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                        SECURITY FINANCIAL BANCORP, INC.
                          TAX INDEMNIFICATION AGREEMENT

     This AGREEMENT (this "Agreement") is made effective as of December 30,
2002, by and between Security Financial Bancorp, Inc. (the "Company"), a
corporation organized under the laws of Delaware with its principal offices at
9321 Wicker Avenue, St. John, Indiana 46373 and John P. Hyland ("Executive").

     WHEREAS, the Company wishes to provide Executive with indemnification for
taxes payable by Executive by reason of Section 280G and 4999 of the Internal
Revenue Code of 1986, as amended.

     NOW, THEREFORE, upon the terms and conditions hereinafter provided, the
parties hereby agree as follows:

1.   TERM.

     This Agreement shall be in effect with respect to payments made in
connection with any "change in control or ownership" (as such phase is defined
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code")), occurring on or prior to December 31, 2005.

2.   For any taxable year in which Executive shall be liable for the payment of
an excise tax under Section 4999 of the Code (or any successor provision
thereto), with respect to any payment in the nature of compensation made by the
Company, Security Federal Bank & Trust (the "Bank") or their affiliates or
successors to (or for the benefit of) Executive pursuant to any agreement or
otherwise (including this Agreement), the Company or its successors shall pay to
Executive an amount determined under the following formula:

     An amount equal to: (E x P) + X

WHERE:

     X    =                        E x P
              ----------------------------------------------
              1 - [(FI x (1 - SLI)) + SLI + E [+ M + PO]]


     E    =   the rate at which the excise tax is assessed under Section 4999
              of the Code; and

     P    =   the amount with respect to which such excise tax is assessed,
              determined without regard to this Section 2; and

     FI   =   the highest marginal rate of federal income, employment, and other
              taxes (other than taxes imposed under Section 4999 of the Code)
              applicable to Executive for the taxable year in question; and

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     SLI  =   the sum of the highest marginal rates of income and payroll tax
              applicable to Executive under applicable state and local laws for
              the taxable year in question; and

     M    =   highest marginal rate of Medicare tax; and

     PO   =   adjustment for phase out of or loss of deduction, personal
              exemption or other similar items.

With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 2 shall be made to Executive on the
earliest of (i) the date the Company is required to withhold such tax, (ii) the
date the tax is required to be paid by Executive, or (iii) at the time of the
change in control or ownership (as such phrase is defined under Section 280G of
the Code or the regulations promulgated thereunder). Notwithstanding anything in
this Agreement to the contrary, it is the intention of the parties that the
Company or its successors provide Executive with a full tax gross-up under the
provisions of this Agreement, such that on a net after-tax basis, the result to
Executive shall be the same as if the excise tax under Section 4999 (or any
successor provisions) of the Code had not been imposed. The tax gross-up may be
adjusted if alternative minimum tax rules are applicable to Executive.

     Notwithstanding the foregoing, if it shall subsequently be determined in a
final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P," above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment") then the Company's independent
accountants shall determine the amount (the "Adjustment Amount") the Company
must pay to Executive, in order to put Executive (or the Company, as the case
may be) in the same position as Executive (or the Company, as the case may be)
would have been if the amount determined as "P" above had been equal to the
Determinative Excess Parachute Payment. In determining the Adjustment Amount,
the independent accountants shall take into account any and all taxes (including
any penalties and interest) paid by or for Executive or refunded to Executive or
for Executive's benefit. As soon as practicable after the Adjustment Amount has
been so determined, the Company shall pay the Adjustment Amount to Executive.

     In each calendar year that Executive receives payments or benefits under
any arrangement with the Company, the Bank, their affiliates or successors,
Executive shall report on his state and federal income tax returns such
information as is consistent with the determination made by the independent
accountants of the Company as described above. The Company shall indemnify and
hold Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorney's and other counsel fees, interest,
fines and penalties) which Executive incurs as a result of reporting such
information. Executive shall promptly notify the Company in writing whenever
Executive receives notice of a judicial or administrative proceeding, formal or
informal, in which the federal tax treatment under Section 4999 of the Code of
any amount paid or payable under this Agreement is being reviewed or is in
dispute. The Company shall assume control, at its expense, over all legal and
accounting matters pertaining to such federal tax treatment (except to the
extent necessary or appropriate for

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Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this Agreement) and Executive shall
cooperate fully with the Company in any such proceeding. Executive shall not
enter into any compromise or settlement or otherwise prejudice any rights the
Company may have in connection therewith without prior consent to the Company.

3.   SEVERABILITY.

     If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

4.   HEADINGS FOR REFERENCE ONLY.

     The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

5.   GOVERNING LAW.

     This Agreement shall be governed by the laws of the State of Indiana,
unless pre-empted by federal law.

6.   ARBITRATION.

     Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.

7.   PAYMENT OF LEGAL FEES.

     All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Company, if Executive is successful pursuant to a legal
judgment, arbitration or settlement.

8.   SUCCESSOR TO THE COMPANY.

     The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Company, expressly
and unconditionally to assume and agree to perform the Company's obligations
under this Agreement, in the same manner and to the same extent that the Company
would be required to perform if no such succession or assignment had taken
place.

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                                   SIGNATURES

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
and on the date first written above.


ATTEST:                                 SECURITY FINANCIAL BANCORP, INC.


/s/ Edwina Golec                        By: /s/ John Wm. Palmer
-----------------------------------         ------------------------------------
                                            For the Entire Board of Directors

           [SEAL]




WITNESS:                                    EXECUTIVE

/s/ Joann Halterman                         /s/ John P. Hyland
-----------------------------------         -----------------------------------

                                            John P. Hyland