===============================================================================



                       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, 1999

    [ ] 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.)

301 Camp Craft Road, Suite 200
       Austin, Texas                                             78746
(Address of principal executive offices)                       (Zip Code)



Registrant's telephone number, including area code:  (512) 327-3065

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


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 March 31, 1999, 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>

Item 1.  Financial Statements

                       BNL FINANCIAL CORPORATION AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>


                                             September 30
     ASSETS                                       1999       December 31,
                                              (Unaudited)        1998
                                              -----------    ------------
<S>                                         <C>             <C>

Investments:
   Investments available for sale, at
        fair value .......................   $10,772,709     $10,006,208
   Equity securities, common stock .......         2,313           2,573
   Cash and cash investments .............       199,112       2,426,963
                                             -----------     -----------
        Total Investments                     10,974,133      12,435,744
Accrued investment income ................       267,734         195,652
Furniture and equipment ..................       453,439         325,717
Deferred policy acquisition costs ........       358,733         379,917
Receivable from reinsurer ................        33,531          33,531
Premiums due and unpaid...................       755,948         611,786
Other assets .............................       363,266         345,428
                                             -----------      ----------
       TOTAL ASSETS                          $13,206,783     $14,327,775
                                             ===========      ==========
     LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Liability for future policy benefits .     $1,356,853      $1,398,633
   Policy claims payable.................      2,438,175       2,508,175
   Premium deposit fund .................        128,813         114,841
   Annuity deposits .....................      3,014,133       3,259,195
   Deferred annuity profits .............        500,000         521,212
   Supplementary contracts without
       life contingencies ...............        111,119         129,944
   Advanced and unallocated premium......        605,342         352,999
   Commissions payable...................        364,686         310,303
   Other liabilities ....................        436,313         528,507
                                              ----------      ----------
       Total liabilities                       8,952,432       9,123,809
                                              ----------      ----------
SHAREHOLDERS' EQUITY:
   Common stock .........................        466,239         466,239
   Additional paid-in capital ...........     14,308,230      14,308,230
   Unrealized appreciation (depreciation)
        of securities ...................       (770,308)        208,289
   Treasury stock .......................        (64,105)        (64,105)
   Accumulated deficit ..................     (9,685,705)     (9,714,687)
                                              ----------     -----------
     Total shareholders' equity                4,254,351       5,203,966
                                              ----------      ----------
TOTAL LIABILITIES & SHAREHOLDER'S EQUITY     $13,206,784     $14,327,775
                                              ==========      ==========
<FN>
       (See Notes to Consolidated Financial Statements)
</FN>
</TABLE>
                                        2
<PAGE>

                      BNL FINANCIAL CORPORATION AND SUBSIDIARY
                       CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>

                                                         Three Months Ended                  Nine Months Ended
                                                           September 30,                       September 30,
                                                    ---------------------------        -----------------------------
                                                         1999           1998                1999            1998
                                                    -------------   -----------        -------------     -----------
<S>                                                   <C>            <C>               <C>              <C>

REVENUES:
   Premium income ..................................  $7,410,959     $5,649,343        $ 21,527,171    $ 15,041,756
   Investment income ...............................     204,311        204,120             584,117         621,118
   Realized gains on investments ...................      17,073          7,411              22,556          61,929
                                                    -------------   ------------        -----------     -----------
    Total income ...................................   7,632,343      5,860,874          22,133,844      15,724,803
                                                    -------------   ------------        -----------     -----------

EXPENSES:
   Policy benefits and other insurance costs .......   6,350,215      5,276,681          18,341,293      13,501,308
   Increase in liability for future policy benefits.     (19,514)        11,670             (41,781)         52,053
   Amortization of deferred policy acquisition costs       5,868          6,012              21,185          20,614
   Operating expenses ..............................   1,103,912        878,366           3,137,072       2,570,398
   Taxes, other than on income .....................     203,323        172,835             647,092         494,925
                                                    -------------   ------------        -----------     -----------

    Total expenses .................................   7,643,804      6,345,564          22,104,861      16,639,298
                                                    -------------   ------------        -----------     -----------

    OPERATING INCOME (LOSS).........................     (11,462)      (484,690)             28,982        (914,495)

Provision for income taxes .........................           0              0                   0               0
                                                    -------------   ------------        -----------     -----------
    NET GAIN (LOSS).................................    ($11,462)     ($484,690)           $ 28,982       ($914,495)
                                                    =============   ============        ===========     ===========
Other comprehensive income, net of tax:
   Unrealized gains on securities:
      Unrealized holding gains arising during
         period.....................................   ($293,759)      $149,416           ($956,041)       $159,957
   Reclassification adjustment for gains
         included in net income.....................     (17,073)        (7,411)            (22,556)        (61,929)
                                                    -------------   ------------        -----------     -----------
Other comprehensive income (loss)...................    (310,832)       142,005            (978,597)         98,028
                                                    -------------   ------------        -----------     -----------

     COMPREHENSIVE INCOME (LOSS)....................   ($322,293)     ($342,685)          ($949,614)      ($816,467)
                                                    =============   ============        ===========     ===========

   Net gain (loss) per share .......................      ($0.00)        ($0.02)              $0.00          ($0.04)
                                                    =============   ============        ===========     ===========

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


<FN>

                  (See Notes to Consolidated Financial Statements)
</FN>
</TABLE>
                                        3
<PAGE>



<TABLE>

                 BNL FINANCIAL CORPORATION AND SUBSIDIARY
                   CONSOLIDATED STATEMENT OF CASH FLOWS
                              (Unaudited)
<CAPTION>

                                                                   Nine Months
                                                               Ended          Ended
                                                              09/30/99       09/30/98
                                                              --------       --------
<S>                                                         <C>            <C>
Cash flows from operating activities:
Net gain (loss) ............................................ $   28,982    ($  914,495)
Adjustments to reconcile  net loss to net cash
  provided by (used in) operating activities:
 Realized (gain) on investments ............................    (23,210)       (61,929)
 Realized loss on sale of furniture and equipment...........        654             -
 Depreciation ..............................................    106,409         77,227
 Amortization of deferred acquisition
    costs and state licenses acquired ......................     23,517         22,945
 Accretion of bond discount ................................        357         (2,631)

Change in assets and liabilities:
 Decrease in accrued investment income .....................    (72,082)        42,493
 Increase in premiums due and unpaid........................   (144,162)      (133,065)
 Decrease (increase) in premium deposit fund ................    13,972         (5,476)
 Decrease in annuity deposits and deferred profits..........   (266,274)       (73,669)
 Decrease (increase) in liability for future policy
    benefits ...............................................    (41,781)        52,053
 Decrease (increase) in policy claims payable...............    (73,000)       571,370
 Increase in advanced and unallocated premium...............    252,343         50,462
 Increase in commissions payable............................     54,383         54,984
 Other net .................................................  (112,378)         96,006
                                                              ----------      ---------
     Total Adjustments .....................................   (281,252)       690,770
                                                              ----------      ---------
     Total cash provided by (used in)
         operating activities ..............................   (252,750)      (223,725)

Cash flows from investing activities:
  Sales of debt securities .................................  2,673,446      8,735,728
  Sales of equity securities ...............................          0              0
  Sales of furniture and equipment .........................      4,000              0
  Purchase of equity securities ............................          0              0
  Purchase of furniture and equipment ......................   (238,786)       (45,270)
  Purchase of fixed maturity securities .................... (4,395,415)    (6,811,410)
                                                              ---------      ---------
      Net cash provided by (used in) investing activities    (1,956,755)     1,879,048
                                                              ---------      ---------
Cash flows from financing activities:
  Payments on supplementary contracts ......................    (18,826)        79,579
                                                               ---------     ----------
      Net cash provided by (used in) financing activities       (18,826)        79,579
                                                              ---------     ----------
Net increase (decrease) in cash and cash equivalents ....... (2,227,851)     1,734,902

Cash and cash equivalents, beginning of year ............     2,426,963        714,539
                                                              ---------      ---------
Cash and cash equivalents, end of period ................   $   199,112    $ 2,449,441
                                                              =========      =========
<FN>
        (See notes to Consolidated Financial Statements)
</FN>
</TABLE>
                                        4
<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


The financial  statements  included herein reflect all adjustments which are, in
the opinion of management,  necessary to present a fair statement of the interim
results on a basis  consistent  with the prior period.  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, 1998, previously filed with the Commission,  for
financial  statements  for  the  year  ended  December  31,  1998,  prepared  in
accordance  with GAAP.  Net income  (loss) per share of common stock is based on
the weighted average number of outstanding common shares.




                                      -5-

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


Liquidity and Capital Resources

At September 30, 1999, the Company had liquid assets of $199,112 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 1999, BNLAC collected $21,594,896
of premiums and annuity deposits (gross before  reinsurance) and the Company had
consolidated investment income of $584,117.

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,
1999,  BNLAC had  statutory  capital and  surplus of  $3,909,925.  In 1997,  BNL
Financial  Corporation  contributed $500,000 to the paid in surplus of BNLAC and
BNL Equity  Corporation  contributed  $250,000.  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.  Some states in which BNLAC is
licensed have increased  these  requirements  to as much as $5,000,000,  but, in
general,  BNLAC may continue to operate under the lower minimum  requirements in
effect when it first became licensed in the applicable state.  BNLAC voluntarily
withdrew  its license in the state of  Washington  due to an  increased  minimum
capital stock requirement in that state of $2,400,000. Management monitors these
developments to maintain compliance with the requirements of each state.

Results of Operations
Premium  income for the first nine  months of 1999 was  $21,527,171  compared to
$15,041,756 for the same period in 1998. The increase of $6,485,415, or 43%, was
due to an increase in insurance premiums written.

Net  investment  income was  $584,117 for the period  ended  September  30, 1999
compared to $621,118 for the same period in 1998. The decrease was primarily due
to lower interest rates and the  reinvestment  of bonds called for redemption in
lower yielding short-term investments.

Realized  gains on  investments  were  $22,556 in the first nine  months of 1999
compared to $61,929 for the same period in 1998.  The decrease in realized gains
was due to a  decrease  in bonds  sold in the  normal  course  of the  Company's
investment activity.

In the first nine months of 1999, policy benefits and other insurance costs were
$18,341,293  compared to  $13,501,308  for the same period in 1998. 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 72.8% during the
first  nine  months  of 1999  compared  to 77.8%  for the same  period  in 1998.
Management believes the decrease in the dental claims ratio indicates a reversal
of the upward trend of the loss ratio over the past two years.

For the period ended  September  30, 1999,  the increase in liability for future
policy benefits was ($41,781)  compared to $52,053 in 1998. The decrease in 1999
was due to a decrease in life reserves from surrendered policies.

Amortization of deferred policy  acquisition  costs were $21,185 and $20,614 for
the first nine months of 1999 and 1998  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  $3,137,072  in the first nine months of 1999
compared to  $2,570,398  for the same period in 1998.  The increase in operating
expenses was primarily  due to an increase in payroll 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 $647,092 for the first
nine  months of 1999  compared  to  $494,925  for the same  period in 1998.  The
increase  was  primarily  due to an increase in premium  taxes on the  increased
premiums collected.

The net gain from  operations  for the  first  nine  months of 1999 was  $28,982
compared to ($914,495)  for the same period in 1998. The profit in 1999 compared
to the 1998 loss,  was primarily due to an increase in premium  income,  a lower
dental  insurance  claims  ratio  and a lower  cost per unit to  administer  the
business.

The "Year 2000" Issue

The "Year 2000" (or "Y2K") Issue is the  inability of  computers  and  computing
technology to recognize  correctly the Year 2000 date change.  The problem arose
because many software  programs were written using two digits for the year (e.g.
98) rather than four digits (e.g. 1998). These systems automatically assume that
the first two  digits  are "1" and "9",  which  will  cause  these  programs  to
misinterpret dates occurring after December 31, 1999.

The Company has 3 primary sources of computer data. They are:
1.   VIP  Systems,  Inc.  (VIP) -  Independent  provider of  mainframe  computer
     support  for all of the  Company's  data  except  dental  insurance  claims
     payments.
2.   Employer Plan Services,  Inc. (EPSI) - Third Party  Administrator (TPA) for
     the Company's dental insurance claims payments and claims records.
3.   In-house  programs  which  provide a majority of the  Company's  management
     reports.

The Y2K compliance status of each of these three systems is as follows:

      VIP

      All VIP  application  software  programs were  originally  written with an
      8-digit  date  field,  including 4 digits for the year  designation.  As a
      result,  VIP has represented to the Company that its application  software
      is Y2K compliant.

      VIP is in the  process of  converting  its  existing  application
      software to PC based hardware using Windows NT operating system (which
      is Y2K compliant).  The conversion  process  includes  testing for Y2K
      compliance  and is scheduled for  completion by November 1, 1999.  BNL
      will perform final Y2K compliance verification tests at that time.

      VIP's  mainframe  computer  used  an  operating  system  that  was not Y2K
      compliant.  VIP recently  acquired and implemented  all necessary  program
      "patches"  required to make its mainframe  operating system Y2K compliant.
      On  January  12,  1999,  VIP  informed  the  Company  that tests have been
      performed without problems and that the mainframe and operating system are
      Y2K compliant.


      EPSI

      In April 1999, the company  changed its TPA to EPSI.  EPSI is currently in
      the  process  of  replacing   equipment  or  making   corrections  to  the
      programming  of  existing   equipment  where  it  is  feasible,   so  that
      date-related  activities  and the functions  they provide do not adversely
      interfere with the processing of data.  Equipment which has been purchased
      has been  guaranteed  as Year  2000  compliant.  They have  purchased  new
      software  that is  Year  2000  compliant  for the  processing  of  claims.
      Contingency  plans are also being  developed to reduce the likelihood that
      year 2000  events  outside  of their  control  will not  adversely  impact
      customer service. BNL will perform Y2K compliance  verification after EPSI
      has  completed  their  software  and  hardware  updates.  In the event the
      verification  tests fail,  the Company's  backup  alternative  would be to
      retain a new TPA that is Y2K compliant.

                                      -7-
<PAGE>

      In-House Programs

      The Company's Internal Systems  Management (ISM) department  implemented a
      year 2000  strategy in January  1998 to evaluate all hardware and in-house
      program  software to determine  their Y2K  readiness.  The ISM  department
      identified the following hardware and software problems:

1.   Computer  system board BIOS's would not  understand  year 2000 date.
2.   Some  computers  were  still  using  operating  systems  that  were not Y2K
     compliant.
3.   Internal network software was not Y2K compliant.
4.   Internal databases had some Y2K issues.

The ISM  department  evaluated  these problems and by January 1999 had taken the
following actions to correct the problems  identified:

1.   Replaced  all computer  system  boards with boards Y2K approved by National
     Software Testing Laboratories.
2.   Upgraded all computers to a Y2K compliant operating system.
3.   Converted the internal network to new network software with all appropriate
     upgrades.
4.   Upgraded the internal database with millennium edition software.

Full  scale  testing  has been  performed  in a year  2000  environment  with no
problems  being  found.  As of  February  1,1999 the  Company's  ISM  department
believes that in-house programs are Y2K compliant.

The cost incurred to date by the Company to correct the Y2K problem has not been
material.  The Company does not expect to incur any additional material costs to
become  compliant  nor does it  foresee  a need for any  substantial  amount  of
in-house staff training.

                                      -8-





<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. On August 27, 1998, the Court entered a ruling certifying the lawsuit 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.  The Company  believes that serious  errors were made in  certifying  the
class,  and  the  Company  is  in  the  process  of  filing  an  appeal  of  the
certification order.

The Company has  retained  the firm of Friday,  Eldredge & Clark,  Little  Rock,
Arkansas,  to handle the defense of the action on behalf of all defendants.  The
company  believes the action is frivolous and that  substantial  evidence exists
which directly refutes the allegations.  The Company is vigorously defending the
matter and is in the process of seeking sanctions against appropriate parties.

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.
No items were submitted to a vote of security holders during the current period.

Item 5.  Other Information.
None

                                      -9-

<PAGE>


Item 6. Exhibits and Reports on Form 10-QSB
No exhibits or reports 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: October 11, 1999                 /s/ Wayne E. Ahart
                                      ____________________________
                                      By: Wayne E. Ahart, Chairman of the Board
                                          (Chief Executive Officer)


Date: October 11, 1999                 /s/ Barry N. Shamas
                                      ____________________________
                                      By: Barry N. Shamas, Executive V.P.
                                          (Chief Financial Officer)




                                      -11-
<PAGE>