by the
Employee or Outside  Directors at the date of termination  and only for a period
of one year following  termination.  In the event of Termination for Cause,  all
rights under the Nonstatutory  Stock Options shall expire upon  termination.  In
the event of the Normal  Retirement,  death or  Disability  of any  Employee  or
Outside  Director,  all  Nonstatutory  Stock  Options  held by such  Employee or
Outside Director,  whether or not exercisable at such time, shall be exercisable
by such  person  or his  legal  representatives  or  beneficiaries  for one year
following  the date of his death or  cessation  of  employment  or  service,  as
applicable,  due to Disability or Normal  Retirement,  provided that in no event
shall the period extend beyond the expiration of the  Nonstatutory  Stock Option
term.  Notwithstanding  the above,  all  Nonstatutory  Stock  Options  held by a
Participant  whose  employment as an Employee or service as an Outside  Director
terminates  following a Change in Control  shall be deemed earned as of the last
day of  employment  or  service  with  the  Bank or an  Affiliate  and  shall be
exercisable for one year following such termination of employment or service.

8.   Incentive Stock Options

     8.1      Grant of Incentive Stock Options

     The  Committee,  from time to time,  may grant  Incentive  Stock Options to
Employees. Incentive Stock Options granted pursuant to the Plan shall be subject
to the following terms and conditions:

     (a) Option  Agreement.  Each Option shall be evidenced by a written  option
agreement  between the Bank and the Employee  specifying the number of shares of
Common Stock that may be acquired through its exercise and containing such other
terms and conditions that are not inconsistent with the terms of this grant.

     (b) Price.  The purchase price per share of Common Stock  deliverable  upon
the exercise of each  Incentive  Stock Option shall be not less than 100% of the
Fair Market Value of the Common Stock on the date the Incentive  Stock Option is
granted.  However,  if an Employee  owns stock  possessing  more than 10% of the
total  combined  voting power of all classes of Common  Stock (or under  Section
424(d) of the Code,  is  deemed to own stock  representing  more than 10% of the
total  combined  voting  power  of all  classes  of  stock  of the  Bank  or its
Affiliates by reason of the  ownership of such classes of common stock  directly
or  indirectly,  by or for any  brother,  sister,  spouse,  ancestor  or  lineal
descendant of such Employee or by or for any corporation, partnership, estate or
trust of which such  Employee is a  shareholder,  partner or  beneficiary),  the
purchase price per share of Common Stock  deliverable  upon the exercise of each
Incentive  Stock  Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the date the Incentive  Stock Option is granted.  Shares may
be  purchased  only upon  payment  of the full  purchase  price.  Payment of the
purchase price may be made, in whole or in part, through the surrender of shares
of the Common Stock. If previously  acquired shares of Common Stock are tendered
in payment of all or part of the exercise price,  the value of such shares shall
be  determined as of the date of exercise of the  Incentive  Stock  Option.

<PAGE>

     (c) Manner of Exercise.  Incentive  Stock  Options  granted under the Stock
Option Plan shall vest in a Participant  at the rate or rates  determined by the
Committee.  The vested Option may be exercised from time to time, in whole or in
part,  by  delivering  a written  notice of exercise to the  President  or Chief
Executive  Officer of the Bank,  provided,  however,  that no  Options  shall be
exercisable  prior to  approval  of the Plan by  stockholders.  Such  notice  is
irrevocable  and must be  accompanied  by full payment of the purchase  price in
cash or shares of  previously  acquired  Common Stock.  If  previously  acquired
shares of Common  Stock are  tendered in payment of all or part of the  exercise
price,  the Fair Market Value of such shares shall be  determined as of the date
of such exercise of the Incentive Stock Option.

     (d)  Amount of  Options.  Incentive  Stock  Options  may be  granted to any
Employee in such  amounts as  determined  by the  Committee;  provided  that the
amount  granted  is  consistent  with the  terms  of  Section  422 of the  Code.
Notwithstanding  the above,  the maximum number of shares that may be subject to
an  Incentive  Stock  Option  awarded  under the Plan to any  Employee  shall be
17,250.  In granting  Incentive Stock Options,  the Committee shall consider the
position and  responsibilities  of the Employee,  the length and value of his or
her service to the Bank, the Company, or the Affiliate, the compensation paid to
the Employee and the Committee's  evaluation of the performance of the Bank, the
Company,  or the Affiliate,  according to measurements  that may include,  among
others, key financial ratios, levels of classified assets, and independent audit
findings.  In the case of an Option  intended to qualify as an  Incentive  Stock
Option,  to the extent  required by Section 422 of the Code,  the aggregate Fair
Market  Value  (determined  as of the time the Option is  granted) of the Common
Stock with respect to which  Incentive Stock Options granted are exercisable for
the first time by the  Participant  during any calendar year (under all plans of
the   Participant's   employer   corporation   and  its  parent  and  subsidiary
corporations)  shall not exceed $100,000.  The provisions of this Section 8.1(d)
shall be construed and applied in accordance with Section 422(d) of the Code and
the regulations, if any, promulgated thereunder.

     (e) Term of Options.  The term during which each Incentive Stock Option may
be exercised  shall be  determined  by the  Committee,  but in no event shall an
Incentive  Stock  Option be  exercisable  in whole or in part more than 10 years
from the Date of Grant.  If any Employee,  at the time an Incentive Stock Option
is granted to him,  owns Common  Stock  representing  more than 10% of the total
combined voting power of the Bank or its Affiliates (or, under Section 424(d) of
the Code, is deemed to own Common Stock  representing more than 10% of the total
combined  voting  power of all such  classes of Common  Stock,  by reason of the
ownership of such classes of Common Stock, directly or indirectly, by or for any
brother,  sister, spouse,  ancestor or lineal descendent of such Employee, or by
or for any corporation, partnership, estate or trust of which such Employee is a
shareholder,  partner or beneficiary), the Incentive Stock Option granted to him
or her shall not be exercisable after the expiration of five years from the Date
of Grant.  No Incentive  Stock  Option  granted  under the Plan is  transferable
except by will or the laws of descent and distribution and is exercisable during
his lifetime only by the Employee to which it is granted.

     The Committee shall determine the date on which each Incentive Stock Option
shall become  exercisable  and may provide that an Incentive  Stock Option shall
become  exercisable in installments.  The shares comprising each installment may
be  purchased  in whole or in part at any time  after such  installment  becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent  with the terms of Section 422 of the Code. The Committee,  in its
sole discretion, may accelerate the time at which any Incentive Stock Option may
be exercised in whole or in part;  provided that it is consistent with the terms
of Section 422 of the Code.  Notwithstanding the above, in the event of a Change
in Control,  all Incentive  Stock Options shall become  immediately  exercisable
unless the Fair Market Value of the amount  exercisable  as a result of a Change
in Control shall exceed $100,000  (determined as of the date of grant).  In such
event, the first $100,000 of Incentive Stock Options  (determined as of the date
of grant) shall be exercisable  as Incentive  Stock Options and any excess shall
be exercisable as Nonstatutory Stock Options.

     (f)  Termination  of  Employment.  Upon the  termination  of an  Employee's
employment for any reason other than Normal  Retirement,  Disability,  Change in
Control,  death,  or Termination  for Cause,  his or her Incentive Stock Options
shall be exercisable only as to those shares that were  immediately  purchasable
by him at the  date of  termination  and  only  for a  period  of  three  months
following  termination.  In the event of Termination for Cause, all rights under
his or her Incentive Stock Options shall expire upon termination.

     In the event of termination of an Employee's  employment due to a Change in
Control,  Normal  Retirement,  death or Disability,  all Incentive Stock Options
held by such  Employee,  whether  or not  exercisable  at such  time,  shall  be

<PAGE>

exercisable  by  such  Employee  (or  in  the  event  of his  death,  his  legal
representative  or beneficiary) for one year following the date of his cessation
of employment;  provided,  however,  that, to the extent prohibited by law, such
Options  shall not be eligible for  treatment as Incentive  Stock Options in the
event such Options are exercised more than three months following the Employee's
cessation of employment. In no event shall the exercise period extend beyond the
expiration of the Incentive Stock Option term.

     (g)  Compliance  with Code.  The Options  granted  under this Section 8 are
intended to qualify as Incentive Stock Options within the meaning of Section 422
of the Code,  but the Bank  makes no  warranty  as to the  qualification  of any
Option as an  incentive  stock  option  within the meaning of Section 422 of the
Code. If an Option granted  hereunder  fails for whatever  reason to comply with
the  provisions  of Section 422 of the Code and such failure is not or cannot be
cured, such Option shall be a Nonstatutory Stock Option.

9.   Limited Rights

     9.1      Grant of Limited Rights

     The Committee may grant a Limited  Right  simultaneously  with the grant of
any Option to any  Employee or Outside  Director  with respect to all or some of
the shares  covered by such Option.  Limited  Rights  granted under the Plan are
subject to the following terms and conditions:

     (a) Terms of Rights.  In no event shall a Limited Right be  exercisable  in
whole or in part before the  expiration  of six months from the date of grant of
the  Limited  Right.  A Limited  Right may be  exercised  only in the event of a
Change in Control.

     The  Limited  Right may be  exercised  only when the  underlying  Option is
eligible to be exercised,  provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise  price of the related
Option.

     Upon  exercise of a Limited  Right,  the related  Option  shall cease to be
exercisable.  Upon exercise or  termination  of an Option,  any related  Limited
Rights shall  terminate.  The Limited Rights may be for no more than 100% of the
difference  between the  exercise  price and the Fair Market Value of the Common
Stock subject to the underlying  Option.  The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.

     (b) Payment.  Upon exercise of a Limited  Right,  the holder shall promptly
receive from the Bank an amount of cash equal to the difference between the Fair
Market  Value on the Date of Grant of the  related  Option  and the Fair  Market
Value of the  underlying  shares  on the date the  Limited  Right is  exercised,
multiplied  by the number of shares with respect to which such Limited  Right is
being exercised. In the event of a Change of Control in which pooling accounting
treatment  is a  condition  to the  transaction,  the  Limited  Right  shall  be
exercisable  solely for shares of stock of the Bank, or in the event of a merger
transaction,  for  shares  of  the  acquiring  corporation,  or its  parent,  as
applicable.  The number of shares to be received on the exercise of such Limited
Right shall be  determined  by dividing  the amount of cash that would have been
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.

10.  Surrender of Option

     In the event of a Participant's termination of employment or termination of
service as a result of death or  Disability,  the  Participant  (or his personal
representative(s),  heir(s),  or  devisee(s))  may, in a form  acceptable to the
Committee, make application to surrender all or part of the Options held by such
Participant  in exchange  for a cash payment from the Bank of an amount equal to
the difference  between the Fair Market Value of the Common Stock on the date of
termination  of  employment  or service and the exercise  price per share of the
Option  on the Date of Grant.  Whether  the Bank  accepts  such  application  or
determines to make payment, in whole or part, is within its sole discretion,  it
being  expressly  understood  that  the  Bank  is  under  no  obligation  to any
Participant  to make such  payments.  In the event  that the Bank  accepts  such
application and determines to make payment, such payment shall be in lieu of the
exercise of the underlying Option and such Option shall cease to be exercisable.

<PAGE>

11.  Rights of a Shareholder; Non-transferability

     A  Participant  shall have no rights as a  shareholder  with respect to any
shares covered by a Non-statutory  and/or  Incentive Stock Option until the date
of issuance of a stock  certificate  for such shares.  Nothing in the Plan or in
any Award  granted  confers on any person any right to continue in the employ of
the Bank or its  Affiliates  or to continue to perform  services for the Bank or
its  Affiliates  or  interferes  in any way  with  the  right of the Bank or its
Affiliates  to  terminate  his or her services as an Employee or Director at any
time.

     No Award under the Plan shall be transferable by the optionee other than by
will or the laws of descent and  distribution  and may only be exercised  during
his or her lifetime by the Participant, or by a guardian or legal representative
of the Participant.

12.  Agreement with Participants

     Each Award of  Options,  and/or  Limited  Rights  shall be  evidenced  by a
written  agreement,  executed by the  Participant and the Bank or its Affiliates
that  describes the  conditions  for receiving the Awards  including the date of
Award, the purchase price if any,  applicable  periods,  and any other terms and
conditions as may be required by the Board of Directors or applicable securities
law.

13.  Designation of Beneficiary

     A Participant, with the consent of the Committee, may designate a person or
persons to receive, in the event of death, any Option or Limited Rights Award to
which he or she would then be entitled. Such designation will be made upon forms
supplied  by and  delivered  to the Bank and may be  revoked  in  writing.  If a
Participant fails  effectively to designate a Beneficiary,  then his estate will
be deemed to be the Beneficiary.

14.  Dilution and Other Adjustments

     In the event of any  change in the  outstanding  shares of Common  Stock by
reason of any stock  dividend  or split,  recapitalization,  pro-rata  return of
capital to all shareholders,  merger, consolidation,  spin-off,  reorganization,
combination or exchange of shares,  or other similar  corporate change, or other
increase or decrease in such shares without receipt or payment of consideration,
the Committee  will make such  adjustments  to  previously  granted  Awards,  to
prevent dilution or enlargement of the rights of the Participant,  including any
or all of the following:

          (a)  adjustments  in the aggregate  number or kind of shares of Common
          Stock that may be awarded under the Plan;

          (b)  adjustments  in the aggregate  number or kind of shares of Common
          Stock covered by Awards already made under the Plan; or

          (c)  subject to Section  8.1(b),  adjustments in the purchase price of
          outstanding  Incentive  and/or  Nonstatutory  Stock  Options,  or  any
          Limited Rights attached to such options.

     No such adjustments,  however,  may change materially the value of benefits
available to a Participant under a previously granted Award.

15.  Limitations upon Exercise of Options

     Notwithstanding  any other  provision  of the Plan,  so long as the Company
remains in the mutual form of organization and so long as any applicable statute
or regulation requires the Company to own at least a majority of the outstanding
shares of Common Stock, an Option granted under the Plan may not be exercised if
the exercise of such an Option  would  result in the Company  owning less than a
majority  of the Common  Stock.  Nothing  herein  shall  preclude  the Bank from
issuing additional authorized but unissued shares of Common Stock to the Company
to allow for the exercise of options that would  otherwise  have resulted in the
Company owning less than a majority of the Common Stock.

<PAGE>

16.  Treatment of Options in the Event of a Conversion Transaction

     In the  event  that the  Company  converts  to stock  form in a  Conversion
Transaction,  any Options outstanding shall, at the option of the holder, (i) be
convertible into Options for common stock of the Stock Holding Company,  or (ii)
if  vested,  be  exercised  by the  holder  prior to the  effective  date of the
Conversion Transaction and the holder shall be entitled to exchange, in the same
manner as other  minority  stockholders  of the Bank, the shares of Common Stock
received  upon such  exercise  for shares of common  stock of the Stock  Holding
Company.  If for any reason such  options are not to be converted or such shares
are not  exchanged,  the holders of Options  under the Plan shall  receive  cash
payment for the shares of Common Stock  represented  by the Options in an amount
equal to the Fair Market Value of the underlying Options or the initial offering
price of the  common  stock of the Stock  Holding  Company  for which the Common
Stock  underlying  the Option would  otherwise be  exchanged,  less the original
exercise  price of such  Options  and,  with  respect to Options  that have been
exercised,  the Stock  Holding  Company shall redeem such shares for cash in the
same manner as such  redemption  would occur for other minority  stockholders of
the Bank. Any exchange,  conversion of Options, or cash payment for shares shall
be subject to  applicable  federal  and state  regulations  and,  if  necessary,
subject to the approval of the appropriate regulatory authorities.

17.  Withholding

     There may be deducted  from each  distribution  of cash and/or Common Stock
under the Plan the amount of tax  required by any  governmental  authority to be
withheld.

18.  Amendment of the Plan

     The Board of Directors  may at any time,  and from time to time,  modify or
amend the Plan in any respect; provided,  however, that if necessary to continue
to qualify the Plan under the Securities and Exchange Commission Rule 16b-3, the
approval by a majority of the shares of Common Stock represented in person or by
proxy at an annual or special meeting of the Bank shall be required for any such
modification or amendment that:

               (a)  increases the maximum number of shares for which Options may
                    be  granted  under  the  Plan  (subject,   however,  to  the
                    provisions of Section 14);

               (b)  reduces the  exercise  price at which  Awards may be granted
                    (subject,  however,  to the provisions of Sections 7, 8, and
                    14;

               (c)  extends the period  during  which  Options may be granted or
                    exercised beyond the times originally  prescribed  (subject,
                    however, to the provisions of Sections 7 and 8; or

               (d)  changes the persons eligible to participate in the Plan.

     Failure to ratify or approve amendments or modifications to subsections (a)
through (d) of this Section 18 by shareholders shall be effective only as to the
specific   amendment  or  modification   requiring  such   ratification.   Other
provisions,  sections, and subsections of the Plan will remain in full force and
effect.

     No such  termination,  modification or amendment may affect the rights of a
Participant under an outstanding Award.

19.  Approval by Stockholders

     The Plan shall be approved by stockholders of the Bank. No Options shall be
granted pursuant to the Plan prior to such stockholder approval.

<PAGE>


20.  Effective Date of Plan

     The Plan  shall  become  effective  upon the date  adopted  by the Board of
Directors, following the approval of stockholders.

21.  Termination of the Plan

     The right to grant Awards under the Plan will terminate upon the earlier of
ten (10) years  after the  Effective  Date or the date on which the  exercise of
Options or related rights  equaling the maximum number of shares  reserved under
the Plan occurs as set forth in Section 5. The Board of Directors  has the right
to suspend or terminate the Plan at any time; provided that no such action will,
without  the  consent of a  Participant,  affect  adversely  his rights  under a
previously granted Award.

22.  Applicable Law

     The Plan will be  administered  in accordance with federal law and the laws
of the State of Michigan.

Adopted February 27, 1996

ATTEST:                                FIRST FEDERAL SAVINGS AND LOAN
                                       ASSOCIATION OF ALPENA



/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
---------------------------------          -------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer




                                       ALPENA BANCSHARES, M.H.C.



/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
---------------------------------          -------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer


April 17, 1996
---------------------------------
Date Approved by Stockholders

<PAGE>


                                   EXHIBIT 4.2

<PAGE>


                         FIRST FEDERAL SAVINGS AND LOAN
                            ASSOCIATION OF ALPENA and
                            ALPENA BANCSHARES, M.H.C.

                       1996 RECOGNITION AND RETENTION PLAN


1.   Establishment of the Plan

     First  Federal  Savings and Loan  Association  of Alpena  (the  "Bank") and
Alpena Bancshares,  M.H.C. (the "Company") hereby establish the 1996 Recognition
and Retention Plan (the "Plan") upon the terms and conditions hereinafter stated
in the Plan.

2.   Purpose of the Plan

     The purpose of the Plan is to retain  Employees  and Outside  Directors  of
experience and ability by providing such persons with a proprietary  interest in
the Bank as compensation for their contributions to the Bank and the Company and
their Affiliates and as an incentive to make such  contributions  and to promote
the Bank's growth and profitability in the future.

3.   Definitions

     The  following  words and  phrases  when  used in the Plan with an  initial
capital letter,  unless the context clearly indicates otherwise,  shall have the
meanings set forth below.  Wherever  appropriate,  the  masculine  pronoun shall
include the feminine pronoun and the singular shall include the plural:

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

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

     "Bank" means First Federal Savings and Loan Association of Alpena.

     "Beneficiary"  means the person or persons  designated  by a  Recipient  to
receive any  benefits  payable  under the Plan in the event of such  Recipient's
death.  Such person or persons shall be designated in writing on forms  provided
for this  purpose  by the  Committee  and may be  changed  from  time to time by
similar  written  notice  to  the  Committee.   In  the  absence  of  a  written
designation,  the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

     "Board" or "Board of  Directors"  means the Board of  Directors of the Bank
and the Company, as applicable.

     "Cause"  means  personal  dishonesty,  willful  misconduct,  any  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  or the willful  violation of any law,  rule or  regulation  (other than
traffic violations or similar offenses) or a final  cease-and-desist  order, any
of which results in a material loss to the Bank or an Affiliate.

     "Change in Control" means:

     (1)(i) A reorganization,  merger, merger conversion,  consolidation or sale
of all or  substantially  all of the  assets  of the  Bank or the  Company  or a
similar  transaction in which the Bank or Company is not the resulting entity or
the Stock Holding  Company is not the resulting  entity;  (ii)  individuals  who
constitute  the Board of  Directors of the Bank or the Board of Directors of the
Company as of the date hereof (the "Incumbent  Board"),  cease for any reason to
constitute  at least a majority  thereof,  provided  that any person  becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-fourths of the directors  composing the Incumbent Board or whose
nomination  for  election by the Bank's or  Company's  stockholders  or members,
respectively,  was  approved  by  the  Nominating  Committee  serving  under  an
Incumbent  Board shall be for purposes of this section  considered  as though he

<PAGE>

were a member of the Incumbent  Board;  or (iii) an  acquisition of "control" of
the Bank or the Company as defined by the Home Owners Loan Act, as amended,  and
applicable rules and regulations promulgated thereunder as in effect at the time
of the Change in Control  (collectively,  the "HOLA"), or (iv) an acquisition of
the Bank's stock requiring submission of notice under the Change in Bank Control
Act;

     (2) In the event the Company  converts from the mutual form of organization
to the  stock  form of  organization  in a  Conversion  Transaction  at any time
subsequent to the effective date of the Plan, a "Change in Control" shall mean a
change in control of the Bank or the Stock Holding Company of a nature that: (i)
would be required to be reported in response to Item 1a of the current report on
Form 8-K,  as in effect on the date  hereof,  pursuant to Section 13 or 15(d) of
the Securities  Exchange Act of 1934 (the "Exchange  Act"); or (ii) results in a
change in control of the Bank or the Stock Holding Company within the meaning of
the Bank Holding Company Act ("BHCA");  or (iii) without limitation,  results in
(a) any  "person"  (as  such  term is used in  Section  13(d)  and  14(d) of the
Exchange  Act) becoming the  "beneficial  owner" (as defined in Rule 13d-3 under
the Exchange  Act),  directly or  indirectly,  of  securities of the Bank or the
Stock Holding  Company  representing  25% or more of the Bank's or Stock Holding
Company's  outstanding  securities  ordinarily  having  the right to vote at the
election of directors,  except for any securities purchased by the Bank's or the
Stock Holding Company's employee stock benefit plans; or (b) the Incumbent Board
ceasing  for any  reason  to  constitute  at least a  majority  of the  Board of
Directors  of  the  Bank  or  Stock  Holding  Company;   or  (c)  results  in  a
reorganization,  merger, consolidation,  sale of all or substantially all of the
assets of the Bank or the Stock Holding Company or similar transaction.

     Notwithstanding  anything to the contrary  herein,  the  conversion  of the
Company to stock form, on a stand-alone basis, shall not be a Change in Control.

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

     "Committee"  means the Stock Benefits  Committee of the Board  appointed by
the Bank which shall consist of at least three Outside  Directors of the Bank or
the Company, all of whom are and must be "disinterested directors," as that term
is defined under Rule 16b-3 of the Securities Exchange Act of 1934.

     "Common  Stock" means shares of the common stock of the Bank,  par value of
$1.00 per share.

     "Company" means Alpena Bancshares, M.H.C.

     "Continuous  Service"  means  employment  as an  Employee  or service as an
Outside  Director  without any interruption or termination of such employment or
service.  In the  case  of an  Employee,  employment  shall  not  be  considered
interrupted  in the case of sick  leave,  military  leave or any other  leave of
absence  approved  by the  Bank or in the  case  of  transfers  between  payroll
locations of the Bank or between the Bank, its parent,  its  subsidiaries or its
successor.  For purposes of determining  Continuous Service, an Outside Director
who  terminates  service  on the  Board but who  continues  to serve the Bank or
Company as a Director  Emeritus  will not be deemed to have an  interruption  or
termination of service under the Plan.

     "Conversion  Transaction"  means the  conversion  of the  Company  from the
mutual to stock form of  organization  either on a  stand-alone  basis or in the
context of a merger conversion, as provided by regulations of the OTS.

     "Director" means a member of the Board of Directors.

     "Director  Emeritus" means a former Director,  who in recognition of his or
her past contributions, has been titled as a director emeritus.

     "Disability" means the permanent and total inability by reason of mental or
physical  infirmity,  or both,  of an Employee  to perform the work  customarily
assigned  to him.  Additionally,  a medical  doctor  selected or approved by the
Board of Directors  must advise the Committee  that it is either not possible to
determine when such Disability  will terminate or that it appears  probable that
such  Disability  will be  permanent  during the  remainder  of such  Employee's
lifetime.

<PAGE>

     "Effective  Date"  means  the  date  the  Plan is  ratified  by the  Board,
following the approval of stockholders.

     "Employee"  means any person who is  currently  employed  by the Bank,  the
Company or an Affiliate, including officers.

     "Escrow Agent" means the person designated by the Board or the Committee to
hold the  Restricted  Stock as agent  for the  parties  until  the  lapse of the
restrictions imposed by Section 6.1.

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

     "Normal  Retirement"  means,  for an Employee,  retirement at the normal or
early  retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any  successor  plan.  For  an  Outside  Director,  Normal  Retirement  means
retirement from service on the Board.

     "Offering"  means the initial  public  offering of the Common  Stock of the
Bank.

     "OTS" means the Office of Thrift Supervision, or any successor thereto.

     "Outside Director" means a Director who is not also an Employee.

     "Recipient"  means an Employee or Director  who receives an Award under the
Plan.

     "Reorganization" means the reorganization of First Federal Savings and Loan
Association of Alpena as a mutual holding company and the  establishment  of the
Bank as its majority-owned subsidiary.

     "Restricted  Period"  means the period of time selected by the Board or the
Committee,  as applicable,  for the purpose of determining when restrictions are
in effect under Section 6 with respect to Restricted Stock.

     "Restricted  Stock" means shares that have been awarded under the Plan to a
Recipient subject to the restrictions  referred to in Section 6, so long as such
restrictions are in effect.

     "Stock Holding  Company" means the holding  company  resulting from a stock
conversion of the Company in a Conversion Transaction.

4.   Administration of the Plan

     4.1 Role of the Committee.  The Plan shall be administered  and interpreted
by the Committee, which shall have all of the powers allocated to it in this and
other sections of the Plan. The interpretation and construction by the Committee
of any  provision of the Plan or of any Award granted  hereunder  shall be final
and binding. The Committee shall act by vote or written consent of a majority of
its members.  Subject to the express provisions and limitations of the Plan, the
Committee  may  adopt  such  rules,  regulations  and  procedures  as  it  deems
appropriate  for the conduct of its  affairs.  The  Committee  shall  report its
actions  and  decisions  with  respect  to the Plan to the Board at  appropriate
times, but in no event less than one time per calendar year.

     4.2 Role of the Board.  The members of the Committee  shall be appointed or
approved by, and will serve at the pleasure of, the Board.  The Board may in its
discretion  from time to time  remove  members  from,  or add  members  to,  the
Committee.  The Board shall have all of the powers  allocated  to it in this and
other  sections of the Plan,  may take any action  under or with  respect to the
Plan that the Committee is  authorized to take,  and may reverse or override any
action  taken or decision  made by the  Committee  under or with  respect to the
Plan, provided,  however,  that the Board may not revoke any Award except in the
case of revocation for Cause or, with respect to unearned Awards, in the event a
Recipient of an Award voluntarily  terminates  employment with the Bank prior to
Normal Retirement.

     4.3 Plan Administration  Restrictions.  The Plan is intended to comply with
Rule 16b-3 under the Securities  Exchange Act of 1934.  Notwithstanding any term
to the contrary  appearing  herein,  unless  permitted by Rule  16b-3(c)(2)(ii),
subsequent to the establishment of the Plan, neither the Committee nor the Board
shall have the  authority to determine  the amount and price of securities to be

<PAGE>

awarded and/or timing of awards to Outside  Directors,  which terms shall be set
forth in the Plan.  To the  extent  any  provision  of the Plan or action by the
Committee  or Board fails to comply with this  Section  4.3,  such  provision or
action shall, to the extent  permitted by law and deemed advisable by the Board,
be deemed null and void.

     4.4 Limitation on Liability.  No member of the Board or the Committee shall
be liable for any  determination  made in good faith with respect to the Plan or
any  Awards  granted  under it. If a member of the Board or the  Committee  is a
party  or is  threatened  to be  made a  party  to any  threatened,  pending  or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative,  by reason of anything  done or not done by him in such  capacity
under or with respect to the Plan, the Bank shall  indemnify such member against
expense  (including  attorneys'  fees),  judgments,  fines and  amounts  paid in
settlement  actually  and  reasonably  incurred by him in  connection  with such
action,  suit or  proceeding  if he  acted  in good  faith  and in a  manner  he
reasonably believed to be in the best interests of the Bank, the Company and its
Affiliates  and,  with  respect to any  criminal  action or  proceeding,  had no
reasonable cause to believe his conduct was unlawful.

5.   Eligibility; Awards

     5.1  Eligibility.  Employees and Outside  Directors are eligible to receive
Awards.

     5.2 Awards to Employees. The Committee may determine which of the Employees
referenced  in  Section  5.1 will be  granted  Awards  and the  number of shares
covered by each Award;  provided,  however, that in no event shall any Awards be
made that will violate the Plan, the Charter,  Bylaws or Plan of  Reorganization
from Mutual  Savings Bank to Mutual  Holding  Company and Stock Issuance Plan of
the  Bank or any  applicable  federal  or state  law or  regulation.  Shares  of
Restricted  Stock that are awarded by the  Committee  shall,  on the date of the
Award,  be  registered  in the  name of the  Recipient  and  transferred  to the
Recipient,  in accordance  with the terms and conditions  established  under the
Plan.  The total number of shares that will be awarded or reserved for Employees
under the Plan shall be 17,940 shares.

     In the event Restricted  Stock is forfeited for any reason,  the Committee,
from time to time,  may determine  which of the Employees  referenced in Section
5.1 will be granted  additional  Awards to be awarded from forfeited  Restricted
Stock.  In  selecting  those  Employees  to whom  Awards will be granted and the
amount of Restricted Stock covered by such Awards,  the Committee shall consider
the  position and  responsibilities  of the  Employees,  the length and value of
their  services to the Bank and its  Affiliates,  the  compensation  paid to the
Employees  and any  other  factors  the  Committee  may deem  relevant,  and the
Committee may request the written  recommendation of the Chief Executive Officer
and other senior executive officers of the Bank, the Company and its Affiliates.
All  allocations  by the Committee  shall be subject to review,  and approval or
rejection, by the Board.

     Subject to Sections 6.3 and 6.4, no Restricted Stock shall be earned unless
the Employee maintains Continuous Service until the restrictions lapse.

     5.3 Awards to Outside Directors. Each Outside Director serving on the Board
of the Bank or the Company on the Effective  Date shall be issued an Award equal
to 2,415  shares of  Restricted  Stock.  The total number of shares that will be
awarded or reserved for Outside Directors under the Plan shall be 9,660 shares.

     Any  person  who  becomes an  Outside  Director  subsequent  to the date of
approval of the Plan by stockholders  shall receive an Award of Restricted Stock
equal to 2,415 shares, subject to availability.

     No  Restricted  Stock  shall be earned by an  Outside  Director  unless the
Outside Director maintains Continuous Service until the restrictions lapse.

     5.4 Manner of Award. As promptly as practicable  after a  determination  is
made  pursuant  to  Sections  5.2 and 5.3 that an Award  has been  granted,  the
Committee  shall notify the Recipient in writing of the grant of the Award,  the
number of shares of Restricted  Stock  covered by the Award,  and the terms upon
which the Restricted Stock subject to the Award may be earned. Upon notification
of an Award of Restricted  Stock,  the Recipient shall execute and return to the
Bank a restricted  stock agreement  setting forth the terms and conditions under
which the  Recipient  shall earn the  Restricted  Stock (the  "Restricted  Stock
Agreement"),  together  with a stock power  endorsed in blank.  Thereafter,  the

<PAGE>

Recipient's  Restricted Stock and stock power shall be deposited with the Escrow
Agent  specified  by the Bank,  who shall hold such  Restricted  Stock under the
terms  and  conditions  set  forth  in  the  Restricted  Stock  Agreement.  Each
certificate representing an Award under the Plan shall be registered in the name
of the Recipient.

     5.5 Treatment of Forfeited  Shares. In the event shares of Restricted Stock
are  forfeited  by a Recipient  hereunder,  such shares shall be returned to the
Bank and shall be held and accounted for and re-awarded pursuant to the terms of
the Plan.

6.   Terms and Conditions of Restricted Stock

     The  Committee  shall  have full and  complete  authority,  subject  to the
limitations  of the Plan, to grant Awards of Restricted  Stock to Employees and,
in addition to the terms and conditions  contained in this Section 6, to provide
such other terms and conditions  (which need not be identical among  Recipients)
in respect of such  Awards,  and the vesting  thereof,  as the  Committee  shall
determine.

     6.1 General Rules.  Restricted  Stock shall be earned by an Employee at the
rate  determined by the  Committee at the time of grant of the Award;  provided,
however,  that no shares  shall be earned  for any year in which the Bank is not
meeting  all of its fully  phased-in  capital  requirements.  Awards  granted to
Outside  Directors shall be earned by an Outside  Director at the rate of twenty
percent  (20%) of the aggregate  number of shares  covered by the Award per year
commencing one year from the date of grant.  Subject to any such other terms and
conditions as the  Committee  shall provide with respect to awards to Employees,
shares of Restricted Stock may not be sold,  assigned,  transferred,  pledged or
otherwise encumbered by the Recipient,  except as hereinafter  provided,  during
the  Restricted  Period.  The  Committee  shall  have  the  authority,   in  its
discretion, to accelerate the time at which any or all of the restrictions shall
lapse with  respect to Awards  issued to  Employees,  or to remove any or all of
such restrictions,  whenever it may determine that such action is appropriate by
reason  of  changes  in  applicable  tax or  other  laws  or  other  changes  in
circumstances occurring after the commencement of such Restricted Period.

     6.2 Continuous Service; Forfeiture.  Except as provided in Sections 6.3 and
6.4, if an Employee or Outside  Director ceases to maintain  Continuous  Service
for any reason,  unless the Committee shall otherwise  determine,  all shares of
Restricted  Stock  theretofore  awarded to such Employee or Outside Director and
which at the time of such  termination of Continuous  Service are subject to the
restrictions  imposed by Section 6.1 shall upon such  termination  of Continuous
Service be forfeited.

     6.3  Exception  for  Termination   Due  to  Death,   Disability  or  Normal
Retirement. Notwithstanding the general rules contained in Sections 6.1 and 6.2,
Restricted Stock awarded to a Recipient whose  employment or service  terminates
due to death,  Disability,  or Normal  Retirement that has not theretofore  been
earned,  shall be deemed earned as of the Recipient's  last day of employment or
service.

     6.4 Exception for Terminations  after a Change in Control.  Notwithstanding
the general rules  contained in Sections 6.1 and 6.2, all Restricted  Stock held
by a Recipient  whose  employment  or service  terminates  following a Change in
Control shall be deemed earned as of the  Recipient's  last day of employment or
service.

     6.5 Revocation for Cause.  Notwithstanding anything herein to the contrary,
if a Recipient  is  terminated  for cause or has  engaged in conduct  that would
justify  termination for cause, the Board may by resolution  immediately revoke,
rescind and terminate any Award, or portion  thereof,  previously  awarded under
the Plan, whether or not yet earned, to the extent Restricted Stock has not been
redelivered by the Escrow Agent to the Recipient.

     6.6 Restricted Stock Legend.  Each certificate  representing an Award under
the Plan shall be  registered  in the name of the Recipient and deposited by the
Recipient,  together with a stock power endorsed in blank, with the Escrow Agent
and shall bear the following (or a similar) legend:

               "The  transferability of this certificate and the shares of stock
               represented  hereby  are  subject  to the  terms  and  conditions
               (including forfeiture) contained in the First Federal Savings and
               Loan  Association of Alpena and Alpena  Bancshares,  M.H.C.  1996

<PAGE>

               Recognition and Retention  Plan.  Copies of such Plan are on file
               in the offices of the Secretary of First Federal Savings and Loan
               Association of Alpena, 100 South Second Avenue, Alpena,  Michigan
               49707."

     6.7 Payment of  Dividends  and Return of  Capital.  After an Award has been
granted but before such Award has been earned,  the Recipient  shall receive any
cash  dividends or stock  dividends  paid with respect to such shares,  or shall
share in any pro-rata return of capital to all shareholders  with respect to the
Common Stock.  Unless the Recipient has made an election  under Section 83(b) of
the Code,  cash  dividends or other  amounts so paid on shares that have not yet
been earned by the Recipient shall be treated as compensation income (or, in the
case of an Outside Director, self-employment income) to the Recipient when paid.

     6.8  Voting of  Restricted  Shares.  After an Award has been  granted,  the
Recipient as owner of such shares shall have the right to vote such shares.

     6.9  Delivery  of Earned  Shares.  At the  expiration  of the  restrictions
imposed by Section 6.1, the Escrow Agent shall  redeliver to the  Recipient  (or
where the  relevant  provision  of Section 6.3 applies in the case of a deceased
Recipient,  to his Beneficiary),  the  certificate(s)  deposited with it and the
shares  represented  by such  certificate(s)  shall be free of the  restrictions
imposed by Section 6.1.

7.   Adjustments upon Changes in Capitalization

     In the event of any  change in the  outstanding  shares  subsequent  to the
Effective Date by reason of any reorganization  (other than the Reorganization),
recapitalization,  stock  split,  combination  or  exchange  of shares,  merger,
consolidation  or any change in the  corporate  structure or shares of the Bank,
the  maximum  aggregate  number  and class of shares as to which  Awards  may be
granted under the Plan shall be appropriately  adjusted.  Any shares of stock or
other securities received,  as a result of any of the foregoing,  by a Recipient
shall  be  subject  to the same  restrictions  and the  certificate(s)  or other
instruments  representing  or  evidencing  such  shares or  securities  shall be
legended and deposited  with the Escrow Agent in the manner  provided in Section
6.6.

8.   Assignments and Transfers

     No Award  nor any  right  or  interest  of a  Recipient  in any  instrument
evidencing any Award may be assigned,  encumbered or transferred  except, in the
event  of the  death  of a  Recipient,  by  will  or the  laws  of  descent  and
distribution.

9.   Employee Rights Under the Plan

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

10.  Withholding Tax

     Upon the termination of the Restricted Period with respect to any shares of
Restricted  Stock (or at such earlier  time, if any, that an election is made by
the  Employee  under  Section  83(b) of the  Code,  or any  successor  provision
thereto, to include the value of such shares in taxable income), the Bank or its
Affiliate, as applicable,  shall have the right to require the Employee or other
person  receiving  such  shares to pay the Bank or  Affiliate  the amount of any
taxes that the Bank or  Affiliate  is required to withhold  with respect to such
shares,  or, in lieu  thereof,  to retain or sell without  notice,  a sufficient
number of shares  held by it to cover the amount  required to be  withheld.  The
Bank or Affiliate  shall have the right to deduct from all  dividends  paid with
respect to shares of Restricted  Stock the amount of any taxes which the Bank or
Affiliate is required to withhold  with respect to such dividend  payments.

<PAGE>

11.  Treatment of Restricted Stock in the Event of Conversion Transaction

     In the  event  that the  Company  converts  to stock  form in a  Conversion
Transaction, any Restricted Stock shall be exchanged into shares of Common Stock
of the Stock Holding  Company,  provided,  however,  that if for any reason such
shares are not to be exchanged, the Stock Holding Company shall,  simultaneously
with the closing of the Conversion  Transaction,  purchase  Restricted Stock for
cash equal to the fair  market  value of such  Restricted  Stock or Shares.  Any
exchange  of shares or cash  payment for shares  shall be subject to  applicable
federal and state regulations and, if necessary,  subject to the approval of the
appropriate Regulatory authorities.

12.  Amendment or Termination

     The Board of the Bank or the Company may amend,  suspend or  terminate  the
Plan or any portion  thereof at any time,  but (except as provided in Section 6)
no amendment shall be made without approval of the stockholders of the Bank that
shall (i)  materially  increase the  aggregate  number of shares with respect to
which Awards may be made under the Plan, (ii) materially  increase the aggregate
number of  shares  that may be  subject  to  Awards  to  Recipients  who are not
Employees,  or (iii) change the class of persons  eligible to participate in the
Plan; provided, however, that no such amendment, suspension or termination shall
impair  the  rights  of  any  Recipient,  without  his  consent,  in  any  Award
theretofore made pursuant to the Plan.

13.  Governing Law

     The Plan shall be governed by the laws of the State of Michigan.

14.  Term of Plan

     The Plan shall become  effective upon its  ratification by the Board of the
Bank and the Company,  following  the approval of the Plan by  stockholders.  It
shall  continue  in effect  until the  earlier  of (i)  fifteen  years  from the
Effective Date, unless sooner terminated under Section 12, or (ii) the date upon
which all shares of Common Stock  available for award  hereunder  have vested in
the Recipients of such Awards.

     IN WITNESS  WHEREOF,  the Bank and the Company  have caused this Plan to be
executed by its duly  authorized  officers and the corporate  seal to be affixed
and duly attested, as of the 27th day of February, 1996.

ATTEST:                                    FIRST FEDERAL SAVINGS AND LOAN
                                           ASSOCIATION OF ALPENA


/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
------------------------------------       -------------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

                                           ALPENA BANCSHARES, M.H.C.



/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
------------------------------------       -------------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer


April 17, 1996
------------------------------------
Date Approved by Stockholders



<PAGE>


                                    EXHIBIT 5

<PAGE>







                                                                  (202) 274-2000

February 20, 2002

Board of Directors
Alpena Bancshares, Inc.
100 S. Second Avenue
Alpena, Michigan 49707

                  Re:      Alpena Bancshares, Inc.
                           Registration Statement on Form S-8
                           ----------------------------------

Ladies and Gentlemen:

     You have  requested  the  opinion  of this firm as to  certain  matters  in
connection  with the offer and sale of Alpena  Bancshares,  Inc. (the "Company")
common stock,  par value $1.00 per share (the "Common  Stock"),  pursuant to the
First  Federal  Savings and Loan  Association  1996 Stock  Option Plan and First
Federal  Savings and Loan  Association of Alpena 1996  Recognition and Retention
Plan (the  "Plans").  We have  reviewed the  Company's  Federal  Stock  Charter,
Registration  Statement  on Form S-8 (the  "Form  S-8"),  as well as  applicable
statutes  and  regulations  governing  the Company and the offer and sale of the
Common Stock.

     Based on the foregoing, we are of the following opinion:

     Upon the  effectiveness  of the Form S-8,  the Common  Stock,  when  issued
pursuant to the Plans, will be legally issued, fully paid and non-assessable.

     This  opinion  has  been  prepared  solely  for the use of the  Company  in
connection  with the  preparation  and filing of the Form S-8, and should not be
used for any other purpose or relied upon by any other person  without the prior
written  consent of this firm.  We hereby  consent to the use of this opinion in
the Form S-8.

                                        Very truly yours,


                                        /s/ Luse Lehman Gorman Pomerenk & Schick
                                        ----------------------------------------
                                        LUSE LEHMAN GORMAN POMERENK &
                                        SCHICK
                                        A Professional Corporation

<PAGE>


                                  EXHIBIT 23.2


<PAGE>




                         CONSENT OF INDEPENDENT AUDITORS



Board of Directors
Alpena Bancshares, Inc.


     We hereby consent to the  incorporation  by reference in this  Registration
Statement  on Form S-8 of our report  dated  January 31,  2001,  relating to the
consolidated  financial statements of Alpena Bancshares,  Inc. and Subsidiaries,
as of December 31, 2000,  which appear in the December 31, 2000 Annual Report on
Form 10-KSB of Alpena Bancshares, Inc.

/s/ Plante & Moran, LLP

Plante & Moran, LLP
Auburn Hills, Michigan
February 20, 2002
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{"company-data": {"conformed-name": "ALPENA BANCSHARES INC", "cik": "0001128227", "assigned-sic": "6770", "irs-number": "383567362"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-83198", "film-number": "02555863"}, "business-address": {"street1": "100 SOUTH SECOND AVENUE", "city": "ALPNEA", "state": "MI", "zip": "49707", "phone": "5173569041"}, "mail-address": {"street1": "100 SOUTH SECOND AVENUE", "city": "ALPENA", "state": "MI", "zip": "49707"}}
Registration No. 333-_______
                                       As filed with the Securities and Exchange
                                       Commission on February 21, 2002

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                             Alpena Bancshares, Inc.
             (Exact Name of Registrant as Specified in its Charter)
       Federal                                         38-3567362
(State of Incorporation)                      (IRS Employer Identification No.)

                              100 S. Second Avenue
                             Alpena, Michigan 49707
                    (Address of Principal Executive Offices)

              First Federal Savings and Loan Association of Alpena
                             1996 Stock Option Plan
                       1996 Recognition and Retention Plan
                            (Full Title of the Plans)

                                   Copies to:

          Martin A. Thomson                      Robert B. Pomerenk, Esquire
President and Chief Executive Officer       Luse Lehman Gorman Pomerenk & Schick
       Alpena Bancshares, Inc.                    A Professional Corporation
        100 S. Second Avenue                   5335 Wisconsin Ave., N.W., #400
       Alpena, Michigan  49707                     Washington, D.C.  20015
           (989) 356-9041                              (202) 274-2000

   (Name, Address and Telephone
    Number of Agent for Service)

                               ------------------
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933 check the following box. X
                               ------------------
CALCULATION OF REGISTRATION FEE

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

       Title of                                       Proposed               Proposed
      Securities                Amount                Maximum                 Maximum               Amount of
         to be                  to be              Offering Price            Aggregate            Registration
      Registered            Registered (1)           Per Share            Offering Price               Fee
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $1.00 per share      24,148 shares (2)          $10.00(4)            $   241,480              $  22.22

Common Stock, par
value $1.00 per share      15,365 shares (3)         $  9.625(4)           $   147,888              $  13.61

Common Stock, par
value $1.00 per share      24,067 shares(5)           $13.25(6)            $   318,888              $  29.34

Common Stock, par
value $1.00 per share      27,600 shares(7)           $13.25(6)            $   365,700              $  33.64

Total:                     91,180 shares                                    $1,073,956              $  98.81
                           =============                                    ==========              ========
--------------
     (1)  Together with an indeterminate  number of additional  shares which may
          be  necessary  to adjust the number of shares  reserved  for  issuance
          pursuant to the First Federal  Savings and Loan  Association of Alpena
          1996  Stock  Option  Plan  and the  First  Federal  Savings  and  Loan
          Association  of Alpena  1996  Recognition  and  Retention  Plan as the
          result of a stock split,  stock dividend or similar  adjustment of the
          outstanding  Common Stock of Alpena  Bancshares,  Inc.  pursuant to 17
          C.F.R. ss.  230.416(a).
     (2)  Represents  the  number  of shares  currently  reserved  for  issuance
          underlying options that have already been granted pursuant to the 1996
          Stock  Option  Plan with an  exercise  price of $10.00 per share.
     (3)  Represents  the  number  of shares  currently  reserved  for  issuance
          underlying options that have already been granted pursuant to the 1996
          Stock  Option  Plan with an  exercise  price of $9.625 per share.  (4)
          Determined  by the  exercise  price  of  the  options  pursuant  to 17
          C.F.R.ss.230.457(h)(1).
     (5)  Represents  the  number  of shares  currently  reserved  for  issuance
          pursuant  to awards  available  for grant  pursuant  to the 1996 Stock
          Option Plan.
     (6)  Determined  by  reference  to the last  sales  price  reported  on the
          Over-the-Counter Market on January 23, 2002, pursuant to Rule 457(c).
     (7)  Represents  the maximum number of shares that have been granted or yet
          may still be granted  pursuant to the 1996  Recognition  and Retention
          Plan.

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

     This   Registration   Statement  shall  become  effective  upon  filing  in
accordance  with Section 8(a) of the  Securities  Act of 1933 and 17 C.F.R.  ss.
230.462.
PART I.

     Items 1 and 2. Plan  Information  and Registrant  Information  and Employee
                    Plan Annual Information

     This Registration Statement relates to the registration of 91,180 shares of
Common Stock of Alpena  Bancshares,  Inc. (the "Company")  reserved for issuance
and delivery  upon the exercise of options  under the 1996 Stock Option Plan and
the 1996  Recognition and Retention Plan.  Documents  containing the information
required by Part I of the  Registration  Statement  have been or will be sent or
given to participants  in the plans, as appropriate,  as specified by Securities
Act Rule  428(b)(1).  Such documents are not being filed with the Securities and
Exchange  Commission (the "Commission" or "SEC"), but constitute (along with the
documents incorporated by reference into this Registration Statement pursuant to
Item 3 of Part II hereof) a prospectus  that meets the  requirements  of Section
10(a) of the Securities Act of 1933, as amended.

PART II.

Item 3.  Incorporation of Documents by Reference

         The following documents previously or concurrently filed by the Company
with the Commission are hereby incorporated by reference in this Registration
Statement:

     a) The  Company's  Annual  Report on Form  10-KSB for the fiscal year ended
     December 31, 2000 (Commission File No.  000-31957),  filed pursuant to Rule
     13a-1 of the  Securities  Exchange Act of 1934,  as amended (the  "Exchange
     Act");

     b) all other  reports  filed by the Company  pursuant  to Section  13(a) or
     15(d) of the  Exchange  Act since the end of the year covered by the Annual
     Report referred to above; and

     c) The  description  of the common  stock of the Company  contained  in the
     Current Report on Form 8-K (Commission File No. 000-31957) originally filed
     by the Company with the Commission on November 15, 2000, and all amendments
     or reports filed for the purpose of updating such description.

     All documents  filed by the Company  pursuant to Sections 13(a) and (c), 14
or 15(d) of the  Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which  deregisters all securities then remaining  unsold,  shall be
deemed to be incorporated by reference into this  Registration  Statement and be
part hereof from the date of filing of such documents.  Any statement  contained
in this  Registration  Statement,  or in a document  incorporated  by  reference
herein,  shall be deemed to be  modified  or  superseded  for  purposes  of this
Registration  Statement to the extent that a statement  contained  herein, or in
any other  subsequently  filed document which also is  incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified or
superseded  shall  not be  deemed,  except  as so  modified  or  superseded,  to
constitute a part of this Registration Statement.

     The  Company  shall  furnish  without  charge  to each  person  to whom the
prospectus is delivered,  on the written or oral request of such person,  a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically  incorporated by reference
to the information that is incorporated).  Requests should be directed to Martin
Thomson,  President and Chief Executive Officer,  Alpena  Bancshares,  Inc., 100
South Second Avenue, Alpena, Michigan 49707, (989) 356-9041.

     All information appearing in this Registration Statement and the prospectus
is qualified in its entirety by the detailed  information,  including  financial
statements,  appearing  in the  documents  incorporated  herein  or  therein  by
reference.

Item 4.  Description of Securities

         Not applicable.
Item 5.  Interests of Named Experts and Counsel

         None.

Item 6.  Indemnification of Directors and Officers

     Generally,  federal  regulations  define areas for  indemnity  coverage for
federal  savings  associations  and  for  indemnity  coverage  for  federal  MHC
subsidiary holding companies, as follows:

               (a) Any  person  against  whom any action is brought by reason of
          the fact  that such  person is or was a  director  or  officer  of the
          institution shall be indemnified by the institution for:

                           (i) Reasonable costs and expenses, including
                  reasonable attorneys' fees, actually paid or incurred by such
                  person in connection with proceedings related to the defense
                  or settlement of such action;

                           (ii) Any  amount  for which  such  person  becomes
                  liable by reason of any judgment in such action;

                           (iii) Reasonable costs and expenses, including
                  reasonable attorneys' fees, actually paid or incurred in any
                  action to enforce his rights under this section, if the person
                  attains a final judgment in favor of such person in such
                  enforcement action.

               (b)  Indemnification  provided for in  subparagraph  (a) shall be
          made to such  officer or  director  only if the  requirements  of this
          subsection are met:

                           (i) The institution shall make the indemnification
                  provided by subparagraph (a) in connection with any such
                  action which results in a final judgment on the merits in
                  favor of such officer or director.

                           (ii) The institution shall make the indemnification
                  provided by subparagraph (a) in case of settlement of such
                  action, final judgment against such director or officer or
                  final judgment in favor of such director or officer other than
                  on the merits except in relation to matters as to which he
                  shall be adjudged to be liable for negligence or misconduct in
                  the performance of duty, only if a majority of the directors
                  of the institution determines that such a director or officer
                  was acting in good faith within what he was reasonably
                  entitled to believe under the circumstances was the scope of
                  his employment or authority and for a purpose which he was
                  reasonably entitled to believe under the circumstances was in
                  the best interest of the institution or its members.

               (c) As used in this paragraph:

                           (i) "Action" means any action, suit or other judicial
                  or administrative proceeding, or threatened proceeding,
                  whether civil, criminal, or otherwise, including any appeal or
                  other proceeding for review;

                           (ii) "Court" includes,  without limitation,  any
                  court to which or in which any appeal or any proceeding for
                  review is brought;

                           (iii) "Final Judgment" means a judgment, decree, or
                  order which is appealable and as to which the period for
                  appeal has expired and no appeal has been taken;

                           (iv) "Settlement"  includes the entry of a judgment
                  by consent or by confession or upon a plea of guilty or of
                  nolo contendere.
Item 7.  Exemption From Registration Claimed.

         Not applicable.

Item 8.  List of Exhibits.

     The following exhibits are filed herewith or incorporated by reference into
this Registration Statement on Form S-8:

          4.1  First Federal  Savings and Loan  Association of Alpena 1996 Stock
               Option Plan.

          4.2  First  Federal  Savings  and  Loan  Association  of  Alpena  1996
               Recognition and Retention Plan.

          5    Opinion of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation  as to the  legality of the Common  Stock  registered
               hereby.

          23.1 Consent of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation (contained in the opinion included as Exhibit 5).

          23.2 Consent of Plante & Moran, LLP

          24   Power of Attorney

Item 9.  Undertakings

         The undersigned Registrant hereby undertakes:

     1. To file,  during any period in which  offers or sales are being made,  a
post-effective  amendment to this Registration Statement to include any material
information with respect to the Registration  Statement not previously disclosed
in this  Registration  Statement or any material  change to such  information in
this Registration Statement;

     2. That, for the purpose of determining  any liability under the Securities
Act of 1933,  each  such  post-effective  amendment  shall be deemed to be a new
Registration  Statement  relating to the  securities  offered  therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof;

     3. To remove from  registration by means of a post-effective  amendment any
of the securities being registered which remain unsold at the termination of the
1994 Incentive Stock Option Plan; and

     4. That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section 13(a)
or  15(d)  of the  Securities  Exchange  Act of  1934  that is  incorporated  by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities  offered therein,  and the offering of such
securities  at that time shall be deemed to be the  initial  bona fide  offering
thereof.

     5. Insofar as indemnification  for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the Registrant of expenses
incurred or paid by a director,  officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES

     The Registrant. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the  requirements  for  filing  on  Form  S-8 and has  duly  caused  this
Registration Statement to be signed on its behalf by the undersigned,  thereunto
duly authorized,  in the City of Alpena, State of Michigan,  on this 30th day of
January, 2002.

                                 Alpena Bancshares, Inc.

                                 By:      /s/ Martin A. Thomson
                                          --------------------------------------
                                          Martin A. Thomson, President and
                                           Chief Executive Officer

                                POWER OF ATTORNEY

     We,  the  undersigned  Directors  of  Alpena  Bancshares,   Inc.  severally
constitute  and appoint Martin A. Thomson with full power of  substitution,  our
true and lawful  attorney  and  agent,  to do any and all things and acts in our
names in the  capacities  indicated  below which said Martin A. Thomson may deem
necessary  or  advisable to enable  Alpena  Bancshares,  Inc. to comply with the
Securities  Act of 1933,  and any rules,  regulations  and  requirements  of the
Securities  and  Exchange  Commission,   in  connection  with  the  Registration
Statement on Form S-8 relating to the First Federal Savings and Loan Association
of  Alpena  1996  Stock  Option  Plan and the  First  Federal  Savings  and Loan
Association  of  Alpena  1996   Recognition   and  Retention   Plan,   including
specifically,  but not limited to, power and  authority to sign for us or any of
us in our names in the capacities indicated below the Registration Statement and
any and all amendments  (including  post-effective  amendments)  thereto; and we
hereby  ratify and confirm all that said Martin A. Thomson  shall do or cause to
be done by virtue hereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.

By: /s/ Martin A. Thomson                By: /s/ James D. Hubinger
    ---------------------------------        -----------------------------------
    Martin A. Thomson, President and         James D. Hubinger, Treasurer/ Chief
    Chief Executive Officer                  Financial Officer
    (Principal Executive Officer)            (Principal Financial and Accounting
                                              Officer)

Date: February 20, 2002                  Date: February 20, 2002

By: /s/ Gary W. Bensinger                By: /s/ Keith D. Wallace
    ----------------------------------       -----------------------------------
    Gary W. Bensinger, Director              Keith D. Wallace, Director

Date: February 20, 2002                  Date: February 20, 2002

By: /s/ James C. Rapin                   By: /s/ Martin A. Thomson
    ----------------------------------       -----------------------------------
    James C. Rapin, Director                 Martin A. Thomson, Director

Date: February 20, 2002                  Date: February 20, 2002

By: /s/ Duane I. Dickey                  By: /s/ Gary C. Vanmassenhove
    ----------------------------------       -----------------------------------
    Duane I. Dickey, Chairman of the         Gary C. Vanmassenhove, Director
    Board

Date: February 20, 2002                  Date: February 20, 2002
EXHIBIT INDEX

Exhibit Number             Description
--------------             ------------

          4.1  First Federal  Savings and Loan  Association of Alpena 1996 Stock
               Option Plan.

          4.2  First  Federal  Savings  and  Loan  Association  of  Alpena  1996
               Recognition and Retention Plan.

          5    Opinion of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation  as to the  legality of the Common  Stock  registered
               hereby.
          23.1 Consent of Luse Lehman Gorman  Pomerenk & Schick,  A Professional
               Corporation (contained in the opinion included as Exhibit 5).

          23.2 Consent of Plante & Moran, LLP.

          24   Power of Attorney
EXHIBIT 4.1
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                     OF ALPENA and ALPENA BANCSHARES, M.H.C.

                             1996 STOCK OPTION PLAN

1.   Purpose

     The purpose of the First Federal Savings and Loan Association of Alpena and
Alpena Bancshares,  M.H.C. 1996 Stock Option Plan (the "Plan") is to advance the
interests of First Federal  Savings and Loan  Association of Alpena (the "Bank")
and its  shareholders by providing  Employees and Outside  Directors of the Bank
and its affiliates,  including  Alpena  Bancshares,  M.H.C.,  the mutual holding
company of the Bank (the "Company"), upon whose judgment, initiative and efforts
the successful  conduct of the business of the Bank and its  affiliates  largely
depends, with an additional incentive to perform in a superior manner as well as
to attract  people of experience and ability to such positions with the Bank and
the Company.

2.   Definitions

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

     "Award"  means an Award of  Nonstatutory  Stock  Options,  Incentive  Stock
Options, and/or Limited Rights granted under the provisions of the Plan.

     "Beneficiary"  means the person or persons  designated  by a  Recipient  to
receive any  benefits  payable  under the Plan in the event of such  Recipient's
death.  Such person or persons shall be designated in writing on forms  provided
for this  purpose  by the  Committee  and may be  changed  from  time to time by
similar  written  notice  to  the  Committee.   In  the  absence  of  a  written
designation,  the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

     "Board of  Directors"  or "Board"  means the Board of Directors of the Bank
and the Company, as applicable.

     "Change in Control" means:

     (1)(i) A reorganization,  merger, merger conversion,  consolidation or sale
of all or  substantially  all of the  assets  of the  Bank or the  Company  or a
similar  transaction in which the Bank or Company is not the resulting entity or
the Stock Holding  Company is not the resulting  entity;  (ii)  individuals  who
constitute  the Board of  Directors of the Bank or the Board of Directors of the
Company as of the date hereof (the "Incumbent  Board"),  cease for any reason to
constitute  at least a majority  thereof,  provided  that any person  becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-fourths of the directors  composing the Incumbent Board or whose
nomination  for  election by the Bank's or  Company's  stockholders  or members,
respectively,  was  approved  by  the  Nominating  Committee  serving  under  an
Incumbent  Board shall be for purposes of this section  considered  as though he
were a member of the Incumbent  Board;  or (iii) an  acquisition of "control" of
the Bank or the Company as defined by the Home Owners Loan Act, as amended,  and
applicable rules and regulations promulgated thereunder as in effect at the time
of the Change in Control  (collectively,  the "HOLA"), or (iv) an acquisition of
the Bank's stock requiring submission of notice under the Change in Bank Control
Act;

     (2) In the event the Company  converts from the mutual form of organization
to the  stock  form of  organization  in a  Conversion  Transaction  at any time
subsequent to the effective  date of this Plan, a "Change in Control" shall mean
a change in control of the Bank or the Stock  Holding  Company of a nature that:
(i) would be  required  to be  reported  in  response  to Item 1a of the current
report on Form 8-K, as in effect on the date  hereof,  pursuant to Section 13 or
15(d) of the  Securities  Exchange  Act of 1934 (the  "Exchange  Act");  or (ii)
results in a change in control of the Bank or the Stock Holding  Company  within
the  meaning  of the  Bank  Holding  Company  Act  ("BHCA");  or  (iii)  without
limitation,  results in (a) any "person" (as such term is used in Section  13(d)
and 14(d) of the Exchange  Act) becoming the  "beneficial  owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Bank or the Stock  Holding  Company  representing  25% or more of the  Bank's or
Stock Holding Company's  outstanding  securities  ordinarily having the right to
vote at the election of directors,  except for any  securities  purchased by the
Bank's or the Stock Holding  Company's  employee stock benefit plans; or (b) the
Incumbent  Board ceasing for any reason to constitute at least a majority of the
Board of Directors  of the Bank or Stock  Holding  Company;  or (c) results in a
reorganization,  merger, consolidation,  sale of all or substantially all of the
assets of the Bank or the Stock Holding Company or similar transaction.

     Notwithstanding  anything to the contrary  herein,  the  conversion  of the
Company to stock form, on a stand-alone basis, shall not be a Change in Control.

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

     "Committee"  means the Stock Benefits  Committee (or the equivalent) of the
Board of Directors consisting of at least three Outside Directors of the Bank or
the Company,  and all of whom are and must be "disinterested  directors" as that
term is defined under Rule 16b-3 under the Exchange Act.

     "Common  Stock"  means the common  stock of the Bank,  par value  $1.00 per
share.

     "Company" means Alpena Bancshares, M.H.C.

     "Continuous  Service"  means  employment  as an  Employee  or service as an
Outside  Director  without any interruption or termination of such employment or
service.  In the  case  of an  Employee,  employment  shall  not  be  considered
interrupted  in the case of sick  leave,  military  leave or any other  leave of
absence  approved  by the  Bank or in the  case  of  transfers  between  payroll
locations of the Bank or between the Bank, its parent,  its  subsidiaries or its
successor.  For purposes of determining  Continuous Service, an Outside Director
who  terminates  service  on the  Board but who  continues  to serve the Bank or
Company as a Director  Emeritus  will not be deemed to have an  interruption  or
termination of service under the Plan.

     "Conversion  Transaction"  means the  conversion  of the  Company  from the
mutual to stock form of  organization  either on a  stand-alone  basis or in the
context of a merger  conversion  with an unrelated  entity,  as  contemplated by
regulations  of the  Office  of  Thrift  Supervision  ("OTS")  or any  successor
thereof.

     "Date of Grant"  means the actual  date on which an Award is granted by the
Committee.

     "Director" means a member of the Board of Directors.

     "Director  Emeritus"  means a former Director who, in recognition of his or
her past contributions, has been titled as a director emeritus.

     "Disability" means the permanent and total inability by reason of mental or
physical  infirmity,  or both,  of an Employee  to perform the work  customarily
assigned  to him.  Additionally,  a medical  doctor  selected or approved by the
Board of Directors  must advise the Committee  that it is either not possible to
determine when such Disability  will terminate or that it appears  probable that
such  Disability  will be  permanent  during the  remainder  of such  Employee's
lifetime.

     "Effective  Date"  means  the  date  the  Plan is  ratified  by the  Board,
following the approval of stockholders.

     "Employee"  means any person who is  currently  employed by the Bank or the
Company or an Affiliate, including officers.

     "Fair  Market  Value"  means,  with respect to the Common  Stock,  the mean
between the bid and asked price for such Common  Stock on the date the Option is
granted  or, if there be no bid and asked  price on said date,  then on the next
prior business day on which there was a bid and asked price. If no bid and asked
price is  available,  then the  price  per  share  shall  be  determined  by the
Committee,  using a reasonable  valuation  method  consistent  with the Code and
Treasury Regulations.
"Incentive  Stock  Option"  means an Option  granted by the Committee to an
Employee  Participant,  which Option is designated as an Incentive  Stock Option
pursuant to Section 8.

     "Limited Right" means the right to receive an amount of cash based upon the
terms set forth in Section 9.

     "Nonstatutory Stock Option" means an Option granted by the Committee to (i)
an Outside  Director or (ii) to any other  Participant and such option is either
(A) not designated by the Committee as an Incentive  Stock Option,  or (B) fails
to satisfy the requirements of an Incentive Stock Option as set forth in Section
422 of the Code and the regulations thereunder.

     "Normal  Retirement"  means,  for an Employee,  retirement at the normal or
early  retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any  successor  plan.  For  an  Outside  Director,  Normal  Retirement  means
retirement from service on the Board.

     "Offering"  means the initial  public  offering of the Common  Stock of the
Bank.

     "Option" means an Award granted under Section 7 or Section 8.

     "Outside Director" means a Director who is not also an Employee.

     "Participant"  means an  Outside  Director  or an  Employee  chosen  by the
Committee to participate in the Plan.

     "Reorganization" means the reorganization of First Federal Savings and Loan
Association of Alpena as a mutual holding company and the  establishment  of the
Bank as its majority-owned subsidiary.

     "Stock Holding  Company" means the holding  company  resulting from a stock
conversion of the Company in a Conversion Transaction.

     "Termination  for Cause" means the  termination  of  employment  or service
caused  by  the  individual's   personal   dishonesty,   incompetence,   willful
misconduct,  any  breach  of a  fiduciary  duty  involving  personal  profit  or
intentional failure to perform stated duties, willful violation of any law, rule
or  regulation  (other than  traffic  violations  or similar  offenses) or final
cease-and-desist  order, or a material breach of a material provision hereof. In
the case of an Outside Director, Termination for Cause means a removal for cause
pursuant to the Bank's Bylaws.

3.   Administration

     The  Plan  shall  be  administered  by  the  Committee.  The  Committee  is
authorized,  subject to the  provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper  administration of the Plan and
to make whatever  determinations and interpretations in connection with the Plan
it deems necessary or advisable.  All determinations and interpretations made by
the Committee  shall be binding and conclusive on all  Participants  in the Plan
and on their legal representatives and beneficiaries.

     The Awards of Nonstatutory Options to Outside Directors under Section 7 are
intended to comply with Rule 16b-3 under the Exchange Act.  Notwithstanding  any
term to the contrary appearing herein, unless permitted by Rule 16b-3(c)(2)(ii),
neither the  Committee  nor the Board of Directors  shall have the  authority to
determine  the amount and price of  securities  to be awarded  and/or  timing of
awards under Section 7 to designated directors or categories of directors, which
terms  shall be set forth  herein.  To the extent any  provision  of the Plan or
action  by Plan  administrators  fails to  comply  with  this  Section  3,  such
provision or action shall be deemed null and void to the extent permitted by law
and deemed advisable by the Board of Directors.

4.   Types of Awards

     Awards  under the Plan may be  granted in any one or a  combination  of (a)
Incentive  Stock  Options;  (b)  Non-Statutory  Stock  Options;  and (c) Limited
Rights.
5.   Stock Subject to the Plan

     Subject to  adjustment  as provided  in Section  14, the maximum  number of
shares  reserved for issuance  under the Plan is ten percent (10%) of the shares
of Common  Stock of the Bank sold in  connection  with the  Offering  (or 69,000
shares).  The maximum  number of shares  reserved  for  issuance to Employees is
44,852 shares or 2.79% of the shares of Common Stock issued in  connection  with
the  Offering.  The maximum  number of shares  reserved  for issuance to Outside
Directors  is 24,148  shares or 1.50% of the  shares of Common  Stock  issued in
connection with the Offering.

     The  shares of  Common  Stock  represented  by such  options  may be either
authorized-but-unissued shares or shares previously issued and reacquired by the
Bank or the Company.  The Company may use  dividends  received  from the Bank to
fund the purchase of shares  necessary to satisfy the exercise of stock options.
To the extent that options  together with any related  rights and Limited Rights
granted under the Plan  terminate,  expire or are cancelled  without having been
exercised or, in the case of Limited  Rights,  without having been exercised for
cash, new Awards may be made with respect to shares underlying such options.

6.   Eligibility

     Employees   shall  be  eligible  to  receive   Incentive   Stock   Options,
Nonstatutory  Stock  Options  and/or  Limited  Rights  under the  Plan.  Outside
Directors  shall not be eligible to receive  Incentive  Stock  Options under the
Plan.  Outside  Directors shall be eligible to receive only  Nonstatutory  Stock
Options and Limited Rights.

7.   Nonstatutory Stock Options

     7.1      Grant of Nonstatutory Stock Options

     (a) Grants to Outside  Directors.  Each Outside  Director who is serving in
such capacity on the effective date of the Plan (the "Effective Date"), shall be
granted Options to purchase 6,037 shares of Common Stock of the Bank, subject to
adjustment  pursuant to Section 14. Each person who becomes an Outside  Director
subsequent to the Effective Date, shall be granted Nonstatutory Stock Options to
purchase  6,037 shares of the Common Stock,  subject to  adjustment  pursuant to
Section 14, to the extent shares remain  available under the Plan.  Nonstatutory
Stock Options granted under the Plan are subject to the terms and conditions set
forth in this Section 7.

     (b)  Grants to  Employees.  The  Committee  may,  from time to time,  grant
Nonstatutory  Stock Options to Employees  and, upon such terms and conditions as
the Committee may determine,  grant  Nonstatutory  Stock Options in exchange for
and upon  surrender of previously  granted  Awards under the Plan.  Nonstatutory
Stock Options granted under the Plan are subject to the terms and conditions set
forth in this Section 7.

     (c) Option  Agreement.  Each Option shall be evidenced by a written  option
agreement  between the Bank and the Employee  specifying the number of shares of
Common Stock that may be acquired through its exercise and containing such other
terms and conditions that are not inconsistent with the terms of this grant. The
maximum number of shares  subject to a  Nonstatutory  Option that may be awarded
under the Plan to any Employee shall be 17,250.

     (d) Price.  The purchase price per share of Common Stock  deliverable  upon
the  exercise of each  Non-statutory  Stock Option  shall be  determined  by the
Committee  on the date the Option is  granted.  Except as provided  below,  such
purchase  price  shall  not be less than  100% of the Fair  Market  Value of the
Common Stock on the date the Option is granted.  The purchase price per share of
Common Stock  deliverable  upon the exercise of each  Nonstatutory  Stock Option
granted in exchange for and upon surrender of previously granted Awards shall be
not less than 85% of the Fair Market  Value of the Common  Stock on the date the
Option is granted,  but in no event may the purchase  price of any  Nonstatutory
Stock  Option be less  than the par value of the  Common  Stock.  Shares  may be
purchased only upon full payment of the purchase price.  Payment of the purchase
price may be made,  in whole or in part,  through the surrender of shares of the
Common Stock at the Fair Market Value of such shares.

     (e)  Manner of  Exercise.  Nonstatutory  Stock  Options  awarded to Outside
Directors  shall vest in a Participant  at the rate of twenty  percent (20%) per
year commencing from the date of grant.  The vested Option may be exercised from
time to time, in whole or in part, by delivering a written notice of exercise to
the President or Chief Executive Officer of the Bank. Such notice is irrevocable
and must be  accompanied by full payment of the purchase price in cash or shares
of previously acquired Common Stock of the Bank at the Fair Market Value of such
shares determined on the exercise date.

     (f) Terms of Options.  The term during which each Nonstatutory Stock Option
may be exercised  shall be determined by the Committee,  but in no event shall a
Nonstatutory  Stock Option be exercisable in whole or in part more than 10 years
and one day  from  the  Date of  Grant.  The  Nonstatutory  Options  awarded  to
Employees shall be exercisable in installments,  as determined by the Committee.
The Committee  shall determine the date on which each  installment  shall become
exercisable. The shares comprising each installment may be purchased in whole or
in part at any time after such installment becomes  exercisable.  The Committee,
in its sole discretion,  may accelerate the time at which any Nonstatutory Stock
Option awarded to Employees may be exercised in whole or in part,  provided that
the Committee may not accelerate  the time at which a Nonstatutory  Stock Option
may be exercised due to retirement of such Employee.  Notwithstanding the above,
in the event of a Change in Control, all Nonstatutory Stock Options shall become
immediately exercisable.

     (g)  Termination  of  Employment  or Service.  Upon the  termination  of an
Employee's  employment or upon termination of an Outside  Director's service for
any reason other than Normal Retirement,  Disability,  death, or Termination for
Cause, the Employee's or Outside Director's  Nonstatutory Stock Options shall be
exercisable  only as to those shares that were  immediately  purchasable  by the
Employee or Outside  Directors at the date of termination  and only for a period
of one year following  termination.  In the event of Termination for Cause,  all
rights under the Nonstatutory  Stock Options shall expire upon  termination.  In
the event of the Normal  Retirement,  death or  Disability  of any  Employee  or
Outside  Director,  all  Nonstatutory  Stock  Options  held by such  Employee or
Outside Director,  whether or not exercisable at such time, shall be exercisable
by such  person  or his  legal  representatives  or  beneficiaries  for one year
following  the date of his death or  cessation  of  employment  or  service,  as
applicable,  due to Disability or Normal  Retirement,  provided that in no event
shall the period extend beyond the expiration of the  Nonstatutory  Stock Option
term.  Notwithstanding  the above,  all  Nonstatutory  Stock  Options  held by a
Participant  whose  employment as an Employee or service as an Outside  Director
terminates  following a Change in Control  shall be deemed earned as of the last
day of  employment  or  service  with  the  Bank or an  Affiliate  and  shall be
exercisable for one year following such termination of employment or service.

8.   Incentive Stock Options

     8.1      Grant of Incentive Stock Options

     The  Committee,  from time to time,  may grant  Incentive  Stock Options to
Employees. Incentive Stock Options granted pursuant to the Plan shall be subject
to the following terms and conditions:

     (a) Option  Agreement.  Each Option shall be evidenced by a written  option
agreement  between the Bank and the Employee  specifying the number of shares of
Common Stock that may be acquired through its exercise and containing such other
terms and conditions that are not inconsistent with the terms of this grant.

     (b) Price.  The purchase price per share of Common Stock  deliverable  upon
the exercise of each  Incentive  Stock Option shall be not less than 100% of the
Fair Market Value of the Common Stock on the date the Incentive  Stock Option is
granted.  However,  if an Employee  owns stock  possessing  more than 10% of the
total  combined  voting power of all classes of Common  Stock (or under  Section
424(d) of the Code,  is  deemed to own stock  representing  more than 10% of the
total  combined  voting  power  of all  classes  of  stock  of the  Bank  or its
Affiliates by reason of the  ownership of such classes of common stock  directly
or  indirectly,  by or for any  brother,  sister,  spouse,  ancestor  or  lineal
descendant of such Employee or by or for any corporation, partnership, estate or
trust of which such  Employee is a  shareholder,  partner or  beneficiary),  the
purchase price per share of Common Stock  deliverable  upon the exercise of each
Incentive  Stock  Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the date the Incentive  Stock Option is granted.  Shares may
be  purchased  only upon  payment  of the full  purchase  price.  Payment of the
purchase price may be made, in whole or in part, through the surrender of shares
of the Common Stock. If previously  acquired shares of Common Stock are tendered
in payment of all or part of the exercise price,  the value of such shares shall
be  determined as of the date of exercise of the  Incentive  Stock  Option.
(c) Manner of Exercise.  Incentive  Stock  Options  granted under the Stock
Option Plan shall vest in a Participant  at the rate or rates  determined by the
Committee.  The vested Option may be exercised from time to time, in whole or in
part,  by  delivering  a written  notice of exercise to the  President  or Chief
Executive  Officer of the Bank,  provided,  however,  that no  Options  shall be
exercisable  prior to  approval  of the Plan by  stockholders.  Such  notice  is
irrevocable  and must be  accompanied  by full payment of the purchase  price in
cash or shares of  previously  acquired  Common Stock.  If  previously  acquired
shares of Common  Stock are  tendered in payment of all or part of the  exercise
price,  the Fair Market Value of such shares shall be  determined as of the date
of such exercise of the Incentive Stock Option.

     (d)  Amount of  Options.  Incentive  Stock  Options  may be  granted to any
Employee in such  amounts as  determined  by the  Committee;  provided  that the
amount  granted  is  consistent  with the  terms  of  Section  422 of the  Code.
Notwithstanding  the above,  the maximum number of shares that may be subject to
an  Incentive  Stock  Option  awarded  under the Plan to any  Employee  shall be
17,250.  In granting  Incentive Stock Options,  the Committee shall consider the
position and  responsibilities  of the Employee,  the length and value of his or
her service to the Bank, the Company, or the Affiliate, the compensation paid to
the Employee and the Committee's  evaluation of the performance of the Bank, the
Company,  or the Affiliate,  according to measurements  that may include,  among
others, key financial ratios, levels of classified assets, and independent audit
findings.  In the case of an Option  intended to qualify as an  Incentive  Stock
Option,  to the extent  required by Section 422 of the Code,  the aggregate Fair
Market  Value  (determined  as of the time the Option is  granted) of the Common
Stock with respect to which  Incentive Stock Options granted are exercisable for
the first time by the  Participant  during any calendar year (under all plans of
the   Participant's   employer   corporation   and  its  parent  and  subsidiary
corporations)  shall not exceed $100,000.  The provisions of this Section 8.1(d)
shall be construed and applied in accordance with Section 422(d) of the Code and
the regulations, if any, promulgated thereunder.

     (e) Term of Options.  The term during which each Incentive Stock Option may
be exercised  shall be  determined  by the  Committee,  but in no event shall an
Incentive  Stock  Option be  exercisable  in whole or in part more than 10 years
from the Date of Grant.  If any Employee,  at the time an Incentive Stock Option
is granted to him,  owns Common  Stock  representing  more than 10% of the total
combined voting power of the Bank or its Affiliates (or, under Section 424(d) of
the Code, is deemed to own Common Stock  representing more than 10% of the total
combined  voting  power of all such  classes of Common  Stock,  by reason of the
ownership of such classes of Common Stock, directly or indirectly, by or for any
brother,  sister, spouse,  ancestor or lineal descendent of such Employee, or by
or for any corporation, partnership, estate or trust of which such Employee is a
shareholder,  partner or beneficiary), the Incentive Stock Option granted to him
or her shall not be exercisable after the expiration of five years from the Date
of Grant.  No Incentive  Stock  Option  granted  under the Plan is  transferable
except by will or the laws of descent and distribution and is exercisable during
his lifetime only by the Employee to which it is granted.

     The Committee shall determine the date on which each Incentive Stock Option
shall become  exercisable  and may provide that an Incentive  Stock Option shall
become  exercisable in installments.  The shares comprising each installment may
be  purchased  in whole or in part at any time  after such  installment  becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent  with the terms of Section 422 of the Code. The Committee,  in its
sole discretion, may accelerate the time at which any Incentive Stock Option may
be exercised in whole or in part;  provided that it is consistent with the terms
of Section 422 of the Code.  Notwithstanding the above, in the event of a Change
in Control,  all Incentive  Stock Options shall become  immediately  exercisable
unless the Fair Market Value of the amount  exercisable  as a result of a Change
in Control shall exceed $100,000  (determined as of the date of grant).  In such
event, the first $100,000 of Incentive Stock Options  (determined as of the date
of grant) shall be exercisable  as Incentive  Stock Options and any excess shall
be exercisable as Nonstatutory Stock Options.

     (f)  Termination  of  Employment.  Upon the  termination  of an  Employee's
employment for any reason other than Normal  Retirement,  Disability,  Change in
Control,  death,  or Termination  for Cause,  his or her Incentive Stock Options
shall be exercisable only as to those shares that were  immediately  purchasable
by him at the  date of  termination  and  only  for a  period  of  three  months
following  termination.  In the event of Termination for Cause, all rights under
his or her Incentive Stock Options shall expire upon termination.

     In the event of termination of an Employee's  employment due to a Change in
Control,  Normal  Retirement,  death or Disability,  all Incentive Stock Options
held by such  Employee,  whether  or not  exercisable  at such  time,  shall  be
exercisable  by  such  Employee  (or  in  the  event  of his  death,  his  legal
representative  or beneficiary) for one year following the date of his cessation
of employment;  provided,  however,  that, to the extent prohibited by law, such
Options  shall not be eligible for  treatment as Incentive  Stock Options in the
event such Options are exercised more than three months following the Employee's
cessation of employment. In no event shall the exercise period extend beyond the
expiration of the Incentive Stock Option term.

     (g)  Compliance  with Code.  The Options  granted  under this Section 8 are
intended to qualify as Incentive Stock Options within the meaning of Section 422
of the Code,  but the Bank  makes no  warranty  as to the  qualification  of any
Option as an  incentive  stock  option  within the meaning of Section 422 of the
Code. If an Option granted  hereunder  fails for whatever  reason to comply with
the  provisions  of Section 422 of the Code and such failure is not or cannot be
cured, such Option shall be a Nonstatutory Stock Option.

9.   Limited Rights

     9.1      Grant of Limited Rights

     The Committee may grant a Limited  Right  simultaneously  with the grant of
any Option to any  Employee or Outside  Director  with respect to all or some of
the shares  covered by such Option.  Limited  Rights  granted under the Plan are
subject to the following terms and conditions:

     (a) Terms of Rights.  In no event shall a Limited Right be  exercisable  in
whole or in part before the  expiration  of six months from the date of grant of
the  Limited  Right.  A Limited  Right may be  exercised  only in the event of a
Change in Control.

     The  Limited  Right may be  exercised  only when the  underlying  Option is
eligible to be exercised,  provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise  price of the related
Option.

     Upon  exercise of a Limited  Right,  the related  Option  shall cease to be
exercisable.  Upon exercise or  termination  of an Option,  any related  Limited
Rights shall  terminate.  The Limited Rights may be for no more than 100% of the
difference  between the  exercise  price and the Fair Market Value of the Common
Stock subject to the underlying  Option.  The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.

     (b) Payment.  Upon exercise of a Limited  Right,  the holder shall promptly
receive from the Bank an amount of cash equal to the difference between the Fair
Market  Value on the Date of Grant of the  related  Option  and the Fair  Market
Value of the  underlying  shares  on the date the  Limited  Right is  exercised,
multiplied  by the number of shares with respect to which such Limited  Right is
being exercised. In the event of a Change of Control in which pooling accounting
treatment  is a  condition  to the  transaction,  the  Limited  Right  shall  be
exercisable  solely for shares of stock of the Bank, or in the event of a merger
transaction,  for  shares  of  the  acquiring  corporation,  or its  parent,  as
applicable.  The number of shares to be received on the exercise of such Limited
Right shall be  determined  by dividing  the amount of cash that would have been
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.

10.  Surrender of Option

     In the event of a Participant's termination of employment or termination of
service as a result of death or  Disability,  the  Participant  (or his personal
representative(s),  heir(s),  or  devisee(s))  may, in a form  acceptable to the
Committee, make application to surrender all or part of the Options held by such
Participant  in exchange  for a cash payment from the Bank of an amount equal to
the difference  between the Fair Market Value of the Common Stock on the date of
termination  of  employment  or service and the exercise  price per share of the
Option  on the Date of Grant.  Whether  the Bank  accepts  such  application  or
determines to make payment, in whole or part, is within its sole discretion,  it
being  expressly  understood  that  the  Bank  is  under  no  obligation  to any
Participant  to make such  payments.  In the event  that the Bank  accepts  such
application and determines to make payment, such payment shall be in lieu of the
exercise of the underlying Option and such Option shall cease to be exercisable.
11.  Rights of a Shareholder; Non-transferability

     A  Participant  shall have no rights as a  shareholder  with respect to any
shares covered by a Non-statutory  and/or  Incentive Stock Option until the date
of issuance of a stock  certificate  for such shares.  Nothing in the Plan or in
any Award  granted  confers on any person any right to continue in the employ of
the Bank or its  Affiliates  or to continue to perform  services for the Bank or
its  Affiliates  or  interferes  in any way  with  the  right of the Bank or its
Affiliates  to  terminate  his or her services as an Employee or Director at any
time.

     No Award under the Plan shall be transferable by the optionee other than by
will or the laws of descent and  distribution  and may only be exercised  during
his or her lifetime by the Participant, or by a guardian or legal representative
of the Participant.

12.  Agreement with Participants

     Each Award of  Options,  and/or  Limited  Rights  shall be  evidenced  by a
written  agreement,  executed by the  Participant and the Bank or its Affiliates
that  describes the  conditions  for receiving the Awards  including the date of
Award, the purchase price if any,  applicable  periods,  and any other terms and
conditions as may be required by the Board of Directors or applicable securities
law.

13.  Designation of Beneficiary

     A Participant, with the consent of the Committee, may designate a person or
persons to receive, in the event of death, any Option or Limited Rights Award to
which he or she would then be entitled. Such designation will be made upon forms
supplied  by and  delivered  to the Bank and may be  revoked  in  writing.  If a
Participant fails  effectively to designate a Beneficiary,  then his estate will
be deemed to be the Beneficiary.

14.  Dilution and Other Adjustments

     In the event of any  change in the  outstanding  shares of Common  Stock by
reason of any stock  dividend  or split,  recapitalization,  pro-rata  return of
capital to all shareholders,  merger, consolidation,  spin-off,  reorganization,
combination or exchange of shares,  or other similar  corporate change, or other
increase or decrease in such shares without receipt or payment of consideration,
the Committee  will make such  adjustments  to  previously  granted  Awards,  to
prevent dilution or enlargement of the rights of the Participant,  including any
or all of the following:

          (a)  adjustments  in the aggregate  number or kind of shares of Common
          Stock that may be awarded under the Plan;

          (b)  adjustments  in the aggregate  number or kind of shares of Common
          Stock covered by Awards already made under the Plan; or

          (c)  subject to Section  8.1(b),  adjustments in the purchase price of
          outstanding  Incentive  and/or  Nonstatutory  Stock  Options,  or  any
          Limited Rights attached to such options.

     No such adjustments,  however,  may change materially the value of benefits
available to a Participant under a previously granted Award.

15.  Limitations upon Exercise of Options

     Notwithstanding  any other  provision  of the Plan,  so long as the Company
remains in the mutual form of organization and so long as any applicable statute
or regulation requires the Company to own at least a majority of the outstanding
shares of Common Stock, an Option granted under the Plan may not be exercised if
the exercise of such an Option  would  result in the Company  owning less than a
majority  of the Common  Stock.  Nothing  herein  shall  preclude  the Bank from
issuing additional authorized but unissued shares of Common Stock to the Company
to allow for the exercise of options that would  otherwise  have resulted in the
Company owning less than a majority of the Common Stock.
16.  Treatment of Options in the Event of a Conversion Transaction

     In the  event  that the  Company  converts  to stock  form in a  Conversion
Transaction,  any Options outstanding shall, at the option of the holder, (i) be
convertible into Options for common stock of the Stock Holding Company,  or (ii)
if  vested,  be  exercised  by the  holder  prior to the  effective  date of the
Conversion Transaction and the holder shall be entitled to exchange, in the same
manner as other  minority  stockholders  of the Bank, the shares of Common Stock
received  upon such  exercise  for shares of common  stock of the Stock  Holding
Company.  If for any reason such  options are not to be converted or such shares
are not  exchanged,  the holders of Options  under the Plan shall  receive  cash
payment for the shares of Common Stock  represented  by the Options in an amount
equal to the Fair Market Value of the underlying Options or the initial offering
price of the  common  stock of the Stock  Holding  Company  for which the Common
Stock  underlying  the Option would  otherwise be  exchanged,  less the original
exercise  price of such  Options  and,  with  respect to Options  that have been
exercised,  the Stock  Holding  Company shall redeem such shares for cash in the
same manner as such  redemption  would occur for other minority  stockholders of
the Bank. Any exchange,  conversion of Options, or cash payment for shares shall
be subject to  applicable  federal  and state  regulations  and,  if  necessary,
subject to the approval of the appropriate regulatory authorities.

17.  Withholding

     There may be deducted  from each  distribution  of cash and/or Common Stock
under the Plan the amount of tax  required by any  governmental  authority to be
withheld.

18.  Amendment of the Plan

     The Board of Directors  may at any time,  and from time to time,  modify or
amend the Plan in any respect; provided,  however, that if necessary to continue
to qualify the Plan under the Securities and Exchange Commission Rule 16b-3, the
approval by a majority of the shares of Common Stock represented in person or by
proxy at an annual or special meeting of the Bank shall be required for any such
modification or amendment that:

               (a)  increases the maximum number of shares for which Options may
                    be  granted  under  the  Plan  (subject,   however,  to  the
                    provisions of Section 14);

               (b)  reduces the  exercise  price at which  Awards may be granted
                    (subject,  however,  to the provisions of Sections 7, 8, and
                    14;

               (c)  extends the period  during  which  Options may be granted or
                    exercised beyond the times originally  prescribed  (subject,
                    however, to the provisions of Sections 7 and 8; or

               (d)  changes the persons eligible to participate in the Plan.

     Failure to ratify or approve amendments or modifications to subsections (a)
through (d) of this Section 18 by shareholders shall be effective only as to the
specific   amendment  or  modification   requiring  such   ratification.   Other
provisions,  sections, and subsections of the Plan will remain in full force and
effect.

     No such  termination,  modification or amendment may affect the rights of a
Participant under an outstanding Award.

19.  Approval by Stockholders

     The Plan shall be approved by stockholders of the Bank. No Options shall be
granted pursuant to the Plan prior to such stockholder approval.
20.  Effective Date of Plan

     The Plan  shall  become  effective  upon the date  adopted  by the Board of
Directors, following the approval of stockholders.

21.  Termination of the Plan

     The right to grant Awards under the Plan will terminate upon the earlier of
ten (10) years  after the  Effective  Date or the date on which the  exercise of
Options or related rights  equaling the maximum number of shares  reserved under
the Plan occurs as set forth in Section 5. The Board of Directors  has the right
to suspend or terminate the Plan at any time; provided that no such action will,
without  the  consent of a  Participant,  affect  adversely  his rights  under a
previously granted Award.

22.  Applicable Law

     The Plan will be  administered  in accordance with federal law and the laws
of the State of Michigan.

Adopted February 27, 1996

ATTEST:                                FIRST FEDERAL SAVINGS AND LOAN
                                       ASSOCIATION OF ALPENA

/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
---------------------------------          -------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

                                       ALPENA BANCSHARES, M.H.C.

/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
---------------------------------          -------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

April 17, 1996
---------------------------------
Date Approved by Stockholders
EXHIBIT 4.2
FIRST FEDERAL SAVINGS AND LOAN
                            ASSOCIATION OF ALPENA and
                            ALPENA BANCSHARES, M.H.C.

                       1996 RECOGNITION AND RETENTION PLAN

1.   Establishment of the Plan

     First  Federal  Savings and Loan  Association  of Alpena  (the  "Bank") and
Alpena Bancshares,  M.H.C. (the "Company") hereby establish the 1996 Recognition
and Retention Plan (the "Plan") upon the terms and conditions hereinafter stated
in the Plan.

2.   Purpose of the Plan

     The purpose of the Plan is to retain  Employees  and Outside  Directors  of
experience and ability by providing such persons with a proprietary  interest in
the Bank as compensation for their contributions to the Bank and the Company and
their Affiliates and as an incentive to make such  contributions  and to promote
the Bank's growth and profitability in the future.

3.   Definitions

     The  following  words and  phrases  when  used in the Plan with an  initial
capital letter,  unless the context clearly indicates otherwise,  shall have the
meanings set forth below.  Wherever  appropriate,  the  masculine  pronoun shall
include the feminine pronoun and the singular shall include the plural:

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

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

     "Bank" means First Federal Savings and Loan Association of Alpena.

     "Beneficiary"  means the person or persons  designated  by a  Recipient  to
receive any  benefits  payable  under the Plan in the event of such  Recipient's
death.  Such person or persons shall be designated in writing on forms  provided
for this  purpose  by the  Committee  and may be  changed  from  time to time by
similar  written  notice  to  the  Committee.   In  the  absence  of  a  written
designation,  the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

     "Board" or "Board of  Directors"  means the Board of  Directors of the Bank
and the Company, as applicable.

     "Cause"  means  personal  dishonesty,  willful  misconduct,  any  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  or the willful  violation of any law,  rule or  regulation  (other than
traffic violations or similar offenses) or a final  cease-and-desist  order, any
of which results in a material loss to the Bank or an Affiliate.

     "Change in Control" means:

     (1)(i) A reorganization,  merger, merger conversion,  consolidation or sale
of all or  substantially  all of the  assets  of the  Bank or the  Company  or a
similar  transaction in which the Bank or Company is not the resulting entity or
the Stock Holding  Company is not the resulting  entity;  (ii)  individuals  who
constitute  the Board of  Directors of the Bank or the Board of Directors of the
Company as of the date hereof (the "Incumbent  Board"),  cease for any reason to
constitute  at least a majority  thereof,  provided  that any person  becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-fourths of the directors  composing the Incumbent Board or whose
nomination  for  election by the Bank's or  Company's  stockholders  or members,
respectively,  was  approved  by  the  Nominating  Committee  serving  under  an
Incumbent  Board shall be for purposes of this section  considered  as though he
were a member of the Incumbent  Board;  or (iii) an  acquisition of "control" of
the Bank or the Company as defined by the Home Owners Loan Act, as amended,  and
applicable rules and regulations promulgated thereunder as in effect at the time
of the Change in Control  (collectively,  the "HOLA"), or (iv) an acquisition of
the Bank's stock requiring submission of notice under the Change in Bank Control
Act;

     (2) In the event the Company  converts from the mutual form of organization
to the  stock  form of  organization  in a  Conversion  Transaction  at any time
subsequent to the effective date of the Plan, a "Change in Control" shall mean a
change in control of the Bank or the Stock Holding Company of a nature that: (i)
would be required to be reported in response to Item 1a of the current report on
Form 8-K,  as in effect on the date  hereof,  pursuant to Section 13 or 15(d) of
the Securities  Exchange Act of 1934 (the "Exchange  Act"); or (ii) results in a
change in control of the Bank or the Stock Holding Company within the meaning of
the Bank Holding Company Act ("BHCA");  or (iii) without limitation,  results in
(a) any  "person"  (as  such  term is used in  Section  13(d)  and  14(d) of the
Exchange  Act) becoming the  "beneficial  owner" (as defined in Rule 13d-3 under
the Exchange  Act),  directly or  indirectly,  of  securities of the Bank or the
Stock Holding  Company  representing  25% or more of the Bank's or Stock Holding
Company's  outstanding  securities  ordinarily  having  the right to vote at the
election of directors,  except for any securities purchased by the Bank's or the
Stock Holding Company's employee stock benefit plans; or (b) the Incumbent Board
ceasing  for any  reason  to  constitute  at least a  majority  of the  Board of
Directors  of  the  Bank  or  Stock  Holding  Company;   or  (c)  results  in  a
reorganization,  merger, consolidation,  sale of all or substantially all of the
assets of the Bank or the Stock Holding Company or similar transaction.

     Notwithstanding  anything to the contrary  herein,  the  conversion  of the
Company to stock form, on a stand-alone basis, shall not be a Change in Control.

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

     "Committee"  means the Stock Benefits  Committee of the Board  appointed by
the Bank which shall consist of at least three Outside  Directors of the Bank or
the Company, all of whom are and must be "disinterested directors," as that term
is defined under Rule 16b-3 of the Securities Exchange Act of 1934.

     "Common  Stock" means shares of the common stock of the Bank,  par value of
$1.00 per share.

     "Company" means Alpena Bancshares, M.H.C.

     "Continuous  Service"  means  employment  as an  Employee  or service as an
Outside  Director  without any interruption or termination of such employment or
service.  In the  case  of an  Employee,  employment  shall  not  be  considered
interrupted  in the case of sick  leave,  military  leave or any other  leave of
absence  approved  by the  Bank or in the  case  of  transfers  between  payroll
locations of the Bank or between the Bank, its parent,  its  subsidiaries or its
successor.  For purposes of determining  Continuous Service, an Outside Director
who  terminates  service  on the  Board but who  continues  to serve the Bank or
Company as a Director  Emeritus  will not be deemed to have an  interruption  or
termination of service under the Plan.

     "Conversion  Transaction"  means the  conversion  of the  Company  from the
mutual to stock form of  organization  either on a  stand-alone  basis or in the
context of a merger conversion, as provided by regulations of the OTS.

     "Director" means a member of the Board of Directors.

     "Director  Emeritus" means a former Director,  who in recognition of his or
her past contributions, has been titled as a director emeritus.

     "Disability" means the permanent and total inability by reason of mental or
physical  infirmity,  or both,  of an Employee  to perform the work  customarily
assigned  to him.  Additionally,  a medical  doctor  selected or approved by the
Board of Directors  must advise the Committee  that it is either not possible to
determine when such Disability  will terminate or that it appears  probable that
such  Disability  will be  permanent  during the  remainder  of such  Employee's
lifetime.
"Effective  Date"  means  the  date  the  Plan is  ratified  by the  Board,
following the approval of stockholders.

     "Employee"  means any person who is  currently  employed  by the Bank,  the
Company or an Affiliate, including officers.

     "Escrow Agent" means the person designated by the Board or the Committee to
hold the  Restricted  Stock as agent  for the  parties  until  the  lapse of the
restrictions imposed by Section 6.1.

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

     "Normal  Retirement"  means,  for an Employee,  retirement at the normal or
early  retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any  successor  plan.  For  an  Outside  Director,  Normal  Retirement  means
retirement from service on the Board.

     "Offering"  means the initial  public  offering of the Common  Stock of the
Bank.

     "OTS" means the Office of Thrift Supervision, or any successor thereto.

     "Outside Director" means a Director who is not also an Employee.

     "Recipient"  means an Employee or Director  who receives an Award under the
Plan.

     "Reorganization" means the reorganization of First Federal Savings and Loan
Association of Alpena as a mutual holding company and the  establishment  of the
Bank as its majority-owned subsidiary.

     "Restricted  Period"  means the period of time selected by the Board or the
Committee,  as applicable,  for the purpose of determining when restrictions are
in effect under Section 6 with respect to Restricted Stock.

     "Restricted  Stock" means shares that have been awarded under the Plan to a
Recipient subject to the restrictions  referred to in Section 6, so long as such
restrictions are in effect.

     "Stock Holding  Company" means the holding  company  resulting from a stock
conversion of the Company in a Conversion Transaction.

4.   Administration of the Plan

     4.1 Role of the Committee.  The Plan shall be administered  and interpreted
by the Committee, which shall have all of the powers allocated to it in this and
other sections of the Plan. The interpretation and construction by the Committee
of any  provision of the Plan or of any Award granted  hereunder  shall be final
and binding. The Committee shall act by vote or written consent of a majority of
its members.  Subject to the express provisions and limitations of the Plan, the
Committee  may  adopt  such  rules,  regulations  and  procedures  as  it  deems
appropriate  for the conduct of its  affairs.  The  Committee  shall  report its
actions  and  decisions  with  respect  to the Plan to the Board at  appropriate
times, but in no event less than one time per calendar year.

     4.2 Role of the Board.  The members of the Committee  shall be appointed or
approved by, and will serve at the pleasure of, the Board.  The Board may in its
discretion  from time to time  remove  members  from,  or add  members  to,  the
Committee.  The Board shall have all of the powers  allocated  to it in this and
other  sections of the Plan,  may take any action  under or with  respect to the
Plan that the Committee is  authorized to take,  and may reverse or override any
action  taken or decision  made by the  Committee  under or with  respect to the
Plan, provided,  however,  that the Board may not revoke any Award except in the
case of revocation for Cause or, with respect to unearned Awards, in the event a
Recipient of an Award voluntarily  terminates  employment with the Bank prior to
Normal Retirement.

     4.3 Plan Administration  Restrictions.  The Plan is intended to comply with
Rule 16b-3 under the Securities  Exchange Act of 1934.  Notwithstanding any term
to the contrary  appearing  herein,  unless  permitted by Rule  16b-3(c)(2)(ii),
subsequent to the establishment of the Plan, neither the Committee nor the Board
shall have the  authority to determine  the amount and price of securities to be
awarded and/or timing of awards to Outside  Directors,  which terms shall be set
forth in the Plan.  To the  extent  any  provision  of the Plan or action by the
Committee  or Board fails to comply with this  Section  4.3,  such  provision or
action shall, to the extent  permitted by law and deemed advisable by the Board,
be deemed null and void.

     4.4 Limitation on Liability.  No member of the Board or the Committee shall
be liable for any  determination  made in good faith with respect to the Plan or
any  Awards  granted  under it. If a member of the Board or the  Committee  is a
party  or is  threatened  to be  made a  party  to any  threatened,  pending  or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative,  by reason of anything  done or not done by him in such  capacity
under or with respect to the Plan, the Bank shall  indemnify such member against
expense  (including  attorneys'  fees),  judgments,  fines and  amounts  paid in
settlement  actually  and  reasonably  incurred by him in  connection  with such
action,  suit or  proceeding  if he  acted  in good  faith  and in a  manner  he
reasonably believed to be in the best interests of the Bank, the Company and its
Affiliates  and,  with  respect to any  criminal  action or  proceeding,  had no
reasonable cause to believe his conduct was unlawful.

5.   Eligibility; Awards

     5.1  Eligibility.  Employees and Outside  Directors are eligible to receive
Awards.

     5.2 Awards to Employees. The Committee may determine which of the Employees
referenced  in  Section  5.1 will be  granted  Awards  and the  number of shares
covered by each Award;  provided,  however, that in no event shall any Awards be
made that will violate the Plan, the Charter,  Bylaws or Plan of  Reorganization
from Mutual  Savings Bank to Mutual  Holding  Company and Stock Issuance Plan of
the  Bank or any  applicable  federal  or state  law or  regulation.  Shares  of
Restricted  Stock that are awarded by the  Committee  shall,  on the date of the
Award,  be  registered  in the  name of the  Recipient  and  transferred  to the
Recipient,  in accordance  with the terms and conditions  established  under the
Plan.  The total number of shares that will be awarded or reserved for Employees
under the Plan shall be 17,940 shares.

     In the event Restricted  Stock is forfeited for any reason,  the Committee,
from time to time,  may determine  which of the Employees  referenced in Section
5.1 will be granted  additional  Awards to be awarded from forfeited  Restricted
Stock.  In  selecting  those  Employees  to whom  Awards will be granted and the
amount of Restricted Stock covered by such Awards,  the Committee shall consider
the  position and  responsibilities  of the  Employees,  the length and value of
their  services to the Bank and its  Affiliates,  the  compensation  paid to the
Employees  and any  other  factors  the  Committee  may deem  relevant,  and the
Committee may request the written  recommendation of the Chief Executive Officer
and other senior executive officers of the Bank, the Company and its Affiliates.
All  allocations  by the Committee  shall be subject to review,  and approval or
rejection, by the Board.

     Subject to Sections 6.3 and 6.4, no Restricted Stock shall be earned unless
the Employee maintains Continuous Service until the restrictions lapse.

     5.3 Awards to Outside Directors. Each Outside Director serving on the Board
of the Bank or the Company on the Effective  Date shall be issued an Award equal
to 2,415  shares of  Restricted  Stock.  The total number of shares that will be
awarded or reserved for Outside Directors under the Plan shall be 9,660 shares.

     Any  person  who  becomes an  Outside  Director  subsequent  to the date of
approval of the Plan by stockholders  shall receive an Award of Restricted Stock
equal to 2,415 shares, subject to availability.

     No  Restricted  Stock  shall be earned by an  Outside  Director  unless the
Outside Director maintains Continuous Service until the restrictions lapse.

     5.4 Manner of Award. As promptly as practicable  after a  determination  is
made  pursuant  to  Sections  5.2 and 5.3 that an Award  has been  granted,  the
Committee  shall notify the Recipient in writing of the grant of the Award,  the
number of shares of Restricted  Stock  covered by the Award,  and the terms upon
which the Restricted Stock subject to the Award may be earned. Upon notification
of an Award of Restricted  Stock,  the Recipient shall execute and return to the
Bank a restricted  stock agreement  setting forth the terms and conditions under
which the  Recipient  shall earn the  Restricted  Stock (the  "Restricted  Stock
Agreement"),  together  with a stock power  endorsed in blank.  Thereafter,  the
Recipient's  Restricted Stock and stock power shall be deposited with the Escrow
Agent  specified  by the Bank,  who shall hold such  Restricted  Stock under the
terms  and  conditions  set  forth  in  the  Restricted  Stock  Agreement.  Each
certificate representing an Award under the Plan shall be registered in the name
of the Recipient.

     5.5 Treatment of Forfeited  Shares. In the event shares of Restricted Stock
are  forfeited  by a Recipient  hereunder,  such shares shall be returned to the
Bank and shall be held and accounted for and re-awarded pursuant to the terms of
the Plan.

6.   Terms and Conditions of Restricted Stock

     The  Committee  shall  have full and  complete  authority,  subject  to the
limitations  of the Plan, to grant Awards of Restricted  Stock to Employees and,
in addition to the terms and conditions  contained in this Section 6, to provide
such other terms and conditions  (which need not be identical among  Recipients)
in respect of such  Awards,  and the vesting  thereof,  as the  Committee  shall
determine.

     6.1 General Rules.  Restricted  Stock shall be earned by an Employee at the
rate  determined by the  Committee at the time of grant of the Award;  provided,
however,  that no shares  shall be earned  for any year in which the Bank is not
meeting  all of its fully  phased-in  capital  requirements.  Awards  granted to
Outside  Directors shall be earned by an Outside  Director at the rate of twenty
percent  (20%) of the aggregate  number of shares  covered by the Award per year
commencing one year from the date of grant.  Subject to any such other terms and
conditions as the  Committee  shall provide with respect to awards to Employees,
shares of Restricted Stock may not be sold,  assigned,  transferred,  pledged or
otherwise encumbered by the Recipient,  except as hereinafter  provided,  during
the  Restricted  Period.  The  Committee  shall  have  the  authority,   in  its
discretion, to accelerate the time at which any or all of the restrictions shall
lapse with  respect to Awards  issued to  Employees,  or to remove any or all of
such restrictions,  whenever it may determine that such action is appropriate by
reason  of  changes  in  applicable  tax or  other  laws  or  other  changes  in
circumstances occurring after the commencement of such Restricted Period.

     6.2 Continuous Service; Forfeiture.  Except as provided in Sections 6.3 and
6.4, if an Employee or Outside  Director ceases to maintain  Continuous  Service
for any reason,  unless the Committee shall otherwise  determine,  all shares of
Restricted  Stock  theretofore  awarded to such Employee or Outside Director and
which at the time of such  termination of Continuous  Service are subject to the
restrictions  imposed by Section 6.1 shall upon such  termination  of Continuous
Service be forfeited.

     6.3  Exception  for  Termination   Due  to  Death,   Disability  or  Normal
Retirement. Notwithstanding the general rules contained in Sections 6.1 and 6.2,
Restricted Stock awarded to a Recipient whose  employment or service  terminates
due to death,  Disability,  or Normal  Retirement that has not theretofore  been
earned,  shall be deemed earned as of the Recipient's  last day of employment or
service.

     6.4 Exception for Terminations  after a Change in Control.  Notwithstanding
the general rules  contained in Sections 6.1 and 6.2, all Restricted  Stock held
by a Recipient  whose  employment  or service  terminates  following a Change in
Control shall be deemed earned as of the  Recipient's  last day of employment or
service.

     6.5 Revocation for Cause.  Notwithstanding anything herein to the contrary,
if a Recipient  is  terminated  for cause or has  engaged in conduct  that would
justify  termination for cause, the Board may by resolution  immediately revoke,
rescind and terminate any Award, or portion  thereof,  previously  awarded under
the Plan, whether or not yet earned, to the extent Restricted Stock has not been
redelivered by the Escrow Agent to the Recipient.

     6.6 Restricted Stock Legend.  Each certificate  representing an Award under
the Plan shall be  registered  in the name of the Recipient and deposited by the
Recipient,  together with a stock power endorsed in blank, with the Escrow Agent
and shall bear the following (or a similar) legend:

               "The  transferability of this certificate and the shares of stock
               represented  hereby  are  subject  to the  terms  and  conditions
               (including forfeiture) contained in the First Federal Savings and
               Loan  Association of Alpena and Alpena  Bancshares,  M.H.C.  1996
Recognition and Retention  Plan.  Copies of such Plan are on file
               in the offices of the Secretary of First Federal Savings and Loan
               Association of Alpena, 100 South Second Avenue, Alpena,  Michigan
               49707."

     6.7 Payment of  Dividends  and Return of  Capital.  After an Award has been
granted but before such Award has been earned,  the Recipient  shall receive any
cash  dividends or stock  dividends  paid with respect to such shares,  or shall
share in any pro-rata return of capital to all shareholders  with respect to the
Common Stock.  Unless the Recipient has made an election  under Section 83(b) of
the Code,  cash  dividends or other  amounts so paid on shares that have not yet
been earned by the Recipient shall be treated as compensation income (or, in the
case of an Outside Director, self-employment income) to the Recipient when paid.

     6.8  Voting of  Restricted  Shares.  After an Award has been  granted,  the
Recipient as owner of such shares shall have the right to vote such shares.

     6.9  Delivery  of Earned  Shares.  At the  expiration  of the  restrictions
imposed by Section 6.1, the Escrow Agent shall  redeliver to the  Recipient  (or
where the  relevant  provision  of Section 6.3 applies in the case of a deceased
Recipient,  to his Beneficiary),  the  certificate(s)  deposited with it and the
shares  represented  by such  certificate(s)  shall be free of the  restrictions
imposed by Section 6.1.

7.   Adjustments upon Changes in Capitalization

     In the event of any  change in the  outstanding  shares  subsequent  to the
Effective Date by reason of any reorganization  (other than the Reorganization),
recapitalization,  stock  split,  combination  or  exchange  of shares,  merger,
consolidation  or any change in the  corporate  structure or shares of the Bank,
the  maximum  aggregate  number  and class of shares as to which  Awards  may be
granted under the Plan shall be appropriately  adjusted.  Any shares of stock or
other securities received,  as a result of any of the foregoing,  by a Recipient
shall  be  subject  to the same  restrictions  and the  certificate(s)  or other
instruments  representing  or  evidencing  such  shares or  securities  shall be
legended and deposited  with the Escrow Agent in the manner  provided in Section
6.6.

8.   Assignments and Transfers

     No Award  nor any  right  or  interest  of a  Recipient  in any  instrument
evidencing any Award may be assigned,  encumbered or transferred  except, in the
event  of the  death  of a  Recipient,  by  will  or the  laws  of  descent  and
distribution.

9.   Employee Rights Under the Plan

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

10.  Withholding Tax

     Upon the termination of the Restricted Period with respect to any shares of
Restricted  Stock (or at such earlier  time, if any, that an election is made by
the  Employee  under  Section  83(b) of the  Code,  or any  successor  provision
thereto, to include the value of such shares in taxable income), the Bank or its
Affiliate, as applicable,  shall have the right to require the Employee or other
person  receiving  such  shares to pay the Bank or  Affiliate  the amount of any
taxes that the Bank or  Affiliate  is required to withhold  with respect to such
shares,  or, in lieu  thereof,  to retain or sell without  notice,  a sufficient
number of shares  held by it to cover the amount  required to be  withheld.  The
Bank or Affiliate  shall have the right to deduct from all  dividends  paid with
respect to shares of Restricted  Stock the amount of any taxes which the Bank or
Affiliate is required to withhold  with respect to such dividend  payments.
11.  Treatment of Restricted Stock in the Event of Conversion Transaction

     In the  event  that the  Company  converts  to stock  form in a  Conversion
Transaction, any Restricted Stock shall be exchanged into shares of Common Stock
of the Stock Holding  Company,  provided,  however,  that if for any reason such
shares are not to be exchanged, the Stock Holding Company shall,  simultaneously
with the closing of the Conversion  Transaction,  purchase  Restricted Stock for
cash equal to the fair  market  value of such  Restricted  Stock or Shares.  Any
exchange  of shares or cash  payment for shares  shall be subject to  applicable
federal and state regulations and, if necessary,  subject to the approval of the
appropriate Regulatory authorities.

12.  Amendment or Termination

     The Board of the Bank or the Company may amend,  suspend or  terminate  the
Plan or any portion  thereof at any time,  but (except as provided in Section 6)
no amendment shall be made without approval of the stockholders of the Bank that
shall (i)  materially  increase the  aggregate  number of shares with respect to
which Awards may be made under the Plan, (ii) materially  increase the aggregate
number of  shares  that may be  subject  to  Awards  to  Recipients  who are not
Employees,  or (iii) change the class of persons  eligible to participate in the
Plan; provided, however, that no such amendment, suspension or termination shall
impair  the  rights  of  any  Recipient,  without  his  consent,  in  any  Award
theretofore made pursuant to the Plan.

13.  Governing Law

     The Plan shall be governed by the laws of the State of Michigan.

14.  Term of Plan

     The Plan shall become  effective upon its  ratification by the Board of the
Bank and the Company,  following  the approval of the Plan by  stockholders.  It
shall  continue  in effect  until the  earlier  of (i)  fifteen  years  from the
Effective Date, unless sooner terminated under Section 12, or (ii) the date upon
which all shares of Common Stock  available for award  hereunder  have vested in
the Recipients of such Awards.

     IN WITNESS  WHEREOF,  the Bank and the Company  have caused this Plan to be
executed by its duly  authorized  officers and the corporate  seal to be affixed
and duly attested, as of the 27th day of February, 1996.

ATTEST:                                    FIRST FEDERAL SAVINGS AND LOAN
                                           ASSOCIATION OF ALPENA

/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
------------------------------------       -------------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

                                           ALPENA BANCSHARES, M.H.C.

/s/ Robert H. Nowicki                  By: /s/ Duane I. Dickey
------------------------------------       -------------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

April 17, 1996
------------------------------------
Date Approved by Stockholders
EXHIBIT 5
(202) 274-2000

February 20, 2002

Board of Directors
Alpena Bancshares, Inc.
100 S. Second Avenue
Alpena, Michigan 49707

                  Re:      Alpena Bancshares, Inc.
                           Registration Statement on Form S-8
                           ----------------------------------

Ladies and Gentlemen:

     You have  requested  the  opinion  of this firm as to  certain  matters  in
connection  with the offer and sale of Alpena  Bancshares,  Inc. (the "Company")
common stock,  par value $1.00 per share (the "Common  Stock"),  pursuant to the
First  Federal  Savings and Loan  Association  1996 Stock  Option Plan and First
Federal  Savings and Loan  Association of Alpena 1996  Recognition and Retention
Plan (the  "Plans").  We have  reviewed the  Company's  Federal  Stock  Charter,
Registration  Statement  on Form S-8 (the  "Form  S-8"),  as well as  applicable
statutes  and  regulations  governing  the Company and the offer and sale of the
Common Stock.

     Based on the foregoing, we are of the following opinion:

     Upon the  effectiveness  of the Form S-8,  the Common  Stock,  when  issued
pursuant to the Plans, will be legally issued, fully paid and non-assessable.

     This  opinion  has  been  prepared  solely  for the use of the  Company  in
connection  with the  preparation  and filing of the Form S-8, and should not be
used for any other purpose or relied upon by any other person  without the prior
written  consent of this firm.  We hereby  consent to the use of this opinion in
the Form S-8.

                                        Very truly yours,

                                        /s/ Luse Lehman Gorman Pomerenk & Schick
                                        ----------------------------------------
                                        LUSE LEHMAN GORMAN POMERENK &
                                        SCHICK
                                        A Professional Corporation
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS

Board of Directors
Alpena Bancshares, Inc.

     We hereby consent to the  incorporation  by reference in this  Registration
Statement  on Form S-8 of our report  dated  January 31,  2001,  relating to the
consolidated  financial statements of Alpena Bancshares,  Inc. and Subsidiaries,
as of December 31, 2000,  which appear in the December 31, 2000 Annual Report on
Form 10-KSB of Alpena Bancshares, Inc.

/s/ Plante & Moran, LLP

Plante & Moran, LLP
Auburn Hills, Michigan
February 20, 2002