----

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**BNL      FINANCIAL CORPORATION**

| IOWA                                                    | 42-1239454                                          |
|---------------------------------------------------------|-----------------------------------------------------|
| (State                of incorporation)                 | (I.R.S.                Employer Identification No.) |
|                                                    |                                                |
| 7010                Hwy 71 W., Ste 100                  |                                                |
| Austin,                Texas                            | 78735                                               |
| (Address                of principal executive offices) | (Zip                Code)                           |
|                                                    |                                                |
|                                                    |                                                |

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**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements**

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**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED        BALANCE SHEETS**

|                                                                                                                                                            |   | **June                30**                                     |                      | December                31,                  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------------------------|----------------------------------------------|--------|
| **ASSETS**                                                                                                                                            |   | **2007                (Unaudited)**                            |                      | 2006                (Audited)                |   |
| Cash                and cash equivalents                                                                                                                        |   | **$        1,901,003** |                      | $                   1,673,058 |   |
| Investment                in fixed maturities, at fair value Available for Sale (amortized                cost                $590,133, $590,133, respectively) |   |                                                           | **597,738**               |                                         |   | 596,800 |   |
| Investment                in fixed maturities, at amortized cost, Held to Maturity (fair value                $20,542,210; $18,798,802, respectively)           |   |                                                           | **20,840,485**            |                                         |   | 19,128,637 |   |
| Other                long-term investments                                                                                                                      |   |                                                           | **1,489,682**             |                                         |   | 1,507,809 |   |
| Investment                in equity securities (cost $326,498; $442,574,                respectively)                                                           |   |                                                           | **449,150**               |                                         |   | 509,381 |   |
| Total                Investments, Including Cash and Cash Equivalents                                                                                           |   |                                                           | **25,278,058**            |                                         |   | 23,415,685 |   |
|                                                                                                                                                            |   |                                                           |                      |                                         |   |   |   |
| Accrued                investment income                                                                                                                        |   |                                                           | **239,453**               |                                         |   | 223,295 |   |
| Furniture                and equipment, net                                                                                                                     |   |                                                           | **1,325,620**             |                                         |   | 1,322,369 |   |
| Deferred                policy acquisition costs                                                                                                                |   |                                                           | **373,691**               |                                         |   | 359,491 |   |
| Policy                loans                                                                                                                                     |   |                                                           | **160,964**               |                                         |   | 153,798 |   |
| Receivable                from reinsurer                                                                                                                        |   |                                                           | **52,820**                |                                         |   | 52,820 |   |
| Premiums                due and unpaid                                                                                                                          |   |                                                           | **1,107,400**             |                                         |   | 1,086,103 |   |
| Income                tax assets                                                                                                                                |   |                                                           | ** 18,000**          |                                         |   |  21,000 |   |
| Intangible                assets                                                                                                                                |   |                                                           | **139,946**               |                                         |   | 142,853 |   |
| Other                assets                                                                                                                                     |   |                                                           | **276,464**               |                                         |   | 232,220 |   |
| Total                Assets                                                                                                                                     |   | **$**                                                          | **28,972,416**            |                                         | $      | 27,009,634 |   |
|                                                                                                                                                            |   |                                                           |                      |                                         |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                                                         |   |                                                           |                      |                                         |   |   |   |
| **Liabilities:**                                                                                                                                                |   |                                                           |                      |                                         |   |   |   |
| Liabilities                for future policy benefits                                                                                                           |   | **$**                                                          | **2,467,428**             |                                         | $      | 2,472,849 |   |
| Policy                claims payable                                                                                                                            |   |                                                           | **2,530,521**             |                                         |   | 2,508,125 |   |
| Annuity                deposits                                                                                                                                 |   |                                                           | **2,464,067**             |                                         |   | 2,536,225 |   |
| Deferred                annuity profits                                                                                                                         |   |                                                           | **277,817**               |                                         |   | 288,389 |   |
| Premium                deposit funds                                                                                                                            |   |                                                           | **26,639**                |                                         |   | 28,458 |   |
| Supplementary                contracts without life contingencies                                                                                               |   |                                                           | **11,648**                |                                         |   | 17,241 |   |
| Advanced                and unallocated premium                                                                                                                 |   |                                                           | **  1,369,145** |                                         |   |     875,089 |   |
| Commissions                payable                                                                                                                              |   |                                                           | **609,570**               |                                         |   | 555,159 |   |
| Accrued                taxes and expenses                                                                                                                       |   |                                                           | **716,144**               |                                         |   | 615,700 |   |
| Bonds                payable                                                                                                                                    |   |                                                           | **1,615,677**             |                                         |   | 1,639,984 |   |
| Other                liabilities                                                                                                                                |   |                                                           | **  978,233**   |                                         |   |   959,911 |   |
| Total                Liabilities                                                                                                                                |   |                                                           | **13,066,889**            |                                         |   | 12,497,130 |   |
|                                                                                                                                                            |   |                                                           |                      |                                         |   |   |   |
| **Shareholders'                Equity:**                                                                                                                        |   |                                                           |                      |                                         |   |   |   |
| Common                stock, $.02 stated value, 45,000,000 shares authorized, 17,213,170                shares                issued and outstanding            |   |                                                           | **344,264**               |                                         |   | 344,264 |   |
| Additional                paid-in capital                                                                                                                       |   |                                                           | ** 7,583,449**       |                                         |   |  7,582,733 |   |
| Accumulated                other comprehensive income                                                                                                           |   |                                                           | **110,183**               |                                         |   | 68,356 |   |
| Accumulated                surplus                                                                                                                              |   |                                                           | **9,525,598**             |                                         |   | 7,977,171 |   |
| Treasury                stock, at cost; 1,634,654; 1,502,270 shares respectively                                                                                |   |                                                           | **(1,657,967**            | **)**                                        |   | (1,460,020 | ) |
| Total                Shareholders' Equity                                                                                                                       |   |                                                           | **15,905,527**            |                                         |   | 14,512,504 |   |
| Total                Liabilities and Shareholders' Equity                                                                                                       |   | **$**                                                          | **28,972,416**            |                                         | $      | 27,009,634 |   |

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**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED        STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

|                                                                             | Three                Months EndedJune                30 |                    | Six                Months EndedJune                30 |            |   |
|----------------------------------------------------------------------------------|---------------------------------------------------------|-------------------------|-------------------------------------------------------|-----------------|--------|
|                                                                             |                                                    | **2007****(Unaudited)** |                                                  | 2006(Unaudited) |   |  **2007****(Unaudited)** |   | 2006(Unaudited) |   |   |
| **Income:**                                                                      |                                                    |                    |                                                  |            |   |    |   |   |   |   |
| Premium                income                                                    | **$**                                                   | **11,125,135**          | $                                                     | 11,032,159      | **$**  | **22,395,701** | $ | 22,348,846 |   |   |
| Vision                insurance income                                           |                                                    | **487,250**             |                                                  | 332,830         |   | **996,755** |   | 724,854 |   |   |
| Net                investment income                                             |                                                    | **300,793**             |                                                  | 321,674         |   | **625,840** |   | 594,038 |   |   |
| Marketing                fees                                                    |                                                    | **33,673**              |                                                  | 33,726          |   | **67,547** |   | 67,687 |   |   |
| Realized                gains on debt retirement                                 |                                                    | ** 2,700**         |                                                  |  2,430     |   | ** 8,103** |   | 10,933 |   |   |
| Realized                gains                                                    |                                                    | ** 5,136**         |                                                  |  2,833     |   | ** 5,136** |   | 20,615 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Total                Income                                                      |                                                    | **11,954,687**          |                                                  | 11,725,652      |   | **24,099,082** |   | 23,766,973 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| **Expenses:**                                                                    |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Liability                for future policy benefits expense                      |                                                    | ** (24,413)**      |                                                  |  (58,487)  |   | **(5,420)** |   | (118,298) |   |   |
| Policy                benefits and other insurance costs                         |                                                    | **8,504,126**           |                                                  | 8,532,378       |   | **16,948,387** |   | 17,441,827 |   |   |
| Amortization                of deferred policy acquisition costs                 |                                                    | **4,653**               |                                                  | 3,996           |   | **8,520** |   | 7,775 |   |   |
| Operating                expenses                                                |                                                    | **2,245,854**           |                                                  | 2,251,367       |   | **4,431,305** |   | 4,379,204 |   |   |
| Taxes,                other than income, fees and assessments                    |                                                    | **404,003**             |                                                  | 390,284         |   | **  830,746** |   |   811,184 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Total                Expenses                                                    |                                                    | **11,134,223**          |                                                  | 11,119,538      |   | **22,213,538** |   | 22,521,692 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Income                from Operations before Income Taxes                        |                                                    | **820,464**             |                                                  | 606,114         |   | **1,885,544** |   | 1,245,281 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Provision                for income taxes                                        |                                                    | ** 147,299**       |                                                  |  108,035   |   | **337,118** |   | 228,100 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Net                Income                                                        | **$**                                                   | **673,165**             | $                                                     | 498,079         | **$**  | **1,548,426** | $ | 1,017,181 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Net                income per common share (basic and diluted)                   | **$**                                                   | **0.04**                | $                                                     | 0.03            | **$**  | **0.10** | $ | 0.06 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Weighted                average number of fully paid common shares               |                                                    | **15,675,591**          |                                                  | 16,795,299      |   | **15,701,335** |   | 16,821,440 |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Other                comprehensive income (loss), net of tax:                    |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Unrealized                gains (losses) on securities:                          |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Unrealized                holding gain (loss) arising during period (net of tax) | **$**                                                   | **(8,423)**             | $                                                     | (4,269)         | **$**  | **  53,179** | $ | (12,794) |   |   |
| Reclassification                adjustment for loss included in net income       |                                                    | **(11,351)**            |                                                  | (6,869)         |   | **  (11,352)** |   |   (11,802) |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Other                Comprehensive Income (loss)                                 |                                                    | **(19,774)**            |                                                  | (11,138)        |   | ** 41,827** |   | (24,596) |   |   |
|                                                                             |                                                    |                    |                                                  |            |   |   |   |   |   |   |
| Comprehensive                Income                                              | **$**                                                   | **653,391**             | $                                                     | 486,941         | **$**  | **1,590.253** | $ | 992,585 |   |   |

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**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

** CONSOLIDATED        STATEMENTS OF CASH FLOWS**

|                                                                                                            | Six                Months EndedJune                30, |                          |
|-----------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|-------------------------------|
| **Cash                flows from operating                activities:**                                    | **2007****(Unaudited)**                                |                          | 2006(Unaudited) |   |
| Net                income                                                                                       | **$**                                                  | **1,548,426**                 |   | $ |   1,017,181 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |                                                   |                          |   |   |   |   |
| Realized                gain on investments                                                                     |                                                   | **(13,677**                   | **)** |   | (14,892 | ) |
| Realized                loss (gain) on furniture and fixtures                                                   |                                                   | **8,541**                     |   |   | (5,723 | ) |
| Realized                gain on debt retirement                                                                 |                                                   | **(8,103**                    | **)** |   | (10,935 | ) |
| Decrease                in deferred tax asset                                                                   |                                                   | **(4,000**                    | **)** |   | - |   |
| Depreciation                                                                                                    |                                                   | ** 144,963**             |   |   | 158,471 |   |
| Amortization                of deferred acquisition costs, and intangibles                                      |                                                   | ** 11,428**              |   |   | 10,682 |   |
| Accretion                of bond discount                                                                       |                                                   | **   614**     |   |   | (3,445 | ) |
| Change                in assets and liabilities:                                                                |                                                   |                          |   |   |   |   |
| Increase                in accrued investment income                                                            |                                                   | **   (16,158** | **)** |   |    (31,269 | ) |
| (Increase)                decrease in premiums due and unpaid                                                   |                                                   | **  (21,297**       | **) ** |   |   58,454 |   |
| Decrease                in liability for future policy benefits                                                 |                                                   | ** (5,420**              | **)** |   | (118,298 | ) |
| Increase                (decrease) in policy claims payable                                                     |                                                   | **22,396**                    |   |   | (227,850 | ) |
| Decrease                in annuity deposits and deferred profits                                                |                                                   | **(82,730**                   | **)** |   | (30,243 | ) |
| Decrease                in premium deposit funds                                                                |                                                   | **(1,819**                    | **)** |   | (2,103 | ) |
| Increase                in advanced and unallocated premium                                                     |                                                   | **494,056**                   |   |   | 170,281 |   |
| Increase                in commissions payable                                                                  |                                                   | ** 54,410**              |   |   |  44,116 |   |
| Other,                increase (decrease)                                                                       |                                                   | **47,193**                    |   |   | (144,113 | ) |
| Net                Cash Provided By Operating Activities                                                        |                                                   | **2,178,823**                 |   |   | 870,314 |   |
|                                                                                                            |                                                   |                          |   |   |   |   |
| **Cash                flows from investing activities:**                                                        |                                                   |                          |   |   |   |   |
| Proceeds                from sales of furniture and equipment                                                   |                                                   | **-**                         |   |   | 11,532 |   |
| Proceeds                from maturity or redemption - Held to Maturity Investments                              |                                                   | ** 939,809**             |   |   |   2,569,357 |   |
| Purchase                of furniture and equipment                                                              |                                                   | **(148,213**                  | **)** |   | (400,170 | ) |
| Proceeds                from sales of equity securities                                                         |                                                   | **129,752**                   |   |   | 96,504 |   |
| Purchase                of fixed maturity securities - Held to Maturity                Investments              |                                                   | **(2,664,265**                | **)** |   | (1,132,412 | ) |
| Purchase                of equity securities                                                                    |                                                   | **-**                         |   |   | (111,654 | ) |
|       Other                investments – Line of credit payments received   |                                                   | **18,128**                    |   |   |        17,613 |   |
| Net                Cash Provided By (Used In) Investing Activities                                              |                                                   | **(1,724,789**                | **)** |   | 1,050,770 |   |
|                                                                                                            |                                                   |                          |   |   |   |   |
| **Cash                flows from financing activities:**                                                        |                                                   |                          |   |   |   |   |
| Net                payments on supplementary contracts                                                          |                                                   | **(5,593**                    | **)** |   | (14,306 | ) |
| Purchase                of treasury stock                                                                       |                                                   | **(204,635**                  | **)** |   | (42,489 | ) |
| Bonds                payable purchased                                                                          |                                                   | **(16,205**                   | **)** |   | (21,869 | ) |
| Exercised                stock options                                                                          |                                                   | **   344**     |   |   |   600 |   |
| Net                Cash Used In Financing Activities                                                            |                                                   | **(226,089**                  | **)** |   | (78,064 | ) |
|  Net                Increase In Cash and Cash                Equivalents                                   |                                                   | **   227,945** | **  ** |   | 1,843,020 |   |
|  Cash                And Cash Equivalents, Beginning Of Period                                             |                                                   | **  1,673,058**     |   |   | 946,272 |   |
|  Cash                And Cash Equivalents, End Of Period                                                   | **$**                                                  | **1,901,003**                 |   | $ |    1,789,292 |   |
|                                                                                                            |                                                   |                          |   |   |   |    |

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**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

** NOTES      TO CONSOLIDATED      FINANCIAL STATEMENTS (UNAUDITED)**

**Note      1.**

**2.  Change      in Accounting Estimate**

**3.        Recently Issued Accounting Standards**

*The Fair Value Option for      Financial Assets and Financial Liabilities*

**4.  Issuer      Tender  Offer and Schedule TO**

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**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

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

**Forward-Looking      Statements**

**Liquidity      and Capital Resources**

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**Consolidated      Results of Operations**

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**Item      3. Quantitative and Qualitative Disclosures About Market      Risk**

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**Item      4.  Control and Procedures**

**Item      4T.  Controls and Procedures**

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**PART      II -- OTHER INFORMATION**

**Item      1. Legal Proceedings.**

**Item      1A.  Risk Factors.**

**Item      2. Unregistered Purchase of Equity Securities.**

**Issuer      Purchases of Equity Securities**

|       **Period**   |   **(a)****Total****Number                of****Shares****Purchased** |   **(b)****Average****Price****Paid****Per                share** |   **(c)****Total                number of shares purchased as part of publicly announced plans or                programs                (1)** |   **(d)****Maximum                number of shares that may yet be purchased under the plans or programs                (1)** |
|--------------------------------------------------|---------------------------------------------------------------------------------|-----------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|
| Month                #1, Jan 1 thru Jan 31, 2007 | 39,334                                                                          | $1.00                                                                       | None                                                                                                                                                     | None                                                                                                                                    |
| Month                #1, Feb 1 thru Feb 28, 2007 | --                                                                              | --                                                                          | None                                                                                                                                                     | None                                                                                                                                    |
| Month                #3, Mar 1 thru 31, 2007     | --                                                                              | --                                                                          | None                                                                                                                                                     | None                                                                                                                                    |
| Month                #4, Apr 1 thru Apr 30, 2007 | --                                                                              | --                                                                          | None                                                                                                                                                     | None                                                                                                                                    |
| Month                #5 May 1 thru May 31, 2007  | --                                                                              | --                                                                          | None                                                                                                                                                     | None                                                                                                                                    |
| Month                #6 Jun 1 thru Jun 30, 2007  | 94,125                                                                          | $1.25                                                                       | None                                                                                                                                                     | None                                                                                                                                    |
| Totals                                           | 133,459                                                                         |                                                                        |                                                                                                                                                     |                                                                                                                                    |

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security      Holders.**

**Item      5. Other Information.**

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**Item      6. Exhibits and Reports on Form 10-Q.**

| **No.**   |   | **Description**                                                                                                                                                                                                                                                   |   | **Page                or Method of Filing**                                                                                                                                                                                                                          |
|-----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  3.1 |   |  Articles                of Incorporation of BNL Financial Corporation, dated January 27,                1984 and                Amendment to Articles of Incorporation of BNL Financial Corporation,                dated                November 13, 1987. |   |  Incorporated                by reference to Exhibit 3.1 of the Company's Annual Report on Form                10-K                for the period ending December 31, 1993.                                                                                     |
| 3.2       |   | By-laws                of BNL Financial Corporation.                                                                                                                                                                                                              |   | Incorporated                by reference to Exhibit 3.2 of the Company’s Registration Statement No.                33-70318                                                                                                                                    |
| 4.1       |   | Instruments                defining the rights of security holders, including                indentures.                                                                                                                                                          |   | Incorporated                by reference to Exhibit 4 of the Company's Registration Statement                No.                2-94538 and Exhibits 3.5 and 4 of Post-Effective Amendment No. 3                thereto.                                             |
| 4.2       |   | Articles                of Incorporation of BNL Financial Corporation, dated January 27,                1984 and                Amendment to Articles of Incorporation on BNL Financial Corporation,                dated                November 13, 1987.       |   | Incorporated                by reference to Exhibits 4.2 of the Company's Annual Report on Form                10-KSB                for the period ending December 31, 1998.                                                                                        |
| 10.1      |   | Form                of Agreement between Commonwealth Industries Corporation, American                Investors Corporation and Wayne E. Ahart regarding rights to purchase                shares of the Company.                                                 |   | Incorporated                by reference to Exhibit I of the Company's Quarterly Report on 10-QSB                for                the period ended September 30, 1994.                                                                                        |
| 10.2      |   | Agreement                dated December 21, 1990 between Registrant and C. Donald Byrd granting                Registrant right of first refusal as to future transfers of Mr. Byrd's                shares of the Company's common stock.                        |   | Incorporated                by reference to Exhibit I of the Company's Quarterly Report on 10-QSB                for                the period ended March 31, 1996.                                                                                            |
| 10.3      |   | Convertible                Debenture Agreement dated July 25, 2001 between BNL Equity Corporation                and                EPSI Benefits Inc.                                                                                                            |   | Incorporated                by reference to Exhibit 10.9 of the Company's Annual Report on 10-K                for                the period ended December 31, 2005.                                                                                                |
| 10.4      |   | Claims                Service Agreement dated June 1, 1999 between Brokers National Life                Assurance Company and Employer Plan Services Inc.                                                                                                         |   | Incorporated                by reference to Exhibit 10.5 of the Company's Annual Report on 10-K                for                the period ended December 31, 2005.                                                                                                |
| 10.5      |   | Office                lease agreement dated January 21, 2005, between Brokers National                Life                Assurance Company and KIMCO for premises in Austin.                                                                                     |   | Incorporated                by reference to Exhibit 10.6 of the Company's Annual Report on 10-K                for                the period ended December 31, 2005.                                                                                                |
| 10.6      |   | Line                of Credit Agreement dated October 15, 2004 between Brokers National                Life                Assurance Company and Employer Plan Services Inc.                                                                                      |   | Incorporated                by reference to Exhibit 10.7 of the Company's Annual Report on 10-K                for                the period ended December 31, 2005.                                                                                                |
| 10.7      |   | Marketing                Agreement dated July 25, 2001 between BNL Equity Corporation and                Employer                Plan Services Inc. and EPSI Benefits Inc.                                                                                        |   | Incorporated                by reference to Exhibit 10.8 of the Company's Annual Report on 10-K                for                the period ended December 31, 2005.                                                                                                |
| 10.8      |   | Outsourcing                Agreement dated May 1, 2006 between Brokers National Life Assurance                Company and Virtual Item Processing Systems, Inc.                                                                                                   |   | Incorporated                by reference as filed with the Company’s Annual Report on 10-K for the                period ended December 31, 2006                                                                                                               |
| 11        |   | Statement                Re computation of per share earnings.                                                                                                                                                                                                    |   | Reference                is made to the computation of per share earnings as shown page 4                herein                and the explanation in  Note 2 to the Notes to Consolidated                Financial Statements (unaudited), page 6 herein. |
| 18        |   | Letter                Re Change in accounting principles                                                                                                                                                                                                          |   | None.  Not                applicable.                                                                                                                                                                                                                      |
| 22        |   | Published                report regarding matters submitted to vote of security                holders                                                                                                                                                            |   | The                Company’s definitive proxy statement dated May 1, 2007, as filed with the                SEC on Schedule 14A on April 16, 2007, is incorporated by reference                herein.                                                         |

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| 23   |   | Consents                of experts and counsel incorporated by reference into a previously                filed                Securities Act registration statement |   | Not                applicable.     |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|
| 31.1 |   | Certification                of Chief Executive OfficerSection                302                                                                                    |   | Filed                herewith - E1 |
| 31.2 |   | Certification                of Chief Financial OfficerSection                302                                                                                    |   | Filed                herewith - E2 |
| 32.1 |   | Certification                of Chief Executive OfficerSection                906                                                                                    |   | Filed                herewith - E3 |
| 32.2 |   | Certification                of Chief Financial OfficerSection                906                                                                                    |   | Filed                herewith - E3 |

**(b)      Material Contracts - Reports on Form 8-K.**

|  No                items were reported on Form 8-K during the period covered by this                report. |
|------------------------------------------------------------------------------------------------------------------|

**SIGNATURES**

|                                                      |   | BNL                FINANCIAL CORPORATION                 |
|-----------------------------------------------------------|--------|----------------------------------------------------------|
|                                                      |   | (Registrant)                                             |
|                                                      |   |                                                     |
|                                                      |   | /s/                Wayne E. Ahart                        |
| Date:                August 14, 2007                      |   | By:                Wayne E. Ahart, Chairman of the Board |
|                                                      |   | (Chief                Executive Officer)                 |
|                                                      |   |                                                     |
|                                                      |   |  /s/                Barry N. Shamas                 |
| Date:                August 14,                2007  |   | By:                Barry N. Shamas, Executive V.P.       |
|                                                      |   | (Chief                Financial Officer)                 |

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**Exhibit      31.1**

**Certification      of Chief Executive Officer**

**Section      302**

|   | 1. | I                have reviewed this quarterly report on Form 10-Q of BNL Financial                Corporation; |
|--------|----|----------------------------------------------------------------------------------------------------------------|

|   | 2. | Based                on my knowledge, this quarterly report does not contain any untrue                statement of a material fact or omit to state a material fact necessary                to                make the statements made, in light of the circumstances under which                such                statements were made, not misleading with respect to the period covered                by                this quarterly report; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Based                on my knowledge, the financial statements, and other financial information                included in this quarterly report, fairly present in all material                respects                the financial condition, results of operations and cash flows of                the                registrant as of, and for, the periods presented in this quarterly                report; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | The                registrant's other certifying officers and I are responsible for                establishing and maintaining disclosure controls and procedures (as                defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant                and we                have: |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | designed                such disclosure controls and procedures to ensure that material                information relating to the registrant, including its consolidated                subsidiaries, is made known to us by others within those entities,                particularly during the period in which this quarterly report is                being                prepared; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | evaluated                the effectiveness of the registrant's disclosure controls and procedures                as of a date within 90 days prior to the filing date of this quarterly                report (the "Evaluation Date"); and |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | presented                in this quarterly report our conclusions about the effectiveness                of the                disclosure controls and procedures based on our evaluation as of                the                Evaluation Date; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | The                registrant's other certifying officers and I have disclosed, based                on our                most recent evaluation, to the registrant's auditors and the audit                committee of registrant's board of directors (or persons performing                the                equivalent function): |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | all                significant deficiencies in the design or operation of internal controls                which could adversely affect the registrant's ability to record,                process,                summarize and report financial data and have identified for the                registrant's auditors any material weaknesses in internal controls;                and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | any                fraud, whether or not material, that involves management or other                employees who have a significant role in the registrant's internal                controls; and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | To                my knowledge and information, there were no events or circumstances                as                described in subparagraphs (a) and (b) above:                and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | The                registrant's other certifying officers and I have indicated in this                quarterly report whether or not there were significant changes in                internal                controls or in other factors that could significantly affect internal                controls subsequent to the date of our most recent evaluation, including                any corrective actions with regard to significant deficiencies and                material weaknesses. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Exhibit      31.2**

**Certification      of Chief Financial Officer**

**Section      302**

|   | 1. | I                have reviewed this quarterly report on Form 10-Q of BNL Financial                Corporation; |
|--------|----|----------------------------------------------------------------------------------------------------------------|

|   | 2. | Based                on my knowledge, this quarterly report does not contain any untrue                statement of a material fact or omit to state a material fact necessary                to                make the statements made, in light of the circumstances under which                such                statements were made, not misleading with respect to the period covered                by                this quarterly report; |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Based                on my knowledge, the financial statements, and other financial information                included in this quarterly report, fairly present in all material                respects                the financial condition, results of operations and cash flows of                the                registrant as of, and for, the periods presented in this quarterly                report; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | The                registrant's other certifying officers and I are responsible for                establishing and maintaining disclosure controls and procedures (as                defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant                and we                have: |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | designed                such disclosure controls and procedures to ensure that material                information relating to the registrant, including its consolidated                subsidiaries, is made known to us by others within those entities,                particularly during the period in which this quarterly report is                being                prepared; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | evaluated                the effectiveness of the registrant's disclosure controls and procedures                as of a date within 90 days prior to the filing date of this quarterly                report (the "Evaluation Date"); and |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | presented                in this quarterly report our conclusions about the effectiveness                of the                disclosure controls and procedures based on our evaluation as of                the                Evaluation Date; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | The                registrant's other certifying officers and I have disclosed, based                on our                most recent evaluation, to the registrant's auditors and the audit                committee of registrant's board of directors (or persons performing                the                equivalent function): |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | all                significant deficiencies in the design or operation of internal controls                which could adversely affect the registrant's ability to record,                process,                summarize and report financial data and have identified for the                registrant's auditors any material weaknesses in internal controls;                and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | any                fraud, whether or not material, that involves management or other                employees who have a significant role in the registrant's internal                controls; and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | To                my knowledge and information, there were no events or circumstances                as                described in subparagraphs (a) and (b) above:                and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | The                registrant's other certifying officers and I have indicated in this                quarterly report whether or not there were significant changes in                internal                controls or in other factors that could significantly affect internal                controls subsequent to the date of our most recent evaluation, including                any corrective actions with regard to significant deficiencies and                material weaknesses. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Exhibit      32.1**

**CERTIFICATION      OF CHIEF EXECUTIVE OFFICER**

**OF      BNL FINANCIAL CORPORATION**

**PURSUANT      TO 18 U.S.C. § 1350**

|   |   | 1. | The                Report fully complies with                the requirements of Section 13 (a) or 15 (d) of the Securities Exchange                Act of 1934; and |
|--------|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | 2. | The                information contained in this                Report fairly presents, in all material respects the financial condition                and results of operations of the                Company. |
|--------|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Exhibit      32.2**

**CERTIFICATION      OF CHIEF FINANCIAL OFFICER**

**OF      BNL FINANCIAL CORPORATION**

**PURSUANT      TO 18 U.S.C. § 1350**

|   |   | 1. | The                Report fully complies with                the requirements of Section 13 (a) or 15 (d) of the Securities Exchange                Act of 1934; and |
|--------|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | 2. | The                information contained in this                Report fairly presents, in all material respects the financial condition                and results of operations of the                Company. |
|--------|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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