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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                      For the Quarter Ended March 31, 2000

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

                  For the transition period from______to_____ .

                          Commission File No. 0-16880

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                            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) 327-3065

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


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

Yes __X__ No____

As of March 31, 2000, the Registrant had 23,311,944  shares of Common Stock,  no
par value, outstanding.

Transitional Small Business Disclosure Format  (check one)  Yes___ No__X__



<PAGE>

<TABLE>
<CAPTION>
                                                    Part I. Financial Information

Item 1.  Financial Statements

                                              BNL FINANCIAL CORPORATION AND SUBSIDIARIES
                                                      CONSOLIDATED BALANCE SHEET
<S>                                                                          <C>                              <C>


                                                                                                                   December 31,
                            ASSETS                                                March 31, 2000                       1999
                                                                                    (Unaudited)                     (Audited)
                                                                              ------------------------         ---------------------
Investments:
   Investments available for sale, at fair value                                          $10,691,044                   $10,344,845
   Equity securities, common stock                                                              2,625                         3,313
   Cash and cash equivalents                                                                1,786,500                     1,419,618
                                                                              ------------------------         ---------------------

                 Total Investments                                                         12,480,169                    11,767,776
Accrued investment income                                                                     235,174                       193,337
Furniture and equipment                                                                       425,283                       438,147
Deferred policy acquisition costs                                                             332,942                       352,186
Receivable from reinsurer                                                                      40,051                        40,051
Premiums due and unpaid                                                                       768,879                       760,941
Other assets                                                                                  377,723                       396,962
                                                                              ------------------------         ---------------------

                      TOTAL ASSETS                                                        $14,660,220                   $13,949,400
                                                                              ========================         =====================

           LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Liability for future policy benefits                                                    $1,450,729                    $1,488,857
   Policy claims payable                                                                    3,003,175                     2,729,175
   Premium deposit fund                                                                       109,201                       118,703
   Annuity deposits                                                                         2,909,581                     2,982,839
   Deferred annuity profits                                                                   496,417                       500,000
   Supplementary contracts without
       life contingencies                                                                      99,035                       105,120
   Advanced and unallocated premium                                                           759,353                       714,482
   Commissions payable                                                                        503,191                       410,903
   Other liabilities                                                                          457,587                       594,187
                                                                              ------------------------         ---------------------

                 Total liabilities                                                          9,788,269                     9,644,266
                                                                              ------------------------         ---------------------

SHAREHOLDERS' EQUITY:
   Common stock                                                                               466,239                       466,239
   Additional paid-in capital                                                              14,308,230                    14,308,230
   Accumulated other comprehensive income                                                    (701,357)                     (897,523)
   Treasury stock                                                                             (64,105)                      (64,105)
   Accumulated deficit                                                                     (9,137,056)                   (9,507,707)
                                                                              ------------------------         ---------------------

           Total shareholders' equity                                                       4,871,951                     4,305,134
                                                                              ------------------------         ---------------------

           TOTAL LIABILITIES & SHAREHOLDER'S EQUITY                                       $14,660,220                   $13,949,400
                                                                              ========================         =====================

                                           (See Accompanying Notes and Accountants' Report)


</TABLE>

                                                                  2


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<TABLE>
<CAPTION>


                                           BNL FINANCIAL CORPORATION AND SUBSIDIARIES
                                              CONSOLIDATED STATEMENT OF INCOME AND
                                                      COMPREHENSIVE INCOME





                                                                                                       Period Ended
                                                                                                         March 31
                                                                                          ----------------------------------------
                                                                                                2000                  1999
                                                                                            (Unaudited)           (Unaudited)
                                                                                          -----------------    -------------------
<S>                                                                                       <C>                  <C>

REVENUES:
   Premium income                                                                               $8,701,580             $6,738,162
   Investment income                                                                               202,056                175,053
   Realized gains on investments                                                                     1,220                     79
                                                                                          -----------------    -------------------

    Total income                                                                                 8,904,857              6,913,294
                                                                                          -----------------    -------------------


EXPENSES:
   Policy benefits and other insurance costs                                                     6,874,884              5,817,957
   Increase in liability for future policy benefits                                                (38,128)               (16,834)
   Amortization of deferred policy acquisition costs                                                19,244                  8,977
   Operating expenses                                                                            1,399,306                925,923
   Taxes, other than on income                                                                     278,900                214,021
                                                                                          -----------------    -------------------

    Total expenses                                                                               8,534,206              6,950,044
                                                                                          -----------------    -------------------

    OPERATING INCOME (LOSS)                                                                        370,651                (36,750)

Provision for income taxes                                                                               0                      0
                                                                                          -----------------    -------------------

    NET INCOME (LOSS)                                                                             $370,651               ($36,750)
                                                                                          =================    ===================

   Net income (loss) per share                                                                       $0.02                 ($0.00)
                                                                                          =================    ===================

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

   Other comprehensive income, net of tax:
       Unrealized gains on securities:
            Unrealized holding gains (loss) arising
                during period                                                                     $197,386               ($86,881)
            Reclassification adjustment for
                gains included in net income                                                        (1,220)                   (79)
                                                                                          -----------------    -------------------

     Other comprehensive income (loss)                                                             196,166                (86,960)
                                                                                          -----------------    -------------------

        COMPREHENSIVE INCOME (LOSS)                                                               $566,817              ($123,710)
                                                                                          =================    ===================

                                        (See Accompanying Notes and Accountants' Reports)



</TABLE>


                                                                3
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<TABLE>
<CAPTION>

                                            BNL FINANCIAL CORPORATION AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                     Three Months                  Three Months
                                                                                        Ended                         Ended
                                                                                      03/31/2000                    03/31/1999
Cash flows from operating activities:                                                (Unaudited)                   (Unaudited)
                                                                                 ---------------------         ---------------------
<S>                                                                              <C>                           <C>

Net income (loss)                                                                            $370,651                      ($36,750)
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
 Realized loss on investments                                                                  (1,220)                         (733)
 Realized gain on sale of furniture and equipment                                                   0                           654
 Depreciation                                                                                  29,708                        34,772
 Amortization of deferred acquisition
    costs and state licenses acquired                                                          20,021                         9,754
 Accretion of bond discount                                                                       (89)                         (402)

Change in assets and liabilities:
 (Increase) decrease in accrued investment income                                             (41,837)                          649
 Increase in premiums due and unpaid                                                           (7,938)                     (186,003)
 Increase (decrease) in premium deposit fund                                                   (9,502)                        8,887
 Decrease in annuity deposits and deferred profits                                            (76,841)                      (36,873)
 Decrease in liability for future policy benefits                                             (38,128)                      (16,834)
 Increase in policy claims payable                                                            274,000                       145,000
 Increase in advanced and unallocated premium                                                  44,871                       339,001
 Increase in commissions payable                                                               92,288                       121,221
 Other net                                                                                   (118,054)                     (213,715)
                                                                                 ---------------------         ---------------------

     Total adjustments                                                                        167,280                       205,378
                                                                                 ---------------------         ---------------------


     Total cash provided by operating activities                                              537,931                       168,628

Cash flows from investing activities:
  Sales of debt securities                                                                    151,881                     1,500,556
  Sales of furniture and equipment                                                                  0                         4,000
  Purchase of furniture and equipment                                                         (16,844)                     (141,174)
  Purchase of fixed maturity securities                                                      (300,000)                   (2,500,000)
                                                                                 ---------------------         ---------------------

      Net cash provided by (used in) investing activities                                    (164,963)                   (1,136,618)
                                                                                 ---------------------         ---------------------

Cash flows from financing activities:
  Net payments on supplementary contracts                                                      (6,086)                       (7,092)
                                                                                 ---------------------         ---------------------

      Net cash provided by (used in) financing activities                                      (6,086)                       (7,092)
                                                                                 ---------------------         ---------------------

Net increase (decrease) in cash and cash equivalents                                          366,882                      (975,082)

Cash and cash equivalents, beginning of year                                                1,419,618                     2,426,963
                                                                                 ---------------------         ---------------------

Cash and cash equivalents, end of period                                                   $1,786,500                    $1,451,881
                                                                                 =====================         =====================

                                         (See Accompanying Notes and Accountants' Report)

</TABLE>

                                                                 4

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            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1.

The accompanying  Consolidated  Financial Statements (unaudited) as of March 31,
2000 and for the quarter ended March 31, 2000 have been reviewed by  independent
certified public accountants. The accompanying Consolidated Financial Statements
(unaudited)  for the  quarter  ended  March 31,  1999 have not 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  March  31,  2000,  and the  results  of
operations  for the quarters  ended March 31, 2000 and March 31,  1999,  and the
cash flows for the quarters ended March 31, 2000 and March 31, 1999.

The statements have been prepared to conform to the  requirements of Form 10-QSB
and do not necessarily  include all disclosures  required by generally  accepted
accounting  principles  (GAAP).  The reader should refer to the Company's Annual
Report on Form 10-KSB for the year ended  December  31, 1999,  previously  filed
with the  Commission,  for financial  statements for the year ended December 31,
1999,  prepared in accordance  with GAAP.  Net income (loss) per share of common
stock is based on the weighted average number of outstanding common shares.

Note 2.

The dental  claims loss ratio was 68.0%  during the first  three  months of 2000
compared to 74.5% for the same  period in 1999.  Part of the decline in the loss
ratio is due to an approximate  $300,000 over estimation of the claims liability
at December 31, 1999. Due to the monthly  fluctuation in claims received and the
lag time in receiving the claims, this accrual is difficult to estimate.

Note 3.

The  Company,  BNL Equity  Corporation  and several  officers in the Company are
defendants in a pending class action lawsuit alleging  violation of the Arkansas
Securities  Act.  Subsequent  to year-end the Arkansas  Supreme  Court  affirmed
certification  of the class.  The  Company  plans to appeal  that  ruling to the
United States Supreme Court. The Company expects to obtain a favorable  judgment
in the case and believes the action is frivolous and that  substantial  evidence
exists which directly refutes the allegations.  However, the ultimate outcome of
this litigation is unknown at the present time.  Accordingly,  no provisions for
any liability that might result have been made in the financial statements.  The
Company has  expended a  substantial  amount to date in legal  expenses.  Future
costs are not estimable at this time. In the opinion of management, the existing
litigation is without merit and the Company  intends to seek  sanctions  against
appropriate parties to the extent permitted by law.


                                      5
<PAGE>


                         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 March 31, 2000 and the related  consolidated
Statements of Income and Comprehensive Income and Cash Flows for the three month
period ended March 31, 2000. These 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 to financial
data and of 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 such consolidated  financial  statements for them to be in conformity
with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the  consolidated  Balance  Sheet of BNL Financial  Corporation  and
Subsidiaries as of December 31, 1999 and the related consolidated  Statements of
Income and Comprehensive  Income,  Stockholders'  Equity, and Cash Flows for the
year then ended (not  presented  herein);  and in our report dated  February 12,
2000,  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, 1999 is fairly  stated,  in all
material respects,  in relation to the consolidated  Balance Sheet from which it
has been derived.

Oklahoma City, Oklahoma
May 9, 2000



                                       6
<PAGE>

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

Forward-Looking Statements

All statement, 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  "aniticipate,"
"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:

o      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

o      customer response to new products and marketing initiatives

o      mortality  and other factors  which may affect the  profitability  of our
       products

o      changes in the Federal income tax laws and regulation which may affect
       the relative income tax advantages of our products

o      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

o      the risk factors or uncertainties listed from time to time in our filings
       with the Securities and Exchange Commission


Liquidity and Capital Resources

At March 31, 2000,  the Company had liquid assets of  $1,786,500 in cash,  money
market savings accounts and short-term certificates of deposit, all of which can
readily be converted to cash.

The major  components of operating cash flows are premium,  annuity deposits and
investment income. In the first three months of 2000, BNLAC collected $8,849,062
of premiums and annuity deposits (gross before  reinsurance) and the Company had
consolidated investment income of $202,056.

The  Company's  investments  are  primarily in U.S.  Government  and  Government
Agencies and other  investment  grade bonds which have been marked to market and
classified  as available  for sale.  The Company  does not hedge its  investment
income through the use of derivatives.

The  Company's  insurance  operations  are  conducted  through its wholly  owned
subsidiary,  Brokers National Life Assurance Company (BNLAC). At March 31, 2000,
BNLAC had  statutory  capital  and surplus of  $4,485,682.  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


                                       7

<PAGE>

in any state in which  BNLAC is  licensed  is  $3,000,000.  Some states in which
BNLAC is licensed have increased  these  requirements  to as much as $5,000,000,
but,  in  general,  BNLAC may  continue  to  operate  under  the  lower  minimum
requirements  in effect when it first became  licensed in the applicable  state.
BNLAC  voluntarily  withdrew  its license in the state of  Washington  due to an
increased  minimum  capital  stock  requirement  in that  state  of  $2,400,000.
Management   monitors  these  developments  to  maintain   compliance  with  the
requirements of each state.

Results of Operations

Premium  income for the first three  months of 2000 was  $8,701,580  compared to
$6,738,162 for the same period in 1999. The increase of $1,963,418,  or 29%, was
due to an increase in insurance premiums written.

Net investment  income was $202,056 for the period ended March 31, 2000 compared
to $175,053 for the same period in 1999.  The increase was  primarily  due to an
increase  in the  yield of the  bond  portfolio  in the  first  quarter  of 2000
compared to the same period in 1999.

Realized  gains on  investments  were $1,220 in the first  three  months of 2000
compared to $79 for the same period in 1999.

In the first three months of 2000,  policy  benefits and other  insurance  costs
were $6,874,884 compared to $5,817,957 for the same period in 1999. The increase
was due to an increase in claims and commissions  resulting from the increase in
insurance  business in force.  The dental claims loss ratio was 68.0% during the
first three months of 2000  compared to 74.5% for the same period in 1999.  Part
of the  decline  in the  loss  ratio  is due  to an  approximate  $300,000  over
estimation  of the claims  payable at  December  31,  1999.  Due to the  monthly
fluctuation  in claims  received and the lag time in receiving the claims,  this
accrual is difficult to estimate.

For the period ended March 31, 2000, the increase in liability for future policy
benefits was ($38,128)  compared to ($16,834) in 1999.  The decrease in 1999 was
due to a decrease in life reserves from surrendered policies.

Amortization  of deferred policy  acquisition  costs were $19,244 and $8,977 for
the first three months of 2000 and 1999  respectively.  Amortization of deferred
policy  acquisition  costs  may  vary in the  future  in  relation  to new  life
insurance sales and lapses or surrenders of existing policies.

Operating  expenses  increased to  $1,399,306  in the first three months of 2000
compared to  $925,923  for the same period in 1999.  The  increase in  operating
expenses was primarily  due to an increase in payroll and claims  administrative
expense - which are all  attributable  to the  increased  volume of insurance in
force.

Taxes,  other than on income,  fees and assessments  were $278,900 for the first
three  months of 2000  compared  to $214,021  for the same  period in 1999.  The
increase  was  primarily  due to an increase in premium  taxes on the  increased
premiums collected.

The  operating  income from  operations  for the first three  months of 2000 was
$370,651  compared  to  ($36,750)  for the same  period in 1999.  Based on claim
experience during the first quarter of 2000, the estimate of claims liability at
December 31, 1999 appears to be overstated by approximately  $300,000.  The over
estimate for this liability has contributed a  corresponding  increase in income
during the first quarter. The remaining increase in income, was primarily due to
a increase in premium  income and a continued  decrease in the dental  insurance
claims ratio.

                                       8
<PAGE>


                          PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

On April  30,  1996,  Myra Jo  Pearson  and Paul  Pearson  filed a class  action
complaint in the Circuit Court of Pulaski County, Arkansas (3rd Division) naming
the Company,  BNL Equity  Corporation  and several  officers of the Company,  as
defendants.  The  plaintiffs  have  alleged  that the  defendants  violated  the
Arkansas  Securities  Act in  several  respects  in  connection  with the public
offerings of securities made by United Arkansas  Corporation  ("UAC") (now known
as BNL Equity Corporation) during the period from January 1989 until May, 1992

The  Company  retained  the  firm of  Friday,  Eldredge  & Clark,  Little  Rock,
Arkansas,  to handle the defense of the action on behalf of all  defendants.  On
March 3, 1998, the plaintiffs  filed a Second Amended Class Action  Complaint in
which they dropped  certain claims,  including  allegations of common law fraud,
fraudulent concealment,  tolling of the statute of limitations,  and the request
for punitive damages.

The first issue determined in the case concerned the procedural issue of whether
the lawsuit would be certified as a class  action,  with the class of plaintiffs
including all Arkansas  purchasers who  participated in the public  offerings of
securities by UAC during the stated time frame.  A hearing was held on the issue
of whether the class would be certified on June 8, 1998,  and on August 27, 1998
the Court  entered a ruling  certifying  the class.  On  February  10,  2000 the
Arkansas Supreme Court affirmed the class  certification and held that the trial
court had subject matter  jurisdiction of this case. The Arkansas  Supreme Court
granted the Company's  motion to stay the mandate while the Company  appeals the
class certification to the United States Supreme Court.

The  certification  of the class  does not have any  impact  on the  substantive
issues to be litigated, including whether or not any material misrepresentations
or omissions  were made in the  offerings  in  question,  whether the claims are
barred by the applicable statute of limitations, and other issues. If the effort
to overturn the action is successful, the Company's potential liability, if any,
would be limited to the named  plaintiffs,  Myra Jo  Pearson,  Paul  Pearson and
James  Stillwell.  The Company  continues to believe  strongly  that the case is
without merit.

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 security holders for a vote.

Item 5.  Other Information.

None

Item 6.  Exhibits  and  Reports on Form  10-QSB No exhibits or reports are being
filed with this 10-QSB.

(b) Reports on Form 8-K

                                       9
<PAGE>


No reports were filed for the period covered by this report.

                                   SIGNATURES

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

                                                  BNL FINANCIAL CORPORATION
                                                         (Registrant)


Date: May 12, 2000                          /S/ Wayne E. Ahart
                                            -----------------------------
                                       By: Wayne E. Ahart, Chairman of the Board
                                            (Chief Executive Officer)


Date: May 12, 2000                          /S/ Barry N. Shamas
                                            -----------------------------

                                        By: Barry N. Shamas, Executive V.P.
                                             (Chief Financial Officer)




                                       10
<PAGE>