SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934

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Security Financial Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)

Security Financial Bancorp, Inc.
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(Name of Person(s) Filing Proxy Statement)

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[SECURITY FINANCIAL BANCORP, INC. LETTERHEAD]

October 17, 2001

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of
Security Financial Bancorp, Inc. The meeting will be held at Security
Financial's main office located at 9321 Wicker Avenue, St. John, Indiana on
Tuesday, October 23, 2001 at 8:30 a.m., local time.

AT THE OCTOBER 23, 2001 MEETING, NO SUBSTANTIVE BUSINESS SHALL BE
CONDUCTED. INSTEAD, THE ONLY ACTION TO BE TAKEN AT THE MEETING WILL BE TO
ADJOURN THE MEETING TO NOVEMBER 13, 2001 AT 8:30 A.M., LOCAL TIME, AT THE
OFFICES OF SECURITY FINANCIAL, 9321 WICKER AVENUE, ST. JOHN, INDIANA, WHICH WILL
PROVIDE US MORE TIME TO COLLECT PROXY CARDS FROM STOCKHOLDERS. THE ENCLOSED
PROXY CARD MAY BE USED FOR VOTING AT THE NOVEMBER 13, 2001 MEETING. WE WILL
CONTINUE TO TABULATE PROXIES RECEIVED UNTIL THE POLLS ARE CLOSED AT THE NOVEMBER
13, 2001 MEETING.

The notice of annual meeting and proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the Company.
Directors and officers of the Company, as well as a representative of Crowe,
Chizek and Company LLP, the Company's independent auditors, will be present to
respond to appropriate questions of stockholders.

At this year's annual meeting, you will be asked to elect three directors,
ratify the appointment of Crowe, Chizek and Company LLP as independent auditors
for the Company's fiscal year ending June 30, 2002, and consider a shareholder
proposal, if presented by its proponent. YOUR BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE "FOR" EACH OF THE NOMINEES FOR DIRECTORS NOMINATED BY THE BOARD OF
DIRECTORS, "FOR" RATIFICATION OF CROWE, CHIZEK AND COMPANY LLP AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 2002, AND "AGAINST"
THE SHAREHOLDER PROPOSAL. ACCORDINGLY, PLEASE GIVE CAREFUL ATTENTION TO THESE
PROXY MATERIALS.

It is important that your shares are represented and voted at this
meeting, whether or not you attend the meeting in person and regardless of the
number of shares you own. To make sure your shares are represented, we urge you
to complete and mail the enclosed WHITE proxy card. If you attend the meeting,
you may vote in person even if you have previously mailed a proxy card.

We look forward to seeing you at the meeting.

Sincerely,

/s/ John P. Hyland

John P. Hyland
PRESIDENT AND CHIEF EXECUTIVE OFFICER

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IF YOU HAVE ANY QUESTIONS OR NEED FURTHER ASSISTANCE IN VOTING YOUR SHARES,
PLEASE CALL:
GEORGESON
SHAREHOLDER
COMMUNICATIONS INC.

17 STATE STREET, 10TH FLOOR
NEW YORK, NY 10004
CALL TOLL FREE (800) 223-2064
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SECURITY FINANCIAL BANCORP, INC.
9321 WICKER AVENUE
ST. JOHN, INDIANA 46373
(219) 365-4344

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

On Tuesday, October 23, 2001, Security Financial Bancorp, Inc. will hold
its annual meeting of stockholders at Security Financial's main office located
at 9321 Wicker Avenue, St. John, Indiana at 8:30 a.m., local time. AT THE
OCTOBER 23, 2001 MEETING, NO SUBSTANTIVE BUSINESS SHALL BE CONDUCTED. INSTEAD,
THE ONLY ACTION TO BE TAKEN AT THE MEETING WILL BE TO ADJOURN THE MEETING TO
NOVEMBER 13, 2001 AT 8:30 A.M., LOCAL TIME, AT THE OFFICES OF SECURITY
FINANCIAL, 9321 WICKER AVENUE, ST. JOHN, INDIANA, WHICH WILL PROVIDE US MORE
TIME TO COLLECT PROXY CARDS FROM STOCKHOLDERS. THE ENCLOSED PROXY CARD MAY BE
USED FOR VOTING AT THE NOVEMBER 13, 2001 MEETING. WE WILL CONTINUE TO TABULATE
PROXIES RECEIVED UNTIL THE POLLS ARE CLOSED AT THE NOVEMBER 13, 2001 MEETING.

At the meeting, stockholders will consider and act on the following:

1. The election of three directors to serve for a term of three years;

2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent auditors for the Company for the fiscal year ending
June 30, 2002;

3. The shareholder proposal, if presented at the meeting; and

4. Any other business that may properly come before the meeting.

NOTE: The Board of Directors is not aware of any other business to come
before the meeting.

Only shareholders of record at the close of business on September 14, 2001
are entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.

Please complete and sign the enclosed form of WHITE proxy, which is
solicited by the Board of Directors, and mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Lawrence R. Parducci

Lawrence R. Parducci
Corporate Secretary

St. John, Indiana
October 17, 2001

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.

SECURITY FINANCIAL BANCORP, INC.
PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Security Financial Bancorp, Inc. ("Security
Financial" or the "Company") to be used at the annual meeting of shareholders of
the Company. The annual meeting will be held at Security Financial's main office
located at 9321 Wicker Avenue, St. John, Indiana on Tuesday, October 23, 2001 at
8:30 a.m., local time. This proxy statement and the enclosed WHITE proxy card
are being first mailed to shareholders on or about October 17, 2001.

VOTING AND PROXY PROCEDURE

WHO CAN VOTE AT THE MEETING

You are entitled to vote your Security Financial common stock only if the
records of the Company show that you held your shares as of the close of
business on September 14, 2001. As of the close of business on September 14,
2001, a total of 1,935,460 shares of Security Financial common stock were
outstanding. Each share of common stock has one vote. The Company's Certificate
of Incorporation provides that record holders of the Company's common stock who
beneficially own, either directly or indirectly, in excess of 10% of the
Company's outstanding shares are not entitled to any vote in respect of the
shares held in excess of the 10% limit.

VOTE REQUIRED

The annual meeting will be held if a majority of the outstanding shares of
common stock entitled to vote is represented at the meeting. If you return valid
proxy instructions or attend the meeting in person, your shares will be counted
for purposes of determining whether there is a quorum, even if you abstain from
voting. Broker non-votes also will be counted for purposes for determining the
existence of a quorum. A broker non-vote occurs when a broker, bank or other
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received voting instructions from the
beneficial owner.

In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the ratification of the appointment of Crowe,
Chizek and Company LLP as independent auditors and the shareholder proposal, if
presented at the meeting, you may vote in favor of the proposal, vote against
the proposal or abstain from voting. The ratification of Crowe, Chizek and
Company LLP as independent auditors and the shareholder proposal, if presented
at the meeting will be decided by the affirmative vote of a majority of the
votes cast at the annual meeting. On these matters, abstentions and broker
non-votes will have no effect on the voting. In the event the shareholder
proposal is approved and the Board determines it is in the best interest of
shareholders and the Company to amend the Company's Certificate of Incorporation
in any manner, any such amendment would have to be approved by stockholders at
another stockholder meeting.

VOTING BY PROXY

The Board of Directors of Security Financial is sending you this proxy
statement for the purpose of requesting that you allow your shares of Security
Financial common stock to be represented at the annual meeting by the persons
named in the enclosed proxy card. All shares of Security Financial common stock
represented at the annual meeting by properly executed and dated proxies will be
voted according to the instructions indicated on the proxy card. If you sign,
date and return a WHITE proxy card without giving voting instructions, your
shares will be voted as recommended by the Company's Board of Directors. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR DIRECTOR,
"FOR" RATIFICATION OF CROWE, CHIZEK AND COMPANY LLP AS INDEPENDENT AUDITORS AND
"AGAINST" THE SHAREHOLDER PROPOSAL IF PRESENTED AT THE ANNUAL MEETING.

If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own best judgment to determine how to vote your shares. This includes a
motion to adjourn or postpone the annual meeting in order to solicit additional
proxies. If the annual meeting is postponed or adjourned, your Security
Financial common stock may be voted by the persons named in the proxy card on
the new annual meeting date as well, unless you have revoked your proxy. The
Company does not know of any other matters to be presented at the annual
meeting.

You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your Company common stock has been voted at the annual
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the annual meeting will not in itself constitute
revocation of your proxy.

If your Security Financial common stock is held "in street name," you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker, bank or other nominee
may allow you to deliver your voting instructions via the telephone or the
Internet. Please see the instruction form provided by your broker, bank or other
nominee that accompanies this proxy statement.

IF YOU HAVE ANY QUESTIONS ABOUT VOTING, PLEASE CONTACT OUR PROXY
SOLICITOR, GEORGESON SHAREHOLDER COMMUNICATIONS, INC., AT (800) 223-2064.

PARTICIPANTS IN THE SECURITY FEDERAL BANK & TRUST ESOP AND 401(K) PLAN

If you participate in the Security Federal Bank & Trust ("Security
Federal") Employee Stock Ownership Plan (the "ESOP") or if you hold shares of
Security Financial common stock through Security Federal's 401(k) Plan, you will
receive a vote instruction form for each plan that reflects all shares you may
vote under the plans. Under the terms of the ESOP, all shares held by the ESOP
are voted by the ESOP trustee, but each participant in the ESOP may direct the
trustee how to vote the shares of Company common stock allocated to his or her
account. Unallocated shares of common stock held by the ESOP and allocated
shares for which no timely voting instructions are received will be voted by the
ESOP trustee in the same proportion as shares for which the trustee has received
timely voting instructions. Under the terms of the 401(k) Plan, a participant
may direct the trustee of the Security Financial Bancorp, Inc. Stock Fund how to
vote shares credited to his or her account. The trustee will vote all shares for
which no directions are given or for which timely instructions were not received
in the

same proportion as shares for which the trustee received timely voting
instructions. The deadline for returning your voting instructions to each of the
plan's trustees is November 6, 2001.

STOCK OWNERSHIP

The following table provides information as of September 14, 2001 with
respect to persons known to Security Financial to be the beneficial owners of
more than 5% of the Company's outstanding common stock. A person may be
considered to beneficially own any shares of common stock over which he or she
has, directly or indirectly, sole or shared voting or investing power.

PERCENT OF
NUMBER OF COMMON STOCK
NAME AND ADDRESS SHARES OWNED OUTSTANDING
------------------ --------------- -------------

Paul J. Duggan 186,000(1) 9.6%
53 West Jackson Boulevard
Suite 400
Chicago, Illinois 60604

John Wm. Palmer 168,000(2) 8.7%
Richard J. Lashley
PL Capital, LLC
20 East Jefferson Avenue
Suite 22
Naperville, Illinois 60540

Security Federal Bank & Trust 155,076(3) 8.0%
Employee Stock Ownership Plan
9321 Wicker Avenue
St. John, Indiana 46373

David M. W. Harvey 115,000(4) 5.9%
P.O. Box 3178
Gardnerville, Nevada 89410
-----------------------------
(1) Paul J. Duggan, Jackson Boulevard Capital Management, Ltd., Jackson
Boulevard Equities, L.P., Jackson Boulevard Investments, L.P., Jackson
Offshore Fund, Ltd. and Jackson Boulevard Partners are deemed to be
beneficial owners of 186,000, 105,200, 58,500, 26,800, 19,900 and 80,300 of
these shares, respectively. Based on information in a Schedule 13D,
Amendment No. 3, filed jointly on September 12, 2001 with the Securities
and Exchange Commission.
(2) Financial Edge Fund. L.P., Financial Edge - Strategic Fund, L.P., PL
Capital, LLC, John Wm. Palmer and Richard J. Lashley are deemed to be
beneficial owners of 166,900, 166,900, 166,900, 168,000 and 167,900 of
these shares, respectively. Based on information in a Schedule 13D,
Amendment No. 4, filed jointly on September 5, 2001 with the Securities and
Exchange Commission.
(3) As of September 14, 2001, 10,338 shares had been allocated under the ESOP
to participants' accounts. See voting "VOTING AND PROXY PROCEDURES -
PARTICIPANTS IN SECURITY FEDERAL BANK & TRUST ESOP AND 401(K) PLAN" for a
discussion of the ESOP's voting procedures.
(4) Everest Partners Limited Partnership (d.b.a. Everest Partners, L.P.),
Everest Managers, L.L.C. and David M. W. Harvey are deemed to be beneficial
owners of 115,000, 115,000 and 115,000 of these shares, respectively. Based
on information in a Schedule 13D, Amendment No. 1, filed jointly on
November 27, 2000 with the Securities and Exchange Commission.

The following table provides information about the shares of Company
common stock that may be considered to be beneficially owned as of September 14,
2001 by each nominee for director nominated by the Board of Directors and by all
directors and executive officers of the Company as a group. A person may be
considered to beneficially own any shares of common stock over which he or she
has, directly or indirectly, sole or shared voting or investment power. Unless
otherwise indicated, each of the named individuals has sole voting power and
sole investment power with respect to the number of shares shown.

NUMBER OF
SHARES OWNED PERCENT OF COMMON
NAME (EXCLUDING OPTIONS) STOCK OUTSTANDING(1)
------------------------ ------------------- ---------------------

Mary Beth Bonaventura 8,763(2) *

Howard O. Cyrus 3,500(3) *

Dr. Peter Ferrini 40,450(4) 2.1%

John P. Hyland 24,536(5) 1.3%

Tula Kavadias 4,700(6) *

Richard J. Lashley 167,900(7) 8.7%

Robert L. Lauer 6,968(8) *

John Wm. Palmer 168,000(7) 8.7%

Lawrence R. Parducci 7,000(9) *

Philip T. Rueth 13,500(10) *

Robert A. Vellutini 12,000(11) *

All directors and executive 317,865(12) 16.4%
officers as a group (17
persons)

--------------------------------------
* Less than 1% of shares outstanding.
(1) Based on 1,935,460 shares of Company common stock outstanding and entitled
to vote as of September 14, 2001.
(2) Includes 3,000 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Ms. Bonaventura as to which she has voting power but not
investment power. Also includes 663 shares owned by Ms. Bonaventura's
spouse's trust.
(3) Includes 2,500 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Cyrus as to which he has voting power but not
investment power.
(4) Includes 3,250 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Ferrini as to which he has voting power but not
investment power.
(5) Includes 19,384 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Hyland as to which he has voting power but not
investment power. Also includes 906 shares allocated to Mr. Hyland under the
ESOP, for which Mr. Hyland has voting power but not investment power.
(6) Includes 2,500 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Ms. Kavadias as to which she has voting power but not
investment power.
(7) Includes unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Messrs. Lashley and Palmer as to which the holder has
voting power but not investment power, as follows: 1,000 shares and 1,000
shares, respectively. Financial Edge Fund. L.P., Financial Edge - Strategic
Fund, L.P., PL Capital, LLC,

John Wm. Palmer and Richard J. Lashley are deemed to be beneficial owners of
166,900, 166,900, 166,900, 168,000 and 167,900 of these shares,
respectively. Based on information in a Schedule 13D, Amendment No. 5, filed
jointly on September 5, 2001 with the Securities and Exchange Commission.
(8) Includes 2,000 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Lauer as to which he has voting power but not
investment power. Also includes 1,400 shares owned by Mr. Lauer's spouse's
trust.
(9) Includes 3,000 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Parducci as to which he has voting power but not
investment power.
(10)Includes 2,500 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Rueth as to which he has voting power but not
investment power. Includes 5,000 shares owned by Mr. Rueth's spouse's trust.
(11)Includes 2,000 unvested shares awarded under the Company's 2001 Stock-Based
Incentive Plan for Mr. Vellutini as to which he has voting power but not
investment power.
(12)For purposes of avoiding double-counting, excludes 166,900 shares
beneficially owned by both Messrs. Palmer and Lashley through Financial Edge
Fund, L.P. and Financial Edge-Strategic Fund, L.P.

PROPOSAL 1 -- ELECTION OF DIRECTORS

The Company's Board of Directors currently consists of eleven members. Ten
directors are independent and one is a member of management. The Board is
divided into three classes with three-year staggered terms, with one-third of
the directors elected each year. The Board of Directors' nominees for election
this year, to serve for a three-year term, or until their respective successors
have been elected and qualified, are Mary Beth Bonaventura, Lawrence R. Parducci
and Robert A. Vellutini, all of whom are currently directors of Security
Financial and Security Federal.

The Board of Directors intends that the proxies solicited by it will be
voted for the election of the nominees named above. If any nominee is unable to
serve, the persons named in the proxy card would vote your shares to approve the
election of any substitute proposed by the Board of Directors. Alternatively,
the Board of Directors may adopt a resolution to reduce the size of the Board.
At this time, the Board of Directors knows of no reason why any nominee might be
unable to serve.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL OF THE
NOMINEES NOMINATED BY THE BOARD OF DIRECTORS NAMED IN THIS PROXY STATEMENT.

Information regarding the Board of Directors' nominees and the directors
continuing in office is provided below. Unless otherwise stated, each individual
has held his or her current occupation for the last five years. The age
indicated for each individual is as of June 30, 2001. The indicated period of
service as a director includes the period of service as a director of Security
Federal. Directors of the Bank are elected each year at the Bank's annual
meeting, which has traditionally been held in July of each year.

BOARD NOMINEES

MARY BETH BONAVENTURA is a Senior Judge of the Lake Superior Court,
Juvenile Division. Ms. Bonaventura was elected as Chief Judge of the Lake
Superior Courts for the 1997-1998 term. Age 47. Director since 1992.

LAWRENCE R. PARDUCCI is a pharmacist, consultant and pharmacy insurance
solicitor for Fagen Pharmacy, a 20-store pharmacy chain. Age 70. Director since
1988.

ROBERT A. VELLUTINI is a Vice President of Investments for A.G. Edwards &
Sons, Inc., a financial services and brokerage firm. Mr. Vellutini is the first
cousin of Dr. Ferrini. Age 56. Director since 1999.

OTHER NOMINEES

Vincent Cainkar has notified the Company of his intent to nominate Vincent
Cainkar, Sheila Donghue and Jay D. Johnson to stand for election to the Board of
Directors.

DIRECTORS CONTINUING IN OFFICE

THE FOLLOWING DIRECTORS HAVE TERMS ENDING IN 2002:

HOWARD O. CYRUS, SR. is the owner of and real estate broker for Cyrus
Realtors, Inc., a corporation specializing in the sales, leasing, appraisals and
management of commercial/industrial properties. Age 63. Director since 1996.

DR. PETER FERRINI is a retired oral surgeon. Dr. Ferrini is the uncle of
Mr. Lauer and is the first cousin of Mr. Vellutini. Age 77. Director since 1977.

RICHARD J. LASHLEY is an investment manager, primarily as Managing Member
of PL Capital, LLC. Mr. Lashley is also a director of Franklin Bank, N.A.,
Southfield, Michigan and was formerly a director of Haven Bancorp, Inc.,
Westbury, New York. Mr. Lashley is a Certified Public Accountant. Age 43.
Director since 2000.

ROBERT L. LAUER is a Vice President of Investments and Assistant Branch
Manager for A.G. Edwards & Sons, Inc. a financial services and brokerage firm.
Mr. Lauer is the nephew of Dr. Ferrini. Age 46. Director since 1998.

THE FOLLOWING DIRECTORS HAVE TERMS ENDING IN 2003:

JOHN P. HYLAND has served as President and Chief Executive Officer of
Security Financial and Security Federal since September 1999 and October 1998,
respectively. Prior to joining Security Federal, Mr. Hyland served as Director,
President and Chief Executive Officer of Southwest Financial Bank and Trust,
Orland Park, Illinois, and as Director and Vice President for Southwest
Financial Corporation, the holding company for Southwest Financial Bank and
Trust. Age 50. Director since 1999.

TULA KAVADIAS is an attorney admitted to the Bar of the State of Indiana.
Ms. Kavadias is the sole proprietor of the law firm of Tula Kavadias &
Associates. Age 44. Director since 1997.

JOHN WM. PALMER is an investment manager, primarily as Managing Member of
PL Capital, LLC. Mr. Palmer is also a director of Franklin Bank, N.A.,
Southfield, Michigan. Mr. Palmer is a Certified Public Accountant. Age 41.
Director since 2000.

PHILIP T. RUETH is a certified public accountant for Steiber, Rueth & Co.,
a certified public accounting firm. Mr. Rueth is also a registered
representative for Terra Securities Corporation, a broker dealer. Age 55.
Director since 1997.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The business of the Company and Security Federal is conducted through
meetings and activities of their Boards of Directors and their committees.
During the year ended June 30, 2001, the Board of Directors of the Company held
seven meetings and the Board of Directors of Security Federal held twelve
meetings. No director attended fewer than 75% of the total meetings of the
Boards of Directors and committees on which he or she served.

The Audit Committee, consisting of Mary Beth Bonaventura, Tula Kavidias,
Robert Lauer, Philip Rueth and Robert Vellutini, receives and reviews all
reports prepared by the Company's independent auditors. This committee met four
times during the year ended June 30, 2001.

The Compensation Committee of the Company, consisting of Mary Beth
Bonaventura, Howard Cyrus, Robert Lauer and Lawrence Parducci, and the
Compensation Committee of the Bank, consisting of Mary Beth Bonaventura, Tula
Kavidias, Lawrence Parducci and Philip Rueth are responsible for all matters
regarding the Company's and the Bank's employee compensation and benefit
programs. Security Federal's committee met two times during the year ended June
30, 2001.

The Nominating Committee, consisting of Tula Kavadias, Howard Cyrus and
Dr. Peter Ferrini, selects annually the nominees for election as directors. This
committee met on July 30, 2001 to select nominees for election as directors at
this annual meeting. The Company's Bylaws provide for shareholder nominations of
directors. See "SHAREHOLDER PROPOSALS AND NOMINATIONS."

DIRECTORS' COMPENSATION

MEETING FEES. Security Federal pays a fee to each of its directors for
attendance at each board meeting and to each of its non-management directors for
each meeting of a committee of which they are members. The following table sets
forth the meeting fees in effect for the fiscal year ended June 30, 2001:

FEES
------
Regular Board Meetings:
Chairman...................... $2,000
Vice-Chairman................. $1,600
Director...................... $1,000
Committee Meetings............... $250

Security Financial pays each of its directors an annual retainer of $2,500
for service on its Board of Directors.

DIRECTOR'S RETIREMENT PLAN. Security Federal maintains a retirement
program for incumbent nonemployee directors to provide a retirement income
supplement for directors. Current directors who attain the normal retirement age
of 65 have the option upon retirement to receive a benefit of approximately
$1,000 for each year of service payable either a) in a lump sum payment, or b)
in a payment with 50% of such sum being paid upon retirement and the balance
being paid in two equal annual installments for the two years immediately
following retirement. If a director dies while still serving on the Board of
Directors, the director's estate will receive an amount equal to $1,000 for each
year of service payable in a lump sum.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following information is furnished for John P. Hyland. No other
executive officer of Security Financial or Security Federal received salary and
bonus of $100,000 or more during the year ended June 30, 2001.

LONG-TERM COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
------------------------ ----------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS AWARDS OPTIONS COMPENSATION
POSITIONS YEAR ($)(2) ($) ($)(3) (#) ($)(4)
----------------- ----- -------- ------- -------- -------- --------

John P. Hyland 2001 $199,192 $ 7,192 $327,202 48,461 $15,375
President and Chief 2000 191,596 18,365 -- -- --
Executive Officer 1999 134,778 -- -- -- --

---------------------------------
(1) Does not include the aggregate amount of perquisites and other personal
benefits, which was less than $50,000 or 10% of the total annual salary and
bonus reported.
(2) Includes director fees.
(3) Represents the total value of 19,384 shares of restricted stock awarded to
Mr. Hyland on June 26, 2001. The restricted stock vests in equal annual
installments over a five-year period beginning on June 26, 2002. At June 30,
2001, the market value of the unvested restricted stock award was $336,700.
Dividends will be paid on the restricted stock.
(4) For 2001, consists of employer contributions to the ESOP of $15,172 and
employer contributions to the supplemental executive retirement plan of
$203.

OPTION GRANTS IN LAST FISCAL YEAR

The following table lists all grants of options to John Hyland for fiscal
year 2001 and contains certain information about potential value of those
options based upon certain assumptions as to the appreciation of the Company's
stock over the life of the option.

NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) FISCAL YEAR PER SHARE DATE (2)
------- ----------- ------------ ---------- --------- -------------

John P. Hyland............ 48,461 46.84% $16.88 6/26/2011 $332,442

-------------------------
(1) Options become exercisable in five equal annual installments commencing on
June 26, 2002, the first anniversary of the date of grant; provided,
however, options will be immediately exercisable if the optionee dies or
becomes disabled, upon a change in control and, in certain circumstances,
upon retirement.
(2) The estimated fair value of the options granted during the year ended June
30, 2001 have been calculated using the Black-Scholes option pricing model,
based on the following assumptions: estimated time until exercise of seven
years; a risk-free interest rate of 5.28%, representing the interest rate of
the Constant Maturity Treasury Bill index as of June 29, 2001 with a
maturity corresponding to the estimated time until exercise; a volatility
rate of 25.13%; and no dividend yield. The approach used in developing the
assumptions upon which the Black- Scholes valuation was done is consistent
with the requirements of Statement of Financial Accounting Standards

No. 123, "Accounting for Stock-Based Compensation." The actual values of the
options will depend on the future market prices of the Company's common
stock, which cannot be forecast with reasonable accuracy. The actual value,
if any, that an optionee will recognize upon exercise of an option will
depend on the difference between the market value of the common stock on the
date the option is exercised and the applicable exercise price.

FISCAL YEAR-END OPTION VALUES

The following table provides certain information with respect to the
number of shares of Company common stock represented by outstanding options held
by John Hyland as of June 30, 2001. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of the existing stock options and the fiscal year-end stock price.

Number of Securities Underlying Unexercised Value of Unexercised In-the-Money
Options at Fiscal Year-End(#) Options at Fiscal Year-End($)(1)
-----------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----- ------------------ ------------------ --------------- ----------------

John P. Hyland......... -- 48,461 $ -- $23,746

----------------------------
(1) Value of unexercised in-the-money stock options equals the market value of
shares covered by in-the- money options on June 30, 2001, less the option
exercise price. Options are in-the-money if the market value of shares
covered by the options is greater than the exercise price.

EMPLOYMENT AGREEMENTS

EMPLOYMENT AGREEMENTS. Effective January 5, 2000, Security Federal and
Security Financial entered into three-year employment agreements with Mr.
Hyland. The term of the agreement with Security Financial extends on a daily
basis until either the Company or the Executive elects not to extend the term.
The term of the Security Federal employment agreement is renewable on an annual
basis, and most recently was renewed effective July 1, 2001 for a new three-year
term. Under the employment agreements, the current salary level for Mr. Hyland
is $187,000. Mr. Hyland's base salary is renewed on an annual basis. In addition
to base salary, the employments agreements provide for, among other things,
participation in stock and employee benefit plans and fringe benefits applicable
to executive personnel. The agreements are terminable by the employers at any
time or by Mr. Hyland if he is assigned duties inconsistent with his initial
position, duties, responsibilities and status, or upon the occurrence of certain
events specified by applicable regulations. If Mr. Hyland's employment is
terminated without cause or upon his voluntary termination following the
occurrence of an event described in the preceding sentence, Security Federal or
Security Financial would be required to honor the terms of the agreement through
the expiration of the current term, including payment of current cash
compensation and continuation of employee benefits.

The employment agreements also provide for a severance payment and other
benefits in the event of involuntary termination of employment in connection
with any change in control of Security Federal or Security Financial. A
severance payment also will be provided on a similar basis in connection with a
voluntary termination of employment where, after a change in control, Mr. Hyland
is assigned duties inconsistent with his position, duties, responsibilities and
status immediately before such change in control.

Even though both Security Federal and Security Financial employment
agreements provide for a severance payment if a change in control occurs, Mr.
Hyland would only be entitled to receive a

severance payment under one agreement. Mr. Hyland would also be entitled to
receive an additional tax indemnification payment if payments under the
employment agreements or any other payments triggered liability under the
Internal Revenue Code as an excise tax constituting "excess parachute payments."
Under applicable law, the excise tax is triggered by change in control-related
payments which equal or exceed three times Mr. Hyland's average annual
compensation over the five years preceding the change in control. The excise tax
equals 20% of the amount of the payment in excess of one times Mr. Hyland's
average compensation over the preceding five-year period.

Payments to Mr. Hyland under Security Federal's employment agreement will
be guaranteed by Security Financial if payments or benefits are not paid by
Security Federal. Payment under Security Financial's employment agreement would
be made by Security Financial. The employment agreements also provide that
Security Federal and Security Financial will indemnify Mr. Hyland to the fullest
extent legally allowable.

The employment agreements restrict Mr. Hyland from competing against
Security Financial or Security Federal for a period of one year from the date of
termination of the agreement if Mr. Hyland is terminated without cause, except
if such termination occurs after a change in control.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Security Federal has implemented a
plan to provide for supplemental benefits with respect to the tax-qualified
retirement plan benefits otherwise limited by certain provisions of the Internal
Revenue Code. Specifically, the supplemental executive retirement plan will
provide benefits to eligible individuals (designated by the Board of Directors
of Security Federal or its affiliates) that cannot be provided under the
tax-qualified plans as a result of the limitations imposed by the Internal
Revenue Code, but that would have been provided under these plans but for such
limitations. The supplemental executive retirement plan also provides eligible
individuals with a supplemental benefit upon a change in control before the
complete scheduled repayment of the employee stock ownership plan loan. This
benefit is intended to provide the eligible individual with the employee stock
ownership benefit that would have otherwise been provided during the loan
repayment period, but for the change in control. An individual's benefits under
the supplemental executive retirement plan will generally become payable at the
same time benefits become payable under the tax-qualified plans.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% shareholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports they
file.

Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that during the year ended
June 30, 2001, each of its executive officers and directors has complied with
applicable reporting requirements for transactions in Company common stock,
except that the following reports by the following individuals were not filed on
a timely basis due to administrative error: one report on Form 3 by Mr. Hunt;
and one report on Form 5 containing two transactions by Ms. Bonaventura.

TRANSACTIONS WITH MANAGEMENT

LOANS AND EXTENSIONS OF CREDIT

Federal regulations require that all loans or extensions of credit to
executive officers and directors must generally be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, unless the loan or
extension of credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over any other
employee, must not involve more than the normal risk of repayment or present
other unfavorable features. Security Federal currently does make new loans and
extensions of credit to Security Federal's executive officers, directors and
employees at different rates or terms than those offered to the general public;
however, Security Federal does not give preference to any director or officer
over any other employee, and such loans do not involve more than the normal risk
of repayment or present other unfavorable features. In addition, loans made to a
director or executive officer in an amount that, when aggregated with the amount
of all other loans to the person and his or her related interests, are in excess
of the greater of $500,000 or 5% of Security Federal's capital and surplus, up
to a maximum of $3.0 million, must be approved in advance by a majority of the
disinterested members of the Board of Directors.

PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors is responsible for
exercising independent, objective oversight of Security Financial's independent
auditors, accounting functions and internal controls. The Audit Committee is
comprised of five directors, each of whom is independent under The Nasdaq Stock
Market, Inc.'s listing standards. The Audit Committee acts under a written
charter adopted by the Board of Directors, a copy of which is attached to this
proxy statement as Appendix A.

The Audit Committee reviewed and discussed the annual financial statements
with management and the independent accountants. As part of this process,
management represented to the Audit Committee that the financial statements were
prepared in accordance with generally accepted accounting principles. The Audit
Committee also received and reviewed written disclosures and a letter from the
accountants concerning their independence as required under applicable standards
for auditors of public companies. The Audit Committee discussed with the
accountants the contents of such materials, the accountant's independence and
the additional matters required under Statement on Auditing Standards No. 61.
Based on such review and discussion, the Audit Committee recommended that the
Board of Directors include the audited consolidated financial statements in
Security Financial's Annual Report on Form 10-KSB for the year ended June 30,
2001 for filing with the Securities and Exchange Commission.

Members of the Audit Committee:

Mary Beth Bonaventura
Tula Kavidias
Robert Lauer
Philip Rueth
Robert Vellutini

AUDIT FEES

The following table sets for the fees billed to the Company for the fiscal
year ending June 30, 2001 by Crowe, Chizek and Company LLP:

Audit Fees....................... $55,480
Financial information and systems
design and implementation fees 0
All other fees*.................. 17,480

------------------------
* Includes fees for tax-related services, branch and merger
and acquisition analysis and the 401(k) Plan audit.

The Audit Committee believes that the provision of non-audit services by
Crowe, Chizek and Company LLP are compatible with maintaining Crowe, Chizek and
Company LLP's independence.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors has appointed Crowe, Chizek and Company LLP to be
its independent auditors for the 2002 fiscal year, subject to the ratification
by shareholders. A representative of Crowe, Chizek and Company LLP is expected
to be present at the annual meeting to respond to appropriate questions from
shareholders and will have the opportunity to make a statement should he or she
desire to do so.

If the ratification of the appointment of the independent auditors is not
approved by a majority of the votes cast by shareholders at the annual meeting,
the Board of Directors may consider other independent auditors.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.

PROPOSAL 3 -- SHAREHOLDER PROPOSAL

One of our shareholders has submitted the proposal described below. We
will furnish the name, address and claimed share ownership position of the
proponent of this proposal promptly upon written or oral request directed to the
Secretary of Security Financial. The following proposal has been carefully
considered by our Board, which has concluded that its adoption would not be in
the best interests of Security Financial or its shareholders. FOR THE REASONS
STATED AFTER THE PROPOSAL AND ITS SUPPORTING STATEMENT, YOUR BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THIS PROPOSAL. The proposal will be voted upon at our
annual meeting if presented by the proponent.

SHAREHOLDER PROPOSAL

"Shall the Certificate of Incorporation be amended by adding Article
FOURTEENTH to read as follows: All compensation, meeting fees, annual retainer,
and fixed fees for service as a Director of the Corporation shall be paid in the
form of Common Stock of the Corporation."

The proponent has submitted the following statement in support of this
proposal:

It is the Proponent's opinion that paying Director compensation through
the issuance of common shares and not in the form of cash will give the
Directors an incentive to increase shareholder value. The Directors serve the
Shareholders, not the opposite.

According to information contained in the Company's Proxy Statement dated
September 19, 2000, one Director owns a total of 500 shares of stock. This stock
would have a market value of $8,250 if the stock is trading at $16.50. Why
should this Director be paid Director's fees in cash? Another Director owns
1,000 shares and three more Directors own under 5,000 shares each. Why should
the Shareholders pay these Directors in cash when the Directors show such little
faith in the Company that they do not purchase common stock?

If the Directors who are paid in cash had such concern about the
Shareholders, why haven't they authorized a larger share buy-back than 5%? The
stock is trading at a substantial discount to book value and a buy-back would be
accretive to book value. Approving the proposed change which requires Director
compensation to be paid in common shares will hopefully instill more concern for
the Shareholders.

YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.

OPPOSITION STATEMENT OF
THE SECURITY FINANCIAL BOARD OF DIRECTORS
TO THE SHAREHOLDER PROPOSAL

THE BOARD OF DIRECTORS BELIEVES THAT THE SHAREHOLDER'S PROPOSAL AND
SUPPORTING STATEMENT ARE NOT IN THE BEST INTERESTS OF THE COMPANY AND
RECOMMENDS THAT YOU VOTE "AGAINST" THE PROPOSAL.

Security Financial pays each of its directors an annual retainer amount of
$2,500, which, if paid in the form of Company Stock, would not materially
increase the directors' aggregate ownership in the Company. Replacing the
current cash retainer compensation policy with an equity-based compensation
plan, however, would be administratively burdensome and increase the Company's
expenses. The plan not only would have to be implemented, but maintained. If
Security Financial were to maintain the plan by purchasing common stock in the
open market, the Company would incur brokerage fees on those purchases and
records would have to be kept of all trades and allocations. Alternatively, the
plan could be maintained by issuing shares of Company stock out of the Company's
authorized, but unissued shares; however, that would be dilutive to our
shareholders, and would impose record-keeping and other administrative burdens
on the Company as well. Regardless of how the plan were maintained, additional
expense would be incurred for, among other things, registering the stock under
the Securities Exchange Act of 1934. Furthermore, the adoption and maintenance
of any such plan may have accounting implications that would have to be
reviewed.

Security Financial agrees that equity-based compensation is important to
ensure that the directors' interests are aligned with the interests of Security
Financial's shareholders. That is why Security Financial asked shareholders to
approve the Incentive Plan at our last annual meeting, which we recently
implemented. However, we do not believe that equity of the Company should be the
sole form of the directors' compensation, nor do we agree that it is appropriate
or desirable to incur the expense associated with changing the form of
compensation paid to directors, as this shareholder proposal would require. To
attract and retain highly qualified individuals to serve as directors, Security
Financial must retain the flexibility to compensate directors in a way that is
competitive both as to amount and to form and method of payment. The Board of
Directors regularly considers options for reducing the Company's overall
expenses, and in connection with those reviews, considers the total compensation
paid to directors of both the Company and the Bank to ensure those fees are
appropriate and competitive with fees paid by similarly sized and situated
thrift holding companies and their subsidiaries. The Board intends to continue
to review overall Board compensation as to both form and amount and will make
changes as the Board deems appropriate. Given the factors discussed above, we
believe this proposal is contrary to the best interests of Security Financial
and its shareholders.

THEREFORE, YOUR BOARD OF DIRECTORS URGES YOU TO VOTE AGAINST
THIS PROPOSAL.

SHAREHOLDER PROPOSALS AND NOMINATIONS

Proposals that shareholders seek to have included in the proxy statement
for the Company's next annual meeting must be received by the Company no later
than June 19, 2002. If next years annual meeting is held on a date more than 30
calendar days from October 23, 2002, a shareholder proposal must be received by
a reasonable time before the proxy solicitation for such annual meeting is made.
Any shareholder proposals will be subject to the requirements of the proxy rules
adopted by the Securities and Exchange Commission.

The Company's Bylaws provide that in order for a stockholder to make
proposals for business to be brought before the annual meeting, the business
must relate to a proper subject matter for stockholder action and the
stockholder must give timely notice thereof in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered or mailed to and
received at the principal executive offices of the Company not less than ninety
(90) days prior to the date of the annual meeting; PROVIDED, HOWEVER, that in
the event that less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received no later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made.

The Company Bylaws provide that in order for a stockholder to make
nominations for the election of directors, the stockholder must give timely
notice in writing to the Secretary of the Company. To be timely, a stockholder's
notice shall be delivered or mailed to and received at the principal executive
offices of the Company not less than ninety (90) days prior to the date of the
meeting; PROVIDED, HOWEVER, that in the event that less than one hundred (100)
days' notice or prior disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.

The requirements for the content of both a stockholder's notice of
proposal for business and a stockholder's notice of nominations can be found in
the Company's Bylaws, a copy of which may be obtained from the Company.

MISCELLANEOUS

The Company will pay the cost of this proxy solicitation. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Security Financial common stock. In addition to soliciting
proxies by mail, directors, officers and regular employees of the Company may
solicit proxies personally or by telephone without receiving additional
compensation. The Company has retained Georgeson Shareholder Communication, Inc.
to assist in soliciting proxies for a fee not to exceed $25,000, plus
reimbursable expenses. Approximately 25 persons will be used by Georgeson
Communications, Inc. in such solicitation. The total amount estimated to be
expended in connection with this proxy contest is $75,000, which excludes the
amount normally expended in connection with a solicitation for the election of
directors in the absence of a contest, and costs represented by salaries and
wages of regular employees and officers of Security Financial.

The Company's Annual Report to Shareholders has been mailed to
shareholders as of the close of business on September 14, 2001. Any shareholder
who has not received a copy of the Annual Report

may obtain a copy by writing to the Secretary of the Company. The Annual Report
is not to be treated as part of the proxy solicitation material or as having
been incorporated in this proxy statement by reference.

A COPY OF THE COMPANY'S FORM 10-KSB, WITHOUT EXHIBITS, FOR THE FISCAL YEAR
ENDED JUNE 30, 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL
BE FURNISHED WITHOUT CHARGE TO SHAREHOLDERS AS OF THE CLOSE OF BUSINESS ON
SEPTEMBER 14, 2001 UPON WRITTEN REQUEST TO LAWRENCE R. PARDUCCI, CORPORATE
SECRETARY, SECURITY FINANCIAL BANCORP, INC., 9321 WICKER AVENUE, ST. JOHN,
INDIANA 46373.

Whether or not you plan to attend the annual meeting on October 23, 2001,
or as adjourned on November 13, 2001, please vote by marking, signing, dating
and promptly returning the enclosed WHITE proxy card in the enclosed WHITE
envelope.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Lawrence R. Parducci

Lawrence R. Parducci
CORPORATE SECRETARY
St. John, Indiana
October 17, 2001

APPENDIX A

SECURITY FINANCIAL BANCORP, INC.
AND
SECURITY FEDERAL BANK & TRUST
AUDIT COMMITTEE CHARTER

MISSION STATEMENT

The committee's role is to assist the board of directors in overseeing all
material aspects of Security Financial Bancorp, Inc.'s (the "Company") financial
reporting, internal control, and audit functions, including a particular focus
on the qualitative aspects of financial reporting to shareholders, on compliance
with significant applicable legal, ethical, and regulatory requirements and to
ensure the objectivity of the financial statements. The role also includes
maintenance of strong, positive working relationships with management, external
and internal auditors, counsel, and other committee advisors.

ORGANIZATION

COMMITTEE COMPOSITION. The committee shall consist of at least two board
members, a majority of whom shall be independent of management and the Company.
Committee appointments, including selection of the committee chairperson, shall
be approved annually by the full board.

MEETINGS. The committee shall meet at least quarterly. Additional meetings
shall be scheduled as considered necessary by the committee or chairperson. A
quorum of the committee shall be declared when a majority of the appointed
members of the committee are in attendance.

EXTERNAL RESOURCES. The committee shall be authorized to access internal
and external resources, as the committee requires, to carry out its
responsibilities.

ROLES AND RESPONSIBILITIES

COMMUNICATION WITH THE BOARD OF DIRECTORS AND MANAGEMENT

o The chairperson and others on the committee shall, to the extent
appropriate, have contact throughout the year with senior
management, the board of directors, external and internal auditors
and legal counsel, as applicable, to strengthen the committee's
knowledge of relevant current and prospective business issues, risks
and exposures. This will include requests by the committee that
members of management, counsel, the internal and external auditors,
as applicable, participate in committee meetings, as necessary, to
carry out the committee's responsibilities.

o The committee, with input from management and other key committee
advisors, shall develop an annual plan, which shall include an
agenda and procedures for the review of the Company's quarterly
financial data, its year end audit, the procedures and results of
the internal audit and the review of the independence of its
accountants.

o The committee, through the committee chairperson, shall report
periodically, as deemed necessary, but at least semi-annually, to
the full board.

A-1

o The committee shall make recommendations to the full board regarding
the compensation to be paid to the external auditors and its views
regarding the retention of the auditors for the upcoming fiscal
year.

REVIEW OF THE INTERNAL AUDIT

o The internal audit function shall be responsible to the board of
directors through the committee.

o The committee shall review and assess the annual internal audit
plan, including the activities and organizational structure of the
internal audit function.

o The committee shall meet with the internal auditors, at least
annually, to review the status of the internal audit activities, any
significant findings and recommendations by the internal auditors
and management's response.

o If either the internal auditors identify significant issues relative
to the overall board responsibility that have been communicated to
management but, in their judgment, have not been adequately
addressed, they should communicate these issues to the committee.

REVIEW OF THE EXTERNAL AUDIT

o The committee shall meet with the external auditors, at least
annually, who shall report all relevant issues to the committee.

o The external auditors, in their capacity as independent public
accountants, shall be responsible to the board of directors and the
audit committee as representatives of the shareholders.

o The committee shall review the annual financial statements,
including the overall scope and focus of the annual audit. This
review should include a determination of whether the annual
financial statements are complete and consistent with the
information known to committee members. This review shall also
include a review of key financial statement issues and risks, their
impact or potential effect on reported financial information, the
processes used by management to address such matters, related
auditor views, and the basis for audit conclusions. Any important
conclusions on concerning the year-end audit work should be
discussed well in advance of the public release of the annual
financial statements.

o The committee shall annually review the performance (effectiveness,
objectivity, and independence) of the external auditors. The
committee shall ensure receipt of a formal written statement from
the external auditors consistent with standards set by the
Independence Standards Board. Additionally, the committee shall
discuss with the auditor relationships or services that may affect
auditor objectivity or independence. If the committee is not
satisfied with the auditors' assurances of independence, it shall
take or recommend to the full board appropriate action to ensure the
independence of the external auditor.

A-2

o The committee shall review any important recommendations on
financial reporting, controls, other matters, and management's
response.

o If the external auditors identify significant issues relative to the
overall board responsibility that have been communicated to
management but, in their judgment, have not been adequately
addressed, they should communicate these issues to the committee.

REPORTING TO SHAREHOLDERS

o The committee should be briefed on the processes used by management
in producing its interim financial statements and review and discuss
with management any questions or issues concerning the statements.
Any important issues on interim financial statements should be
discussed well in advance of the public release of the interim
financial statements.

o The committee will ensure that management requires that the external
auditors review the financial information included in the Company's
interim financial statements before the Company files its quarterly
reports with the Securities and Exchange Commission.

o The committee shall review all major financial reports in advance of
filings or distribution, including the annual report.

o The committee shall annually provide a written report of its
activities and findings, a copy of which shall be included within
the proxy statement for the annual meeting. The report shall appear
over the names of the audit committee. Such report shall be
furnished to and approved by the full board of directors prior to
its inclusion in the proxy statement. The report will state whether
the committee: (i) has reviewed and discussed the audited financial
statements with management; (ii) has discussed with the independent
auditors the matters to be discussed by Statement of Auditing
Standards No. 61; (iii) has received the written disclosures and the
letter from the independent auditors regarding the independence
required by Independence Standards Board Standard No. 1; (iv) has
discussed with the auditors their independence; and (iv) based on
the review and discussion of the audited financial statements with
management and the independent auditors, has recommended to the
board of directors that the audited financial statements be included
in the Company's annual report on Form 10-KSB.

o The Company shall disclose that the committee is governed by a
written charter, a copy of which has been approved by the full board
of directors. The committee shall review the charter annually,
assess its adequacy and propose appropriate amendments to the full
board of directors. A copy of the charter shall be filed as an
appendix to the proxy statement at least every three years.

REGULATORY EXAMINATIONS

o The committee shall review the results of examinations by regulatory
authorities and management's response to such examinations.

A-3

COMMITTEE SELF ASSESSMENT AND EDUCATION

o The committee shall review, discuss, and assess its own performance
as well as the committee role and responsibilities, seeking input
from senior management, the full board, and others.

o The Committee shall review significant accounting and reporting
issues, including recent professional and regulatory pronouncements
and understand their impact on the Company's business, results of
operation and financial statements.

While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations.

A-4

APPENDIX B

The following table sets forth the names, principal business occupations,
business addresses (or home addresses if retired) of those individuals deemed to
be participants in this proxy solicitation under the federal securities laws
(the "Participants"). The number of shares of common stock of Security Financial
Bancorp, Inc. (the "Company") beneficially owned, directly or indirectly, as of
September 14, 2001 is included under "Stock Ownership" of the Company's Proxy
Statement. None of the Participants owns any securities of record, but not
beneficially.

NAME, PRINCIPAL OCCUPATION AND BUSINESS ADDRESS
----------------------------------------------------

Mary Beth Bonaventura
Senior Judge
Lake Superior Court, Juvenile Division
400 Broadway
Gary, IN 46402

Howard O. Cyrus
Real Estate Broker
9723 Prairie Avenue
Highland, IN 46322

Dr. Peter Ferrini
Retired
8408 Castle Avenue
Munster, IN 46321

John P. Hyland
President and Chief Executive Officer
Security Financial Bancorp, Inc. and
Security Federal Bank & Trust
9321 Wicker Avenue
St. John, IN 46373

Tula Kavadias
Attorney
Tula Kavadias & Associates
2117 N. Main Street
Crown Point, IN 46307

Richard J. Lashley
Investment Manager
PL Capital, LLC
20 East Jefferson Avenue
Suite 22
Naperville, IL 60540

Robert L. Lauer
Vice President of Investments
A.G. Edwards & Sons, Inc.
1477 E. 83rd Avenue
Merrillville, IN 46410

John Wm. Palmer
Investment Manager
PL Capital, LLC
20 East Jefferson Avenue
Suite 22
Naperville, IL 60540

NAME, PRINCIPAL OCCUPATION AND BUSINESS ADDRESS
----------------------------------------------------

Lawrence R. Parducci
Pharmacist
Fagen Pharmacy
8401 Indianapolis Boulevard
Highland, IN 46322

Philip T. Rueth
Certified Public Accountant
Steiber, Rueth & Co.
9307 Calumet Avenue
Munster, IN 46321

Robert A. Vellutini
Vice President of Investments
A.G. Edwards & Sons, Inc.
1477 E. 83rd Avenue
Merrillville, IN 46410

Except as described below and other than stock options and stock awards
granted to each of the individuals above, and the participation by Mr. Hyland in
the Security Federal Bank & Trust Employee Stock Ownership Plan, no Participant
is or was within the past year, a party to a contract, arrangement or
understanding with any person with respect to any securities of the Company.
Messrs. Palmer and Lashley are parties to Joint Filing Agreements as attached to
their Schedules 13D, including amendments, filed with the Securities and
Exchange Commission and share profits with PL Capital, LLC, Financial
Edge-Strategic Funds, L.P. and Financial Edge Fund, L.P. None of the
Participants owns any securities of any parent or subsidiary of the Company.

Except for Mr. Hyland, who entered into an employment agreement with the
Company and the Bank, no Participant has any arrangement or understanding with
any person: (i) with respect to any future employment by the Company or its
affiliates or (ii) with respect to any future transactions to which the Company
or any of its affiliates may be a party. For a description of the material terms
of the Bank and Company employment agreements with Mr. Hyland, see "Proposal I -
Executive Compensation - Employment Agreements" in the Company's Proxy
Statement.

B-2

The following table sets forth all purchases and sales of the Company's
common stock by the Participants since January 5, 2000, the date of the
Company's initial public offering, and the dates and amounts of such
transactions.

NUMBER OF TYPE OF BENEFICIAL
NAME DATE TRANSACTIONS(1) SHARES OWNERSHIP
--------------------------- --------------- ------------------ ---------------- -----------------------------------------

Mary Beth Bonaventura 01/05/2000 Purchase 5,100 Direct
05/25/2000 Purchase 163 Indirect-By Trust (Spouse)
05/30/2000 Purchase 500 Indirect-By-Trust (Spouse)
06/26/2001 Award 3,000 Indirect-By RRP Award

Howard O. Cyrus 01/05/2000 Purchase 1,000 Direct
06/26/2001 Award 2,500 Indirect-By RRP Award

Dr. Peter Ferrini 01/05/2000 Purchase 15,000 Indirect-By-Trust
04/28/2000 Purchase 4,000 Indirect-By-Trust
04/28/2000 Purchase 4,000 Indirect-By-Trust
05/19/2000 Purchase 1,000 Indirect-By-Trust
05/25/2000 Purchase 1,000 Indirect-By-Trust
07/24/2000 Purchase 1,100 Indirect-By-Trust
07/27/2000 Purchase 2,000 Indirect-By-Trust
08/01/2000 Purchase 2,000 Indirect-By-Trust
10/23/2000 Purchase 2,000 Indirect-By-Trust
10/30/2000 Purchase 600 Indirect-By-Trust
11/09/2000 Purchase 300 Indirect-By-Trust
12/11/2000 Purchase 1,000 Indirect-By-Trust
12/13/2000 Purchase 1,000 Indirect-By-Trust
02/27/2001 Purchase 1,000 Indirect-By-Trust
06/05/2001 Purchase 1,000 Indirect-By-Trust
06/26/2001 Award 3,250 Indirect-By RRP Award
08/10/2001 Purchase 200 Indirect-By-Trust

John P. Hyland(2) 02/10/2000 Purchase 2,000 Indirect-By IRA
02/25/2000 Purchase 1,000 Indirect-By IRA
05/05/2000 Purchase 310 Indirect-By IRA
12/31/2000 Allocation 906 Indirect-By ESOP
06/26/2001 Award 19,384 Indirect-By RRP Award

Tula Kavadias 01/05/2000 Purchase 500 Direct
10/23/2000 Purchase 1,300 Direct
10/23/2000 Purchase 400 Indirect-By IRA
06/26/2001 Award 2,500 Indirect-By RRP Award

NUMBER OF TYPE OF BENEFICIAL
NAME DATE TRANSACTIONS(1) SHARES OWNERSHIP
--------------------------- --------------- ------------------ ---------------- -----------------------------------------
Richard J. Lashley(3) 02/11/2000 Purchase 5,000 Indirect-By Financial Edge Fund, L.P.
02/14/2000 Purchase 20,000 Indirect-By Financial Edge Fund, L.P.
02/16/2000 Purchase 5,000 Indirect-By Financial Edge Fund, L.P.
02/17/2000 Purchase 2,900 Indirect-By Financial Edge Fund, L.P.
02/18/2000 Purchase 10,000 Indirect-By Financial Edge Fund, L.P.
02/25/2000 Purchase 50,000 Indirect-By Financial Edge Fund, L.P.
03/02/2000 Purchase 7,000 Indirect-By Financial Edge Fund, L.P.
03/02/2000 Purchase 10,000 Indirect-By Financial Edge-Strategic
Fund, L.P.
03/06/2000 Purchase 13,000 Indirect-By Financial Edge Fund, L.P.
03/07/2000 Purchase 37,000 Indirect-By Financial Edge Fund, L.P.
03/08/2000 Purchase 2,000 Indirect-By Financial Edge Fund, L.P.
03/10/2000 Purchase 5,000 Indirect-By Financial Edge Fund, L.P.
04/25/2000 Purchase 10,000 Indirect-By Financial Edge Fund, L.P.
05/15/2000 Purchase 1,000 Indirect-By Spouse
07/28/2000 Sale (10,000) Indirect-By Financial Edge Fund, L.P.
02/02/2001 Sale (1,000) Indirect-By Spouse
06/26/2001 Award 1,000 Indirect-By RRP Award

Robert L. Lauer 05/01/2000 Purchase 1,100 Direct
05/02/2000 Purchase 180 Indirect-By IRA
06/13/2000 Purchase 400 Indirect-By Revocable Trust (Spouse)
07/27/2000 Purchase 1,000 Indirect-By Revocable Trust (Spouse)
08/16/2000 Purchase 2,000 Direct
10/23/2000 Purchase 138 Indirect-By IRA
05/15/2001 Purchase 150 Indirect-By IRA
06/26/2001 Award 2,000 Indirect-By RRP Award

John Wm. Palmer(3) 02/11/2000 Purchase 5,000 Indirect-By Financial Edge Fund, L.P.
02/14/2000 Purchase 20,000 Indirect-By Financial Edge Fund, L.P.
02/16/2000 Purchase 5,000 Indirect-By Financial Edge Fund, L.P.
02/17/2000 Purchase 2,900 Indirect-By Financial Edge Fund, L.P.
02/18/2000 Purchase 10,000 Indirect-By Financial Edge Fund, L.P.
02/25/2000 Purchase 50,000 Indirect-By Financial Edge Fund, L.P.
03/02/2000 Purchase 7,000 Indirect-By Financial Edge Fund, L.P.
03/02/2000 Purchase 10,000 Indirect-By Financial Edge-Strategic
Fund, L.P.
03/06/2000 Purchase 13,000 Indirect-By Financial Edge Fund, L.P.
03/07/2000 Purchase 37,000 Indirect-By Financial Edge Fund, L.P.
03/08/2000 Purchase 2,000 Indirect-By Financial Edge Fund, L.P.
03/10/2000 Purchase 5,000 Indirect-By Financial Edge Fund, L.P.
04/25/2000 Purchase 10,000 Indirect-By Financial Edge Fund, L.P.
05/15/2000 Purchase 100 Direct
07/28/2000 Sale (10,000) Indirect-By Financial Edge Fund, L.P.
06/26/2001 Award 1,000 Indirect-By RRP Award

Lawrence R. Parducci 01/05/2000 Purchase 4,000 Direct
06/26/2001 Award 3,000 Indirect-By RRP Award

NUMBER OF TYPE OF BENEFICIAL
NAME DATE TRANSACTIONS(1) SHARES OWNERSHIP
--------------------------- --------------- ------------------ ---------------- -----------------------------------------

Philip T. Rueth 01/05/2000 Purchase 5,000 Indirect-By Trust
01/05/2000 Purchase 5,000 Indirect-By Trust (Spouse)
10/23/2000 Purchase 1,000 Indirect-By Trust (Family)
06/26/2001 Award 2,500 Indirect-By RRP Award

Robert A. Vellutini 01/05/2000 Purchase 10,000 Direct
06/26/2001 Award 2,000 Indirect-By RRP Award

-------------------------------
(1) None of the Participants borrowed or otherwise obtained funds for the
purpose of acquiring or holding securities of the Company.
(2) In addition, Mr. Hyland makes periodic purchases of the Company's common
stock through Security Federal Bank & Trust's 401(k) Plan.
(3) Based on information in Schedules 13D, including amendments, filed with the
Securities and Exchange Commission.

B-5

REVOCABLE PROXY
SECURITY FINANCIAL BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS

OCTOBER 23, 2001
8:30 A.M., LOCAL TIME
-------------------------------

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints the official proxy committee of Security
Financial Bancorp, Inc. (the "Company") with full power of substitution, to act
as proxy for the undersigned, and to vote all shares of common stock of the
Company which the undersigned is entitled to vote only at the annual meeting of
shareholders, to be held on October 23, 2001, at 8:30 a.m., local time, at the
Company's main office located at 9321 Wicker Avenue, St. John, Indiana and at
any and all adjournments thereof, with all of the powers the undersigned would
possess if personally present at such meeting as follows:

1. The election as Directors of all nominees listed (unless the "FOR ALL
EXCEPT" box is marked and the instructions below are complied with).

Mary Beth Bonaventura, Lawrence R. Parducci and Robert A. Vellutini

FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------

|_| |_| |_|

INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.

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

2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent auditors of Security Financial Bancorp, Inc. for the
fiscal year ending June 30, 2002.

FOR AGAINST ABSTAIN
--- ------- -------

|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.

3. The shareholder proposal as set forth in the proxy statement, if
presented at the meeting.

FOR AGAINST ABSTAIN
--- ------- -------

|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.

This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted "FOR" each of the nominees
for director listed on this Revocable Proxy, "FOR" ratification of Crowe, Chizek
and Company LLP as independent auditors and "AGAINST" the shareholder proposal
if presented at the meeting. If any other business is presented at the Annual
Meeting, including whether or not to adjourn the meeting, this proxy will be
voted by the proxies in their best judgment. At the present time, the Board of
Directors knows of no other business to be presented at the Annual Meeting. This
proxy also confers discretionary authority on the Board of Directors to vote
with respect to the election of any person as Director where the nominees are
unable to serve or for good cause will not serve and matters incident to the
conduct of the meeting.

Dated:________________________________

-------------------------------------
SIGNATURE OF Shareholder

-------------------------------------
SIGNATURE OF CO-HOLDER (IF ANY)

The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a notice of annual meeting of shareholders and of a
proxy statement and of the annual report to shareholders.

Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.

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

PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS WHITE PROXY IN THE
ENCLOSED POSTAGE-PAID WHITE ENVELOPE.

Security Federal Bank & Trust Letterhead

Dear ESOP Participant:

On behalf of the Board of Directors of Security Financial Bancorp, Inc.
(the "Company"), I am forwarding to you a Notice and Proxy Statement for the
Company's Annual Meeting of Stockholders. We will hold the Annual Meeting of
Stockholders on October 23, 2001, at the time and location stated in the notice.
AT THE OCTOBER 23, 2001 MEETING, NO SUBSTANTIVE BUSINESS SHALL BE CONDUCTED.
INSTEAD, THE ONLY ACTION TO BE TAKEN AT THE MEETING WILL BE TO ADJOURN THE
MEETING TO NOVEMBER 13, 2001 AT 8:30 A.M., LOCAL TIME, AT THE OFFICES OF
SECURITY FINANCIAL, 9321 WICKER AVENUE, ST. JOHN, INDIANA. THE POLLS WILL REMAIN
OPEN DURING THE ADJOURNMENT. I have also included with these materials the
Company's Annual Report to Stockholders, as well as a GREEN vote authorization
form. The vote authorization form allows you to convey your voting instructions,
as a participant in the Security Federal Bank & Trust Employee Stock Ownership
Plan (the "ESOP"), to First Bankers Trust Company, N.A. (the "ESOP Trustee") on
the proposals presented to stockholders at the Annual Meeting.

As of September 14, 2001, the record date for the Annual Meeting, the ESOP
Trustee held 155,076 shares of Company common stock on behalf of the ESOP, of
which ____________ had been allocated to participants' accounts. The ESOP
Trustee will vote the allocated shares as directed by ESOP participants;
provided the trustee timely receives instructions from the participants. Subject
to its fiduciary duties under the Employee Retirement Income Security Act of
1974, as amended, the ESOP Trustee will vote the unallocated shares and the
allocated shares for which it does not timely receive instructions in a manner
calculated to most accurately reflect the instructions it receives from
participants regarding the allocated shares.

In order to direct the voting of the shares of Company common stock
allocated to your ESOP account, please complete and sign the enclosed GREEN vote
authorization form and return it in the provided postage-paid envelope by
November 6, 2001. Your vote will not be revealed, directly or indirectly, to any
officer, employee or director of the Company or Security Federal Bank & Trust.
The ESOP Trustee will tabulate the votes received from participants and vote the
shares of Company common stock held in the ESOP Trust in accordance with the
terms of the ESOP.

Please note that as an employee of Security Federal Bank & Trust you may
participate in several benefit plans for which you may receive a separate vote
authorization form. PLEASE VOTE ALL OF THE VOTE AUTHORIZATION FORMS YOU RECEIVE.

Sincerely,

John P. Hyland
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Name: ____________________
Shares: ____________________

VOTE AUTHORIZATION FORM
-----------------------

I understand that First Bankers Trust Company, the ESOP Trustee, is the
holder of record and custodian of all shares attributed to me of Security
Financial Bancorp, Inc. (the "Company") common stock under the Security Federal
Bank & Trust Employee Stock Ownership Plan. I understand that my voting
instructions are solicited on behalf of the Company's Board of Directors for the
Annual Meeting of Stockholders to be held on October 23, 2001 and at any and all
adjournments thereof.

Accordingly, you are to vote my shares as follows:

1. The election as Directors of all nominees listed (unless the "FOR ALL
EXCEPT" box is marked and the instructions below are complied with).

Mary Beth Bonaventura, Lawrence R. Parducci and Robert A. Vellutini

FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------

|_| |_| |_|

INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.

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

2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent auditors of Security Financial Bancorp, Inc. for the
fiscal year ending June 30, 2002.

FOR AGAINST ABSTAIN
--- ------- -------

|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.

3. The shareholder proposal as set forth in the proxy statement, if
presented at the meeting.

FOR AGAINST ABSTAIN
--- ------- -------

|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.

The ESOP Trustee is hereby authorized to vote any shares attributed to me
in its trust capacity as indicated above.

----------------------------------- ------------------------------------
Date Signature

PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED POSTAGE-PAID ENVELOPE NO
LATER THAN NOVEMBER 6, 2001.

Security Federal Bank & Trust Letterhead

Dear 401(k) Plan Participant:

On behalf of the Board of Directors of Security Financial Bancorp, Inc.
(the "Company"), I am forwarding to you a Notice and Proxy Statement for the
Company's Annual Meeting of Stockholders. We will hold the Annual Meeting of
Stockholders on October 23, 2001, at the time and location stated in the notice.
AT THE OCTOBER 23, 2001 MEETING, NO SUBSTANTIVE BUSINESS SHALL BE CONDUCTED.
INSTEAD, THE ONLY ACTION TO BE TAKEN AT THE MEETING WILL BE TO ADJOURN THE
MEETING TO NOVEMBER 13, 2001 AT 8:30 A.M., LOCAL TIME, AT THE OFFICES OF
SECURITY FINANCIAL, 9321 WICKER AVENUE, ST. JOHN, INDIANA. THE POLLS WILL REMAIN
OPEN DURING THE ADJOURNMENT. I have also included with these materials the
Company Annual Report to Stockholders, as well as a YELLOW vote authorization
form. The vote authorization form allows you to convey your voting instructions,
as a Security Federal Bank & Trust 401(k) Plan participant investing in the
Security Financial Bancorp, Inc. Stock Fund (the "Employer Stock Fund"), to
First Bankers Trust Company, N.A. (the "Employer Stock Fund Trustee") on the
proposals presented to stockholders at the Annual Meeting.

As of September 14, 2001, the record date for the Annual Meeting, the
Employer Stock Fund Trust held _______ shares of Company common stock. The
Employer Stock Fund Trustee will vote these shares as directed by participants;
provided the trustee receives the instructions from participants by November 6,
2001.

In order to direct the voting of shares of Company common stock credited
to your 401(k) Plan account, please complete and sign the enclosed YELLOW vote
authorization form and return it in the enclosed postage-paid envelope by
November 6, 2001. The Employer Stock Fund Trustee will tabulate the votes
received and vote the shares of Company common stock held in the Employer Stock
Fund Trust in accordance with the terms of the plan.

Sincerely,

John P. Hyland
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Name:____________________
Shares:___________________

VOTE AUTHORIZATION FORM
-----------------------

I understand that First Bankers Trust Company, N.A., the Employer Stock
Fund Trustee, is the holder of record and custodian of all shares attributed to
me of Security Financial Bancorp, Inc. (the "Company") common stock held in the
Security Financial Bancorp, Inc. Stock Fund under the Security Federal Bank &
Trust 401(k) Plan. I understand that my voting instructions are solicited on
behalf of the Company's Board of Directors for the Annual Meeting of
Stockholders to be held on October 23, 2001 and at any and all adjournment
thereof.

Accordingly, you are to vote my shares as follows:

1. The election as Directors of all nominees listed (unless the "FOR ALL
EXCEPT" box is marked and the instructions below are complied with).

Mary Beth Bonaventura, Lawrence R. Parducci and Robert A. Vellutini

FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
|_| |_| |_|

INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.

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

2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent auditors of Security Financial Bancorp, Inc. for the
fiscal year ending June 30, 2002.

FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.

3. The shareholder proposal as set forth in the proxy statement, if
presented at the meeting.

FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.

The Employer Stock Fund Trustee is hereby authorized to vote any shares
attributed to me in its trust capacity as indicated above.

-------------------------------- -----------------------------------
Date Signature

PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED POSTAGE-PAID
ENVELOPE NO LATER THAN NOVEMBER 6, 2001.

[Security Financial Bancorp, Inc. Letterhead]

Dear Stock Award Recipient:

On behalf of the Board of Directors of Security Financial Bancorp, Inc.
(the "Company"), I am forwarding to you a Notice and Proxy Statement for the
Company's Annual Meeting of Stockholders. We will hold the Annual Meeting of
Stockholders on October 23, 2001, at the time and location stated in the notice.
AT THE OCTOBER 23, 2001 MEETING, NO SUBSTANTIVE BUSINESS SHALL BE CONDUCTED.
INSTEAD, THE ONLY ACTION TO BE TAKEN AT THE MEETING WILL BE TO ADJOURN THE
MEETING TO NOVEMBER 13, 2001 AT 8:30 A.M., LOCAL TIME, AT THE OFFICES OF
SECURITY FINANCIAL, 9321 WICKER AVENUE, ST. JOHN, INDIANA. THE POLLS WILL REMAIN
OPEN DURING THE ADJOURNMENT. I have also included with these materials the
Company's Annual Report to Stockholders, as well as a BLUE vote authorization
form. The vote authorization form allows you to convey your voting instructions,
as a recipient of a stock award under the Security Financial Bancorp, Inc.
Stock-Based Incentive Plan (the "Incentive Plan"), to First Bankers Trust
Company, N.A. (the "Incentive Plan Trustee") on the proposals presented to
stockholders at the Annual Meeting.

As of the record date for the Annual Meeting, September 14, 2001, the
Incentive Plan Trust held ________________shares of Company common stock. The
Incentive Plan Trustee will vote these shares as directed by the stock award
recipients; provided the trustee receives the instructions from the stock award
recipients by November 6, 2001.

In order to direct the voting of Company common stock subject to your
stock award, please complete and sign the enclosed BLUE vote authorization form
and return it in the postage- paid envelope provided by November 6, 2001. The
Incentive Plan Trustee will tabulate the votes received from stock award
recipients and vote the shares of Company common stock held in the Incentive
Plan Trust in accordance with the terms of the plan.

Please note that if you are an employee of Security Federal Bank & Trust
you may participate in several benefit plans for which you may receive a vote
authorization form. PLEASE VOTE ALL VOTE AUTHORIZATION FORMS YOU RECEIVE.

Sincerely,

John P. Hyland
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Name:____________________
Shares:___________________

VOTE AUTHORIZATION FORM
-----------------------

I understand that First Bankers Trust Company, N.A., the Incentive Plan
Trustee, is the holder of record and custodian of all shares attributed to me of
Security Financial Bancorp, Inc. (the "Company") common stock held in the
Security Financial Bancorp, Inc. Stock-Based Incentive Plan Trust. I understand
that my voting instructions are solicited on behalf of the Company's Board of
Directors for the Annual Meeting of Stockholders to be held on October 23, 2001
and at any and all adjournments thereof.

Accordingly, you are to vote my shares as follows:

1. The election as Directors of all nominees listed (unless the "FOR ALL
EXCEPT" box is marked and the instructions below are complied with).

Mary Beth Bonaventura, Lawrence R. Parducci and Robert A. Vellutini

FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
|_| |_| |_|

INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.

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

2. The ratification of the appointment of Crowe, Chizek and Company LLP
as independent auditors of Security Financial Bancorp, Inc. for the
fiscal year ending June 30, 2002.

FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.

3. The shareholder proposal as set forth in the proxy statement, if
presented at the meeting.

FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.

The Incentive Plan Trustee is hereby authorized to vote any shares
attributed to me in its trust capacity as indicated above.

------------------------------- ------------------------------------
Date Signature

PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED POSTAGE-PAID
ENVELOPE NO LATER THAN NOVEMBER 6, 2001.