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| 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)                           |

|  Large accelerated filer r     |  Accelerated filer r         |
|--------------------------------------------------------------|-----------------------------------|
|                                                         |                              |
|  Non-accelerated filer x                                |  Smaller Reporting Company r |

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Ta

ble 

|                                     |                                                                                  | Page   |
|------------------------------------------|---------------------------------------------------------------------------------------|--------|
| PART I   Financial Information |                                                                                  |
|                                     |                                                                                  |   |
| Item 1.                                  | Financial Statements                                                                  | 3      |
| Item 2.                                  | Management's Discussion and Analysis of Financial Condition and Results of Operations | 14     |
| Item 3.                                  | Quantitative and Qualitative Disclosures About Market Risk                            | 16     |
| Item 4.                             | Internal Control and Procedures                                                  | 17     |
| Item 4T.                                 | Controls and Procedures                                                               | 17     |
|                                     |                                                                                  |   |
| PART II  Other Information          |                                                                                  |
|                                     |                                                                                  |   |
| Item 1.                                  | Legal Proceedings                                                                     | 18     |
| Item 1A.                            | Risk Factors                                                                          | 18     |
| Item 2.                                  | Unregistered Sales of Equity Securities and Use of Proceeds                           | 18     |
| Item 3.                                  | Defaults Upon Senior Securities                                                       | 18     |
| Item 4.                                  | (Removed and Reserved)                                                                | 18     |
| Item 5.                                  | Other Information                                                                     | 18     |
| Item 6.                                  | Exhibits                                                                              | 19     |
| Signatures                               | 20                                                                                    |

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|                                                                                                                    |   | March 31,        |       |   | December 31,   |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|------------------|------------|--------|----------------|--------|
| ASSETS                                                                                                        |   | 2010 (Unaudited) |       |   | 2009 (Audited) |   |
| Cash and cash equivalents                                                                                               |   | $                | 7,304,421  |   |           | $      | 8,090,103 |   |
| Investment in fixed maturities, at fair value Available for Sale (amortized cost $42,000)                               |   |             | 168,000    |   |           |   |  146,720 |   |
| Investment in fixed maturities, at amortized cost, Held to Maturity (fair value $18,667,151; $18,423,612, respectively) |   |             | 18,447,084 |   |           |   | 18,358,628 |   |
| Other long-term investments (fair value $722,585, $769,663)                                                             |   |             | 1,168,404  |   |           |   | 1,180,041 |   |
| Investment in equity securities (cost $711,915)                                                                         |   |             | 708,273    |   |           |   | 674,671 |   |
| Total Investments, Including Cash and Cash Equivalents                                                                  |   |             | 27,796,182 |   |           |   | 28,450,163 |   |
|                                                                                                                    |   |             |       |   |           |   |   |   |
| Accrued investment income                                                                                               |   |             | 171,870    |   |           |   | 128,469 |   |
| Furniture and equipment, net                                                                                            |   |             | 796,631    |   |           |   | 835,367 |   |
| Deferred policy acquisition costs                                                                                       |   |             | 253,061    |   |           |   | 253,254 |   |
| Policy loans                                                                                                            |   |             | 151,483    |   |           |   | 162,395 |   |
| Receivable from reinsurer                                                                                               |   |             | 47,475     |   |           |   | 47,475 |   |
| Premiums due and unpaid                                                                                                 |   |             | 949,489    |   |           |   | 967,508 |   |
| Income tax assets                                                                                                       |   |             | 87,000     |   |           |   | 106,000 |   |
| Intangible assets                                                                                                       |   |             | 123,954    |   |           |   | 125,408 |   |
| Other assets                                                                                                            |   |             | 147,097    |   |           |   | 292,002 |   |
| Total Assets                                                                                                            |   | $                | 30,524,242 |   |           | $      | 31,368,041 |   |
|                                                                                                                    |   |             |       |   |           |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                    |   |             |       |   |           |   |   |   |
|                                                                                                                    |   |             |       |   |           |   |   |   |
| Liabilities:                                                                                                            |   |             |       |   |           |   |   |   |
| Liabilities for future policy benefits                                                                                  |   | $                | 2,084,978  |   |           | $      | 2,143,273 |   |
| Policy claims payable                                                                                                   |   |             | 1,401,003  |   |           |   | 1,348,590 |   |
| Annuity deposits                                                                                                        |   |             | 2,476,093  |   |           |   | 2,505,778 |   |
| Deferred annuity profits                                                                                                |   |             | 198,298    |   |           |   | 201,492 |   |
| Premium deposit funds                                                                                                   |   |             | 17,782     |   |           |   | 20,547 |   |
| Supplementary contracts without life contingencies                                                                      |   |             | 35,130     |   |           |   | 36,791 |   |
| Advanced and unallocated premium                                                                                        |   |             | 1,038,945  |   |           |   | 968,159 |   |
| Commissions payable                                                                                                     |   |             | 651,005    |   |           |   | 615,455 |   |
| Accrued taxes and expenses                                                                                              |   |             | 304,063    |   |           |   | 406,932 |   |
| Bonds payable                                                                                                           |   |             | 1,325,008  |   |           |   | 1,323,388 |   |
| Other liabilities                                                                                                       |   |             | 1,085,578  |   |           |   | 1,066,525 |   |
| Total Liabilities                                                                                                       |   |             | 10,617,883 |   |           |   | 10,636,930 |   |
|                                                                                                                    |   |             |       |   |           |   |   |   |
| Shareholders' Equity:                                                                                                   |   |             |       |   |           |   |   |   |
| Common stock, $.02 stated value, 45,000,000 shares authorized, 15,463,965  shares issued and outstanding      |   |             | 309,279    |   |           |   | 309,279 |   |
| Additional paid-in capital                                                                                              |   |             | 5,709,216  |   |           |   | 5,725,590 |   |
| Accumulated other comprehensive income                                                                                  |   |             | 55,272     |   |           |   | 36,042 |   |
| Accumulated surplus                                                                                                     |   |             | 14,267,862 |   |           |   | 15,092,975 |   |
| Treasury stock, at cost, 343,982; 343,194 shares, respectively                                                          |   |             | (435,270   | )      |           |   | (432,775 | ) |
| Total Shareholders' Equity                                                                                              |   |             | 19,906,359 |   |           |   | 20,731,111 |   |
| Total Liabilities and Shareholders' Equity                                                                              |   | $                | 30,524,242 |   |           | $      | 31,368,041 |   |

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|                                                                | Three Months EndedMarch 31, |       |
|---------------------------------------------------------------------|-----------------------------|------------|
|                                                                | 2010(Unaudited)             |       |   | 2009(Unaudited) |   |
| Income:                                                             |                        |       |   |   |   |
| Premium income                                                      | $                           | 10,133,970 |   |   | $ | 10,545,125 |   |
| Vision insurance income                                             |                        | 582,883    |   |   |   | 601,519 |   |
| Net investment income                                               |                        | 258,253    |   |   |   | 296,732 |   |
| Realized gains (losses) on debt retirement                     |                        | (324       | ) |   |   | 11,968 |   |
| Realized gains                                                      |                        | -          |   |   |   | 197 |   |
|                                                                |                        |       |   |   |   |   |   |
| Total Income                                                        |                        | 10,974,782 |   |   |   | 11,455,541 |   |
|                                                                |                        |       |   |   |   |   |   |
| Expenses:                                                           |                        |       |   |   |   |   |   |
|    Liability for future policy benefits expense      |                        | (58,295    | ) |   |   | (43,264 | ) |
|    Policy benefits and other insurance costs         |                        | 7,760,598  |   |   |   | 8,053,413 |   |
|    Amortization of deferred policy acquisition costs |                        | 194        |   |   |   | (3,983 | ) |
|    Operating expenses                                |                        | 2,049,509  |   |   |   | 2,098,156 |   |
|    Taxes, other than income, fees and assessments    |                        | 403,632    |   |   |   | 422,087 |   |
|                                                                |                        |       |   |   |   |   |   |
| Total Expenses                                                      |                        | 10,155,638 |   |   |   | 10,526,409 |   |
|                                                                |                        |       |   |   |   |   |   |
| Income from Operations before Income Taxes                          |                        | 819,144    |   |   |   | 929,132 |   |
|                                                                |                        |       |   |   |   |   |   |
| Provision for income taxes                                          |                        | 131,000    |   |   |   | 163,439 |   |
|                                                                |                        |       |   |   |   |   |   |
| Net Income                                                          | $                           | 688,144    |   |   | $ | 765,693 |   |
|                                                                |                        |       |   |   |   |   |   |
| Net income per common share (basic and diluted)                     | $                           | 0.05       |   |   | $ | 0.05 |   |
|                                                                |                        |       |   |   |   |   |   |
| Weighted average number of fully paid common shares                 |                        | 15,128,074 |   |   |   | 15,199,069 |   |
|                                                                |                        |       |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:                      |                        |       |   |   |   |   |   |
| Unrealized gains (losses) on securities:                            |                        |       |   |   |   |   |   |
| Unrealized holding gain arising during period (net of tax)          | $                           | 19,230     |   |   | $ | 17,895 |   |
| Reclassification adjustment for loss included in net income         |                        | -          |   |   |   | (163 | ) |
|                                                                |                        |       |   |   |   |   |   |
| Other Comprehensive Income                                          |                        | 19,230     |   |   |   | 17,732 |   |
|                                                                |                        |       |   |   |   |   |   |
| Comprehensive Income                                                | $                           | 707,374    |   |   | $ | 783,425 |   |

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|                                                                              |   | Three Months EndedMarch 31, |       |
|-----------------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                              |   | 2010(Unaudited)             |       |   | 2009(Unaudited) |   |
|                                                                              |   |                        |       |   |   |   |
| Cash flows from operating activities:                                             |   |                        |       |   |   |   |   |   |
| Net income                                                                        |   | $                           | 688,144    |   |   | $ | 765,693 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                        |       |   |   |   |   |   |
| Realized (gain) loss on investments                                          |   |                        | -          |   |   |   | (197 | ) |
| Realized (gain) loss on debt retirement                                      |   |                        | 324        |   |   |   | (11,968 | ) |
| Decrease in deferred tax asset                                                    |   |                        | (17,000    | ) |   |   | (7,000 | ) |
| Depreciation                                                                      |   |                        | 63,578     |   |   |   | 63,519 |   |
| Amortization of deferred acquisition costs, and intangibles                       |   |                        | 1,647      |   |   |   | (2,529 | ) |
| Accretion of bond discount                                                        |   |                        | 7,585      |   |   |   | 4,968 |   |
| Change in assets and liabilities:                                                 |   |                        |       |   |   |   |   |   |
| Increase in accrued investment income                                             |   |                        | (43,401    | ) |   |   | (51,479 | ) |
| Decrease in premiums due and unpaid                                               |   |                        | 18,019     |   |   |   | 84,252 |   |
| Increase (decrease) in liability for future policy benefits                       |   |                        | (58,295    | ) |   |   | 43,264 |   |
| Increase (decrease) in policy claims payable                                      |   |                        | 52,413     |   |   |   | (41,528 | ) |
| Increase (decrease) in annuity deposits and deferred profits                      |   |                        | (32,879    | ) |   |   | 66,279 |   |
| Increase (decrease) in premium deposit funds                                      |   |                        | (2,765     | ) |   |   | 86 |   |
| Increase in advanced and unallocated premium                                      |   |                        | 70,786     |   |   |   | 327,195 |   |
| Increase in commissions payable                                                   |   |                        | 35,550     |   |   |   | 55,830 |   |
| Other, increase (decrease)                                                        |   |                        | 72,215     |   |   |   | (52,743 | ) |
| Net Cash Provided By Operating Activities                                         |   |                        | 855,921    |   |   |   | 1,243,642 |   |
|                                                                              |   |                        |       |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |                        |       |   |   |   |   |   |
| Proceeds from maturity or redemption - Held to Maturity Investments               |   |                        | 1,355,400  |   |   |   | 1,676,648 |   |
| Purchase of furniture and equipment                                               |   |                        | (24,873    | ) |   |   | - |   |
| Purchase of fixed maturity securities - Held to Maturity Investments              |   |                        | (1,450,000 | ) |   |   | (2,863,104 | ) |
| Other investments – Line of credit payments received                        |   |                        | 11,638     |   |   |   | 10,757 |   |
| Net Cash Used In Investing Activities                                             |   |                        | (107,835   | ) |   |   | (1,175,699 | ) |
|                                                                              |   |                        |       |   |   |   |   |   |
| Cash flows from financing activities:                                             |   |                        |       |   |   |   |   |   |
| Net payments on supplementary contracts                                           |   |                        | (1,661     | ) |   |   | (765 | ) |
| Purchase of treasury stock                                                        |   |                        | (34,370    | ) |   |   | (40,285 | ) |
| Dividends to shareholders                                                         |   |                        | (1,513,257 | ) |   |   | - |   |
| Bonds payable purchased                                                           |   |                        | (32,731    | ) |   |   | (20,439 | ) |
| Exercised stock options                                                           |   |                        | 48,251     |   |   |   | - |   |
| Net Cash Used In Financing Activities                                             |   |                        | (1,533,768 | ) |   |   | (61,489 | ) |
|  Net Increase (Decrease) in Cash and Cash Equivalents                        |   |                        | (785,682   | ) |   |   | 6,454 |   |
|  Cash And Cash Equivalents, Beginning Of Period                              |   |                        | 8,090,103  |   |   |   | 4,989,381 |   |
|  Cash And Cash Equivalents, End Of Period                                    |   | $                           | 7,304,421  |   |   | $ | 4,995,835 |   |
|                                                                              |   |                        |       |   |   |   |   |   |

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| Portfolio Designated “Held to Maturity”  March 31, 2010                      |   |  Amortized Cost |       |   | Gross Unrealized Gains |   |          | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|----------------------------------------------------------------------------------------------------|--------|----------------------|------------|--------|------------------------|--------|---------------|-------------------------|--------|--------|------------------------|--------|
| US Treasury securities and obligations of   US government corporations and agencies |   | $                    | 7,093,078  |   |                   | $      | 51,630        |                    |   | $      | 12,528                 |   |   | $ | 7,132,180 |   |
| Corporate securities                                                                               |   |                 | 3,742,502  |   |                   |   | 158,367       |                    |   |   | 135,540                |   |   |   | 3,765,329 |   |
| Mortgage-backed securities   GNMA and FNMA CMO                                      |   |                 | 7,611,504  |   |                   |   |  197,589 |                    |   |   | 39,451                 |   |   |   | 7,769,642 |   |
|                                                                                               |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Totals                                                                                             |   | $                    | 18,447,084 |   |                   | $      | 407,585       |                    |   | $      | 187,518                |   |   | $ | 18,667,151 |   |
|   Portfolio Designated “Available for Sale” March 31, 2010              |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Corporate securities                                                                               |   | $                    | 42,000     |   |                   | $      | 126,000       |                    |   | $      | -                      |   |   | $ | 168,000 |   |
|                                                                                               |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Totals                                                                                             |   | $                    | 42,000     |   |                   | $      | 126,000       |                    |   | $      | -                      |   |   | $ | 168,000 |   |

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|                                   |   | Held to MaturityMarch 31, 2010 |       |   | Available for SaleMarch 31, 2010 |   |
|----------------------------------------|--------|--------------------------------|------------|--------|----------------------------------|--------|
|                                   |   | Amortized Cost                 |       |   | Estimated Market Value      |   |   | Amortized Cost |   |   | Estimated Market Value |   |
| Due in one year or less                |   | $                              | 1,054,353  |   |                             | $      | 1,066,340 |   |   | $ | - |   |   | $ | - |   |
| Due after one year through five years  |   |                           | 4,809,673  |   |                             |   | 4,863,719 |   |   |   | - |   |   |   | - |   |
| Due after five years through ten years |   |                           | 1,874,832  |   |                             |   | 1,857,216 |   |   |   | - |   |   |   | - |   |
| Due after ten years                    |   |                           | 3,096,722  |   |                             |   | 3,110,234 |   |   |   | 42,000 |   |   |   | 168,000 |   |
|                                   |   |                           | 10,835,580 |   |                             |   | 10,897,509 |   |   |   | 42,000 |   |   |   | 168,000 |   |
|                                   |   |                           |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities             |   |                           | 7,611,504  |   |                             |   | 7,769,642 |   |   |   | - |   |   |   | - |   |
|                                   |   |                           |       |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $                              | 18,447,084 |   |                             | $      | 18,667,151 |   |   | $ | 42,000 |   |   | $ | 168,000 |   |

|                                       |   | 2010   |    |
|--------------------------------------------|--------|--------|---------|
|                                       |   | Cost   |    |   | MarketValue |   |
| Banks, trusts and Insurance companies |   | $      | 81,183  |   |   | $ | 27,675 |   |
| Industrial and other                       |   |   | 630,732 |   |   |   | 680,598 |   |
|                                       |   |   |    |   |   |   |   |   |
|                                       |   | $      | 711,915 |   |   | $ | 708,273 |   |

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|                                        |   | 2010   |    |
|---------------------------------------------|--------|--------|---------|
| Beginning Balance                           |   | $      | 246,862 |   |
| Additions charged to operations             |   |   | -       |   |
| Direct write downs                          |   |   | -       |   |
| Recoveries previously charged to operations |   |   | -       |   |
|                                        |   |   |    |   |
| Ending Balance                              |   | $      | 246,862 |   |

|                                                                                                          |   | Less than 12 Months |      |   | 12 Months or Greater |   |   | Total      |   |
|---------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|----------------------|--------|--------|------------|--------|
| Description of Securities                                                                                     |   | Fair Value          |      |   | Unrealized Losses    |   |   | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Investment in Fixed Maturities,  Held to Maturity                                                   |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
| US Treasury securities and  obligations of US government   corporations and agencies |   | $                   | 1,190,848 |   |                 | $      | 9,153  |       |   | $ | 246,625 |   |   | $ | 3,375 |   |   | $ | 1,437,473 |   |   | $ | 12,528 |   |
| Corporate securities                                                                                          |   |                | -         |   |                 |   | -      |       |   |   | 714,460 |   |   |   | 135,540 |   |   |   | 714,460 |   |   |   | 135,540 |   |
| Mortgage-backed securities  GNMA and FNMA CMO                                                       |   |                | 1,917,743 |   |                 |   | 38,985 |       |   |   | 224,155 |   |   |   | 466 |   |   |   | 2,141,898 |   |   |   | 39,451 |   |
|               Totals                    |   | $                   | 3,108,591 |   |                 | $      | 48,138 |       |   | $ | 1,185,240 |   |   | $ | 139,381 |   |   | $ | 4,293,831 |   |   | $ | 187,519 |   |
|                                                                                                          |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Long-Term Investments                                                                                   |   | $                   | -         |   |                 | $      | -      |       |   | $ | 707,005 |   |   | $ | 445,819 |   |   | $ | 707,005 |   |   | $ | 445,819 |   |
|               Totals                    |   | $                   | -         |   |                 | $      | -      |       |   | $ | 707,005 |   |   | $ | 445,819 |   |   | $ | 707,005 |   |   | $ | 445,819 |   |
|                                                                                                          |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities                                                                                             |   | $                   | -         |   |                 | $      | -      |       |   | $ | 257,018 |   |   | $ | 159,733 |   |   | $ | 257,018 |   |   | $ | 159,733 |   |
|               Totals                    |   | $                   | -         |   |                 | $      | -      |       |   | $ | 257,018 |   |   | $ | 159,733 |   |   | $ | 257,018 |   |   | $ | 159,733 |   |

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| Corporate Bonds March 31, 2010 |   | S&PRating |   |   | Amortized Book Value |    |    | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|-------------------------------------|--------|---------------|--------|--------|----------------------|---------|---------|-------------------------|--------|--------|------------------------|--------|
| American General Finance            |   | BB+           |   |   | $                    | 200,000 |    |                    | $      | 43,320 |                   |   | $ | 158,680 |   |
| MBIA                                |   | BB+           |   |   |                 | 200,000 |    |                    |   | 82,480 |                   |   |   | 117,520 |   |
| Prudential                          |   |          | A-     |   |                 |    | 150,000 |                    |   |   | 5,400                  |   |   |   | 144,600 |   |
|                                |   |          |   |   |                 |    |    |                    |   |   |                   |   |   |   |   |   |
| Totals                              |   |          |   |   |                 | $       | 550,000 |                    |   | $      | 131,200                |   |   | $ | 420,800 |   |

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| Equity Securities March 31, 2010 |   |   Cost |    |   | Gross Unrealized Gains (Losses) |   |     | Estimated Market Value |   |
|---------------------------------------|--------|------------------|---------|--------|---------------------------------|--------|----------|------------------------|--------|
| Garmin LTD                            |   | $                | 220,322 |   |                            | $      | (85,117  | )                      |   | $ | 135,205 |   |
| Treaty Oak Bank                       |   |             | 50,813  |   |                            |   | (30,988  | )                      |   |   | 19,825 |   |
| Regions Financial Corporation         |   |             | 30,370  |   |                            |   | (22,520  | )                      |   |   | 7,850 |   |
| International Assets                  |   |             | 27,282  |   |                            |   | (18,444  | )                      |   |   | 8,838 |   |
| British Petroleum                     |   |             | 88,270  |   |                            |   | (2,664   | )                      |   |   | 85,606 |   |
|                                  |   |             |    |   |                            |   |     |                   |   |   |   |   |
| Totals                                |   | $                | 417,057 |   |                            | $      | (159,733 | )                      |   | $ | 257,324 |   |

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| Description                                                                                                         |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |      | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |   | Total  |    |
|--------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|----------------------------------------------|--------|------------------------------------------|--------|--------|---------|
| Trading Securities                                                                                                       |   |                                                          |      |                                         |   |                                     |   |   |    |
|    Equity Securities - Banks                                                                              |   | $                                                             | 27,762    |                                         | $      | -                                        |   | $      | -       |   | $ | 27,762 |   |
|    Equity Securities - Industrial and Other                                                          |   |                                                          | 680,511   |                                         |   |                                     |   |   |    |   |   | 680,511 |   |
|            Total Trading Securities                               |   | $                                                             | 708,273   |                                         | $      | -                                        |   | $      | -       |   | $ | 708,273 |   |
|                                                                                                                     |   |                                                          |      |                                         |   |                                     |   |   |    |   |   |   |   |
| Fixed Maturity, Available for Sale – Corporate                                                                |   | $                                                             | -         |                                         | $      | 168,000                                  |   | $      | -       |   | $ | 168,000 |   |
|             Total Fixed Maturity, Available for Sale    |   | $                                                             | -         |                                         | $      | 168,000                                  |   | $      | -       |   | $ | 168,000 |   |
|                                                                                                                     |   |                                                          |      |                                         |   |                                     |   |   |    |   |   |   |   |
| Fixed Maturities, Held to Maturity                                                                                  |   |                                                          |      |                                         |   |                                     |   |   |    |   |   |   |   |
| US Treasury Securities and    Obligations of  US Government Corporations and Agencies |   | $                                                             | -         |                                         | $      | 7,132,180                                |   | $      | -       |   | $ | 7,132,180 |   |
| Corporate Securities                                                                                                     |   |                                                          | -         |                                         |   | 3,647,809                                |   |   | 117,520 |   |   | 3,765,329 |   |
| Mortgage-Backed Securities GNMA and FNMA CMO                                                                        |   |                                                          | -         |                                         |   | 7,769,642                                |   |   | -       |   |   | 7,769,642 |   |
|       Total  Fixed Maturities, Held to Maturity                                       |   | $                                                             | -         |                                         | $      | 18,549,631                               |   | $      | 117,520 |   | $ | 18,667,151 |   |
|                                                                                                                     |   |                                                          |      |                                         |   |                                     |   |   |    |   |   |   |   |
| Other Long Term Investments                                                                                              |   |                                                          | -         |                                         |   | -                                        |   |   | 722,585 |   |   | 722,585 |   |
| Cash                                                                                                                     |   |                                                          | 2,619,031 |                                         |   | -                                        |   |   | -       |   |   | 2,619,031 |   |
| Cash Equivalents                                                                                                         |   |                                                          | -         |                                         |   | 4,685,390                                |   |   | -       |   |   | 4,685,390 |   |
|                                                                                                                     |   |                                                          |      |                                         |   |                                     |   |   |    |   |   |   |   |
|       Total Assets                                                                         |   | $                                                             | 3,327,304 |                                         | $      | 23,403,021                               |   | $      | 840,105 |   | $ | 27,570,430 |   |

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|                                        |   | Other Long-term Investments |    |   | FixedMaturity |   |    | Total  |   |
|---------------------------------------------|--------|-----------------------------|---------|--------|---------------|--------|---------|--------|--------|
| Fair value, beginning of period             |   | $                           | 769,663 |   |          | $      | 90,000  |   |   | $ | 859,663 |   |
| Other the temporary decline in fair value:  |   |                        |    |   |          |   |    |   |   |   |   |   |
| Included in net income                      |   |                        | -       |   |          |   | -       |   |   |   | - |   |
| Included in other comprehensive income      |   |                        | -       |   |          |   | -       |   |   |   | - |   |
| Purchases, sales, issuances and settlements |   |                        | (11,636 | )      |          |   | -       |   |   |   | (11,636 | ) |
| Investment reclassified                     |   |                        | -       |   |          |   | -       |   |   |   | - |   |
| Temporary increase (decline) in fair value  |   |                        | (35,442 | )      |          |   | 27,520  |   |   |   | (7,922 | ) |
|                                        |   |                        |    |   |          |   |    |   |   |   |   |   |
|      Total         |   | $                           | 722,585 |   |          | $      | 117,520 |   |   | $ | 840,105 |   |

|                                               | 2010     |   |       |
|----------------------------------------------------|----------|--------|------------|
|                                               | Carrying |   | Fair       |   |   |
| Assets                                             | Amount   |   | Value      |   |   |
| Cash and Cash Equivalents                          |     | $      | 7,304,421  |   |   | $ | 7,304,421 |   | (a) |
| Investments-fixed maturity, available for sale     |     |   | 168,000    |   |   |   | 168,000 |   | (b) |
| Investments-fixed maturity, held to maturity       |     |   | 18,447,084 |   |   |   | 18,667,151 |   | (b) |
| Investments –equity securities               |     |   | 708,273    |   |   |   | 708,273 |   | (b) |
| Other long term investments                        |     |   | 1,168,404  |   |   |   | 722,585 |   | (b) |
| Other financial instruments-Assets                 |     |   | 360,605    |   |   |   | 380,605 |   | (a) |
|                                               |     |   |       |   |   |   |   |   |   |
| Total financial instruments-Assets                 |     | $      | 28,156,787 |   |   | $ | 27,951,035 |   |   |
|                                               |     |
| Liabilities                                        |     |   |       |   |   |   |   |   |   |
| Premium deposit funds                              |     | $      | 17,782     |   |   | $ | 17,782 |   | (a) |
| Bonds payable                                      |     |   | 1,325,008  |   |   |   | 1,325,008 |   | (a) |
| Supplementary contracts without life contingencies |     |   | 35,130     |   |   |   | 35,130 |   | (a) |
| Annuity deposits                                   |     |   | 2,476,093  |   |   |   | 2,476,093 |   | (a) |
|                                               |     |   |       |   |   |   |   |   |   |
| Total financial instruments-Liabilities            |     | $      | 3,854,013  |   |   | $ | 3,854,013 |   |   |

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| Period                            |   | (a)TotalNumber ofSharesPurchased |   |   | (b)AveragePricePaidPer Share |   | (c)Total number of shares purchased as part of publicly announced plans or programs | (d)Maximum number of shares that may yet be purchased under the plans or programs |
|-----------------------------------|--------|----------------------------------|--------|--------|------------------------------|--------|-------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|
| Month #1, Jan 1 thru Jan 31, 2010 |   |                             | 13,706 |   |                         | $      | 1.25                                                                                |                                                                              | None | None |
| Month #2, Feb 1 thru Feb 28, 2010 |   |                             | -      |   |                         |   | -                                                                                   |                                                                              | None | None |
| Month #3, Mar 1 thru 31, 2010     |   |                             | 12,582 |   |                         | $      | 1.37                                                                                |                                                                              | None | None |
| Totals                            |   |                             | 26,288 |   |                         |   |                                                                                |                                                                              |   |   |

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| 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, 2007 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, 2007                                                                      |
| 10.9 |   | Amended Convertible Debenture Date July 14, 2008 between BNL Financial Corporation and EPSI Benefits Inc.                                                                                     |   | Incorporated by reference to Exhibit 1 of the Company’s periodic Report on Form 8-K dated July 14, 2008.                                                                           |
| 11   |   | Statement Re computation of per share earnings.                                                                                                                                               |   | Reference is made to the computation of per share earnings as shown page 5 herein and the explanation in Note 1 to the Notes to Consolidated Financial Statements (unaudited), page 5 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 27, 2010, as filed with the SEC on Schedule 14A on April 20, 2010, is incorporated by reference herein.                              |

| 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 Officer Section 302                                                                    |   | Filed herewith - E1       |
| 31.2 |   | Certification of Chief Financial Officer Section 302                                                                    |   | Filed herewith – E3 |
| 32   |   | Certification of Chief Executive Officer and Chief Financial Officer Section 906                                        |   | Filed herewith – E5 |

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SIGNATURES

|                     |   | BNL FINANCIAL CORPORATION                                                                                                                                                                                                                                                                                           |
|--------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |   | (Registrant)                                                                                                                                                                                                                                                                                                        |
|                     |   |                                                                                                                                                                                                                                                                                                                |
|                     |   | /s/ Wayne E. Ahart                                                       |
| Date: May 14, 2010       |   | By: Wayne E. Ahart, Chairman of the Board                                                                                                                                                                                                                                                                           |
|                     |   | (Chief Executive Officer)                                                                                                                                                                                                                                                                                           |
|                     |   |                                                                                                                                                                                                                                                                                                                |
|                     |   | /s/ Barry N. Shamas                                                 |
| Date: May 14, 2010  |   | By: Barry N. Shamas, Executive V.P.                                                                                                                                                                                                                                                                                 |
|                     |   | (Chief Financial Officer)                                                                                                                                                                                                                                                                                           |

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