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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    For the Quarter Ended September 30, 2000

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the transition period from______to_____ .

Commission File No. 0-16880

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



                            BNL FINANCIAL CORPORATION

             (Exact name of Registrant as specified in its charter)

         IOWA                                               42-1239454
(State of incorporation)                    (I.R.S. Employer Identification No.)

2100 W. William Cannon, Suite L
        Austin, Texas                                             78745
(Address of principal executive offices)                        (Zip Code)



Registrant's telephone number, including area code:  (512) 383-0220

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


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                Yes __X__ No____
                                        -

As of June 30, 2000, the Registrant  had 23,311,944  shares of Common Stock,  no
par value, outstanding.

Transitional Small Business Disclosure Format  (check one)  Yes___ No__X__


<PAGE>

<TABLE>
<CAPTION>
                                                    Part I. Financial Information

Item 1.  Financial Statements

                                              BNL FINANCIAL CORPORATION AND SUBSIDIARIES
                                                      CONSOLIDATED BALANCE SHEETS
<S>                                                                          <C>                              <C>


                                                                                                                   December 31,
                            ASSETS                                              September 30, 2000                   1999
                                                                                    (Unaudited)                    (Audited)
                                                                              ------------------------         ---------------------
Investments:
   Investments available for sale, at fair value                                          $12,090,983                   $10,344,845
   Equity securities, common stock                                                                808                         3,313
   Cash and cash equivalents                                                                1,070,252                     1,419,618
                                                                              ------------------------         ---------------------

                 Total Investments                                                         13,162,043                    11,767,776
Accrued investment income                                                                     307,897                       193,337
Furniture and equipment                                                                       403,704                       438,147
Deferred policy acquisition costs                                                             325,522                       352,186
Receivable from reinsurer                                                                      40,051                        40,051
Premiums due and unpaid                                                                       758,656                       760,941
Deferred income tax asset                                                                     679,129                             0
Other assets                                                                                  383,063                       396,962
                                                                              ------------------------         ---------------------

                      TOTAL ASSETS                                                        $16,060,065                   $13,949,400
                                                                              ========================         =====================

           LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Liability for future policy benefits                                                    $1,400,604                    $1,488,857
   Policy claims payable                                                                    2,524,350                     2,729,175
   Premium deposit fund                                                                       108,406                       118,703
   Annuity deposits                                                                         2,797,123                     2,982,839
   Deferred annuity profits                                                                   496,417                       500,000
   Supplementary contracts without
       life contingencies                                                                      86,635                       105,120
   Advanced and unallocated premium                                                           412,230                       714,482
   Commissions payable                                                                        426,119                       410,903
   Other liabilities                                                                          583,266                       594,187
                                                                              ------------------------         ---------------------

                 Total liabilities                                                          8,835,150                     9,644,266
                                                                              ------------------------         ---------------------

SHAREHOLDERS' EQUITY:
   Common stock, $.02 stated value, 45,000,000 shares
      authorized; 23,311,944 shares issued and outstanding                                    466,239                       466,239
   Additional paid-in capital                                                              14,308,230                    14,308,230
   Accumulated other comprehensive income (loss)                                             (543,272)                     (897,523)
   Treasury stock, at cost, 138,795 shares                                                    (64,105)                      (64,105)
   Accumulated deficit                                                                     (6,942,177)                   (9,507,707)
                                                                              ------------------------         ---------------------

           Total shareholders' equity                                                       7,224,915                     4,305,134
                                                                              ------------------------         ---------------------

           TOTAL LIABILITIES & SHAREHOLDER'S EQUITY                                       $16,060,065                   $13,949,400
                                                                              ========================         =====================

                                           (See Accompanying Notes and Independent Accountants' Report)


</TABLE>

                                        2


<PAGE>

<TABLE>
<CAPTION>


                                           BNL FINANCIAL CORPORATION AND SUBSIDIARIES
                                              CONSOLIDATED STATEMENTS OF INCOME AND
                                                      COMPREHENSIVE INCOME



                                                       Three Months Ended                   Nine Months Ended
                                                          September 30,                       September 30,
                                                    ---------------------------        -----------------------------
                                                         2000           1999                2000            1999
                                                     (Unaudited)    (Unaudited)         (Unaudited)      (Unaudited)
                                                    -------------   -----------        -------------     -----------
<S>                                                   <C>            <C>               <C>              <C>

REVENUES:
   Premium income ..................................  $8,962,095     $7,410,959        $ 26,433,690    $ 21,527,171
   Investment income ...............................     243,870        204,311             648,611         584,117
   Realized gains on investments ...................    (105,804)        17,073            (103,784)         22,556
                                                    -------------   ------------        -----------     -----------
    Total income ...................................   9,100,161      7,632,343          26,978,517      22,133,844
                                                    -------------   ------------        -----------     -----------

EXPENSES:
   Policy benefits and other insurance costs .......   6,637,284      6,350,215          20,091,878      18,341,292
   Increase in liability for future policy benefits.       8,199        (19,514)            (88,253)        (41,781)
   Amortization of deferred policy acquisition costs       3,155          5,868              26,664          21,185
   Operating expenses ..............................   1,412,158      1,103,912           4,194,585       3,137,072
   Taxes, other than on income .....................     276,589        203,323             825,506         647,094
                                                    -------------   ------------        -----------     -----------

    Total expenses .................................   8,337,385      7,643,804          25,050,380      22,104,862
                                                    -------------   ------------        -----------     -----------

    OPERATING INCOME (LOSS).........................     762,776        (11,461)          1,928,137          28,982

Provision for income taxes (benefits)...............    (637,392)             0            (637,392)              0
                                                    -------------   ------------        -----------     -----------
    NET INCOME (LOSS)...............................  $1,400,168      ($ 11,461)         $2,565,529        $ 28,982
                                                    =============   ============        ===========     ===========

  Net income per share ...........................      $0.06           $0.00               $0.11           $0.00
                                                    =============   ============        ===========     ===========

    Weighted average number
    of shares ......................................   23,311,944     23,311,944         23,311,944      23,311,944
                                                    =============   ============        ===========     ===========

Other comprehensive income, net of tax:
   Unrealized gains on securities:
      Unrealized holding gains (loss) arising during
         period.....................................     $ 88,546     ($293,759)           $250,468      ($956,041)
      Reclassification adjustment for gains
         included in net income.....................      105,805       (17,073)            103,784        (22,556)
                                                    -------------   ------------        -----------     -----------
Other comprehensive income (loss)...................      194,351      (310,832)            354,252       (978,597)
                                                    -------------   ------------        -----------     -----------

     COMPREHENSIVE INCOME (LOSS)....................   $1,594,519     ($322,293)         $2,919,781       ($949,615)
                                                    =============   ============        ===========     ===========

<FN>
                               (See Accompanying Notes and Independent Accountants' Reports)

</FN>

</TABLE>

                                        3
<PAGE>



<TABLE>
<CAPTION>

                                            BNL FINANCIAL CORPORATION AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                     Nine Months                   Nine Months
                                                                                        Ended                         Ended
                                                                                      09/30/2000                    09/30/1999
Cash flows from operating activities:                                                (Unaudited)                   (Unaudited)
                                                                                 ---------------------         ---------------------
<S>                                                                              <C>                           <C>

Net income (loss)                                                                          $2,565,529                       $28,982
Adjustments to reconcile net income to net cash                                  ---------------------         ---------------------
   provided by operating activities:
 Realized (gain) loss on investments                                                          104,584                       (23,210)
 Realized (gain) loss on sale of furniture and equipment                                         (800)                          654
 Depreciation                                                                                  93,948                       106,409
 Amortization of deferred acquisition
    costs and state licenses acquired                                                          28,996                        23,517
 Accretion of bond discount                                                                     1,373                           357

Change in assets and liabilities:
 Increase in accrued investment income                                                       (114,560)                      (72,082)
 (Increase) decrease in premiums due and unpaid                                                 2 285                      (144,162)
 Increase (decrease) in premium deposit fund                                                  (10,297)                       13,972
 Decrease in annuity deposits and deferred profits                                           (189,299)                     (266,274)
 Decrease in liability for future policy benefits                                             (88,253)                      (41,781)
 Decrease in policy claims payable                                                           (204,825)                      (73,000)
 Increase (decrease) in advanced and unallocated premium                                     (302,252)                      252,343
 Increase in commissions payable                                                               15,216                        54,383
 Increase in deferred tax asset                                                              (679,129)                            0
 Other net                                                                                        633                      (112,378)
                                                                                 ---------------------         ---------------------

     Total adjustments                                                                     (1,342,380)                     (281,252)
                                                                                 ---------------------         ---------------------


     Total cash provided by (used in) operating activities                                  1,223,149                      (252,270)
                                                                                 ---------------------         --------------------
Cash flows from investing activities:
  Sales of debt securities                                                                    452,249                     2,673,446
  Sales of furniture and equipment                                                                800                         4,000
  Purchase of furniture and equipment                                                         (59,506)                     (238,786)
  Purchase of fixed maturity securities                                                    (1,947,572)                   (4,395,415)
                                                                                 ---------------------         ---------------------

      Net cash provided by (used in) investing activities                                  (1,554,029)                   (1,956,755)
                                                                                 ---------------------         ---------------------

Cash flows from financing activities:
  Net payments on supplementary contracts                                                     (18,486)                      (18,826)
                                                                                 ---------------------         ---------------------

      Net cash (used in) financing activities                                                 (18,486)                      (18,826)
                                                                                 ---------------------         ---------------------

Net increase (decrease) in cash and cash equivalents                                         (349,366)                   (2,227,851)

Cash and cash equivalents, beginning of year                                                1,419,618                     2,426,963
                                                                                 ---------------------         ---------------------

Cash and cash equivalents, end of period                                                   $1,070,252                    $  199,112
                                                                                 =====================         =====================

                                         (See Accompanying Notes and Independent Accountants' Report)

</TABLE>

                                        4

<PAGE>



           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1.

The accompanying  Consolidated  Financial Statements (unaudited) as of September
30,  2000 and for the quarter  ended  September  30, 2000 have been  reviewed by
independent   certified  public  accountants.   The  accompanying   Consolidated
Financial  Statements  (unaudited)  for the period ended September 30, 1999 have
not been reviewed by independent certified public accountants. In the opinion of
management,  the  aforementioned  financial  statements  contain all adjustments
necessary to present fairly the financial position as of September 30, 2000, and
the results of operations for the periods ended September 30, 2000 and September
30,  1999,  and the cash flows for the  periods  ended  September  30,  2000 and
September 30, 1999.

The statements have been prepared to conform to the  requirements of Form 10-QSB
and do not necessarily  include all disclosures  required by generally  accepted
accounting  principles  (GAAP).  The reader should refer to the Company's Annual
Report on Form 10-KSB for the year ended  December  31, 1999,  previously  filed
with the  Commission,  for financial  statements for the year ended December 31,
1999,  prepared in accordance with GAAP. Net income per share of common stock is
based on the weighted average number of outstanding common shares.

Note 2.

The  dental  claims  loss ratio was 64.9%  during the first nine  months of 2000
compared to 72.9% for the same period in 1999. The decrease is in large part due
to management's continuing efforts to control the claims loss ratio through rate
strategies,  modification of benefits, use of dental PPO networks and changes in
marketing  strategies.  However, part of the decline in the loss ratio is due to
an approximate  $650,000 over estimation of the claims liability at December 31,
1999,  which had the  effect of  reducing  claims  expense  in 2000.  Due to the
monthly fluctuation in claims received and the lag time in receiving the claims,
this accrual is difficult to estimate.

Note 3.

The  Company,  BNL Equity  Corporation  and several  officers in the Company are
defendants in a pending class action lawsuit alleging  violation of the Arkansas
Securities  Act.  Subsequent  to year-end the Arkansas  Supreme  Court  affirmed
certification  of the class. The Company filed a petition for Writ of Certiorari
with the United  States  Supreme  Court.  On October 2, 2000,  the  petition was
denied.  In due course,  the case will proceed in the trial  court.  The Company
expects to obtain a favorable  judgment in the case and  believes  the action is
frivolous  and will both  vigorously  defend and seek redress for harm caused by
the lawsuit to the Company.  However, the ultimate outcome of this litigation is
unknown at the present time.  Accordingly,  no provisions for any liability that
might  result  have been  made in the  financial  statements.  The  Company  has
expended a substantial  amount to date in legal  expenses.  Future costs are not
estimable at this time.

Note 4.

The Company follows Statement of Financial  Accounting Standards (SFAS) No. 109,
"Accounting  for  Income  Taxes,"  which  prescribes  the  liability  method  of
accounting  for deferred  income taxes.  Under the liability  method,  companies
establish  a deferred  tax  liability  or asset for the  future  tax  effects of
temporary differences between book and tax basis of assets and liabilities.

In the  quarter  ended  September  30, 2000 the  Company  reduced the  valuation
allowance  against its  deferred tax asset and recorded a net deferred tax asset
of $679,129. This reflects management's estimate of the future benefit that will
be realizable from use of approximately  $7,600,000 in loss  carryforwards  that
expire in various amounts between years 2001 - 2012. Realization is dependent on
generating   sufficient   taxable   income  prior  to  expiration  of  the  loss
carryforward.  Although  realization is not assured,  management  believes it is
more likely than not that all of the net  deferred  tax asset will be  realized.
However,  the amount of the deferred tax asset  considered  realizable  could be
reduced  in the near term if  estimates  of future  taxable  income  during  the
carryforward  period are reduced.  Recording  the deferred tax asset reduces the
current  federal tax expense of $41,737,  by a credit amount of $679,129,  for a
net federal tax benefit of $637,392 at September 30, 2000.
                                       5
<PAGE>






                                               INDEPENDENT ACCOUNTANTS' REPORT

To The Board of Directors
BNL Financial Corporation

We have reviewed the  accompanying  Consolidated  Balance Sheet of BNL Financial
Corporation  and   Subsidiaries  as  of  September  30,  2000  and  the  related
Consolidated  Statements of Income and  Comprehensive  Income and Cash Flows for
the three-month and nine-month  period ended September 30, 2000. These financial
statements are the responsibility of the Corporation's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such consolidated  financial  statements for them to be in conformity
with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the  Consolidated  Balance  Sheet of BNL Financial  Corporation  and
Subsidiaries as of December 31, 1999 and the related Consolidated  Statements of
Income and Comprehensive  Income,  Stockholders'  Equity, and Cash Flows for the
year then ended (not  presented  herein);  and in our report dated  February 12,
2000,  we  expressed  an  unqualified  opinion on those  consolidated  financial
statements.  In our  opinion,  the  information  set  forth in the  accompanying
Consolidated  Balance  Sheet as of December  31, 1999 is fairly  stated,  in all
material respects,  in relation to the Consolidated  Balance Sheet from which it
has been derived.

Oklahoma City, Oklahoma                                SMITH, CARNEY & CO., p.c.
November 9, 2000




                                       6
<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Liquidity and Capital Resources

At September  30, 2000,  the Company had liquid  assets of  $1,070,252  in cash,
money market savings  accounts and short-term  certificates  of deposit,  all of
which can readily be converted to cash.

The major  components of operating cash flows are premium,  annuity deposits and
investment income. In the first nine months of 2000, BNLAC collected $26,346,722
of premiums and annuity deposits (gross before  reinsurance) and the Company had
consolidated investment income of $648,611.

The  Company's  investments  are  primarily in U.S.  Government  and  Government
Agencies and other  investment  grade bonds which have been marked to market and
classified  as available  for sale.  The Company  does not hedge its  investment
income through the use of derivatives.

The  Company's  insurance  operations  are  conducted  through its wholly  owned
subsidiary,  Brokers National Life Assurance  Company (BNLAC).  At September 30,
2000, BNLAC had statutory  capital and surplus of $6,099,404.  BNLAC is required
to maintain minimum levels of statutory  capital and surplus,  which differ from
state to state,  as a condition to conducting  business in those states in which
it is  licensed.  The State of Arkansas,  which is the legal  domicile of BNLAC,
requires a minimum of $2,300,000 in capital and surplus. The highest requirement
in any state in which BNLAC is licensed is $3,000,000.  Management  monitors the
minimum capital and surplus requirements to maintain compliance in each state in
which it is licensed.

Results of Operations

Premium  income for the first nine  months of 2000 was  $26,433,690  compared to
$21,527,171 for the same period in 1999. The increase of $4,906,519, or 23%, was
due  to an  increase  in  insurance  premiums  written  and  group  dental  rate
increases.

Net  investment  income was  $648,611 for the period  ended  September  30, 2000
compared to $584,117 for the same period in 1999. The increase was primarily due
to an  increase  in the size and yield of the bond  portfolio  in the first nine
months of 2000 compared to the same period in 1999.

Realized losses on investments  were ($103,784) in the first nine months of 2000
compared  to realized  gain of $22,556 for the same period in 1999.  The current
year  realized  loss is primarily  due to the write down in book value of common
stock to reflect the decline in their market value.

In the first nine months of 2000, policy benefits and other insurance costs were
$20,091,878  compared to  $18,341,292  for the same period in 1999. The increase
was due to an increase in claims and commissions  resulting from the increase in
insurance  business in force.  The dental claims loss ratio was 64.9% during the
first nine months of 2000  compared  to 72.9% for the same  period in 1999.  The
decrease is in large part due to management's  continuing efforts to control the
claims loss ratio  through rate  strategies,  modification  of benefits,  use of
dental PPO networks and changes in marketing  strategies.  However,  part of the
decline in the loss ratio is due to an approximate  $650,000 over  estimation of
the claims  liability  at December  31,  1999,  which had the effect of reducing
claims  expense in 2000. Due to the monthly  fluctuation in claims  received and
the lag time in receiving the claims, this accrual is difficult to estimate.

For the period ended  September  30, 2000,  the decrease in liability for future
policy benefits was ($88,253) compared to ($41,781) in 1999. The larger decrease
in 2000 was due to a decrease in life reserves from surrendered policies.

                                       8
<PAGE>

Amortization  of deferred policy  acquisition  costs was $26,664 and $21,185 for
the first nine months of 2000 and 1999,  respectively.  Amortization of deferred
policy  acquisition  costs  may  vary in the  future  in  relation  to new  life
insurance sales and lapses or surrenders of existing policies.

Operating  expenses  increased  to  $4,194,585  in the first nine months of 2000
compared to  $3,137,072  for the same period in 1999.  The increase in operating
expenses was primarily due to an increase in personnel and claims administrative
expense - which are all  attributable  to the  increased  volume of insurance in
force.

Taxes,  other than on income,  fees and assessments  were $825,506 for the first
nine  months of 2000  compared  to  $647,094  for the same  period in 1999.  The
increase  was  primarily  due to an increase in premium  taxes on the  increased
premiums collected.

The provision for income taxes was a $637,392  benefit for the first nine months
of 2000 compared to $0 for the same period in 1999.  The Company has reduced its
valuation  allowance  against its deferred tax asset and recorded a net deferred
tax asset of $679,129,  reflecting  the benefit of  approximately  $7,600,000 in
loss  carryforwards  that expire in various  amounts  between years 2001 - 2012.
Realization  is  dependent  on  generating  sufficient  taxable  income prior to
expiration of the loss  carryforward.  For the period ended  September 30, 2000,
the Company had $41,737 of current  federal tax expense  which was offset by the
$679,129 deferred tax credit.

The income  from  operations  for the first nine  months of 2000 was  $2,565,529
compared  to  $28,982  for the same  period in 1999.  Based on claim  experience
during 2000, the estimate of claims liability at December 31, 1999 is overstated
by approximately  $650,000. The over estimate for this liability has contributed
a corresponding increase in income during 2000. The remaining increase in income
was  primarily  due to an increase in premium  income,  lower  dental  insurance
claims ratio and the recognition of a deferred tax asset.

Forward-Looking Statements

All statement, trend analyses and other information contained in this report and
elsewhere (such as in filings by us with the Securities and Exchange Commission,
press  releases,  presentations  by us or our  management  or  oral  statements)
relative to markets for our products and trends in our  operations  or financial
results,  as well as other  statements  including  words  such as  "anticipate,"
"believe,"   "plan,"   "estimate,"   "expect,"   "intend,"   and  other  similar
expressions,  constitute forward-looking statements under the Private Securities
Litigation Reform Act of 1995. These  forward-looking  statements are subject to
known and unknown risks,  uncertainties and other factors which may cause actual
results   to  be   materially   different   from  those   contemplated   by  the
forward-looking statements. Such factors include, among other things:

     o    general economic  conditions and other factors,  including  prevailing
          interest rate levels and stock and credit market performance which may
          affect  (among  other  things) our ability to sell our  products,  our
          ability  to  access  capital   resources  and  the  costs   associated
          therewith,  the market value of our investments and the lapse rate and
          profitability of policies

     o    customer response to new products and marketing initiatives

     o    mortality,   morbidity   and  other   factors  which  may  affect  the
          profitability of our products o changes in the federal income tax laws
          and regulations which may affect the relative income tax advantages of
          our products

     o    regulatory changes or actions,  including those relating to regulation
          of financial  services  affecting  (among other things) bank sales and
          underwriting  of  insurance  products  and  regulation  of  the  sale,
          underwriting and pricing of products

     o    the risk  factors  or  uncertainties  listed  from time to time in our
          filings with the Securities and Exchange Commission

                                       9
<PAGE>


                          PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

On April  30,  1996,  Myra Jo  Pearson  and Paul  Pearson  filed a class  action
complaint in the Circuit Court of Pulaski County, Arkansas (3rd Division) naming
the Company,  BNL Equity  Corporation  and several  officers of the Company,  as
defendants.  The  plaintiffs  have  alleged  that the  defendants  violated  the
Arkansas  Securities  Act in  several  respects  in  connection  with the public
offerings of securities made by United Arkansas  Corporation  ("UAC") (now known
as BNL Equity Corporation) during the period from January 1989 until May 1992.

The  Company  retained  the  firm of  Friday,  Eldredge  & Clark,  Little  Rock,
Arkansas,  to handle the defense of the action on behalf of all  defendants.  On
March 3, 1998, the plaintiffs filed a Second Amended Class Action Complaint,  in
which they dropped  certain claims,  including  allegations of common law fraud,
fraudulent concealment,  tolling of the statute of limitations,  and the request
for punitive damages.

The first issue determined in the case concerned the procedural issue of whether
the lawsuit would be certified as a class  action,  with the class of plaintiffs
including all Arkansas  purchasers who  participated in the public  offerings of
securities by UAC during the stated time frame.  A hearing was held on the issue
of whether the class would be certified on June 8, 1998,  and on August 27, 1998
the Court  entered a ruling  certifying  the class.  On  February  10,  2000 the
Arkansas Supreme Court affirmed the class  certification and held that the trial
court had subject matter  jurisdiction of this case. The Arkansas  Supreme Court
granted the Company's motion to stay the mandate.

The  Company  filed a petition  for Writ of  Certiorari  with the United  States
Supreme Court. On October 2, 2000, the petition was denied. The certification of
the class does not have any impact on the  substantive  issues to be  litigated,
including whether or not any material  misrepresentations or omissions were made
in the  offerings in question,  whether the claims are barred by the  applicable
statute of limitations,  and other issues. In due course,  the case will proceed
in the trial court,  Pulaski County Circuit Court,  Little Rock,  Arkansas.  The
Company believes that the lawsuit is frivolous and will both vigorously defend
and seek redress for harm caused by the lawsuit.

Item 2.  Changes in Securities.

None of the  rights  of the  holders  of any of the  Company's  securities  were
materially  modified during the period covered by this report.  In addition,  no
class of  securities  of the  Company was issued or  modified  which  materially
limited or qualified any class of its registered securities.

Item 3. Defaults Upon Senior Securities.

During the period  covered by this report  there was no material  default in the
payment of any principal, interest, sinking or purchase fund installment, or any
other material default not cured within 30 days with respect to any indebtedness
of the Company.

Item 4.  Submission of Matters to a Vote of Security Holders.
-------------------------------------------------------------
 There were no matters submitted to a vote of security holders.

Item 5.  Other Information.

None

Item 6.  Exhibits  and  Reports on Form  10-QSB
No reports or exhibits are being filed with this 10-QSB.

(b) Reports on Form 8-K
No reports were filed for the period covered by this report

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                           BNL FINANCIAL CORPORATION
                                (Registrant)



Date: November 10, 2000                  /s/ Wayne E. Ahart
                                        -------------------------------------
                                    By: Wayne E. Ahart, Chairman of the Board
                                        (Chief Executive Officer)


Date: November 10, 2000                /s/ Barry N. Shamas
                                       -------------------------------------
                                    By: Barry N. Shamas, Executive V.P.
                                       (Chief Financial Officer)



                                       10

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