SECURITY FEDERAL BANK & TRUST
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

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                          Security Federal Bank & Trust
                     Supplemental Executive Retirement Plan

                                Table of Contents

Article I - Introduction.....................................................1

Article II - Definitions.....................................................2

Article III - Eligibility and Participation..................................5

Article IV - Benefits........................................................6

Article V - Accounts.........................................................9

Article VI - Supplemental Benefit Payments..................................10

Article VII - Claims Procedures.............................................12

Article VIII - Amendment and Termination....................................14

Article IX - General Provisions.............................................15

Article X - Required Regulatory Provisions..................................18


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                                    Article I
                                  Introduction

Section 1.01 Purpose, Design and Intent.

(a)   The purpose of the Security Federal Bank & Trust Supplemental Executive
      Retirement Plan (the "Plan") is to assist Security Federal Bank & Trust
      (the "Bank") and its affiliates in retaining the services of key employees
      until their retirement, to induce such employees to use their best efforts
      to enhance the business of the Bank and its affiliates, and to provide
      certain supplemental retirement benefits to such employees.

(b)   The Plan, in relevant part, is intended to constitute an unfunded "excess
      benefit plan" as defined in Section 3(36) of the Employee Retirement
      Income Security Act of 1974, as amended. In this respect, the Plan is
      specifically designed to provide certain key employees with retirement
      benefits that would have been provided under various tax-qualified
      retirement plans sponsored by the Bank but for the applicable limitations
      placed on benefits and contributions under such plans by various
      provisions of the Internal Revenue Code of 1986, as amended.


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                                   Article II
                                   Definitions

Section 2.01 Definitions.In this Plan, whenever the context so indicates, the
singular or the plural number and the masculine or feminine gender shall be
deemed to include the other, the terms "he," "his," and "him," shall refer to a
Participant or a beneficiary of the Participant, as the case may be, and, except
as otherwise provided, or unless the context otherwise requires, the capitalized
terms shall have the following meanings:

(a) "Affiliate" means any corporation, trade or business, which, at the time of
reference, is together with the Bank, a member of a controlled group of
corporations, a group of trades or businesses (whether or not incorporated)
under common control, or an affiliated service group, as described in Sections
414(b), 414(c), and 414(m) of the Code, respectively, or any other organization
treated as a single employer with the Bank under Section 414(o) of the Code.

(b) "Applicable Limitations" means one or more of the following, as applicable:

      (i)   the maximum limitation on annual benefits payable by a tax-qualified
            defined benefit plan under Section 415(b) of the Code;

      (ii)  the limitations on annual additions to a tax-qualified defined
            contribution plan under Section 415(c) of the Code;

      (iii) the maximum limitation on the annual amount of compensation that
            may, under Section 401(a)(17) of the Code, be taken into account in
            determining contributions to and benefits under tax-qualified plans;
            and

      (iv)  the maximum limitations, under Sections 401(k), 401(m), or 402(g) of
            the Code, on pre-tax contributions that may be made to a qualified
            defined contribution plan.

(c) "Bank" means Security Federal Bank & Trust, and its successors.

(d) "Board of Directors" means the Board of Directors of the Bank.

(e) "Change in Control" means, with respect to the Bank or the Company, an event
of a nature that: (i) would be required to be reported in response to Item 1(a)
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 Holding Company within
the meaning of the Change in Bank Control Act and the Rules and Regulations
promulgated by the Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R.
ss. 303.4(a), with respect to the Bank, and the Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency), with respect to the Holding Company, as in effect on the date of this
Agreement; or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange


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Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of voting securities of the Bank or the
Holding Company representing 20% or more of the Bank's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Bank purchased by the Holding Company and any voting
securities purchased by any employee benefit plan of the Holding Company or its
Subsidiaries, or (B) individuals who constitute the Board on 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-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by a Nominating Committee solely
composed of members which are Incumbent Board members, shall be, for purposes of
this clause (B), considered as though he were a member of the Incumbent Board,
or (C) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Holding Company or a similar
transaction occurs or is effectuated in which the Bank or Holding Company is not
the resulting entity, or (D) a proxy statement has been distributed soliciting
proxies from stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or Bank
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged for
or converted into cash or property or securities not issued by the Bank or the
Holding Company and shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Bank or Holding Company then
outstanding.

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

(g) "Committee" means the person(s) designated by the Board of Directors,
pursuant to Section 9.02 of the Plan, to administer the Plan.

(h) "Common Stock" means the common stock of the Company.

(i) "Company" means Security Financial Bancorp, Inc., and its successors.

(j) "Effective Date" means January 1, 2000.

(k) "Eligible Individual" means any Employee who participates in the ESOP,
Pension Plan or Savings Plan, as the case may be, and whom the Board of
Directors determines is one of a "select group of management or highly
compensated employees," as such phrase is used for purposes of Sections 101,
201, and 301 of ERISA.

(l) "Employee" means any person employed by the Bank or an Affiliate.

(m) "Employer" means the Bank or Affiliate that employs the Employee.

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


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(o) "ESOP" means the Security Federal Bank & Trust Employee Stock Ownership
Plan, as amended from time to time.

(p) "ESOP Acquisition Loan" means a loan or other extension of credit incurred
by the trustee of the ESOP in connection with the purchase of Common Stock on
behalf of the ESOP.

(q) "ESOP Valuation Date" means any day as of which the investment experience of
the trust fund of the ESOP is determined and individuals' accounts under the
ESOP are adjusted accordingly.

(r) "Participant" means an Eligible Individual who is entitled to benefits under
the Plan.

(s) "Pension Plan" means the Security Federal Bank, a Federal Savings Bank
Pension Plan in the Financial Institutions Retirement Fund, as amended from time
to time.

(t) "Plan" means this Security Federal Bank & Trust Supplemental Executive
Retirement Plan.

(u) "Savings Plan" means the Security Federal Bank, a Federal Savings Bank
401(k) Plan, as amended from time to time.

(v) "Supplemental ESOP Account" means an account established by an Employer,
pursuant to Section 5.01 of the Plan, with respect to a Participant's
Supplemental ESOP Benefit.

(w) "Supplemental ESOP Benefit" means the benefit credited to a Participant
pursuant to Section 4.01 of the Plan.

(x) "Supplemental Pension Benefit" means the benefit earned by a Participant
pursuant to Section 4.03 of the Plan.

(y) "Supplemental Savings Account" means an account established by an Employer,
pursuant to Section 5.03 of the Plan, with respect to a Participant's Supplement
Savings Benefit.

(z) "Supplemental Savings Benefit" means the benefit credited to a Participant
pursuant to Section 4.04 of the Plan.

(aa) "Supplemental Stock Ownership Account" means an account established by an
Employer, pursuant to Section 5.02 of the Plan, with respect to a Participant's
Supplemental Stock Ownership Benefit.

(bb) "Supplemental Stock Ownership Benefit" means the benefit credited to a
Participant pursuant to Section 4.02 of the Plan.


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                                   Article III
                          Eligibility and Participation

Section 3.01 Eligibility and Participation.

(a)   Each Eligible Individual may participate in the Plan. An Eligible
      Individual shall become a Participant in the Plan upon designation as such
      by the Board of Directors. An Eligible Individual whom the Board of
      Directors designates as a Participant in the Plan shall commence
      participation as of the date established by the Board of Directors. The
      Board of Directors shall establish an Eligible Individual's date of
      participation at the same time it designates the Eligible Individual as a
      Participant in the Plan.

(b)   The Board of Directors may, at any time, designate an Eligible Individual
      as a Participant for any or all supplemental benefits provided for under
      Article IV of the Plan.


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                                  Article IV
                                   Benefits

Section 4.01 Supplemental ESOP Benefit.

As of the last day of each plan year of the ESOP, the Employer shall credit the
Participant's Supplemental ESOP Account with a Supplemental ESOP Benefit equal
to the excess of (a) over (b), where:

(a)   Equals the annual contributions made by the Employer and/or the number of
      shares of Common Stock released for allocation in connection with the
      repayment of an ESOP Acquisition Loan that would otherwise be allocated to
      the accounts of the Participant under the ESOP for the applicable plan
      year if the provisions of the ESOP were administered without regard to any
      of the Applicable Limitations; and

(b)   Equals the annual contributions made by the Employer and/or the number of
      shares of common stock released for allocation in connection with the
      repayment of an ESOP Acquisition Loan that are actually allocated to the
      accounts of the Participant under the provisions of the ESOP for that
      particular plan year after giving effect to any reduction of such
      allocation required by the limitations imposed by any of the Applicable
      Limitations.

Section 4.02 Supplemental Stock Ownership Benefit.

(a)   Upon a Change in Control, the Employer shall credit to the Participant's
      Supplemental Stock Ownership Account a Supplemental Stock Ownership
      Benefit equal to (i) less (ii), the result of which is multiplied by
      (iii), where:

      (i)   Equals the total number of shares of Common Stock acquired with the
            proceeds of all ESOP Acquisition Loans (together with any dividends,
            cash proceeds, or other medium related to such ESOP Acquisition
            Loans) that would have been allocated or credited for the benefit of
            the Participant under the ESOP and/or this Plan, as the case may be,
            had the Participant continued in the employ of the Employer through
            the first ESOP Valuation Date following the last scheduled payment
            of principal and interest on all ESOP Acquisition Loans outstanding
            at the time of the Change in Control; and

      (ii)  Equals the total number of shares of Common Stock acquired with the
            proceeds of all ESOP Acquisition Loans (together with any dividends,
            cash proceeds, or other medium related to such ESOP acquisition
            Loans) and allocated for the benefit of the Participant under the
            ESOP and/or this Plan, as the case may be, as of the first ESOP
            Valuation Date following the Change in Control; and

      (iii) Equals the fair market value of Common Stock immediately preceding
            the Change in Control.


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(b)   For purposes of clause: (i) of subsection (a) of this Section 4.02, the
      total number of shares of Common Stock shall be determined by multiplying
      the sum of (i) and (ii) by (iii), where:

      (i)   equals the average of the total shares of Common Stock acquired with
            the proceeds of an ESOP Acquisition Loan and allocated for the
            benefit of the Participant under the ESOP as of the three most
            recent ESOP Valuation Dates preceding the Change in Control (or
            lesser number if the Participant has not participated in the ESOP
            for three full years);

      (ii)  equals the average number of shares of Common Stock credited to the
            Participant's Supplemental ESOP Account for the three most recent
            plan years of the ESOP (such that the three most recent plan years
            coincide with the three most recent ESOP Valuation Dates referred to
            in (i) above); and

      (iii) equals the original number of scheduled annual payments on the ESOP
            Acquisition Loans.

Section 4.03 Supplemental Pension Benefit.

A Participant or, in the event of his death, his beneficiary, whose retirement
or survivor benefits under the Pension Plan are limited by one or more of the
Applicable Limitations, shall be entitled to a supplemental retirement benefit
or survivor benefit (Supplemental Pension Benefit) under this Plan in an amount
equal to the excess of:

      (i)   the benefit to which he would be entitled under the Pension Plan in
            the absence of the Applicable Limitations, computed as of the day
            the Participant separates from service with the Employer on the
            basis of the benefit form elected under the Pension Plan; over

      (ii)  the actual benefit to which he is entitled under the Pension Plan,
            computed as of the day the Participant separates from service with
            the Employer on the basis of the benefit form elected under the
            Pension Plan;

provided, however, that, if the Plan is frozen or terminated with respect to a
Participant prior to his separation from service with the Employer, such
Supplemental Pension Benefit shall not exceed the Supplemental Pension Benefit
that would have been payable under this Section 4.03, on the basis of the
benefit form elected under the Pension Plan, if his separation from service had
occurred as of the date of the termination of the Plan.

Section 4.04 Supplemental Savings Benefit.

A Participant's Supplemental Savings Benefit under the Plan shall be equal to
the excess of (a) over (b), where:


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(a)   is the sum of the matching contributions and other contributions of the
      Employer that would otherwise be allocated to an account of the
      Participant under the Savings Plan for a particular year if the provisions
      of the Savings Plan were administered without regard to any of the
      Applicable Limitations; and

(b)   is the sum of the matching contributions and other contributions of the
      Employer that are actually allocated on account of the Participant under
      the provisions of the Savings Plan for that particular year after giving
      effect to any reduction of such allocation required by any of the
      Applicable Limitations.


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                                    Article V
                                    Accounts

Section 5.01 Supplemental ESOP Benefit Account.

For each Participant who is credited with a benefit pursuant to Section 4.01 of
the Plan, the Employer shall establish, as a memorandum account on its books, a
Supplemental ESOP Account. Each year, the Committee shall credit to the
Participant's Supplemental ESOP Account the amount of benefits determined under
Section 4.01 of the Plan for that year. The Committee shall credit the account
with an amount equal to the appropriate number of shares of Common Stock or
other medium of contribution that would have otherwise been made to the
Participant's accounts under the ESOP but for the limitations imposed by the
Code. Shares of Common Stock shall be valued under this Plan in the same manner
as under the ESOP. Cash contributions credited to a Participant's Supplemental
ESOP Account shall be credited annually with interest at a rate equal to the
combined weighted return provided to the Participant's non-stock accounts under
the ESOP.

Section 5.02 Supplemental Stock Ownership Account.

The Employer shall establish, as a memorandum account on its books, a
Supplemental Stock Ownership Account. Upon a Change in Control, the Committee
shall credit to the Participant's Supplemental Stock Ownership Account the
amount of benefits determined under Section 4.02 of the Plan. The Committee
shall credit the account with an amount equal to the appropriate number of
shares of Common Stock or other medium of contribution that would have otherwise
been made to the Participant's accounts under the ESOP. Shares of Common Stock
shall be valued under this Plan in the same manner as under the ESOP. Cash
contributions credited to a Participant's Supplemental Stock Ownership Account
shall be credited annually with interest at a rate equal to the combined
weighted return provided to the Participant's non-stock accounts under the ESOP.

Section 5.03 Supplemental Savings Account.

The Employer shall establish a memorandum account, the "Supplemental Savings
Account" for each Participant on its books, and each year the Committee will
credit the amount of contributions determined under Section 4.04 of the Plan.
Contributions credited to a Participant's Supplemental Savings Account shall be
credited monthly with interest at a rate equal to the combined weighted return
provided to the Participant's account(s) under the Savings Plan.


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                                   Article VI
                          Supplemental Benefit Payments

Section 6.01 Payment of Supplemental ESOP Benefit.

(a)   A Participant's Supplemental ESOP Benefit shall be paid to the Participant
      or in the event of the Participant's death, to his beneficiary, in the
      same form, time and medium (i.e., cash and/or shares of Common Stock) as
      his benefits are paid under the ESOP.

(b)   A Participant shall have a non-forfeitable right to the Supplemental ESOP
      Benefit credited to him under this Plan in the same percentage as he has
      to benefits allocated to him under the ESOP at the time the benefits
      become distributable to him under the ESOP.

Section 6.02 Payment of Supplemental Stock Ownership Benefit.

(a)   A Participant's Supplemental Stock Ownership Benefit shall be paid to the
      Participant or in the event of the Participant's death, to his
      beneficiary, in the same form, time and medium (i.e., cash and/or shares
      of Common Stock) as his benefits are paid under the ESOP.

(b)   A Participant shall always have a fully non-forfeitable right to the
      Supplemental Stock Ownership Benefit credited to him under this Plan.

Section 6.03 Payment of Supplemental Pension Benefit.

(a)   A Participant's Supplemental Pension Benefit shall be paid to the
      Participant or in the event of the Participant's death, to his
      beneficiary, in the same form, and at the same time as his benefits are
      paid under the Pension Plan.

(b)   A Participant shall have a non-forfeitable right to his Supplemental
      Pension Benefit under this Plan in the same percentage as he has to his
      accrued benefits under the Pension Plan at the time the benefits become
      distributable to him under the Pension Plan.

Section 6.04 Payment of Supplemental Savings Benefit.

(a)   A Participant's Supplemental Savings Benefit shall be paid to the
      Participant or in the event of the Participant's death, to his
      beneficiary, in the same form, and at the same time as his benefits are
      paid under the Savings Plan.

(b)   A Participant shall have a non-forfeitable right to his Supplemental
      Savings Benefit under this Plan in the same percentage as he has to his
      matching contributions under the Savings Plan at the time the benefits
      become distributable to him under the Savings Plan.


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Section 6.05 Alternative Payment of Benefits.

Notwithstanding the other provisions of this Article VI, a Participant may, with
prior written consent of the Committee and upon such terms and conditions as the
Committee may impose, request that the Supplemental ESOP Benefit and/or
Supplemental Stock Ownership Benefit and/or the Supplemental Pension Benefit
and/or Supplemental Savings Benefit to which he is entitled, and the survivor
benefit to which his beneficiary under the Pension Plan may be entitled under
Section 4.03 be paid commencing at a different time, over a different period, in
a different form, or to different persons, than the benefit to which he or his
beneficiary may be entitled under the ESOP, Savings Plan or the Pension Plan;
provided, however, that in the event of any difference with respect to his
Supplemental Pension Benefit, the benefit actually paid under this Section 6.05
shall be the actuarial equivalent (as determined based on applicable tables,
factors, and assumptions set forth in the Pension Plan) of the benefit that
would be paid in accordance with the provisions of Section 6.03 of the Plan.


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                                   Article VII
                                Claims Procedures

Section 7.01 Claims Reviewer.

For purposes of handling claims with respect to this Plan, the "Claims Reviewer"
shall be the Committee, unless the Committee designates another person or group
of persons as Claims Reviewer.

Section 7.02 Claims Procedure.

(a)   An initial claim for benefits under the Plan must be made by the
      Participant or his or her beneficiary or beneficiaries in accordance with
      the terms of this Section 7.02.

(b)   Not later than ninety (90) days after receipt of such a claim, the Claims
      Reviewer will render a written decision on the claim to the claimant,
      unless special circumstances require the extension of such 90-day period.
      If such extension is necessary, the Claims Reviewer shall provide the
      Participant or the Participant's beneficiary or beneficiaries with written
      notification of such extension before the expiration of the initial 90-day
      period. Such notice shall specify the reason or reasons for the extension
      and the date by which a final decision can be expected. In no event shall
      such extension exceed a period of ninety (90) days from the end of the
      initial 90-day period.

(c)   In the event the Claims Reviewer denies the claim of a Participant or any
      beneficiary in whole or in part, the Claims Reviewer's written
      notification shall specify, in a manner calculated to be understood by the
      claimant, the reason for the denial; a reference to the Plan or other
      document or form that is the basis for the denial; a description of any
      additional material or information necessary for the claimant to perfect
      the claim; an explanation as to why such information or material is
      necessary; and an explanation of the applicable claims procedure.

(d)   Should the claim be denied in whole or in part and should the claimant be
      dissatisfied with the Claims Reviewer's disposition of the claimant's
      claim, the claimant may have a full and fair review of the claim by the
      Committee upon written request submitted by the claimant or the claimant's
      duly authorized representative and received by the Committee within sixty
      (60) days after the claimant receives written notification that the
      claimant's claim has been denied. In connection with such review, the
      claimant or the claimant's duly authorized representative shall be
      entitled to review pertinent documents and submit the claimant's views as
      to the issues, in writing. The Committee shall act to deny or accept the
      claim within sixty (60) days after receipt of the claimant's written
      request for review unless special circumstances require the extension of
      such 60-day period. If such extension is necessary, the Committee shall
      provide the claimant with written notification of such extension before
      the expiration of such initial 60-day period. In all events, the Committee
      shall act to deny or accept the claim within 120 days of the receipt of
      the claimant's written request for review. The action of the Committee
      shall be in the form of a written notice to the claimant and its contents
      shall include all of the requirements for action on the original claim.

(e)   In no event may a claimant commence legal action for benefits the claimant
      believes are due the claimant until the claimant has exhausted all of the
      remedies and procedures afforded the claimant by this Article VII.


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                                  Article VIII
                            Amendment and Termination

Section 8.01 Amendment of the Plan.

The Bank may from time to time and at any time amend the Plan; provided,
however, that such amendment may not adversely affect the rights of any
Participant or beneficiary with respect to any benefit under the Plan to which
the Participant or beneficiary may have previously become entitled prior to the
effective date of such amendment without the consent of the Participant or
beneficiary. The Committee shall be authorized to make minor or administrative
changes to the Plan, as well as amendments required by applicable federal or
state law (or authorized or made desirable by such statutes); provided, however,
that such amendments must subsequently be ratified by the Board of Directors.

Section 8.02 Termination of the Plan.

The Bank may at any time terminate the Plan; provided, however, that such
termination may not adversely affect the rights of any Participant or
beneficiary with respect to any benefit under the Plan to which the Participant
or beneficiary may have previously become entitled prior to the effective date
of such termination without the consent of the Participant or beneficiary. Any
amounts credited to the supplemental accounts of any Participant shall remain
subject to the provisions of the Plan and no distribution of benefits shall be
accelerated because of termination of the Plan.


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                                   Article IX
                               General Provisions

Section 9.01 Unfunded, Unsecured Promise to Make Payments in the Future.

The right of a Participant or any beneficiary to receive a distribution under
this Plan shall be an unsecured claim against the general assets of the Bank or
its Affiliates and neither a Participant nor his designated beneficiary or
beneficiaries shall have any rights in or against any amount credited to any
account under this Plan or any other assets of the Bank or an Affiliate. The
Plan at all times shall be considered entirely unfunded both for tax purposes
and for purposes of Title I of ERISA. Any funds invested hereunder shall
continue for all purposes to be part of the general assets of the Bank or an
Affiliate and available to its general creditors in the event of bankruptcy or
insolvency. Accounts under this Plan and any benefits which may be payable
pursuant to this Plan are not subject in any manner to anticipation, sale,
alienation, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of a Participant or a Participant's beneficiary. The
Plan constitutes a mere promise by the Bank or Affiliate to make benefit
payments in the future. No interest or right to receive a benefit may be taken,
either voluntarily or involuntarily, for the satisfaction of the debts of, or
other obligations or claims against, such Participant or beneficiary, including
claims for alimony, support, separate maintenance and claims in bankruptcy
proceedings.

Section 9.02 Committee as Plan Administrator.

(a)   The Plan shall be administered by the Committee designated by the Board of
      Directors.

(b)   The Committee shall have the authority, duty and power to interpret and
      construe the provisions of the Plan as it deems appropriate. The Committee
      shall have the duty and responsibility of maintaining records, making the
      requisite calculations and disbursing the payments hereunder. In addition,
      the Committee shall have the authority and power to delegate any of its
      administrative duties to employees of the Bank or Affiliate, as they may
      deem appropriate. The Committee shall be entitled to rely on all tables,
      valuations, certificates, opinions, data and reports furnished by any
      actuary, accountant, controller, counsel or other person employed or
      retained by the Bank with respect to the Plan. The interpretations,
      determinations, regulations and calculations of the Committee shall be
      final and binding on all persons and parties concerned.

Section 9.03 Expenses.

Expenses of administration of the Plan shall be paid by the Bank or an
Affiliate.

Section 9.04 Statements.

The Committee shall furnish individual annual statements of accrued benefits to
each Participant, or current beneficiary, in such form as determined by the
Committee or as required by law.


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Section 9.05 Rights of Participants and Beneficiaries.

(a)   The sole rights of a Participant or beneficiary under this Plan shall be
      to have this Plan administered according to its provisions, to receive
      whatever benefits he or she may be entitled to hereunder.

(b)   Nothing in the Plan shall be interpreted as a guaranty that any funds in
      any trust which may be established in connection with the Plan or assets
      of the Bank or an Affiliate will be sufficient to pay any benefit
      hereunder.

(c)   The adoption and maintenance of this Plan shall not be construed as
      creating any contract of employment or service between the Bank or an
      Affiliate and any Participant or other individual. The Plan shall not
      affect the right of the Bank or an Affiliate to deal with any Participants
      in employment or service respects, including their hiring, discharge,
      compensation, and conditions of employment or other service.

Section 9.06 Incompetent Individuals.

The Committee may from time to time establish rules and procedures which it
determines to be necessary for the proper administration of the Plan and the
benefits payable to a Participant or beneficiary in the event that such
Participant or beneficiary is declared incompetent and a conservator or other
person legally charged with that Participant's or beneficiary's care is
appointed. Except as otherwise provided herein, when the Committee determines
that such Participant or beneficiary is unable to manage his or her financial
affairs, the Committee may pay such Participant's or beneficiary's benefits to
such conservator, person legally charged with such Participant's or
beneficiary's care, or institution then contributing toward or providing for the
care and maintenance of such Participant or beneficiary. Any such payment shall
constitute a complete discharge of any liability of the Bank or an Affiliate and
the Plan for such Participant or beneficiary.

Section 9.07 Sale, Merger, or Consolidation of the Bank.

The Plan may be continued after a sale of assets of the Bank, or a merger or
consolidation of the Bank into or with another corporation or entity only if and
to the extent that the transferee, purchaser or successor entity agrees to
continue the Plan. Additionally, upon a merger, consolidation or other change in
control any amounts credited to a Participant's deferral accounts shall be
placed in a grantor trust to the extent not already in such a trust. In the
event that the Plan is not continued by the transferee, purchaser or successor
entity, then the Plan shall be terminated subject to the provisions of Section
8.02 of the Plan. Any legal fees incurred by a Participant in determining
benefits to which such Participant is entitled under the Plan following a sale,
merger, or consolidation of the Bank or an Affiliate of which the Participant is
an Employee or, if applicable, a member of the Board of Directors, shall be paid
by the resulting or succeeding entity.


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Section 9.08 Location of Participants.

Each Participant shall keep the Bank informed of his or her current address and
the current address of his or her designated beneficiary or beneficiaries. The
Bank shall not be obligated to search for any person. If such person is not
located within three (3) years after the date on which payment of the
Participant's benefits payable under this Plan may first be made, payment may be
made as though the Participant or his or her beneficiary had died at the end of
such three-year period.

Section 9.09 Liability of the Bank and its Affiliates.

Notwithstanding any provision herein to the contrary, neither the Bank nor any
individual acting as an employee or agent of the Bank shall be liable to any
Participant, former Participant, beneficiary, or any other person for any claim,
loss, liability or expense incurred in connection with the Plan, unless
attributable to fraud or willful misconduct on the part of the Bank or any such
employee or agent of the Bank.

Section 9.10 Governing Law.

All questions pertaining to the construction, validity and effect of the Plan
shall be determined in accordance with the laws of the United States and to the
extent not preempted by such laws, by the laws of Indiana.


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<PAGE>

                                    Article X
                         Required Regulatory Provisions

Section 10.01 Required Regulatory Provisions.

      (a) The Employer may terminate an Employee's employment at any time, but
any termination by the Employer, other than termination for cause, shall not
prejudice the Employee's right to compensation or other benefits under this
Plan. An Employee shall not have the right to receive compensation or other
benefits for any period after a termination for cause as otherwise provided
hereunder.

      (b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
ss.1818(e)(3) or (g)(1), the Bank's obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion (i)
pay the Employee all or part of the compensation withheld while their contract
obligations were suspended and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.

      (c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all obligations of the Bank under this Plan shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.

      (d) If the Bank is in default as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. ss.1813(x)(1) all obligations of the Bank under
this Plan shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the Participants.

      (e) Any payments made to Participants pursuant to this Plan, or otherwise,
are subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k),
12 C.F.R. Part 359 and 12 C.F.R. Section 545.121 and any rules and regulations
promulgated thereunder.

Having been adopted by its Board of Directors on September 9, 1999, this Plan is
executed by its duly authorized officer this August 21, 2000.

                                        SECURITY FEDERAL BANK & TRUST
Attest:

/s/ EDWINA GOLEC                        By:  /s/ JOHN P. HYLAND
-----------------------------------        -----------------------------------
EDWINA GOLEC, SECRETARY                    For the Entire Board of Directors
                                           JOHN P. HYLAND


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