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**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**

|                                                                                                                                                            |   | **September                30**                                |                      | December                31,                  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------------------------|----------------------------------------------|--------|
| **ASSETS**                                                                                                                                            |   | **2007                (Unaudited)**                            |                      | 2006                (Audited)                |   |
| Cash                and cash equivalents                                                                                                                        |   | **$        3,143,774** |                      | $                   1,673,058 |   |
| Investment                in fixed maturities, at fair value Available for Sale (amortized                cost                $590,133, $590,133, respectively) |   |                                                           | **603,344**               |                                         |   | 596,800 |   |
| Investment                in fixed maturities, at amortized cost, Held to Maturity (fair value                $19,517,696; $18,798,802, respectively)           |   |                                                           | **19,631,489**            |                                         |   | 19,128,637 |   |
| Other                long-term investments                                                                                                                      |   |                                                           | **1,479,783**             |                                         |   | 1,507,809 |   |
| Investment                in equity securities (cost $326,498; $442,574,                respectively)                                                           |   |                                                           | **530,415**               |                                         |   | 509,381 |   |
| Total                Investments, Including Cash and Cash Equivalents                                                                                           |   |                                                           | **25,388,804**            |                                         |   | 23,415,685 |   |
|                                                                                                                                                            |   |                                                           |                      |                                         |   |   |   |
| Accrued                investment income                                                                                                                        |   |                                                           | **261,702**               |                                         |   | 223,295 |   |
| Furniture                and equipment, net                                                                                                                     |   |                                                           | **1,257,011**             |                                         |   | 1,322,369 |   |
| Deferred                policy acquisition costs                                                                                                                |   |                                                           | **347,910**               |                                         |   | 359,491 |   |
| Policy                loans                                                                                                                                     |   |                                                           | **162,120**               |                                         |   | 153,798 |   |
| Receivable                from reinsurer                                                                                                                        |   |                                                           | **52,820**                |                                         |   | 52,820 |   |
| Premiums                due and unpaid                                                                                                                          |   |                                                           | **1,240,200**             |                                         |   | 1,086,103 |   |
| Income                tax assets                                                                                                                                |   |                                                           | ** -**               |                                         |   |  21,000 |   |
| Intangible                assets                                                                                                                                |   |                                                           | **138,492**               |                                         |   | 142,853 |   |
| Other                assets                                                                                                                                     |   |                                                           | **138,314**               |                                         |   | 232,220 |   |
| Total                Assets                                                                                                                                     |   | **$**                                                          | **28,987,373**            |                                         | $      | 27,009,634 |   |
|                                                                                                                                                            |   |                                                           |                      |                                         |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                                                         |   |                                                           |                      |                                         |   |   |   |
| **Liabilities:**                                                                                                                                                |   |                                                           |                      |                                         |   |   |   |
| Liabilities                for future policy benefits                                                                                                           |   | **$**                                                          | **2,459,068**             |                                         | $      | 2,472,849 |   |
| Policy                claims payable                                                                                                                            |   |                                                           | **2,614,054**             |                                         |   | 2,508,125 |   |
| Annuity                deposits                                                                                                                                 |   |                                                           | **2,411,493**             |                                         |   | 2,536,225 |   |
| Deferred                annuity profits                                                                                                                         |   |                                                           | **267,173**               |                                         |   | 288,389 |   |
| Premium                deposit funds                                                                                                                            |   |                                                           | **25,930**                |                                         |   | 28,458 |   |
| Income                tax liability                                                                                                                             |   |                                                           | **18,000**                |                                         |   | - |   |
| Supplementary                contracts without life contingencies                                                                                               |   |                                                           | ** 8,797**           |                                         |   | 17,241 |   |
| Advanced                and unallocated premium                                                                                                                 |   |                                                           | **  1,225,726** |                                         |   |     875,089 |   |
| Commissions                payable                                                                                                                              |   |                                                           | **488,462**               |                                         |   | 555,159 |   |
| Accrued                taxes and expenses                                                                                                                       |   |                                                           | **634,510**               |                                         |   | 615,700 |   |
| Bonds                payable                                                                                                                                    |   |                                                           | **1,615,677**             |                                         |   | 1,639,984 |   |
| Other                liabilities                                                                                                                                |   |                                                           | **  923,824**   |                                         |   |   959,911 |   |
| Total                Liabilities                                                                                                                                |   |                                                           | **12,692,714**            |                                         |   | 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                                                                                                                       |   |                                                           | ** 7,589,199**       |                                         |   |  7,582,733 |   |
| Accumulated                other comprehensive income                                                                                                           |   |                                                           | **183,720**               |                                         |   | 68,356 |   |
| Accumulated                surplus                                                                                                                              |   |                                                           | **10,347,551**            |                                         |   | 7,977,171 |   |
| Treasury                stock, at cost; 2,039,501; 1,502,270 shares respectively                                                                                |   |                                                           | **(2,170,075**            | **)**                                        |   | (1,460,020 | ) |
| Total                Shareholders' Equity                                                                                                                       |   |                                                           | **16,294,659**            |                                         |   | 14,512,504 |   |
| Total                Liabilities and Shareholders' Equity                                                                                                       |   | **$**                                                          | **28,987,373**            |                                         | $      | 27,009,634 |   |

----

**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED        STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

|                                                                             | Three                Months EndedSeptember                30 |               | Nine                Months EndedSeptember                30 |            |   |
|----------------------------------------------------------------------------------|--------------------------------------------------------------|-------------------------|-------------------------------------------------------------|-----------------|--------|
|                                                                             |                                                         | **2007****(Unaudited)** |                                                        | 2006(Unaudited) |   |  **2007****(Unaudited)** |   | 2006(Unaudited) |   |   |
| **Income:**                                                                      |                                                         |                    |                                                        |            |   |    |   |   |   |   |
| Premium                income                                                    | **$**                                                        | **11,187,480**          | $                                                           | 11,081,025      | **$**  | **33,583,181** | $ | 33,429,870 |   |   |
| Vision                insurance income                                           |                                                         | **482,579**             |                                                        | 445,745         |   | **1,479,334** |   | 1,170,599 |   |   |
| Net                investment income                                             |                                                         | **337,856**             |                                                        | 312,502         |   | **963,696** |   | 906,540 |   |   |
| Marketing                fees                                                    |                                                         | **100,448**             |                                                        | 39,027          |   | **167,994** |   | 106,713 |   |   |
| Realized                gains on debt retirement                                 |                                                         | ** -**             |                                                        |  3,915     |   | ** 8,103** |   | 14,850 |   |   |
| Realized                gains                                                    |                                                         | ** 5,993**         |                                                        |  (261)     |   | ** 11,129** |   | 20,354 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Total                Income                                                      |                                                         | **12,114,356**          |                                                        | 11,881,953      |   | **36,213,437** |   | 35,648,926 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| **Expenses:**                                                                    |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Liability                for future policy benefits expense                      |                                                         | ** (8,360)**       |                                                        |  (28,088)  |   | **(13,780)** |   | (146,386) |   |   |
| Policy                benefits and other insurance costs                         |                                                         | **8,573,825**           |                                                        | 8,371,819       |   | **25,522,212** |   | 25,813,646 |   |   |
| Amortization                of deferred policy acquisition costs                 |                                                         | **5,616**               |                                                        | 6,911           |   | **14,136** |   | 14,685 |   |   |
| Operating                expenses                                                |                                                         | **2,173,305**           |                                                        | 2,138,236       |   | **6,604,610** |   | 6,517,439 |   |   |
| Taxes,                other than income, fees and assessments                    |                                                         | **301,382**             |                                                        | 326,446         |   | **  1,132,128** |   |   1,137,631 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Total                Expenses                                                    |                                                         | **11,045,768**          |                                                        | 10,815,324      |   | **33,259,306** |   | 33,337,015 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Income                from Operations before Income Taxes                        |                                                         | **1,068,588**           |                                                        | 1,066,629       |   | **2,954,131** |   | 2,311,911 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Provision                for income taxes                                        |                                                         | ** 246,634**       |                                                        |  195,791   |   | **583,752** |   | 423,891 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Net                Income                                                        | **$**                                                        | **821,954**             | $                                                           | 870,838         | **$**  | **2,370,380** | $ | 1,888,020 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Net                income per common share (basic and diluted)                   | **$**                                                        | **0.05**                | $                                                           | 0.05            | **$**  | **0.15** | $ | 0.11 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Weighted                average number of fully paid common shares               |                                                         | **15,675,591**          |                                                        | 16,532,522      |   | **15,701,335** |   | 16,701,162 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Other                comprehensive income (loss), net of tax:                    |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Unrealized                gains (losses) on securities:                          |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Unrealized                holding gain (loss) arising during period (net of tax) | **$**                                                        | **73,573**              | $                                                           | 57,079          | **$**  | **  126,716** | $ | 44,284 |   |   |
| Reclassification                adjustment for loss included in net income       |                                                         | -                       |                                                        | (1,762)         |   | **  (11,351)** |   |   (13,564) |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Other                Comprehensive Income (loss)                                 |                                                         | ** 73,573**        |                                                        | 55,317          |   | ** 115,365** |   | 30,720 |   |   |
|                                                                             |                                                         |                    |                                                        |            |   |   |   |   |   |   |
| Comprehensive                Income                                              | **$**                                                        | **895,527**             | $                                                           | 926,155         | **$**  | **2,485,745** | $ | 1,918,740 |   |   |

----

**BNL      FINANCIAL CORPORATION AND SUBSIDIARIES**

** CONSOLIDATED        STATEMENTS OF CASH FLOWS**

|                                                                                                            | Nine                Months EndedSeptember                30, |                          |
|-----------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|-------------------------------|
| **Cash                flows from operating                activities:**                                    | **2007****(Unaudited)**                                      |                          | 2006(Unaudited) |   |
| Net                income                                                                                       | **$**                                                        | **2,370,380**                 |   | $ |   1,888,020 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |                                                         |                          |   |   |   |   |
| Realized                gain on investments                                                                     |                                                         | **(13,677**                   | **)** |   | (14,721 | ) |
| Realized                loss (gain) on furniture and fixtures                                                   |                                                         | **2,549**                     |   |   | (5,633 | ) |
| Realized                gain on debt retirement                                                                 |                                                         | **(8,103**                    | **)** |   | (14,850 | ) |
| Decrease                in deferred tax asset                                                                   |                                                         | **18,000**                    |   |   | 15,000 |   |
| Depreciation                                                                                                    |                                                         | ** 262,248**             |   |   | 244,285 |   |
| Amortization                of deferred acquisition costs, and intangibles                                      |                                                         | ** 18,497**              |   |   | 19,047 |   |
| Accretion                of bond discount                                                                       |                                                         | **  1,251**         |   |   | (3,098 | ) |
| Change                in assets and liabilities:                                                                |                                                         |                          |   |   |   |   |
| Increase                in accrued investment income                                                            |                                                         | **   (38,408** | **)** |   |    (43,280 | ) |
| (Increase)                decrease in premiums due and unpaid                                                   |                                                         | **  (154,096**      | **) ** |   |   15,099 |   |
| Decrease                in liability for future policy benefits                                                 |                                                         | ** (13,780**             | **)** |   | (146,386 | ) |
| Increase                (decrease) in policy claims payable                                                     |                                                         | **105,929**                   |   |   | (196,152 | ) |
| Decrease                in annuity deposits and deferred profits                                                |                                                         | **(145,947**                  | **)** |   | (155,268 | ) |
| Decrease                in premium deposit funds                                                                |                                                         | **(2,528**                    | **)** |   | (2,514 | ) |
| Increase                in advanced and unallocated premium                                                     |                                                         | **350,637**                   |   |   | 112,151 |   |
| Decrease                in commissions payable                                                                  |                                                         | ** (66,697**             | **) ** |   |  (29,118 | ) |
| Other,                increase                                                                                  |                                                         | ** 83,147**              |   |   | 95,072 |   |
| Net                Cash Provided By Operating Activities                                                        |                                                         | **2,769,402**                 |   |   | 1,777,654 |   |
|                                                                                                            |                                                         |                          |   |   |   |   |
| **Cash                flows from investing activities:**                                                        |                                                         |                          |   |   |   |   |
| Proceeds                from sales of furniture and equipment                                                   |                                                         | **47,251**                    |   |   |  5,640 |   |
| Proceeds                from maturity or redemption - Held to Maturity Investments                              |                                                         | ** 2,242,642**           |   |   |   2,654,553 |   |
| Purchase                of furniture and equipment                                                              |                                                         | **(246,690**                  | **)** |   | (468,426 | ) |
| Proceeds                from sales of equity securities                                                         |                                                         | **129,752**                   |   |   | 96,504 |   |
| Purchase                of fixed maturity securities - Held to Maturity                Investments              |                                                         | **(2,764,065**                | **)** |   | (1,873,302 | ) |
| Purchase                of equity securities                                                                    |                                                         | **-**                         |   |   | (200,202 | ) |
|       Other                investments – Line of credit payments received   |                                                         | **28,026**                    |   |   |        26,387 |   |
| Net                Cash Provided By (Used In) Investing Activities                                              |                                                         | **(563,084**                  | **)** |   | 241,154 |   |
|                                                                                                            |                                                         |                          |   |   |   |   |
| **Cash                flows from financing activities:**                                                        |                                                         |                          |   |   |   |   |
| Net                payments on supplementary contracts                                                          |                                                         | **(8,444**                    | **)** |   | (17,004 | ) |
| Purchase                of treasury stock                                                                       |                                                         | **(711,299**                  | **)** |   | (1,234,786 | )  |
| Treasury                shares sold                                                                             |                                                         | **-**                         |   |   | 64,550 |   |
| Bonds                payable purchased                                                                          |                                                         | **(16,205**                   | **)** |   | (29,700 | ) |
| Exercised                stock options                                                                          |                                                         | **   346**     |   |   |   150 |   |
| Net                Cash Used In Financing Activities                                                            |                                                         | **(735,602**                  | **)** |   | (1,216,790 | ) |
|  Net                Increase In Cash and Cash                Equivalents                                   |                                                         | **  1,470,716**     | **  ** |   | 802,018 |   |
|  Cash                And Cash Equivalents, Beginning Of Period                                             |                                                         | **  1,673,058**     |   |   | 946,272 |   |
|  Cash                And Cash Equivalents, End Of Period                                                   | **$**                                                        | **3,143,774**                 |   | $ |    1,748,290 |   |

----

**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 Sales of Equity Securities and Use of      Proceeds.**

** (c)       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                                                                                                                                    |
| Month                #2, Feb 1 thru Feb 28, 2007 | --                                                                              | --                                                                          | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #3, Mar 1 thru 31, 2007     | --                                                                              | --                                                                          | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #4, Apr 1 thru Apr 30, 2007 | --                                                                              | --                                                                          | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #5 May 1 thru May 31, 2007  | --                                                                              | --                                                                          | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #6 Jun 1 thru Jun 30, 2007  | 94,125                                                                          | $1.25                                                                       | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #7 Jul 1 thru Jul 31, 2007  |   --                                                                  |  --                                                                    | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #8 Aug 1 thru Aug 31, 2007  |    --                                                            | --                                                                          | --                                                                                                                                                       | None                                                                                                                                    |
| Month                #9 Sep 1 thru Sep 30, 2007  | 420,246                                                                         | $1.25                                                                       | 420,246                                                                                                                                                  | None                                                                                                                                    |
| Totals                                           | 553,705                                                                         |                                                                        | 420,246                                                                                                                                                  |                                                                                                                                    |

**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.                                                         |

----

| 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:                November 13, 2007                      |   | By:                Wayne E. Ahart, Chairman of the Board |
|                                                        |   | (Chief                Executive Officer)                 |
|                                                        |   |                                                     |
|                                                        |   |  /s/                Barry N. Shamas                 |
| Date:                November 13,                2007  |   | By:                Barry N. Shamas, Executive V.P.       |
|                                                        |   | (Chief                Financial Officer)                 |

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