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



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

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

                    For the Quarter Ended September 30, 2003

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

                 For the transition period from______to_____ .

                          Commission File No. 000-16880

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



                            BNL FINANCIAL CORPORATION
             (Exact name of Registrant as specified in its charter)

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

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



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

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


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

                                Yes __X__ No____


As of September 30, 2003, the Registrant had 20,265,136 shares of Common Stock,
no par value, outstanding.




<PAGE>




--------------------------------------------------------------------------------
BNL FINANCIAL CORPORATION AND SUBSIDIARIES
--------------------------------------------------------------------------------

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements



                         INDEPENDENT ACCOUNTANTS' REPORT




To The Board of Directors
BNL Financial Corporation


We have reviewed the accompanying Consolidated Balance Sheet of BNL Financial
Corporation and Subsidiaries as of September 30, 2003 and the related
Consolidated Statements of Income and Comprehensive Income for the three-month
and nine-month periods ended September 30, 2003 and 2002, and the Consolidated
Statement of Cash Flows for the nine-month periods ended September 30, 2003 and
2002. These interim financial statements are the responsibility of the
Corporation's management.

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

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

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the Consolidated Balance Sheet of BNL
Financial Corporation and Subsidiaries as of December 31, 2002 and the related
Consolidated Statements of Income and Comprehensive Income, Changes in
Shareholder's Equity and Cash Flows for the year then ended (not presented
herein); and in our report dated February 8, 2003, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying Consolidated Balance Sheet as of
December 31, 2002 is fairly stated, in all material respects, in relation to the
Consolidated Balance Sheet from which it has been derived.






Oklahoma City, Oklahoma                                SMITH, CARNEY & CO., p.c.
November 14, 2003


                                      -1-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
BNL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------------------
  ASSETS
                                                                                   September 30,            December 31,
                                                                                 2003 (Unaudited)          2002 (Audited)
                                                                                --------------------     -------------------
<S>                                                                             <C>                      <C>
Cash and cash equivalents                                                                $2,572,786             $ 5,660,879
Investment in fixed maturities, at fair value Available for Sale (amortized
  cost  $1,840,595, $2,348,098, respectively)                                             2,143,808               2,524,142
Investment in fixed maturities, at amortized cost, Held to Maturity (fair
  value $15,339,915;  $9,877,365, respectively)                                          15,158,718               9,771,071
Other long-term investments                                                               1,527,407               1,497,407
 Investment in equity securities  (cost $245,461; $175,626, respectively)                   244,420                 120,265
                                                                                --------------------     -------------------
               Total Investments, Including Cash and
                     Cash Equivalents                                                    21,647,139              19,573,764

Accrued investment income                                                                   184,792                 186,518
Furniture and equipment, net                                                                411,021                 462,843
Deferred policy acquisition costs                                                           232,639                 251,340
Policy loans                                                                                137,960                 128,651
Receivable from reinsurer                                                                    32,236                  32,236
Premiums due and unpaid                                                                     797,742                 921,008
Income tax assets                                                                           279,000                 322,000
Intangible assets                                                                           163,691                 168,052
Other assets                                                                                128,149                  86,930
                                                                                --------------------     -------------------
               Total Assets                                                             $24,014,369             $22,133,342
                                                                                ====================     ===================

               LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Liabilities for future policy benefits                                               $ 1,566,980             $ 1,544,772
   Policy claims payable                                                                  2,168,716               2,357,549
   Annuity deposits                                                                       2,807,079               2,847,549
   Deferred annuity profits                                                                 453,351                 478,058
   Premium deposit funds                                                                     41,689                  43,825
   Supplementary contracts without life contingencies                                        73,412                  89,707
   Advanced and unallocated premium                                                         973,375                 739,856
   Commissions payable                                                                      427,531                 445,468
   Accrued taxes and expenses                                                               657,395                 621,413
   Bonds payable                                                                          3,345,203                       0
   Other liabilities                                                                        370,561                 384,974
                                                                                --------------------     -------------------
                              Total Liabilities                                          12,885,292               9,553,171
                                                                                --------------------     -------------------

COMMITMENTS AND CONTINGENCIES
   Contingent long-term liabilities                                                         647,675               4,269,404
                                                                                --------------------     -------------------

          Total Commitments and Contingencies                                               647,675               4,269,404
                                                                                --------------------     -------------------


Shareholders' Equity:
   Common stock, $.02 stated value, 45,000,000 shares authorized, 21,040,086;
    23,419,647 shares issued and outstanding, respectively                                  420,802                 468,393
   Additional paid-in capital                                                            10,821,443              14,366,816
   Accumulated other comprehensive income                                                   272,395                 121,715
   Accumulated deficit                                                                    (276,973)             (2,279,019)
   Contingent Treasury stock, 431,783; 2,846,269 shares respectively                      (647,675)             (4,269,404)
   Treasury stock, at cost; 343,167; 301,205 shares respectively                          (108,590)                (97,734)
                                                                                --------------------     -------------------
               Total Shareholders' Equity                                                10,481,402               8,310,767
                                                                                --------------------     -------------------

          Total Liabilities and Shareholders' Equity                                    $24,014,369             $22,133,342
                                                                                ====================     ===================
------------------------------------------------------------------------------------------------------------------------------------
          (See accompanying notes and Independent Accountants' Report)
</TABLE>
                                      -2-
<PAGE>
<TABLE>
<CAPTION>
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BNL FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------------------

                                                                     Three Months Ended                     Nine Months Ended
                                                                        September 30                           September 30
                                                           ---------------------------------     ----------------------------------
                                                                2003              2002                2003               2002
                                                            (Unaudited)        (Unaudited)         (Unaudited)        (Unaudited)
                                                           ---------------    --------------     ----------------    --------------
<S>                                                        <C>                <C>                <C>                 <C>
Income:
   Premium income                                             $10,204,943       $10,443,117         $ 30,635,896       $30,723,715
   Net investment income                                          231,602           299,162              721,749           897,765
   Marketing fees                                                  37,353            37,389              103,602           111,544
   Realized gains (loss)                                          144,455          (95,961)              244,914         (140,278)
                                                           ---------------    --------------     ----------------    --------------

               Total Income                                    10,618,353        10,683,707           31,706,161        31,592,746
                                                           ---------------    --------------     ----------------    --------------


Expenses:
   Liability for future policy benefits expense                  (22,057)            47,836               22,208            70,947
   Policy benefits and other insurance costs                    7,333,259         7,889,578           22,519,906        23,392,168
   Amortization of deferred policy acquisition costs                7,632             9,015               18,701            19,766
   Operating expenses                                           1,951,508         1,812,669            5,678,473         5,323,721
   Taxes, other than income, fees and assessments
                                                                  353,416           313,927            1,028,826           975,954
                                                           ---------------    --------------     ----------------    --------------

                Total Expenses                                  9,623,758        10,073,025           29,268,114        29,782,556
                                                           ---------------    --------------     ----------------    --------------


                Income from Operations before
                     Income Taxes                                 994,595           610,682            2,438,047         1,810,190

   Provision for income taxes                                     122,000            50,000              436,000           244,000
                                                           ---------------    --------------     ----------------    --------------


               Net Income                                       $ 872,595         $ 560,682          $ 2,002,047        $1,566,190
                                                           ===============    ==============     ================    ==============


Net income per common share (basic and diluted)                     $0.04             $0.03                $0.09             $0.08
                                                           ===============    ==============     ================    ==============


Weighted average number of fully
      paid common shares                                       20,193,332        20,582,081           20,199,625        20,582,081
                                                           ===============    ==============     ================    ==============


Other comprehensive income, net of tax:
     Unrealized gains on securities:
          Unrealized holding gain (loss) arising
           during period                                       $ (43,609)        $(100,917)            $ 194,651        $(188,833)
       Reclassification adjustment for gain (loss)
           included in net income                                (36,815)            95,961             (43,971)           140,279
                                                           ---------------    --------------     ----------------    --------------


                Other Comprehensive Income (Loss)                (80,424)           (4,956)              150,680          (48,554)
                                                           ---------------    --------------     ----------------    --------------


                Comprehensive Income                             $792,171          $555,726           $2,152,727        $1,517,636
                                                           ===============    ==============     ================    ==============







------------------------------------------------------------------------------------------------------------------------------------
          (See accompanying notes and Independent Accountants' Report)
</TABLE>


                                     -3-
<PAGE>

<TABLE>
<CAPTION>

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BNL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                 Nine Months Ended
                                                                                                    September 30,
                                                                                        -------------------------------------
                                                                                              2003                2002
                                                                                          (Unaudited)          (Unaudited)
                                                                                        -----------------    ----------------
<S>                                                                                     <C>                  <C>
Cash flows from operating activities:
     Net income                                                                              $ 2,002,047         $ 1,566,190
     Adjustments to reconcile net income to net cash
          provided by operating activities:
            Realized (gain) loss on investments                                                (244,914)             140,278
            Decrease in deferred tax asset                                                        43,000             130,000
            Depreciation                                                                         180,585             142,530
            Amortization of deferred acquisition costs,
                  organization costs and intangibles                                              23,062              24,128
            Accretion of bond discount                                                             9,998               1,125
        Change in assets and liabilities:
             (Increase) decrease in accrued investment income                                      1,726            (24,987)
             (Increase) decrease in premiums due and unpaid                                      123,266            (89,421)
             Increase in liability for future policy benefits                                     22,208              70,948
             Decrease in policy claims payable                                                 (188,833)            (27,383)
             Decrease in annuity deposits and deferred profits                                  (65,177)            (37,823)
             Decrease in premium deposit funds                                                   (2,136)             (5,393)
             Increase (decrease) in advanced and unallocated premium                             233,519           (321,333)
             Increase (decrease) in commissions payable                                         (17,937)              42,442
             Other, increase                                                                      57,754             152,492
                                                                                        -----------------    ----------------

                    Net Cash Provided By Operating Activities                                 2, 178,168           1,763,793
                                                                                        -----------------    ----------------

Cash flows from investing activities:
     Proceeds from sales of furniture and equipment                                                7,103                   0
     Proceeds from maturity or redemption - Available for Sale Investments                     2,153,553           4,165,307
     Proceeds from maturity or redemption - Held to Maturity Investments                       2,150,000                   0
     Proceeds from sales of equity securities                                                          0             174,293
     Purchase of furniture and equipment                                                      ( 135,867)           (182,491)
     Purchase of fixed maturity securities - Available for Sale Investments                            0         (4,124,625)
    Purchase of fixed maturity securities - Held to Maturity Investments                     (9,256,299)                   0
     Purchase of equity securities                                                              (69,841)           (182,044)
     Other investments - Line of credit advanced                                                (30,000)                   0
                                                                                        -----------------    ----------------

                     Net Cash Used In Investing Activities                                   (5,181,351)           (149,560)
                                                                                        -----------------    ----------------


Cash flows from financing activities:
     Net (payments) receipts on supplementary contracts                                         (16,295)              25,752
     Treasury shares purchased                                                                  (73,407)                   0
     Treasury shares sold                                                                         62,550               6,325
     Bonds payable purchased                                                                    (75,583)                   0
     Exercised stock options and stock bonus                                                      17,825              51,886
                                                                                        -----------------    ----------------

  Net Cash Provided By (Used In) Financing Activities                                            (84,910)              83,963
                                                                                        -----------------    ----------------


Net Increase (Decrease) In Cash and Cash Equivalents                                         (3,088,093)           1,698,196

Cash And Cash Equivalents, Beginning Of Period                                                 5,660,879           1,726,746
                                                                                        -----------------    ----------------


Cash And Cash Equivalents, End Of Period                                                     $ 2,572,786         $ 3,424,942
                                                                                        =================    ================


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          (See accompanying notes and Independent Accountant's Report)
</TABLE>
                                      -4-
<PAGE>
--------------------------------------------------------------------------------
 BNL FINANCIAL CORPORATION AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Note 1.
The accompanying Consolidated Financial Statements (unaudited) as of September
30, 2003 and September 30, 2002 have been reviewed by independent certified
public accountants. In the opinion of management, the aforementioned financial
statements contain all adjustments necessary to present fairly the financial
position as of September 30, 2003, and the results of operations for the periods
ended September 30, 2003 and September 30, 2002, and the cash flows for the
periods ended September 30, 2003 and September 30, 2002. All such adjustments
are of a normal recurring nature.

The statements have been prepared to conform to the requirements of Form 10-Q
and do not necessarily include all disclosures required by generally accepted
accounting principles (GAAP). The reader should refer to the Company's Annual
Report on Form 10-K for the year ended December 31, 2002, previously filed with
the Commission, for financial statements for the year ended December 31, 2002,
prepared in accordance with GAAP. Net income per share of common stock is based
on the weighted average number of outstanding common shares.

Note 2.
The dental claims loss ratio was 63% during the first nine months of 2003
compared to 66% for the same period in 2002. Part of the decline in loss ratio
is due to an approximate $190,000 over estimation of the claims liability at
December 31, 2002, which had the effect of reducing claims expense in 2003. Due
to fluctuation in claims incurred this accrual is difficult to estimate.


Note 3.
During the quarter ended September 30, 2003, the Company reclassified Contingent
Long Term Liabilities and Contingent Treasury Stock in the amount of $3,621,729
to Bonds Payable and Treasury Stock, respectively, in accordance with the
character of the litigation settlement of December 2001 and the performance of
all duties there under. The $3,621,729 of Treasury Stock was retired and
returned to authorized but not issued status. The remaining Contingent Long
Term Liabilities and Contingent Treasury Stock in the amount of $647,675
represents shares that may or may not have rights to exchange under the
settlement and, as such, are contingent on determination of their status.


Note 4.
During the second and third quarter of 2003, the Company made cash offers to
bond holders and stockholders for the purchase of bonds and stock. Though
September 30, 2003, bond purchases resulted in a reduction of Bonds Payable of
$276,456 and gains from the early extinguishments of debt of $200,891 reflected
in Realized Gains in the financial statements. Stock purchases amounted to
$73,407 and are included in Treasury Stock.

                                      -5-
<PAGE>



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

In this section, we review the consolidated results of operations for the nine
months ended September 30, 2003 and 2002 and significant changes in the
consolidated financial condition of the Company. This discussion should be read
in conjunction with the accompanying consolidated financial statements, notes
and selected financial data.

Forward-Looking Statements

All statements, trend analyses and other information contained in this report
and elsewhere (such as in filings by us with the Securities and Exchange
Commission, press releases, presentations by us or our management or oral
statements) relative to markets for our products and trends in our operations or
financial results, as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," and other
similar expressions, constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to known and unknown risks, uncertainties and other factors which may
cause actual results to be materially different from those contemplated by the
forward-looking statements. Such factors include, among other things: (i)
general economic conditions and other factors, including prevailing interest
rate levels and stock and credit market performance which may affect (among
other things) our ability to sell our products, our ability to access capital
resources and the costs associated therewith, the market value of our
investments and the lapse rate and profitability of policies; (ii) world
conflict, including but not limited to the war in Iraq, which may affect
consumers spending trends and priorities; (iii) customer response to new
products and marketing initiatives: (iv) mortality, morbidity and other factors
which may affect the profitability of our products; (v) changes in the federal
income tax laws and regulations which may affect the relative income tax
advantages of our products; (vi) regulatory changes or actions, including those
relating to regulation of financial services affecting (among other things) bank
sales and underwriting of insurance products and regulation of the sale,
underwriting and pricing of products; and (vii) the risk factors or
uncertainties listed from time to time in our filings with the Securities and
Exchange Commission.

Liquidity and Capital Resources

At September 30, 2003, we had liquid assets of $2,572,786 in cash, money market
savings accounts, U.S. Treasury Bills and short-term certificates of deposit.
All of the non-cash liquid assets can readily be converted to cash.

The major components of operating cash flows are premium income and investment
income while policy benefits are the most significant cash outflow. In the first
nine months of 2003, BNLAC collected $31,779,130 of premiums and annuity
deposits (gross before reinsurance) and we had consolidated investment income of
$721,749. Other sources of cash flow in 2003 were overwrite commissions of
$407,412 on vision products and marketing fees from EPSI Benefits Inc. of
$103,602. The Company paid $18,697,989 of policy benefits in the first nine
months of 2003.

The Company's investments are primarily in U.S. Government, Government Agency
and other investment grade bonds. We do not hedge our investment income through
the use of derivatives.

Other long term investments of $1,527,407 consists of, in part, a convertible
debenture loan in the amount of $1,357,407 from one of the Company's
subsidiaries, BNL Equity Corporation (BNLE), to EPSI Benefits, Inc. (EBI), a
Texas Corporation. The loan bears interest at an annual rate of 14%, payable
monthly, with principal payments commencing September 15, 2008 and a maturity
date of August 15, 2015. To protect its interest, BNLE may convert the debenture
into 51% of the outstanding common stock of EBI, subject to regulatory approval.
The note is one of several agreements entered into by the Company's subsidiaries
which expand the business relationship with EBI and its subsidiary, Employer
Plan Services, Inc. (EPSI), which provides substantially all of the A&H claims
processing and adjudication for the Company's insurance subsidiary, Brokers
National Life Assurance Company ("BNLAC"). BNLE receives a marketing fee from
EBI under a related marketing agreement. As part of the agreement, BNLAC agreed
to pledge $335,000 of bonds as guarantor for an operating line of credit from
BankOne for EPSI through October 15, 2002.

Other long-term investments include an operating line of credit agreement with
an advance amount of $170,000. On October 15, 2002 BNLAC and EPSI entered into a
loan agreement whereby BNLAC will provide EPSI with a $200,000 line of credit
maturing October 15, 2004 that replaced the one with BankOne. The line of credit
is at prime, 4.5%, with interest payable monthly to BNLAC.

                                      -6-
<PAGE>
During the quarter ended September 30, 2003, the Company became a third party
indemnitor by entering into a series of bond indemnity and guarantee agreements
totaling approximately $445,000 in conjunction with a marketing agreement with a
third party, Employer Plan Services Inc. (EPSI). The Company received personal
guarantees from the owners of EPSI to effectively limit potential liability
under the guarantee agreement. With regard to the bond indemnities, the Company
will be obligated only if EPSI, EPSI'S parent and its shareholders, who are the
primary obligors, were all to become insolvent. Management considers the
likelihood of the Company realizing a liability under these agreements to be
remote.

We believe liquid assets, along with investment income, premium income and
marketing fees will be sufficient to meet our long and short-term liquidity
needs. We do not have any current plans to borrow money for operations.

Our insurance operations are conducted through BNLAC. At September 30, 2003,
BNLAC had statutory capital and surplus of $12,606,104. BNLAC is required to
maintain minimum levels of statutory capital and surplus, which differ from
state to state, as a condition to conducting business in those states in which
it is licensed. The State of Arkansas, which is the legal domicile of BNLAC,
requires a minimum of $2,300,000 in capital and surplus. The highest requirement
in any state in which BNLAC is licensed is $5,000,000. Management monitors the
minimum capital and surplus requirements to maintain compliance in each state in
which it is licensed.

Consolidated Results of Operations

Premium income for the third quarter of 2003 was $10,204,943 compared to
$10,443,117 for the same period in 2002. The decrease of 2% for the quarter was
due to three large dental groups that lapsed in late 2002 and early 2003.
Premium income for the first nine months of 2003 was $30,635,896 compared to
$30,723,715 for the same period in 2002. The decrease of 0.2% for the year was
due to three large dental groups that lapsed in late 2002 and early 2003.

Net investment income was $231,602 for the third quarter of 2003 compared to
$299,162 for the third quarter of 2002. Net investment income for the first nine
months of 2003 was $721,749 compared to $897,765 for the same period in 2002.
The 21% decrease for the quarter and 20% decrease for the first nine months were
primarily due to the general decline in interest rates.

The Company received $37,353 of marketing fees from EPSI Benefits Inc. in the
third quarter of 2003 compared to $37,389 for the same period last year. For the
nine months of 2003 marketing fees were $103,602 compared to $111,545 for the
same period of 2002. The Marketing Fees are collectable in conjunction with the
expanded business relationship of the Company with EPSI Benefits Inc. The
decrease in marketing fees in 2003 is due to a decrease in self-funded groups
that are administered by EPSI Benefits Inc.

Realized gain on investments were $144,455 for the third quarter of 2003
compared to a loss of $95,961 for the same period in 2002. For the first nine
months of 2003 realized gains were $244,914 compared to $140,278 of realized
losses for the same period in 2002. The realized gains in 2003 are primarily due
to the purchase of a portion of the Company's outstanding debentures at less
than face value and the realized loss in 2002 is from the markdown of MCI bonds.

For the third quarter of 2003, liability for future policy benefits expense was
($22,057) compared to $47,836 for the same period in 2002. For the nine-month
period ended September 30, 2003, liability for future policy benefits expense
was $22,208 compared to $70,947 for the same period in 2002. The decrease during
both periods of 2003 was due to an increase in surrenders of life and annuity
policies in 2003 compared to 2002.

                                      -7-
<PAGE>
Policy benefits and other insurance costs were $7,333,259 in the third quarter
of 2003 compared to $7,889,578 for the same period in 2002. In the first nine
months of 2003 policy benefits and other insurance costs were $22,519,906
compared to $23,392,168 for the same period in 2002. The decrease was primarily
due to a reduction in policy benefits on the group dental insurance and the
effect of the over estimation of incurred but not received claims at December
31, 2002. See Note 2 of the Financial Statements. The claims ratio on group
dental insurance, which represents the ratio of claims incurred to premium
earned, was 63% for the first nine months of 2003 compared to 66% for the first
nine months of 2002.

Amortization of deferred policy acquisition costs was $7,632 and $9,015 for the
third quarter and $18,701 and $19,766 for the first nine months of 2003 and
2002, respectively. Amortization of deferred policy acquisition costs varies in
relation to lapses or surrenders of existing policies.

For the third quarter of 2003 operating expenses were $1,951,508 compared to
$1,812,669 for the same period in 2002. Operating expenses were $5,678,473 in
the first nine months of 2003 compared to $5,323,721 for the same period in
2002. The increase for both periods was primarily due to executive bonus
incentive plan expenses which increase with profits, and payroll expense and
advertising expense associated with increased operating territory.

Taxes, other than on income, fees and assessments, were $353,416 for the third
quarter of 2003 compared to $313,927 for the third quarter of 2002. Taxes, other
than on income, fees and assessments, were $1,028,826 for the first nine months
of 2003 compared to $975,954 for the same period in 2002. The increase for both
periods was primarily due to an increase in licenses and fees due to expanded
operating territory and state income taxes on increased profits.

The provision for income taxes in the third quarter of 2003 includes $112,000
current tax expense and $10,000 deferred tax expense compared to $65,000 current
tax expense and ($15,000) deferred tax credit in the third quarter of 2002. The
provision for income taxes in the first nine months of 2003 was $393,000 current
tax expense and $43,000 deferred tax expense compared to $114,000 current
expense and $130,000 deferred tax expense for the same period in 2002. The
current tax expense increased in both periods of 2003 compared to 2002 due to
the complete utilization of the life insurance company's net operating losses.

Income from operations before income taxes for the third quarter of 2003 was
$994,595 compared to $610,682 for the same period in 2002. For the first nine
months of 2003 income from operations before income taxes was $2,438,047
compared to $1,810,190 for the same period in 2002. The increase for both
periods was primarily due to the decrease in the claims expense on the group
dental insurance described above.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the potential loss resulting from adverse changes in the
value of financial instruments, either derivative or non-derivative, caused by
fluctuations in interest rates, foreign exchange rates, commodity prices, and
equity security prices. We handle market risks in accordance with our
established policies. We did not have financial instruments to manage and reduce
the impact of changes in interest rates at September 30, 2003 and December 31,
2002. We held various financial instruments at September 30, 2003 and 2002,
consisting of financial assets reported in our Consolidated Balance Sheets.

Interest Rate Risk - We are subject to interest rate risk through the investment
in fixed maturity securities, such as U.S. Government and Government Agency
securities and other investment grade bonds. The fair market value of long-term,
fixed-interest rate debt is subject to interest rate risk. Generally, the fair
value of fixed-interest rate debt will increase as interest rates fall and will
decrease as interest rates rise. The estimated fair value of our fixed maturity
securities at September 30, 2003 and December 31, 2002 was $17,483,723 and
$12,401,507, respectively.

Based on testing at December 31, 2002, a one percentage point increase would
result in a decrease in the estimated fair value of fixed maturity securities of
$338,000. Initial fair values were determined using the current rates at which
we could enter into comparable financial instruments with similar remaining
maturities. The estimated earnings and cash flows impact for the first nine
months of 2003 resulting from a one percentage point increase in interest rates
would be immaterial, holding other variables constant.

                                      -8-
<PAGE>




Foreign-Exchange Rate Risk - We currently have no exposure to foreign-exchange
rate risk because all of our financial instruments are denominated in U.S.
dollars.

Commodity Price Risk - We have no financial instruments subject to commodity
price risk.

Equity Security Price Risk - Equity securities at September 30, 2003 totaled
$244,420, or only 1.0% of total investments and cash on a consolidated basis.

The preceding discussion of estimated fair value of our financial instruments
and the sensitivity analyses resulting from hypothetical changes in interest
rates are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements reflect our current
expectations and involve uncertainties. These forward-looking market risk
disclosures are selective in nature and only address the potential impact from
financial instruments. They do not include other potential effects which could
impact our business as a result of changes in interest rates, foreign-exchange
rates, commodity prices, or equity security prices.

4. Internal Control and Procedures

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's reports
pursuant to the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to the Company's management, including its Chief Executive Officer and its Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurances of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures, as
that term is defined in Rule 13a-14(c) under the Securities Exchange Act of
1934, as amended. Based on this evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective in timely alerting the Company's Chief Executive
Officer and Chief Financial Officer to material information required to be
disclosed in the periodic reports filed with the SEC.

 In addition, the Company's Chief Executive Officer and Chief Financial Officer
have reviewed the Company's internal controls, and there have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect those controls subsequent to the date of the last
evaluation.

                                      -9-
<PAGE>
PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

On November 5, 2001, the Board of Directors of the Company and BNL Equity
Corporation approved a settlement in the class action case of Myra Jo Pearson,
Paul Pearson and James Stilwell v. BNL Equity Corporation (Formerly Known as
United Arkansas Corporation), BNL Financial Corporation (Formerly Known as
United Iowa Corporation), and certain Officers of the Company, in Pulaski County
Circuit Court, Third Division, No. 96-4971. The settlement, which was approved
by the Pulaski County Circuit Court and the Arkansas Insurance Commissioner
January 28, 2002, and was subject to various conditions, including the approvals
by any other applicable regulatory authorities and conditioned upon compliance
with federal and state securities laws. As of December 31, 2002, all requisite
approvals were received.

As part of the settlement agreement, the Company is in the process of issuing
and exchanging its bonds in the principal amount of $1.50 for each share of
common stock of BNL owned by the members of the Class. The bonds will be for a
term of twelve years, effective December 15, 2002, with principal payable at
maturity and shall bear interest at the rate of 6% per annum payable annually
from the previous fiscal year's earnings of BNL. If any interest payment is not
made, it will be added to the principal and paid at maturity. The bonds shall be
fully callable and redeemable at par at any time by BNL and are reflected on the
Balance Sheet at September 30, 2003 and bonds payable in the amount of
$3,345,203

During the quarter ended September 30, 2003, the Company reclassified Contingent
Long Term Liabilities and Contingent Treasury Stock in the amount of $3.621,729
to Bonds Payable and Treasury Stock, respectively, in accordance with the
character of the litigation settlement of December 2001 and the performance of
all duties there under.The $3,621,729 of Treasury Stock was retired and returned
to authorized but not issued status. The remaining Contingent Long Term
Liabilities and Contingent Treasury Stock in the amount of $647,675 represents
shares that may or may not have rights to exchange under the settlement and, as
such, are contingent on determination of their status.


Item 2.  Changes in Securities.

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

Item 3. Defaults Upon Senior Securities.

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

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

No matters were submitted to a vote of security holders during the time period
covered by this filing.

Item 5.  Other Information.

None

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

None


(b) Reports on Form 8-K.

The Company did not file a Form 8-K during the period covered by this document.


                                      -10-
<PAGE>

                                   SIGNATURES

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

                            BNL FINANCIAL CORPORATION
                                  (Registrant)


                                            /s/ Wayne E Ahart
Date: November 14, 2003                    ____________________________________

                                       By: Wayne E. Ahart, Chairman of the Board
                                          (Chief Executive Officer)

                                            /s/ Barry N. Shamas
Date: November 14, 2003                    ____________________________________
                                       By: Barry N. Shamas, Executive V.P.
                                           (Chief Financial Officer)



                                      -11-

<PAGE>



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



                                 Certifications

I, Wayne E. Ahart, certify that:

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

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

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

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

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

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

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



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

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

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

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



      Date: November 14, 2003

      /s/ Wayne E Ahart
      -----------------------
      Wayne E. Ahart
      Chairman of the Board

                                      -12-

<PAGE>
I, Barry N. Shamas, certify that:

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

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

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

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

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

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

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

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

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

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

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



      Date: November 14, 2003

      /s/ Barry N. Shamas
      -----------------------
     Barry N. Shamas
     Chief Financial Officer



                                      -13-

<PAGE>




                                                                   Exhibit 99.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                          OF BNL FINANCIAL CORPORATION
                         PURSUANT TO 18 U.S.C. ss. 1350


In connection with the accompanying report on Form 10-Q for the period ending
September 30, 2003 and filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, Wayne E. Ahart, Chief Executive Officer of BNL
Financial Corporation, hereby certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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


/s/ Wayne E Ahart
-----------------------

Wayne E. Ahart
Chief Executive Officer
November 14, 2003





                                      -14-












                                                                    Exhibit 99.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                          OF BNL FINANCIAL CORPORATION
                         PURSUANT TO 18 U.S.C. ss. 1350


In connection with the accompanying report on Form 10-Q for the period ending
September 30, 2003 and filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, Barry N. Shamas, Chief Financial Officer of BNL
Financial Corporation, hereby certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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


/s/ Barry N. Shamas
-----------------------

Barry N. Shamas
Chief Financial Officer
November 14, 2003


                                      -15-