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| IOWA                                     | 42-1239454                           |
|------------------------------------------|--------------------------------------|
| (State of incorporation)                 | (I.R.S. Employer Identification No.) |
|                                     |                                 |
| 7010 Hwy 71 W., Ste 100, Austin, Texas   | 78735                                |
| (Address of principal executive offices) | (Zip Code)                           |
|                                     |                                 |
|                                     |                                 |

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TABLE 

|                         |                                                                                  | Page   |
|------------------------------|---------------------------------------------------------------------------------------|--------|
| PART I Financial Information |                                                                                  |
|                         |                                                                                  |   |
| Item 1.                      | Financial Statements                                                                  | 3      |
| Item 2.                      | Management's Discussion and Analysis of Financial Condition and Results of Operations | 13     |
| Item 3.                      | Quantitative and Qualitative Disclosures About Market Risk                            | 15     |
| Item 4.                      | Internal Control and Procedures                                                       | 15     |
| Item 4T.                     | Controls and Procedures                                                               | 15     |
|                         |                                                                                  |   |
| PART II Other Information    |                                                                                  |
|                         |                                                                                  |   |
| Item 1.                      | Legal Proceedings                                                                     | 16     |
| Item 1A.                     | Risk Factors                                                                          | 16     |
| Item 2.                      | Unregistered Sales of Equity Securities and Use of Proceeds                           | 16     |
| Item 3.                      | Defaults Upon Senior Securities                                                       | 16     |
| Item 4.                      | (Removed and Reserved)                                                                | 16     |
| Item 5.                      | Other Information                                                                     | 16     |
| Item 6.                      | Exhibits                                                                              | 17     |
| Signatures                   | 19                                                                                    |

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|                                                                                                                    |   | September 30, 2010 |       |   | December 31, 2009 |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
| ASSETS                                                                                                        |   |  (Unaudited)  |       |   | (Audited)         |   |
| Cash and cash equivalents                                                                                               |   | $                  | 9,253,809  |   |              | $      | 8,090,103 |   |
| Investment in fixed maturities, at fair value Available for Sale (amortized cost $42,000)                               |   |               | 189,500    |   |              |   |  146,720 |   |
| Investment in fixed maturities, at amortized cost, Held to Maturity (fair value $17,685,372; $18,423,612, respectively) |   |               | 17,179,907 |   |              |   | 18,358,628 |   |
| Other long-term investments (fair value $941,000, $769,663)                                                             |   |               | 1,152,825  |   |              |   | 1,180,041 |   |
| Investment in equity securities (cost $685,953, $711,915)                                                               |   |               | 627,759    |   |              |   | 674,671 |   |
| Total Investments, Including Cash and Cash Equivalents                                                                  |   |               | 28,403,800 |   |              |   | 28,450,163 |   |
|                                                                                                                    |   |               |       |   |              |   |   |   |
| Accrued investment income                                                                                               |   |               | 126,887    |   |              |   | 128,469 |   |
| Furniture and equipment, net                                                                                            |   |               | 819,064    |   |              |   | 835,367 |   |
| Deferred policy acquisition costs                                                                                       |   |               | 242,064    |   |              |   | 253,254 |   |
| Policy loans                                                                                                            |   |               | 159,266    |   |              |   | 162,395 |   |
| Receivable from reinsurer                                                                                               |   |               | 47,475     |   |              |   | 47,475 |   |
| Premiums due and unpaid                                                                                                 |   |               | 932,993    |   |              |   | 967,508 |   |
| Income tax assets                                                                                                       |   |               | 49,000     |   |              |   | 106,000 |   |
| Intangible assets                                                                                                       |   |               | 121,046    |   |              |   | 125,408 |   |
| Other assets                                                                                                            |   |               | 128,602    |   |              |   | 292,002 |   |
| Total Assets                                                                                                            |   | $                  | 31,030,197 |   |              | $      | 31,368,041 |   |
|                                                                                                                    |   |               |       |   |              |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                    |   |               |       |   |              |   |   |   |
|                                                                                                                    |   |               |       |   |              |   |   |   |
| Liabilities:                                                                                                            |   |               |       |   |              |   |   |   |
| Liabilities for future policy benefits                                                                                  |   | $                  | 2,080,896  |   |              | $      | 2,143,273 |   |
| Policy claims payable                                                                                                   |   |               | 1,486,204  |   |              |   | 1,348,590 |   |
| Annuity deposits                                                                                                        |   |               | 2,446,314  |   |              |   | 2,505,778 |   |
| Deferred annuity profits                                                                                                |   |               | 187,099    |   |              |   | 201,492 |   |
| Premium deposit funds                                                                                                   |   |               | 20,271     |   |              |   | 20,547 |   |
| Supplementary contracts without life contingencies                                                                      |   |               | 31,808     |   |              |   | 36,791 |   |
| Advanced and unallocated premium                                                                                        |   |               | 941,921    |   |              |   | 968,159 |   |
| Commissions payable                                                                                                     |   |               | 553,406    |   |              |   | 615,455 |   |
| Accrued taxes and expenses                                                                                              |   |               | 292,005    |   |              |   | 406,932 |   |
| Bonds payable                                                                                                           |   |               | 1,300,708  |   |              |   | 1,323,388 |   |
| Other liabilities                                                                                                       |   |               | 960,690    |   |              |   | 1,066,525 |   |
| Total Liabilities                                                                                                       |   |               | 10,301,322 |   |              |   | 10,636,930 |   |
|                                                                                                                    |   |               |       |   |              |   |   |   |
| Shareholders' Equity:                                                                                                   |   |               |       |   |              |   |   |   |
| Common stock, $.02 stated value, 45,000,000 shares authorized, 15,463,965 shares issued and outstanding            |   |               | 309,279    |   |              |   | 309,279 |   |
| Additional paid-in capital                                                                                              |   |               | 5,708,215  |   |              |   | 5,725,590 |   |
| Accumulated other comprehensive income                                                                                  |   |               | 76,375     |   |              |   | 36,042 |   |
| Accumulated surplus                                                                                                     |   |               | 15,120,433 |   |              |   | 15,092,975 |   |
| Treasury stock at cost, 383,128; 343,194 shares, respectively                                                           |   |               | (485,427   | )      |              |   | (432,775 | ) |
| Total Shareholders' Equity                                                                                              |   |               | 20,728,875 |   |              |   | 20,731,111 |   |
| Total Liabilities and Shareholders' Equity                                                                              |   | $                  | 31,030,197 |   |              | $      | 31,368,041 |   |

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Table of Contents

|                                                                          |   | Three Months Ended |       |   | Nine Months Ended |   |
|-------------------------------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                                                          |   | September 30,      |       |   | September 30,     |   |
|                                                                          |   | 2010               |       |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                          |   | (Unaudited)        |       |   | (Unaudited)       |   |   | (Unaudited) |   |   | (Unaudited) |   |
| Income:                                                                       |   |               |       |   |              |   |   |   |   |   |   |   |
| Premium income                                                                |   | $                  | 10,012,944 |   |              | $      | 10,266,460 |   |   | $ | 30,158,944 |   |   | $ | 31,207,306 |   |
| Vision insurance income                                                       |   |               | 618,271    |   |              |   | 600,993 |   |   |   | 1,799,280 |   |   |   | 1,790,034 |   |
| Net investment income                                                         |   |               | 222,280    |   |              |   | 244,311 |   |   |   | 725,502 |   |   |   | 851,657 |   |
| Realized gains on debt retirement                                             |   |               | -          |   |              |   | 3,198 |   |   |   | 4,536 |   |   |   | 19,183 |   |
| Realized gains (losses)                                                       |   |               | (47,763    | )      |              |   | 38,625 |   |   |   | (64,315 | ) |   |   | 41,319 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total Income                                                                  |   |               | 10,805,732 |   |              |   | 11,153,587 |   |   |   | 32,623,947 |   |   |   | 33,909,499 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                     |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Liability for future policy benefits expense                |   |               | 29,229     |   |              |   | 25,483 |   |   |   | (62,377 | ) |   |   | 65,651 |   |
|    Policy benefits and other insurance costs                   |   |               | 7,756,644  |   |              |   | 8,048,352 |   |   |   | 23,491,663 |   |   |   | 24,175,659 |   |
|    Amortization of deferred policy acquisition costs           |   |               | 5,918      |   |              |   | 8,990 |   |   |   | 11,191 |   |   |   | 14,124 |   |
|    Operating expenses                                          |   |               | 1,990,651  |   |              |   | 2,139,365 |   |   |   | 6,230,574 |   |   |   | 6,478,868 |   |
|    Taxes, other than income, fees and assessments              |   |               | 277,047    |   |              |   | 227,481 |   |   |   | 1,070,920 |   |   |   | 1,048,852 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total Expenses                                                                |   |               | 10,059,489 |   |              |   | 10,449,671 |   |   |   | 30,741,971 |   |   |   | 31,783,154 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income from Operations before Income Taxes                                    |   |               | 746,243    |   |              |   | 703,916 |   |   |   | 1,881,976 |   |   |   | 2,126,345 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                                    |   |               | 152,260    |   |              |   | 140,980 |   |   |   | 341,260 |   |   |   | 385,985 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                                                                    |   | $                  | 593,983    |   |              | $      | 562,936 |   |   | $ | 1,540,716 |   |   | $ | 1,740,360 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net income per common share (basic and diluted)                          |   | $                  | 0.04       |   |              | $      | 0.04 |   |   | $ | 0.10 |   |   | $ | 0.12 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of fully paid common shares                      |   |               | 15,113,923 |   |              |   | 15,165,012 |   |   |   | 15,109,033 |   |   |   | 15,126,010 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net of tax:                                       |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains (losses) on securities:                                      |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized holding gain arising during period (net of tax)                    |   |               | 131,968    |   |              |   | 125,095 |   |   |   | 26,768 |   |   |   | 200,256 |   |
| Reclassification adjustment for gain  (loss) included in net income |   |               | -          |   |              |   | (32,058 | ) |   |   | 13,565 |   |   |   | (34,294 | ) |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income                                                    |   |               | 131,968    |   |              |   | 93,037 |   |   |   | 40,333 |   |   |   | 165,962 |   |
|                                                                          |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Income                                                          |   | $                  | 725,681    |   |              | $      | 655,973 |   |   | $ | 1,581,049 |   |   | $ | 1,906,322 |   |

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|                                                                              |   | Nine Months Ended |       |
|-----------------------------------------------------------------------------------|--------|-------------------|------------|
|                                                                              |   | September 30,     |       |
|                                                                              |   | 2010              |       |   | 2009 |   |
|                                                                              |   | (Unaudited)       |       |   | (Unaudited) |   |
| Cash flows from operating activities:                                             |   |              |       |   |   |   |
| Net income                                                                        |   | $                 | 1,540,715  |   |   | $ | 1,740,360 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |              |       |   |   |   |   |   |
| Realized (gain) loss on investments                                               |   |              | 64,105     |   |   |   | (41,319 | ) |
| Realized gain on debt retirement                                                  |   |              | (4,536     | ) |   |   | (19,183 | ) |
| Decrease (increase) in deferred tax asset                                         |   |              | 16,000     |   |   |   | (38,000 | ) |
| Depreciation                                                                      |   |              | 216,046    |   |   |   | 225,808 |   |
| Amortization of deferred acquisition costs, and intangibles                       |   |              | 15,552     |   |   |   | 18,485 |   |
| Accretion of bond discount                                                        |   |              | 19,759     |   |   |   | 8,763 |   |
| Change in assets and liabilities:                                                 |   |              |       |   |   |   |   |   |
| Decrease in accrued investment income                                             |   |              | 1,581      |   |   |   | 1,337 |   |
| Decrease in premiums due and unpaid                                               |   |              | 34,514     |   |   |   | 190,981 |   |
| Increase (decrease) in liability for future policy benefits                       |   |              | (62,377    | ) |   |   | 65,651 |   |
| Increase (decrease) in policy claims payable                                      |   |              | 137,614    |   |   |   | (55,576 | ) |
| Increase (decrease) in annuity deposits and deferred profits                      |   |              | (73,857    | ) |   |   | 150,212 |   |
| Decrease in premium deposit funds                                                 |   |              | (276       | ) |   |   | (69 | ) |
| Decrease in advanced and unallocated premium                                      |   |              | (26,238    | ) |   |   | (174,980 | ) |
| Decrease in commissions payable                                                   |   |              | (62,049    | ) |   |   | (2,950 | ) |
| Other, decrease                                                                   |   |              | (18,186    | ) |   |   | (114,253 | ) |
| Net Cash Provided By Operating Activities                                         |   |              | 1,798,367  |   |   |   | 1,955,267 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |              |       |   |   |   |   |   |
| Proceeds from maturity or redemption - Held to Maturity Investments               |   |              | 6,768,266  |   |   |   | 9,880,340 |   |
| Proceeds from sale of equity securities                                           |   |              | 15,251     |   |   |   | - |   |
| Proceeds from sale of furniture and equipment                                     |   |              | 11,290     |   |   |   | - |   |
| Purchase of furniture and equipment                                               |   |              | (211,273   | ) |   |   | (64,379 | ) |
| Purchase of equity securities                                                     |   |              | (74,394    | ) |   |   | - |   |
| Purchase of fixed maturity securities - Held to Maturity Investments              |   |              | (5,589,629 | ) |   |   | (8,246,565 | ) |
| Other investments – Line of credit payments received                        |   |              | 27,216     |   |   |   | 33,164 |   |
| Net Cash Provided By Investing Activities                                         |   |              | 946,727    |   |   |   | 1,602,560 |   |
|                                                                              |   |              |       |   |   |   |   |   |
| Cash flows from financing activities:                                             |   |              |       |   |   |   |   |   |
| Net payments on supplementary contracts                                           |   |              | (4,983     | ) |   |   | (2,195 | ) |
| Purchase of treasury stock                                                        |   |              | (88,528    | ) |   |   | (113,431 | ) |
| Dividends to shareholders                                                         |   |              | (1,513,257 | ) |   |   | (757,525 | ) |
| Bonds payable purchased                                                           |   |              | (27,871    | ) |   |   | (13,224 | ) |
| Exercised stock options                                                           |   |              | 53,251     |   |   |   | 50,498 |   |
| Net Cash Used In Financing Activities                                             |   |              | (1,581,388 | ) |   |   | (835,877 | ) |
| Net Increase in Cash and Cash Equivalents                                         |   |              | 1,163,706  |   |   |   | 2,721,950 |   |
|  Cash And Cash Equivalents, Beginning Of Period                              |   |              | 8,090,103  |   |   |   | 4,989,381 |   |
|  Cash And Cash Equivalents, End Of Period                                    |   | $                 | 9,253,809  |   |   | $ | 7,711,331 |   |
|                                                                              |   |              |       |   |   |   |   |   |

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| Portfolio Designated “Held to Maturity” September 30, 2010            |   |  Amortized Cost |       |   | Gross Unrealized Gains |   |          | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|----------------------------------------------------------------------------------------|--------|----------------------|------------|--------|------------------------|--------|---------------|-------------------------|--------|--------|------------------------|--------|
| US Treasury securities and obligations of US government corporations and agencies |   | $                    | 5,399,969  |   |                   | $      | 85,214        |                    |   | $      | -                      |   |   | $ | 5,485,183 |   |
| Canadian government                                                                    |   |                 | 478,623    |   |                   |   | -             |                    |   |   | 2,564                  |   |   |   | 476,059 |   |
| Corporate securities                                                                   |   |                 | 3,859,056  |   |                   |   | 203,569       |                    |   |   | 87,984                 |   |   |   | 3,974,641 |   |
| Mortgage-backed securities GNMA and FNMA CMO                                      |   |                 | 7,442,259  |   |                   |   |  337,830 |                    |   |   | 30,600                 |   |   |   | 7,749,489 |   |
|                                                                                   |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Totals                                                                                 |   | $                    | 17,179,907 |   |                   | $      | 626,613       |                    |   | $      | 121,148                |   |   | $ | 17,685,372 |   |
|                                                                                   |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Portfolio Designated “Available for Sale” September 30, 2010          |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Corporate securities                                                                   |   | $                    | 42,000     |   |                   | $      | 147,500       |                    |   | $      | -                      |   |   | $ | 189,500 |   |
|                                                                                   |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Totals                                                                                 |   | $                    | 42,000     |   |                   | $      | 147,500       |                    |   | $      | -                      |   |   | $ | 189,500 |   |

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|                                   |   | Held to Maturity   |       |   | Available for Sale     |   |
|----------------------------------------|--------|--------------------|------------|--------|------------------------|--------|
|                                   |   | September 30, 2010 |       |   | September 30, 2010     |   |
|                                   |   | Amortized Cost     |       |   | Estimated Market Value |   |   | Amortized Cost |   |   | Estimated Market Value |   |
|                                   |   |               |       |   |                   |   |   |   |   |   |   |   |
| Due in one year or less                |   | $                  | 1,293,324  |   |                   | $      | 1,292,288 |   |   | $ | - |   |   | $ | - |   |
| Due after one year through five years  |   |               | 3,860,680  |   |                   |   | 3,954,892 |   |   |   | - |   |   |   | - |   |
| Due after five years through ten years |   |               | 2,578,647  |   |                   |   | 2,646,964 |   |   |   | - |   |   |   | - |   |
| Due after ten years                    |   |               | 2,004,997  |   |                   |   | 2,041,740 |   |   |   | 42,000 |   |   |   | 189,500 |   |
|                                   |   |               | 9,737,648  |   |                   |   | 9,935,884 |   |   |   | 42,000 |   |   |   | 189,500 |   |
|                                   |   |               |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities             |   |               | 7,442,259  |   |                   |   | 7,749,488 |   |   |   | - |   |   |   | - |   |
|                                   |   |               |       |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | $                  | 17,179,907 |   |                   | $      | 17,685,372 |   |   | $ | 42,000 |   |   | $ | 189,500 |   |

|                                       |   | 2010   |    |
|--------------------------------------------|--------|--------|---------|
|                                       |   | Cost   |    |   | Market Value |   |
|                                       |   |   |    |   |   |   |
| Banks, trusts and Insurance companies |   | $      | 81,183  |   |   | $ | 10,320 |   |
| Industrial and other                       |   |   | 604,770 |   |   |   | 617,439 |   |
|                                       |   |   |    |   |   |   |   |   |
|                                       |   | $      | 685,953 |   |   | $ | 627,759 |   |

|                                        |   | 2010   |    |
|---------------------------------------------|--------|--------|---------|
| Beginning Balance                           |   | $      | 204,582 |   |
| Additions charged to operations             |   |   | -       |   |
| Direct write downs                          |   |   | -       |   |
| Recoveries previously charged to operations |   |   | -       |   |
|                                        |   |   |    |   |
| Ending Balance                              |   | $      | 204,582 |   |

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Table of Contents

|                                                    |   | Less than 12 Months |      |   | 12 Months or Greater |   |   | Total      |   |
|---------------------------------------------------------|--------|---------------------|-----------|--------|----------------------|--------|--------|------------|--------|
| Description of Securities                               |   | Fair Value          |      |   | Unrealized Losses    |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|                                                    |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Investment in Fixed Maturities, Held to Maturity:       |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Canadian Government                                     |   | $                   | 476,059   |   |                 | $      | 2,564  |       |   | $ | - |   |   | $ | - |   |   | $ | 476,059 |   |   | $ | 2,564 |   |
| Corporate securities                                    |   |                | 821,921   |   |                 |   | 5,439  |       |   |   | 400,000 |   |   |   | 82,546 |   |   |   | 1,221,921 |   |   |   | 87,985 |   |
| Mortgage-backed securities  GNMA and FNMA CMO |   |                | 669,023   |   |                 |   | 30,600 |       |   |   | - |   |   |   | - |   |   |   | 669,023 |   |   |   | 30,600 |   |
|    Totals                                |   | $                   | 1,967,003 |   |                 | $      | 38,603 |       |   | $ | 400,000 |   |   | $ | 82,546 |   |   | $ | 2,367,003 |   |   | $ | 121,149 |   |
|                                                    |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Long-Term Investments                             |   | $                   | -         |   |                 | $      | --     |       |   | $ | 941,000 |   |   | $ | 211,825 |   |   | $ | 941,000 |   |   | $ | 211,825 |   |
|    Totals                                |   | $                   | -         |   |                 | $      | -      |       |   | $ | 941,000 |   |   | $ | 211,825 |   |   | $ | 941,000 |   |   | $ | 211,825 |   |
|                                                    |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities                                       |   | $                   | -         |   |                 | $      | -      |       |   | $ | 317,174 |   |   | $ | 154,285 |   |   | $ | 317,174 |   |   | $ | 154,285 |   |
|    Totals                                |   | $                   | -         |   |                 | $      | -      |       |   | $ | 317,174 |   |   | $ | 154,285 |   |   | $ | 317,174 |   |   | $ | 154,285 |   |

| Corporate Bonds September 30, 2010 |   | S&PRating |   |   | Amortized Book Value |    |    | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|-----------------------------------------|--------|---------------|--------|--------|----------------------|---------|---------|-------------------------|--------|--------|------------------------|--------|
| American General Finance                |   | B             |   |   | $                    | 200,000 |    |                    | $      | 30,776 |                   |   | $ | 169,224 |   |
| MBIA                                    |   | BB+           |   |   |                 | 200,000 |    |                    |   | 51,770 |                   |   |   | 148,230 |   |
|                                    |   |          |   |   |                 |    |    |                    |   |   |                   |   |   |   |   |   |
| Totals                                  |   |          |   |   |                 | $       | 400,000 |                    |   | $      | 82,546                 |   |   | $ | 317,454 |   |

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| Equity Securities September 30, 2010 |   | Cost   |    |   |   Gross Unrealized Gains(Losses) |   |     |    Estimated Market Value |   |
|-------------------------------------------|--------|--------|---------|--------|---------------------------------------|--------|----------|-------------------------------------|--------|
| Garmin LTD                                |   | $      | 220,322 |   |                                  | $      | (113,782 | )                                   |   | $ | 106,540 |   |
| Regions Financial Corporation             |   |   | 30,370  |   |                                  |   | (23,100  | )                                   |   |   | 7,270 |   |
| International Assets                      |   |   | 27,282  |   |                                  |   | (16,603  | )                                   |   |   | 10,679 |   |
| Intel                                     |   |   | 39,200  |   |                                  |   | (800     | )                                   |   |   | 38,400 |   |
|                                      |   |   |    |   |                                  |   |     |                                |   |   |   |   |
| Totals                                    |   | $      | 317,174 |   |                                  | $      | (154,285 | )                                   |   | $ | 162,889 |   |

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|       Description                                                               |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |       |   |    Significant Other Observable Inputs(Level 2) |   |      |   Significant Unobservable Inputs(Level 3) |   |   |      Total |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|------------|--------|-----------------------------------------------------------|--------|-----------|------------------------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                               |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |
| Trading Securities                                                                                                 |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |
|    Equity Securities – Banks                                                                  |   | $                                                             | 10,320     |   |                                                      | $      | -         |                                                 |   | $      | -                                   |   |   | $ | 10,320 |   |
|    Equity Securities - Industrial and Other                                                    |   |                                                          | 617,439    |   |                                                      |   | -         |                                                 |   |   | -                                   |   |   |   | 617,439 |   |
|            Total Trading Securities                         |   | $                                                             | 627,759    |   |                                                      | $      | -         |                                                 |   | $      | -                                   |   |   | $ | 627,759 |   |
|                                                                                                               |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |   |   |   |   |
| Fixed Maturity, Available for Sale – Corporate                                                          |   | $                                                             | -          |   |                                                      | $      | 189,500   |                                                 |   | $      | -                                   |   |   | $ | 189,500 |   |
|             Total Fixed Maturity, Available for Sale   |   | $                                                             | -          |   |                                                      | $      | 189,500   |                                                 |   | $      | -                                   |   |   | $ | 189,500 |   |
|                                                                                                               |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |   |   |   |   |
| Fixed Maturities , Held to Maturity                                                                           |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |   |   |   |   |
| US Treasury Securities and Obligations of  US Government Corporations and Agencies             |   | $                                                             | 5,485,183  |   |                                                      | $      | -         |                                                 |   | $      | -                                   |   |   | $ | 5,485,183 |   |
| Canadian Government Securities                                                                                     |   |                                                          | 476,059    |   |                                                      |   | -         |                                                 |   |   | -                                   |   |   |   | 476,059 |   |
| Corporate Securities                                                                                               |   |                                                          | 3,585,351  |   |                                                      |   | 241,060   |                                                 |   |   | 148,230                             |   |   |   | 3,974,641 |   |
| Mortgage-Backed Securities GNMA and FNMA CMO                                                                  |   |                                                          | 7,749,489  |   |                                                      |   | -         |                                                 |   |   | -                                   |   |   |   | 7,749,489 |   |
|           Total Fixed Maturities, Held to Maturity          |   | $                                                             | 17,296,082 |   |                                                      | $      | 241,060   |                                                 |   | $      | 148,230                             |   |   | $ | 17,685,372 |   |
|                                                                                                               |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |   |   |   |   |
| Other Long Term Investments                                                                                        |   | $                                                             | -          |   |                                                      | $      | -         |                                                 |   | $      | 941,000                             |   |   | $ | 941,000 |   |
| Cash                                                                                                               |   |                                                          | 2,936,828  |   |                                                      |   | -         |                                                 |   |   | -                                   |   |   |   | 2,936,828 |   |
| Cash Equivalents                                                                                                   |   |                                                          | -          |   |                                                      |   | 6,316,981 |                                                 |   |   | -                                   |   |   |   | 6,316,981 |   |
|           Total Other Investments                                |   | $                                                             | 2,936,828  |   |                                                      | $      | 6,316,981 |                                                 |   | $      | 941,000                             |   |   | $ | 10,194,809 |   |
|                                                                                                               |   |                                                          |       |   |                                                      |   |      |                                                 |   |   |                                |   |   |   |   |   |
|                  Total Assets |   | $                                                             | 20,860,669 |   |                                                      | $      | 6,747,541 |                                                 |   | $      | 1,089,230                           |   |   | $ | 28,697,440 |   |

|                                                                 |   | Other Long-term Investments |    |   | FixedMaturity |   |    |  Total |   |
|----------------------------------------------------------------------|--------|-----------------------------|---------|--------|---------------|--------|---------|-------------|--------|
| Fair value, beginning of period                                      |   | $                           | 769,663 |   |          | $      | 90,000  |        |   | $ | 859,663 |   |
| Other-than-temporary decline in fair value:                          |   |                        |    |   |          |   |    |        |   |   |   |   |
|      Included in net income                 |   |                        | -       |   |          |   | -       |        |   |   | - |   |
|      Included in other comprehensive income |   |                        | -       |   |          |   | -       |        |   |   | - |   |
| Purchases, sales, issuances and settlements                          |   |                        | (27,215 | )      |          |   | -       |        |   |   | (27,215 | ) |
| Investment reclassified                                              |   |                        | -       |   |          |   | -       |        |   |   | - |   |
| Temporary increase in fair value                                     |   |                        | 198,552 |   |          |   | 58,230  |        |   |   | 256,782 |   |
|                                                                 |   |                        |    |   |          |   |    |        |   |   |   |   |
|      Total                                  |   | $                           | 941,000 |   |          | $      | 148,230 |        |   | $ | 1,089,230 |   |

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|                                               |   | 2010     |       |
|----------------------------------------------------|--------|----------|------------|
|                                               |   | Carrying |       |   | Fair |   |
| Assets                                             |   | Amount   |       |   | Value |   |
|                                               |   |     |       |   |   |   |
|                                               |   |     |       |   |   |   |
| Cash and Cash Equivalents                          |   | $        | 9,253,809  |   |   | $ | 9,253,809 | (a) |
| Investments-fixed maturity, available for sale     |   |     | 189,500    |   |   |   | 189,500 | (b) |
| Investments-fixed maturity, held to maturity       |   |     | 17,179,907 |   |   |   | 17,685,372 | (b) |
| Investments-equity securities                      |   |     | 627,759    |   |   |   | 627,759 | (b) |
| Other long term investments                        |   |     | 1,152,825  |   |   |   | 941,000 | (b) |
| Other financial instruments-Assets                 |   |     | 331,543    |   |   |   | 331,543 | (a) |
|                                               |   |     |       |   |   |   |   |   |
| Total financial instruments-Assets                 |   | $        | 28,735,343 |   |   | $ | 29,028,983 |   |
|                                               |   |     |       |
| Liabilities                                        |   |     |       |   |   |   |   |   |
|                                               |   |     |       |   |   |   |   |   |
| Premium deposit funds                              |   | $        | 20,271     |   |   | $ | 20,271 | (a) |
| Bonds payable                                      |   |     | 1,300,708  |   |   |   | 1,300,708 | (a) |
| Supplementary contracts without life contingencies |   |     | 31,808     |   |   |   | 31,808 | (a) |
| Annuity deposits                                   |   |     | 2,446,314  |   |   |   | 2,446,314 | (a) |
|                                               |   |     |       |   |   |   |   |   |
| Total financial instruments-Liabilities            |   | $        | 3,799,101  |   |   | $ | 3,799,101 |   |

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|       Period |   |   (a)TotalNumber ofSharesPurchased |   |   |   (b)AveragePricePaidPer Share |   | (c)Total number of shares purchased as part of publicly announced plans or programs |   | (d)Maximum number of shares that may yet be purchased under the plans or programs |
|--------------------------------------------|--------|-----------------------------------------|--------|--------|-------------------------------------|--------|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|
| Month #1, Jan. 1 thru Jan. 31, 2010        |   |                                    | 13,706 |   |                                | $      | 1.25                                                                                |   | None                                                                              |   | None |
| Month #2, Feb. 1 thru Feb. 28, 2010        |   |                                    | -      |   |                                |   | -                                                                                   |   | None                                                                              |   | None |
| Month #3, March 1 thru March 31, 2010      |   |                                    | 12,582 |   |                                | $      | 1.37                                                                                |   | None                                                                              |   | None |
| Month #4, April 1 thru April 30, 2010      |   |                                    | 1,860  |   |                                | $      | 1.37                                                                                |   | None                                                                              |   | None |
| Month #5, May 1 thru May 31, 2010          |   |                                    | -      |   |                                |   | -                                                                                   |   | None                                                                              |   | None |
| Month #6, June 1 thru June 30, 2010        |   |                                    | 22,381 |   |                                | $      | 1.25                                                                                |   | None                                                                              |   | None |
| Month #7, July 1 thru July 31, 2010        |   |                                    | 4,200  |   |                                | $      | 1.25                                                                                |   | None                                                                              |   | None |
| Month #8, Aug. 1 thru Aug. 31, 2010        |   |                                    | -      |   |                                |   | -                                                                                   |   | None                                                                              |   | None |
| Month #9, Sept. 1 thru Sept. 30, 2010      |   |                                    | 14,706 |   |                                | $      | 1.25                                                                                |   | None                                                                              |   | None |
| Totals                                     |   |                                    | 69,435 |   |                                |   |                                                                                |   |                                                                              |   |   |

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| No.  |   | Description                                                                                                                                                                                   |   | Page or Method of Filing                                                                                                                                           |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1  |   | Articles of Incorporation of BNL Financial Corporation, dated January 27, 1984 and Amendment to Articles of Incorporation of BNL Financial Corporation, dated November 13, 1987.         |   | Incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the period ending December 31, 1993.                                      |
| 3.2  |   | By-laws of BNL Financial Corporation.                                                                                                                                                         |   | Incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement No. 33-70318.                                                          |
| 4.1  |   | Instruments defining the rights of security holders, including indentures.                                                                                                                    |   | Incorporated by reference to Exhibit 4 of the Company's Registration Statement No. 2-94538 and Exhibits 3.5 and 4 of Post-Effective Amendment No. 3 thereto.  |
| 4.2  |   | Articles of Incorporation of BNL Financial Corporation, dated January 27, 1984 and Amendment to Articles of Incorporation on BNL Financial Corporation, dated November 13, 1987.         |   | Incorporated by reference to Exhibits 4.2 of the Company's Annual Report on Form 10-KSB for the period ending December 31, 1998.                                   |
| 10.1 |   | Form of Agreement between Commonwealth Industries Corporation, American Investors Corporation and Wayne E. Ahart regarding rights to purchase shares of the Company.                          |   | Incorporated by reference to Exhibit I of the Company's Quarterly Report on 10-QSB for the period ended September 30, 1994.                                   |
| 10.2 |   | Agreement dated December 21, 1990 between Registrant and C. Donald Byrd granting Registrant right of first refusal as to future transfers of Mr. Byrd's shares of the Company's common stock. |   | Incorporated by reference to Exhibit I of the Company's Quarterly Report on 10-QSB for the period ended March 31, 1996.                                       |
| 10.3 |   | Convertible Debenture Agreement dated July 25, 2001 between BNL Equity Corporation and EPSI Benefits Inc.                                                                                     |   | Incorporated by reference to Exhibit 10.9 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                      |
| 10.4 |   | Claims Service Agreement dated June 1, 1999 between Brokers National Life Assurance Company and Employer Plan Services Inc.                                                              |   | Incorporated by reference to Exhibit 10.5 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                           |
| 10.5 |   | Office lease agreement dated January 21, 2005, between Brokers National Life Assurance Company and KIMCO for premises in Austin.                                                         |   | Incorporated by reference to Exhibit 10.6 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                           |

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| 10.6 |   | Line of Credit Agreement dated October 15, 2004 between Brokers National Life Assurance Company and Employer Plan Services Inc.    |   | Incorporated by reference to Exhibit 10.7 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                      |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.7 |   | Marketing Agreement dated July 25, 2001 between BNL Equity Corporation and Employer Plan Services Inc. and EPSI Benefits Inc.      |   | Incorporated by reference to Exhibit 10.8 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                      |
| 10.8 |   | Outsourcing Agreement dated May 1, 2007 between Brokers National Life Assurance Company and Virtual Item Processing Systems, Inc.  |   | Incorporated by reference as filed with the Company’s Annual Report on 10-K for the period ended December 31, 2007.                                                                     |
| 10.9 |   | Amended Convertible Debenture Date July 14, 2008 between BNL Financial Corporation and EPSI Benefits Inc.                               |   | Incorporated by reference to Exhibit 1 of the Company’s periodic Report on Form 8-K dated July 14, 2008.                                                                           |
| 11   |   | Statement Re computation of per share earnings.                                                                                         |   | Reference is made to the computation of per share earnings as shown page 5 herein and the explanation in Note 1 to the Notes to Consolidated Financial Statements (unaudited), page 5 herein. |
| 18   |   | Letter Re Change in accounting principles.                                                                                         |   | None.  Not applicable.                                                                                                                                                              |
| 22   |   | Published report regarding matters submitted to vote of security holders.                                                               |   | The Company’s definitive proxy statement dated May 27, 2010, as filed with the SEC on Schedule 14A on April 20, 2010, is incorporated by reference herein.                              |
| 23   |   | Consents of experts and counsel incorporated by reference into a previously filed Securities Act registration statement.           |   | Not applicable.                                                                                                                                                                               |
| 31.1 |   | Certification of Chief Executive Officer Section 302                                                                               |   | Filed herewith - E1                                                                                                                                                                           |
| 31.2 |   | Certification of Chief Financial Officer Section 302                                                                               |   | Filed herewith – E3                                                                                                                                                                     |
| 32   |   | Certification of Chief Executive Officer and Chief Financial Officer Section 906                                                        |   | Filed herewith – E5                                                                                                                                                                     |

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SIGNATURES

|                          |   | BNL FINANCIAL CORPORATION                                                                                                                                                                                                                                                                                           |
|-------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   | (Registrant)                                                                                                                                                                                                                                                                                                        |
|                          |   |                                                                                                                                                                                                                                                                                                                |
|                          |   | /s/ Wayne E. Ahart                                                  |
| Date: November 15, 2010       |   | By: Wayne E. Ahart, Chairman of the Board                                                                                                                                                                                                                                                                           |
|                          |   | (Chief Executive Officer)                                                                                                                                                                                                                                                                                           |
|                          |   |                                                                                                                                                                                                                                                                                                                |
|                          |   | /s/ Barry N. Shamas                                                 |
| Date: November 15, 2010  |   | By: Barry N. Shamas, Executive V.P.                                                                                                                                                                                                                                                                                 |
|                          |   | (Chief Financial Officer)                                                                                                                                                                                                                                                                                           |

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