| 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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|                                                                                                                              |   | June      30, 2008                                    |                  |  December      31, 2007                                                       |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|-----------------------|------------------------------------------------------------------------------------|--------|
| ASSETS                                                                                                                  |   | (Unaudited)                                           |                  | (Audited)                                                                          |   |
| Cash      and cash equivalents                                                                                                    |   | $       10,048,335 |                  |     $        4,937,983 |   |
| Investment      in fixed maturities, at fair value Available for Sale (amortized cost      $590,473)                              |   |                                                  | 570,806               |                                                                               |   | 599,600 |   |
| Investment      in fixed maturities, at amortized cost, Held to Maturity (fair value      $14,538,494; $19,027,913, respectively) |   |                                                  | 14,746,163            |                                                                               |   | 19,087,747 |   |
| Other      long-term investments                                                                                                  |   |                                                  | 1,245,449             |                                                                               |   | 1,470,054 |   |
| Investment      in equity securities (cost $567,451; $373,603,    respectively)                                                   |   |                                                  | 615,690               |                                                                               |   | 534,725 |   |
| Total      Investments, Including Cash and Cash Equivalents                                                                       |   |                                                  | 27,226,443            |                                                                               |   | 26,630,109 |   |
|                                                                                                                              |   |                                                  |                  |                                                                               |   |   |   |
| Accrued      investment income                                                                                                    |   |                                                  | 187,487               |                                                                               |   | 220,461 |   |
| Furniture      and equipment, net                                                                                                 |   |                                                  | 1,078,069             |                                                                               |   | 1,147,453 |   |
| Deferred      policy acquisition costs                                                                                            |   |                                                  | 318,290               |                                                                               |   | 324,125 |   |
| Policy      loans                                                                                                                 |   |                                                  | 174,525               |                                                                               |   | 171,889 |   |
| Receivable      from reinsurer                                                                                                    |   |                                                  | 53,383                |                                                                               |   | 53,383 |   |
| Premiums      due and unpaid                                                                                                      |   |                                                  | 1,014,515             |                                                                               |   | 1,461,467 |   |
| Income      tax assets                                                                                                            |   |                                                  |   13,000    |                                                                               |   |       - |   |
| Intangible      assets                                                                                                            |   |                                                  | 134,130               |                                                                               |   | 137,038 |   |
| Other      assets                                                                                                                 |   |                                                  | 169,324               |                                                                               |   | 155,150 |   |
| Total      Assets                                                                                                                 |   | $                                                     | 30,369,166            |                                                                               | $      | 30,301,075 |   |
|                                                                                                                              |   |                                                  |                  |                                                                               |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                         |   |                                                  |                  |                                                                               |   |   |   |
|                                                                                                                              |   |                                                  |                  |                                                                               |   |   |   |
| Liabilities:                                                                                                                      |   |                                                  |                  |                                                                               |   |   |   |
| Liabilities      for future policy benefits                                                                                       |   | $                                                     | 2,286,161             |                                                                               | $      | 2,255,045 |   |
| Policy      claims payable                                                                                                        |   |                                                  | 1,830,491             |                                                                               |   | 2,306,288 |   |
| Annuity      deposits                                                                                                             |   |                                                  | 2,491,567             |                                                                               |   | 2,463,546 |   |
| Deferred      annuity profits                                                                                                     |   |                                                  | 242,211               |                                                                               |   | 235,159 |   |
| Premium      deposit funds                                                                                                        |   |                                                  | 23,021                |                                                                               |   | 25,318 |   |
| Supplementary      contracts without life contingencies                                                                           |   |                                                  |  35,596          |                                                                               |   |  5,905 |   |
| Advanced      and unallocated premium                                                                                             |   |                                                  |   1,566,201 |                                                                               |   |   2,219,429 |   |
| Commissions      payable                                                                                                          |   |                                                  | 547,965               |                                                                               |   | 514,014 |   |
| Accrued      taxes and expenses                                                                                                   |   |                                                  | 227,121               |                                                                               |   | 356,393 |   |
| Bonds      payable                                                                                                                |   |                                                  | 1,568,017             |                                                                               |   | 1,607,576 |   |
| Deferred      income tax liability                                                                                                |   |                                                  | -                     |                                                                               |   | 29,601 |   |
| Other      liabilities                                                                                                            |   |                                                  | 1,203,569             |                                                                               |   |   967,929 |   |
| Total      Liabilities                                                                                                            |   |                                                  | 12,021,920            |                                                                               |   | 13,004,203 |   |
|                                                                                                                              |   |                                                  |                  |                                                                               |   |   |   |
| 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                                                                                                   |   |                                                  |  5,748,840       |                                                                               |   |  5,751,240 |   |
| Accumulated      other comprehensive income (loss)                                                                                |   |                                                  | (50,590               | )                                                                                  |   | 122,630 |   |
| Accumulated      surplus                                                                                                          |   |                                                  | 12,647,282            |                                                                               |   | 11,426,539 |   |
| Treasury      stock, at cost; 246,053; 250,252 shares respectively                                                                |   |                                                  | (307,565              | )                                                                                  |   | (  312,816 | ) |
| Total      Shareholders' Equity                                                                                                   |   |                                                  | 18,347,246            |                                                                               |   | 17,296,872 |   |
| Total      Liabilities and Shareholders' Equity                                                                                   |   | $                                                     | 30,369,166            |                                                                               | $      | 30,301,075 |   |

----

|                                                                   | Three      Months EndedJune      30 |            | Six      Months EndedJune      30 |            |   |
|------------------------------------------------------------------------|-------------------------------------|-----------------|-----------------------------------|-----------------|--------|
|                                                                   |                                | 2008(Unaudited) |                              | 2007(Unaudited) |   |  2008(Unaudited) |   | 2007(Unaudited) |   |   |
| Income:                                                                |                                |            |                              |            |   |    |   |   |   |   |
| Premium      income                                                    | $                                   | 10,983,178      | $                                 | 11,125,135      | $      | 22,125,851 | $ | 22,395,701 |   |   |
| Vision      insurance income                                           |                                | 522,722         |                              | 487,250         |   | 1,150,274 |   | 996,755 |   |   |
| Net      investment income                                             |                                | 257,827         |                              | 300,793         |   | 569,604 |   | 625,840 |   |   |
| Marketing      fees                                                    |                                | 0               |                              | 33,673          |   | 0 |   | 67,547 |   |   |
| Realized      gains on debt retirement                                 |                                |  3,375     |                              | 2,700           |   | 13,187 |   | 8,103 |   |   |
| Realized      gains (loss)                                             |                                |  (202,729) |                              | 5,136           |   | (193,891) |   |  5,136 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Total      Income                                                      |                                | 11,564,373      |                              | 11,954,687      |   | 23,665,025 |   | 24,099,082 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Expenses:                                                              |                                |            |                              |            |   |   |   |   |   |   |
|         Liability for future policy benefits expense         |                                |  175       |                              |  (24,413)  |   | 31,115 |   | (5,420) |   |   |
|         Policy benefits and other insurance costs            |                                | 8,253,364       |                              | 8,504,126       |   | 16,756,175 |   | 16,948,387 |   |   |
|        Amortization of deferred policy acquisition costs          |                                | 11,435          |                              | 4,653           |   | 5,835 |   | 8,520 |   |   |
|        Operating expenses                                         |                                | 2,312,370       |                              | 2,245,854       |   | 4,505,343 |   | 4,431,305 |   |   |
|        Taxes, other than income, fees and assessments             |                                | 367,271         |                              | 404,003         |   |   821,990 |   |   830,746 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Total      Expenses                                                    |                                | 10,944,615      |                              | 11,134,223      |   | 22,120,458 |   | 22,213,538 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Income      from Operations before Income Taxes                        |                                | 619,758         |                              | 820,464         |   | 1,544,567 |   | 1,885,544 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Provision      for income taxes                                        |                                |  150,504   |                              |  147,299   |   | 323,824 |   | 337,118 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Net      Income                                                        | $                                   | 469,254         | $                                 | 673,165         | $      | 1,220,743 | $ | 1,548,426 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Net      income per common share (basic and diluted)                   | $                                   | 0.03            | $                                 | 0.04            | $      | 0.08 | $ | 0.10 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Weighted      average number of fully paid common shares               |                                | 15,210,863      |                              | 15,675,591      |   | 15,212,084 |   | 15,701,335 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                    |                                |            |                              |            |   |   |   |   |   |   |
| Unrealized      gains (losses) on securities:                          |                                |            |                              |            |   |   |   |   |   |   |
| Unrealized      holding gain (loss) arising during period (net of tax) | $                                   | (36,057)        | $                                 | (8,423)         | $      | (165,303) | $ | 53,179 |   |   |
| Reclassification      adjustment for loss included in net income       |                                | (3,911)         |                              | (11,351)        |   |   (7,916) |   |   (11,352) |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Other      Comprehensive Income (loss)                                 |                                | (39,968)        |                              | (19,774)        |   | (173,219) |   | 41,827 |   |   |
|                                                                   |                                |            |                              |            |   |   |   |   |   |   |
| Comprehensive      Income                                              | $                                   | 429,286         | $                                 | 653,391         | $      | 1,047,524 | $ | 1,590,253 |   |   |

----

|                                                                                                | Six      Months EndedJune      30, |                        |
|-----------------------------------------------------------------------------------------------------|------------------------------------|-----------------------------|
| Cash flows      from operating activities:                                                     | 2008(Unaudited)                    |                        | 2007(Unaudited) |   |
| Net      income                                                                                     | $                                  |   1,220,743       |   | $ | 1,548,426 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities:         |                               |                        |   |   |   |   |
| Realized      (gain) loss on investments                                                            |                               | 193,891                     |   |   | (13,677 |  ) |
| Realized      loss on furniture and fixtures                                                        |                               | -                           |   |   | 8,541 |   |
| Realized      gain on debt retirement                                                               |                               | (13,187                     | ) |   | (8,103 |  ) |
| Decrease      in deferred tax asset                                                                 |                               | (7,602                      | ) |   | (4,000 |  ) |
| Depreciation                                                                                        |                               |  151,475               |   |   |  144,963 |   |
| Amortization      of deferred acquisition costs, and intangibles                                    |                               |  8,743                 |   |   |  11,428 |   |
| Accretion      of bond discount                                                                     |                               |    (906      | )  |   |    614 |   |
| Change      in assets and liabilities:                                                              |                               |                        |   |   |   |   |
| (Increase)      decrease in accrued investment income                                               |                               |    32,974    |   |   |    (16,158 |  ) |
| (Increase)      decrease in premiums due and unpaid                                                 |                               |   446,952         |   |   |   (21,297 |  )  |
| Increase      (decrease) in liability for future policy benefits                                    |                               | 31,116                      |   |   |  (5,420 |  ) |
| Increase      (decrease) in policy claims payable                                                   |                               | (475,797                    | ) |   | 22,396 |   |
| Increase      (decrease) in annuity deposits and deferred profits                                   |                               | 17,073                      |   |   | (82,730 |  ) |
| Decrease      in premium deposit funds                                                              |                               | (2,297                      | ) |   | (1,819 |  ) |
| Increase      (decrease) in advanced and unallocated premium                                        |                               | (653,228                    | ) |   | 494,056 |   |
| Increase      in commissions payable                                                                |                               |  33,951                |   |   |  54,410 |   |
| Other,      increase                                                                                |                               | 101,320                     |   |   | 47,193 |   |
| Net      Cash Provided By Operating Activities                                                      |                               | 1,085,221                   |   |   | 2,178,823 |   |
|                                                                                                |                               |                        |   |   |   |   |
| Cash      flows from investing activities:                                                          |                               |                        |   |   |   |   |
| Proceeds      from maturity or redemption - Held to Maturity Investments                            |                               |   9,355,669       |   |   |  939,809 |   |
| Proceeds      from sales of equity securities                                                       |                               | -                           |   |   | 129,752 |   |
| Purchase      of equity securities                                                                  |                               |   (260,347        | ) |   | - |   |
| Purchase      of furniture and equipment                                                            |                               | (82,090                     | ) |   | (148,213 |  ) |
| Purchase      of fixed maturity securities - Held to MaturityInvestments                            |                               | (5,023,844                  | ) |   | (2,664,265 |  ) |
|       Other      investments – Line of credit payments received |                               | 20,023                      |   |   | 18,128 |   |
| Net      Cash Provided By (Used In) Investing Activities                                            |                               | 4,009,411                   |   |   | (1,724,789 |  ) |
|                                                                                                |                               |                        |   |   |   |   |
| Cash      flows from financing activities:                                                          |                               |                        |   |   |   |   |
| Net      (payments) deposits on supplementary contracts                                             |                               | 29,691                      |   |   | (5,593 |  ) |
| Purchase      of treasury stock                                                                     |                               | (6,750                      | ) |   | (204,635 |  ) |
| Bonds      payable purchased                                                                        |                          | (19,221                     | ) |   | (16,205 |  ) |
| Exercised      stock options                                                                        |                               |  12,000                |   |   |    344 |   |
| Net      Cash Provided By (Used In) Financing    Activities                          |                               | 15,720                      |   |   | (226,089 |  ) |
|  Net Increase In Cash and Cash      Equivalents                                                |                               |    5,110,352 |    |   |    227,945 |   |
|  Cash      And Cash Equivalents, Beginning Of Period                                           |                               |   4,937,983       |   |   |   1,673,058 |    |
|  Cash      And Cash Equivalents, End Of Period                                                 | $                                  | 10,048,335                  |   | $ | 1,901,003 |   |
|                                                                                                |                               |                        |   |   |   |   |

----

----

|                                                  |   | Level      1 |   | Level      2 |   | Level      3        |   | Total      |
|-------------------------------------------------------|--------|--------------|--------|--------------|--------|---------------------|--------|------------|
| Fixed      Maturities , held to maturity              | $      | -            | $      | 14,538,494   | $      | -                   | $      | 14,538,494 |
| Fixed      maturities, available for sale             |   | -            |   | 570,806      |   | -                   |   | 570,806    |
| Equity      securities, available for sale            |   | 615,690      |   | -            |   | -                   |   | 615,690    |
| Other      long term investments                      |   | -            |   | -            |   |   908,248 |   | 908,248    |
| Cash      and cash equivalents                        |   | 5,682,543    |   | 4,365,791    |   | -                   |   | 10,048,334 |
|                                                  |   |         |   |         |   |                |   |       |
|       Total      assets | $      | 6,298,233    | $      | 19,475,091   | $      | 908,248             | $      | 26,681,572 |

|                                                                                        |   | Other      Long-term Investments |   |   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|
| Fair      value, beginning of period                                                        | $      | 1,470,054                        |   |   |
| Included      in Earnings:   Other      than temporary decline in fair value |   |  (204,582)                  |   |   |
| Purchases,      sales, issuances and settlements                                            |   | (20,024)                         |   |   |
| Temporary      decline in fair value                                                        |   | (337,200)                        |   |   |
|                                                                                        |   |                             |   |   |
| Fair      value, end of period                                                              | $      | 908,248                          |   |   |
|                                                                                        |   |                             |   |   |

----

|                                             |   | 2008     |
|--------------------------------------------------|--------|----------|
| Beginning      Balance                           | $      | -        |
| Additions      charged to operations             |   | 204,582  |
| Direct      write downs                          |   | -        |
| Recoveries      previously charged to operations |   | -        |
|                                             |   |     |
| Ending      Balance                              |   | $204,582 |

----

----

----

----

|     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, 2008 | 1,200                                       | $1.25                                   | None                                                                                                | None                                                                                              |
| Month      #1, Feb 1 thru Feb 28, 2008 | 3,000                                       | $1.25                                   | None                                                                                                | None                                                                                              |
| Month      #3, Mar 1 thru 31, 2008     | 1,200                                       | $1.25                                   | None                                                                                                | None                                                                                              |
| Month      #4, April 1 thru 30, 2008   | None                                        | None                                    | None                                                                                                | None                                                                                              |
| Month      #5, May 1 thru 31, 2008     | None                                        | None                                    | None                                                                                                | None                                                                                              |
| Month      #6, June 1 thru 30, 2008    | None                                        | None                                    | None                                                                                                | None                                                                                              |
| Totals                                 | 5,400                                       |                                    |                                                                                                |                                                                                              |

----

|  Name                  |   |  Votes      FOR |   | Votes      AGAINST or Withheld |   |  Abstentions |   |  Broker      No Votes |
|-----------------------------|--------|----------------------|--------|--------------------------------|--------|-------------------|--------|----------------------------|
| Wayne      E. Ahart         |   | 12,048,371           |   | 21,732                         |   | -                 |   | -                          |
| C.      Donald Byrd         |   | 12,048,371           |   | 21,372                         |   | -                 |   | -                          |
| Kenneth      Tobey          |   | 12,045,617           |   | 21,372                         |   | -                 |   | -                          |
| Barry      N. Shamas        |   | 12,051,371           |   | 21,372                         |   | -                 |   | -                          |
| Cecil      Alexander        |   | 12,052,373           |   | 21,372                         |   | -                 |   | -                          |
| Richard      Barclay        |   | 12,052,373           |   | 21,372                         |   | -                 |   | -                          |
| Eugene      A. Cernan       |   | 12,052,373           |   | 21,372                         |   | -                 |   | -                          |
| Hayden      Fry             |   | 12,050,093           |   | 21,372                         |   | -                 |   | -                          |
| John      Greig             |   | 12,050,873           |   | 21,372                         |   | -                 |   | -                          |
| Roy      Ledbetter          |   | 12,050,873           |   | 21,372                         |   | -                 |   | -                          |
| C.      James McCormick     |   | 12,050,873           |   | 21,372                         |   | -                 |   | -                          |
| John      E. Miller         |   | 12,050,873           |   | 21,372                         |   | -                 |   | -                          |
| Robert      R. Rigler       |   | 12,049,673           |   | 21,372                         |   | -                 |   | -                          |
| L.      Stanley Schoelerman |   | 12,050,873           |   | 21,372                         |   | -                 |   | -                          |

| Votes      FOR |   | Votes      AGAINST or Withheld |   | Abstentions |   | Broker      No Votes |
|----------------|--------|--------------------------------|--------|-------------|--------|----------------------|
| 12,006,577     |   | 9,920                          |   | 59,108      |   | -                    |

----

| No.       |   | Description                                                                                                                                                                                                  |   | Page      or Method of Filing                                                                                                                                                                                |
|-----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  3.1 |   |  Articles      of Incorporation of BNL Financial Corporation, dated January 27, 1984 and      Amendment to Articles of Incorporation of BNL Financial Corporation, dated      November 13, 1987.        |   |  Incorporated      by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K      for the period ending December 31, 1993.                                                                |
| 3.2       |   | By-laws      of BNL Financial Corporation.                                                                                                                                                                   |   | Incorporated      by reference to Exhibit 3.2 of the Company’s Registration Statement No.      33-70318                                                                                                |
| 4.1       |   | Instruments      defining the rights of security holders, including    indentures.                                                                                                                           |   | Incorporated      by reference to Exhibit 4 of the Company's Registration Statement No.      2-94538 and Exhibits 3.5 and 4 of Post-Effective Amendment No. 3      thereto.                                  |
| 4.2       |   | Articles      of Incorporation of BNL Financial Corporation, dated January 27, 1984 and      Amendment to Articles of Incorporation on BNL Financial Corporation, dated      November 13, 1987.              |   | Incorporated      by reference to Exhibits 4.2 of the Company's Annual Report on Form 10-KSB      for the period ending December 31, 1998.                                                                   |
| 10.1      |   | Form      of Agreement between Commonwealth Industries Corporation, American      Investors Corporation and Wayne E. Ahart regarding rights to purchase      shares of the Company.                          |   | Incorporated      by reference to Exhibit I of the Company's Quarterly Report on 10-QSB for      the period ended September 30, 1994.                                                                   |
| 10.2      |   | Agreement      dated December 21, 1990 between Registrant and C. Donald Byrd granting      Registrant right of first refusal as to future transfers of Mr. Byrd's      shares of the Company's common stock. |   | Incorporated      by reference to Exhibit I of the Company's Quarterly Report on 10-QSB for      the period ended March 31, 1996.                                                                       |
| 10.3      |   | Convertible      Debenture Agreement dated July 25, 2001 between BNL Equity Corporation and      EPSI Benefits Inc.                                                                                          |   | Incorporated      by reference to Exhibit 10.9 of the Company's Annual Report on 10-K for      the period ended December 31, 2005.                                                                           |
| 10.4      |   | Claims      Service Agreement dated June 1, 1999 between Brokers National Life      Assurance Company and Employer Plan Services Inc.                                                                        |   | Incorporated      by reference to Exhibit 10.5 of the Company's Annual Report on 10-K for      the period ended December 31, 2005.                                                                           |
| 10.5      |   | Office      lease agreement dated January 21, 2005, between Brokers National Life      Assurance Company and KIMCO for premises in Austin.                                                                   |   | Incorporated      by reference to Exhibit 10.6 of the Company's Annual Report on 10-K for      the period ended December 31, 2005.                                                                           |
| 10.6      |   | Line      of Credit Agreement dated October 15, 2004 between Brokers National Life      Assurance Company and Employer Plan Services Inc.                                                                    |   | Incorporated      by reference to Exhibit 10.7 of the Company's Annual Report on 10-K for      the period ended December 31, 2005.                                                                           |
| 10.7      |   | Marketing      Agreement dated July 25, 2001 between BNL Equity Corporation and Employer      Plan Services Inc. and EPSI Benefits Inc.                                                                      |   | Incorporated      by reference to Exhibit 10.8 of the Company's Annual Report on 10-K for      the period ended December 31, 2005.                                                                           |
| 10.8      |   | Outsourcing      Agreement dated May 1, 2007 between Brokers National Life Assurance      Company and Virtual Item Processing Systems, Inc.                                                                  |   | Incorporated      by reference as filed with the Company’s Annual Report on 10-K for the      period ended December 31, 2007                                                                           |
| 10.9      |   | Amendment      dated July 14, 2008 to Convertible Debenture Agreement (Ex 10.3      above)                                                                                                                   |   | Filed      herewith                                                                                                                                                                                          |
| 11        |   | Statement      Re computation of per share earnings.                                                                                                                                                         |   | Reference      is made to the computation of per share earnings as shown page 4 herein      and the explanation in Note 2 to the Notes to Consolidated Financial      Statements (unaudited), page 6 herein. |
| 18        |   | Letter      Re Change in accounting principles                                                                                                                                                               |   | None.  Not      applicable.                                                                                                                                                                        |
| 22        |   | Published      report regarding matters submitted to vote of security    holders                                                                                                                             |   | The      Company’s definitive proxy statement dated April 28, 2008, as filed with      the SEC on Schedule 14A on April 30, 2008, is incorporated by reference      herein.                            |

----

| 23   |   | Consents      of experts and counsel incorporated by reference into a previously filed      Securities Act registration statement |   | Not      applicable.           |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|
| 31.1 |   | Certification      of Chief Executive OfficerSection      302                                                                     |   | Filed      herewith - E1       |
| 31.2 |   | Certification      of Chief Financial OfficerSection      302                                                                     |   | Filed      herewith – E3 |
| 32   |   | Certification      of Chief Executive Officer and Chief Financial Officer Section      906                                        |   | Filed      herewith – E5 |

|  This      quarter the Company reported the amendment to the convertible debenture      loan investment with EPSI Benefits Inc on Form  8-K. |
|---------------------------------------------------------------------------------------------------------------------------------------------------|

|                             |   | BNL      FINANCIAL CORPORATION                 |
|----------------------------------|--------|------------------------------------------------|
|                             |   | (Registrant)                                   |
|                             |   |                                           |
|                             |   | s/s      Wayne E. Ahart                        |
| Date:      August 14, 2008       |   | By:      Wayne E. Ahart, Chairman of the Board |
|                             |   | (Chief      Executive Officer)                 |
|                             |   |                                           |
|                             |   |  s/s      Barry N. Shamas                 |
| Date: August 14,      2008  |   | By:      Barry N. Shamas, Executive V.P.       |
|                             |   | (Chief      Financial Officer)                 |

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