UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                           Form 10-QSB
(Mark one)
 X  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended               June 30, 1997               .

      TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from                                 to             
Commission file number                0-13538              

                 NATIONAL AFFILIATED CORPORATION
(Exact Name of small business issuer as specified in its charter)

                   Louisiana                        72-0947819                
    (State or other jurisdiction of(I.R.S. Employer Identification
     incorporation or organization)Number)

7228 England Drive, Suite 24, P.O. Box 12190, Alexandria, LA 71315

             (Address of principal executive offices)

                          (318) 473-4355

        (Insurer's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last 
report)

Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 
such shorter period that the registrant was required to file such reports), 
and (2) has been subject to such filing requirements for the past 90
days. Yes  X  No    

               APPLICABLE ONLY TO ISSUERS INVOLVED
                 IN BANKRUPTCY PROCEEDINGS DURING
                    THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be 
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of 
securities under a plan confirmed by a court. Yes     No    

              APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.

Registrant had 8,786,415  Voting Common Shares outstanding on June 30, 1997.

                  PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996 
<TABLE>
<S>                                            <C>          <C>
                                                  1997        1996
ASSETS:
Cash                                              $62,770    $195,835
Invested assets:                                           
   Fixed maturities available-for-sale at mark  1,486,908   1,227,902
   Equity securities available-for-sale at mar    708,280      80,938
   Mortgage loans                               1,662,212   1,425,000
   Collateral loans                             1,244,322     881,822
   Other long-term investments at equity           99,947     127,775
   Other long-term investments at market           39,000           0
   Certificates of deposit, time deposits and     843,255      24,673
   Restricted assets at market                  1,030,209   1,032,000
Accrued investment income                         132,163      62,313
Finance notes receivable - net                      2,670       7,117
Policy loans                                      102,790     107,830
Reinsurance receivable                            705,338     679,623
Other amounts receivable:
   Premiums due and uncollected                    74,155      25,458
   Agents' balances (net of allowance for unco             
     account of $150,000 in 1997 and 1996)        186,146     138,133
   Other                                          814,739   2,139,330
Property - net                                    134,050     136,839
Deferred policy acquisition costs                 809,381     966,545
Other assets                                      968,024      21,482
TOTAL                                         $11,106,359  $9,280,615
                                               
LIABILITIES AND STOCKHOLDERS' EQUITY:          
Policy benefit reserves                         3,372,172  $3,650,190
Policy claims                                     725,992     961,697
Unearned premiums                                  24,583      24,642
Dividends left on deposit                         277,703     304,697
Advance premium deposits                          162,141     168,141
Other policyholders' funds                         10,287      11,452
Accounts payable and accruals                     363,597     301,464
Debentures                                      1,500,000           0
   Total liabilities                            6,436,475   5,422,283
Commitments and contingent liabilities
Stockholders' equity:
   Voting common shares, no par; 14,000,000 sh             
     authorized; 8,786,415 and 8,740,915 share  9,300,003   9,275,003
   Additional paid-in capital                     154,500     154,500
   Net unrealized investment gains (losses)      (148,181)   (508,846)
   Accumulated deficit                         (4,636,438) (5,062,325)
   Total stockholders' equity                   4,669,884   3,858,332
TOTAL                                         $11,106,359  $9,280,615
</TABLE>
See notes to consolidated financial statements.

NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<S>                             <C>        <C>     <C>       <C>
                                       Three Months          Six Months
                                   1997      1996      1997      1996
REVENUES:
Insurance premiums               $610,529  $469,636 $1,215,680 $1,003,555
Net investment income             109,594   180,238   170,296   314,846
Other income                      657,049    18,662   701,256    31,835
   Total revenues               1,377,172   668,536 2,087,232 1,350,236

EXPENSES:
Increase (decrease) in policy be   45,782   (18,283) (315,303)  (40,329)
Claims and other benefits         357,738   361,961   892,800   695,523
Policyholder dividends              3,300     5,468     5,552     7,679
Commission expense                 65,008    69,443   122,962   154,769
Depreciation and amortization      20,099     8,327    21,539    14,890
Interest expense                   20,420    20,653    33,459    30,192
Salaries, wages and taxes          90,805   182,849   213,325   368,126
Operating expense                 301,016   382,058   434,524   691,842
Restructuring expense              24,642         0    95,324         0
Amortization of deferred acquisi   67,225    79,783   157,164   237,697
   Total expenses                 996,035 1,092,259 1,661,346 2,160,390

GAIN (LOSS) BEFORE INCOME TAXES   381,137  (423,723)  425,886  (810,154)

PROVISION FOR INCOME TAXES              0         0         0         0

NET GAIN (LOSS)                  $381,137 ($423,723) $425,886 ($810,154)

GAIN (LOSS) PER COMMON SHARE        $0.04    ($0.12)    $0.05    ($0.23)
        (primary and fully diluted)

WEIGHTED AVERAGE COMMON 
     SHARES OUTSTANDING         8,779,415 3,579,489 8,767,582 3,579,489
</TABLE>

See notes to consolidated financial statements.

NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<S>                                              <C>         <C>
                                                  1997        1996
Cash flows from operating activities:
Net loss                                         $425,887   ($810,155)
Non-cash and non-operating items:
   Gain on sale of invested assets                  1,532    (191,408)
   Depreciation and amortization                    2,789      14,890
Change in assets and liabilities:
   Deferred policy acquisition costs              157,164     237,697
   Policy benefit reserves and unearned premiu   (278,077)    (85,551)
   Policy claims                                 (235,705)   (193,486)
   Equity write-down of other long-term invest     27,828       7,888
   Accounts payable and accruals                   62,133  (1,674,871)
   Due from reinsurance companies                 (25,715)     80,032
   Other                                          258,337     208,667
Net cash provided from (used in) operating act    396,173  (2,406,297)
Cash flows from investing activities:
Acquisitions of:
   Invested assets
      Fixed maturities available-for-sale        (880,784) (1,269,585)
      Equity securities available-for-sale       (262,500)   (250,000)
      Mortgage loans                             (237,212)          0
      Collateral loans                           (362,500)          0
      Other long-term investments                 (39,000)          0
      Certificates of deposit, time deposits,    (818,582)          0
   Finance notes receivable                             0     (10,000)
   Property                                             0      (6,301)
Proceeds from:
   Invested assets
      Fixed maturities available-for-sale         617,860   2,971,255
      Other long-term investments                       0      29,000
      Certificates of deposit and time deposit          0      93,943
   Finance notes receivable                         4,447           0
Policy loans                                        5,040     (19,635)
Agent's balances - net                            (48,013)     20,887
Net cash (used in) provided from investing act (2,021,244)  1,559,564
Cash flows from financing activities:
Withdrawals of dividends and advance premiums     (32,994)    (54,981)
Sale of preferred and common stock                 25,000     695,000
Sale of convertible debentures                  1,500,000           0
Net cash provided from financing activities     1,492,006     640,019
Net decrease in cash                             (133,065)   (206,714)
Cash at beginning of year                         195,835     306,686
Cash at end of period                             $62,770     $99,972

Supplemental cash flows disclosures:
Interest paid                                     $13,736     $18,264
Income taxes paid                                      $0          $0
</TABLE>
See notes to consolidated financial statements.

NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997          

NOTE 1 - REPRESENTATION BY MANAGEMENT


The unaudited consolidated financial statements included herein reflect all 
normal, recurring adjustments which are necessary to a fair presentation of the
consolidated financial position, results of operations and cash flows for the 
interim periods presented.

The results of operations for the six month period ended June 30, 1997, are not
necessarily indicative of the results to be expected for the entire year of 
1997.


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATION

Management's discussion and analysis reviews the consolidated financial 
condition of National Affiliated Corporation ("NAC" or "the Company") at 
June 30, 1997 and 1996, the consolidated  results of operations for the periods 
ended June 30, 1997 and 1996, and, where  appropriate, factors that may affect 
future financial performance.  This discussion should be read in conjunction 
with the accompanying  consolidated  financial  statements, notes thereto and 
selected financial data.

Previously, the Company, through its wholly-owned subsidiary, National 
Affiliated Investors Life Insurance Company ("NAIL"), issued life and accident 
and health insurance policies to customers in targeted niche markets in urban 
and rural areas.  Beginning in 1997, the Company changed its focus to reduce its
operating and marketing costs and to begin steps to acquire other life insurance
companies. 

Financial Condition

The Company's assets at June 30, 1997, totaled $11,106,359 as compared to
$9,280,615 on December 31, 1996. Liabilities totaled $6,436,475 and $5,422,283
on June 30, 1997 and December 31, 1996, respectively. Stockholder's equity
increased to $4,669,884 at June 30, 1997, from $3,858,332 at December 31, 1996.
Equity securities increased by $627,342 due to common stocks included in the
recapture of the life insurance block. Effective December 31, 1995, NAIL and
Maryland Southern Life Insurance Company (MSLIC) entered into a coinsurance
agreement whereby MSLIC assumed 80% of all the life insurance business retained
by NAIL. This agreement was terminated December 31, 1996 and the ceded
business was recaptured by NAIL. This is a 
nonrecurring transaction. Insurance companies use coinsurance and reinsurance to
increase their statutory capital. This practice is more common in small 
insurance companies. The practice provides additional statutory capital 
immediately, but also has a negative impact on profits in the long run. The 
securities were sold in the
second quarter of 1996 for a profit. Other amounts receivable decreased by
$1,324,591 primarily as a result of the reversal of the coinsurance transaction 
in February 1997. Policy benefit reserves decreased by $278,018 due to a 
decrease in the number and amount of policies. The reserves also decreased due 
to the reduction in cash outflows, which is a component of reserves if the 
company is losing money. The reduction in cash outflows resulted from the cost 
reduction program. 

In the first half of 1997, the Company's earnings per share were $.05 on net
income of $425,886, as compared to a loss per share in the first half of 1996 of
$.23 on a loss of  $810,154. Premium revenues exceeded the first half of 1996 by
$212,125, or 16%, due to recapture of the 80% coinsurance from MSLIC in the
first quarter of 1997. Other income increased $669,421 due to restructuring 
of the New Mexico Health program. Policy claims and other benefits increased by
$197,277, or 28%. This was due to large health claims which occurred in the 
first four months of the year. Salaries were reduced by 42% and other operating
expenses were reduced by $257,000, or 37%. These improvements were due to
outsourcing of operations and cost reduction programs implemented by new
management.


Results of Operations

1997 Compared to 1996

The Company had a net profit for the first six months of 1997 of $425,886
compared to a loss of $810,154 for the six months ended June 30, 1996.  The
earnings per common share were $.05 for the first half of 1997 compared to a 
loss of $.23 for the same period 1996.  Total revenues in the first half 1997 
increased to $2,087,232 from $1,350,236 in 1996.  Premium revenues increased to
$1,215,680 in the first half of 1997 from $1,003,555 in 1996.
<TABLE>
        <S>                       <C>               <C>
                                   Six months ended June 30,
                                     1997              1996
        Life premium               $ 410,302        $  542,446
        Life reinsurance premiums    (11,266)         (349,310)
        A & H premiums               936,805           912,790
        A & H reinsurance premiums  (120,161)         (102,371)

        Total premium revenues    $1,215,680        $1,003,555
</TABLE>
Although total premiums increased, life premiums declined as a result of
continuing lapses of FLA-100 policies.  The Company ceased paying significant
dividends on these policies in 1992 when the Board of Directors determined the
projected dividend to be excessive.  This action has caused the lapse rate of 
these policies to increase. 

The increase in the accident and health (A&H) premium is the result of adding
additional members to the New Mexico group business.  Management expects the
number of lives covered to increase by 25% to 30%  in 1997. The Company has
received a 33% rate increase, which will be effective October 1, 1997. 
Additional savings of 6% were also obtained through benefit reductions.  

Net investment income decreased to $170,296 as of June 30, 1997 as compared to
$314,846 at June 30, 1996. This decrease was due to capital gains realized from
the sale of assets in connection with a coinsurance transaction in the first 
quarter of 1996.

The Company's claims and other benefits increased to $892,800 for the first half
of 1997 from $695,523 for the first half of 1996.  The increase is the result of
the claims incurred on the New Mexico policies described above. These claims 
were due to seven extraordinary cases including several leukemia cases and 
several premature births. Reinsurance covered a portion of the costs. Only one 
case of this magnitude occurred in the six years previous to this period. This 
unusual number of claims is not expected to occur again in future periods. The 
composition of benefits and claims for the six months ending June 30 are as 
follows:
<TABLE>
            <S>                    <C>                     <C>
                                         Six months ended June 30,
                                      1997                    1996
            Life benefits          $    155,577            $  23,770
            A & H benefits              737,223              671,753
                       
              Total benefits        $   892,800            $ 695,523
</TABLE>
Commission expense decreased to $122,962 for the first six months of  1997 from
$154,769 for the first six months of 1996, primarily as a result of decreased 
sales of life policies.  The composition of commission expense was as follows:
<TABLE>
       <S>                        <C>                    <C>
                                            Six months ended June 30,
                                     1997                    1996
     
       Life commissions            $ 26,200               $ 76,118 
       A & H commissions             96,762                 78,651
     
       Total                      $ 122,962              $ 154,769
</TABLE>
Salaries and operating expenses decreased to $647,849 in the first half of 1997
from $1,059,968 in 1996. The Company expects additional decreases in salaries
and other operating expenses during the remainder of 1997. The Company has
moved its offices and decreased its rent, utility and maintenance costs. The
Company has downsized its staff by 76% and outsourced its computer and policy
administrative services.  These changes are expected to result in a further 
decrease in these expenses in 1997.  Management is continuing to evaluate 
operations to further reduce operating costs.

Conseco Capital Management (CCM), an asset management company with $29
billion of assets under management, manages the assets of the Company. Based on
CCM's historical record of investing assets, the Company expects to see an
improvement in its investment income.

Deferred policy acquisition costs decreased to $157,164 for the first six months
of 1997 as compared to $237,697 for the first six months of 1996.  The lapse of
FLA-100 policies is still causing a decrease in deferred acquisition costs.  The
decrease in deferred acquisition costs is allocated between life and health as
follows:
<TABLE>
            <S>                   <C>                      <C>
     
                                        Six months ended June 30,
                                      1997                    1996
     
            Life                   $ 99,836               $  146,763
            A & H                    57,328                   90,934
                              
            Total                 $ 157,164                $ 237,697

</TABLE>
Liquidity and Capital Resources

The liquidity requirements for the Company's operations generally arise from the
insurance operations of NAIL and the administrative activities of NAC, and
include payment of claims  to policyholders, payment of commissions and other
costs of acquiring new policies, payment of operating costs, and payment of cash
values upon termination of policies.  These demands have generally been met by
NAIL with funds generated by its operations, from its reserves and liquid 
assets, and from capital contributions by NAC.  NAC has funded its operations 
primarily through management fees charged to its subsidiaries, including NAIL. 
NAIL is prohibited by Louisiana law from paying dividends to NAC other than from
statutory profits.

Statutory losses in the previous six years by NAIL have had a substantial 
negative impact on the amount of its surplus.  Due to the decline in surplus and
continual operating losses, NAIL was notified during 1996 that its licenses were
suspended in the states of Alabama, Tennessee and Wyoming.  With the stock 
purchase by The Southern Group, the Company contributed $2,766,913 to NAIL's 
surplus at December 31, 1996. The latest liquidity test published by A.M. Best 
Insurance Reports rates NAIL's Current Liquidity as 123%. The usual range stated
by Best for this test is 95% to 120%. NAIL's Quick Liquidity, which measures the
portion of liabilities covered by cash and quickly convertible investments, is 
56.8% while the usual range is 10% to 20%. 

Acquisition of Life Insurance Companies

The Company's business plans will focus on growth through the acquisition and
consolidation  of other small life insurance companies.  The Company plans to 
seek to acquire undervalued life insurance companies in the $2 million to $50 
million equity range. The acquisitions are expected to be made through a joint 
venture with The Southern Group. This acquisition strategy will require 
acquisition candidates, evaluation, acquisition finance, and regulatory 
approvals. The Southern Group has implemented a program of identifying potential
acquisition candidates and the Company intends to review acquisition 
opportunities presented by The Southern Group. Maryland Southern Life Insurance 
Company and Southern Mortgage, Inc. are under agreement to be added to the joint
venture in the third quarter.  

The Southern Group signed a strategic alliance with CCM to provide assistance in
the evaluation of the assets of target life insurance companies during the due
diligence phase. CCM has done a full evaluation of acquisition candidates and 
will continue to do so in the future.


              PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
          
          From time to time, the Company and National Affiliated Investors
          Life (NAIL), NAC's life insurance subsidiary, are involved in
          lawsuits related to their operations. In most cases, such lawsuits
          involve claims under insurance policies of NAIL or other contracts
          of the Company. 

          In a lawsuit styled Newsome v. NAIL, et. al., filed in the Jefferson
          County Circuit Court in Alabama, the plaintiff alleged breach of
          contract, fraud and related causes of action based on the alleged
          failure of NAIL to provide coverage under a short term medical
          policy. On August 22, 1997, a jury verdict was rendered against
          NAIL and Edward Carroll, the former president of NAIL, for
          actual damages of $250,000 and punitive damages of an additional
          $600,000. After consultation with counsel, management believes
          that the size of the jury award was excessive and that grounds exist
          under Alabama law for a reduction in the amount of such damages.
          Insurance coverage is available from the insurer that has
          underwritten the officers' and directors' liability coverage for
          NAIL. While the officers' and directors' liability coverage may not
          extend to recoveries of punitive damages, management of NAIL
          has made a claim against a second insurance policy held by NAIL as
          general liability insurance. NAIL has made demand on its general
          liability insurance carrier to pay this claim, including the punitive
          damages. NAIL is also engaged in settlement discussions with the
          plaintiff. In the event this case is not settled on a timely basis, 
          NAIL has already filed a vigorous challenge to this jury verdict and 
          has submitted motions with the court for elimination or reduction of 
          the amount of the jury award. If NAIL is unsuccessful in its attempts 
          to request that the court reduce the amount of the jury awarded
          damages, in its efforts to cause its insurance carriers to pay the
          amount of the damages as a covered claim or in its efforts to settle
          the case for a payment of a lesser amount to the plaintiffs, the
          payment of the jury award would have a material adverse effect on
          the operations and business of NAIL.

          However, based on the settlement discussions and Alabama case
          law, management believes that this case will be disposed of without
          any payments from NAIL in excess of the amounts previously
          included in the reserves established for litigation. 

          NAIL has outstanding two lawsuits related to claims by purchasers
          of the FLA 100 founders policies. NAIL issued more than 14,000
          individual FLA 100 founders policies from 1982 to 1988. At
          December 31, 1996, approximately 1,200 of these policies
          remained in force of which approximately 600 were premium
          paying. These founders policies were participating life policies that
          paid a dividend to policyholders. According to the terms of the
          policy, NAIL was not required to pay dividends after the third
          anniversary date of each policy. While NAIL did pay dividends
          during the required three anniversary dates on each policy, in 1992,
          NAIL ceased paying dividends with respect to any FLA 100
          policies. In Landreneau, et. al.v. NAIL, plaintiff filed a lawsuit in
          Louisiana's 13th Judicial District Court on May 10, 1995, alleging
          breach of contract and fraud regarding the sale of FLA 100
          founders policies. The plaintiff had purchased six units of coverage
          and paid for renewal for a total of five years on these policies. The
          trial court rendered a judgment in favor of the plaintiff in the
          approximate amount of $34,000, less the cost of insurance, which is
          approximately $7,000, plus interest. This judgment was in general
          computed as the amount of the premiums paid less the value of the
          life insurance coverage provided plus attorneys' fees. This judgment
          was affirmed by the Third Court of Appeals of the State of
          Louisiana and NAIL filed an appeal with the Supreme Court of the
          State of Louisiana. On May 9, 1997, the Supreme Court of the
          State of Louisiana denied the request of NAIL to hear an appeal of
          this matter. Accordingly, NAIL will be required to pay the amount
          of the judgment entered by the trial court. A separate lawsuit,
          Classert et. al. v. NAIL et. al., filed in the 18th Judicial District
          Court, on August 26, 1996, also relates to the FLA 100 founders
          policies. Five plaintiffs asserting to represent the class of persons
          that purchased FLA 100 founders policies allege fraudulent sales
          practices by former employees of NAIL and are seeking unspecified
          damages. NAIL opposes the certification of these plaintiffs as
          representatives of the class of persons that purchased FLA 100
          policies and intends to continue to vigorously oppose such
          certification and otherwise to defend this case. Although discovery
          has begun in the Classert case, there remain significant procedural
          matters to be resolved and significant additional discovery before
          NAIL will be able to make an accurate prediction of the likely
          outcome of this case. Based on the best estimates of the schedule
          for resolving the procedural and discovery matters in connection
          with this case, management believes that the issue of whether the
          case will proceed as a class action will be heard by the trial court 
          in the third or fourth quarter of 1997 with a possible trial date not 
          set until late 1998 or mid 1999. If the court certifies a class of 
          persons including a significant number of the former FLA 100 
          policyholders and a judgment is rendered in favor of such a class of 
          plaintiffs, such an adverse judgment would have a material adverse 
          effect on NAIL. 
          
          The Company and NAIL have other outstanding lawsuits as well as
          other claims that arise in the ordinary course of business. Even
          though the Company and NAIL may be contesting the validity or
          extent of its liability in response to such lawsuits, the Company has
          established reserves in its consolidated financial statements that
          approximate its estimated potential liability. Included in the 
          financial statements is a total reserve of $122,000 that has been 
          established with respect to all of the lawsuits and claims against the
          Company and NAIL. In establishing this reserve, management has taken 
          into account the facts and circumstances of each case, the advice of
          counsel, the availability of insurance coverages and other factors
          deemed by them to be relevant. 

ITEM 2.   CHANGES IN SECURITIES
          
          A former employee acquired 21,000 shares of common stock of the
          Company upon the exercise of options at $0.50 per share in May,
          1997. These shares were issued pursuant to a registration statement
          filed by the Company on Form S-8.  

          On May 21, 1997, NAC completed the sale of $1,500,000 of
          convertible debentures which was previously reported by the
          Company in its Annual Report on Form 10-K for the fiscal year
          ended December 31, 1996. The debentures were sold to purchasers
          who were not United States persons in transactions occurring
          outside of the United States. All of the purchasers were institutional
          investors. The offering was completed with the assistance of
          European American Securities, Inc., a NASDAQ licensed broker-
          dealer domiciled in London, who was paid a commission of
          $150,000 in connection with the placement. The offering is
          intended to be exempt from registration pursuant to Regulation S
          promulgated under the Securities Act of 1933, as amended. 

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
          None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
          HOLDERS
          None

ITEM 5.   OTHER INFORMATION
          None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

EXHIBIT 11
     NATIONAL AFFILIATED CORPORATION AND SUBSIDIARIES

     STATEMENT OF COMPUTATION OF PER SHARE EARNINGS

          The weighted average number of shares outstanding for the six
          months ended June 30, 1997 was computed as follows:
<TABLE>
        <S>                                               <C>
        Shares outstanding, beginning of period           8,740,915

        Shares issued, first quarter, 1997                   24,500

        Shares issued, second quarter, 1997                  21,000

        Shares outstanding, end of period                 8,786,415
</TABLE>
     Shares outstanding,
     January   8,740,915
     February  8,760,915
     March     8,765,415
     April     8,765,415
     May       8,786,415
     June      8,786,415
               52,605,490 / 6 = 8,767,582

     April     8,765,415
     May       8,786,415
     June      8,786,415
               26,338,245 / 3 = 8,779,415



SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
     Registrant has duly caused this report to be signed on its behalf by the
     undersigned thereunto duly authorized.

                                         NATIONAL AFFILIATED CORPORATION
                                                    (Registrant)

   Date           September 16, 1997      By:      T. Brent Chapel, CPA 
                        
                                             T. Brent Chapel, CPA
                                             Chief Financial Officer (Duly
                                             authorized officer and
                                             principal accounting officer of
                                             the Registrant)