**Annual      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934**

**FORM      10-K**

**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934**

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

**BNL      FINANCIAL CORPORATION**

|                                                                                             |                                             |
|--------------------------------------------------------------------------------------------------|--------------------------------------------------|
| IOWA                                                                                             | 42-1239454                                       |
| (State                of incorporation)                                                          | (IRS                Employer Identification No.) |
|                                                                                             |                                             |
| 7010                Hwy 71 W., Suite 100                                                         |                                             |
| Austin,                TX                                                                        | 78735                                            |
| (Address                of principal executive offices)                                          | (Zip                Code)                        |
|                                                                                             |                                             |
| Registrant's                telephone number, including area code: (512)                383-0220 |

----

**PART      1**

**ITEM      1. Business**

**General**

|   |   |  BNL                Financial Corporation               |  ----------- |  Consumer's                Protective Association(Inactive                Association) |
|--------|--------|--------------------------------------------------------------|-------------------|---------------------------------------------------------------------------------------------|
|   |   | |                                                            |              |                                                                                        |
|   |   |  Brokers                National Life Assurance Company |              |                                                                                        |
|   |   | |                                                            |              |                                                                                        |
|   |   |  BNL                Brokerage Corporation               |              |                                                                                        |

**Industry      Segments**

**Sales      and Marketing**

----

|                                                                 |   | **2005**                     |   | 2004                     |   |
|----------------------------------------------------------------------|--------|------------------------------|--------|--------------------------|--------|
| I.                Annualized Premiums and Annuity Deposits In Force: |   |                              |   |                     |   |
| Ordinary                Life Insurance                               |   | **$                301,000** |   | $                293,000 |   |
| Individual                Annuities(1)                               |   | **100,000**                  |   | 106,000                  |   |
| Group                Dental Insurance                                |   | **41,465,000**               |   | 39,652,000               |   |
| Miscellaneous                A&H insurance                       |   | **2,351,000**                |   | 1,946,000                |   |
|                                                                 |   |                         |   |                     |   |
| Total                                                                |   | **$44,217,000**              |   | $41,997,000              |   |

| II.                  Collected Premiums and Annuity Deposits: |   |                           |   |                       |
|---------------------------------------------------------------|--------|--------------------------------|--------|----------------------------|
| Ordinary                  Life Insurance                      |   | **$                  295,000** |   | $                  288,000 |
| Individual                  Annuities(1)                      |   | **84,000**                     |   | 85,000                     |
| Group                  Dental Insurance                       |   | **41,629,000**                 |   | 40,681,000                 |
| Miscellaneous                  A&H insurance              |   | **2,370,000**                  |   | 1,773,000                  |
|                                                          |   |                           |   |                       |
| Total                                                         |   | **$44,378,000**                |   | $42,827,000                |
|  III.                  Face Value of Insurance:          |   |                           |   |                       |
| Ordinary                  Life Insurance                      |   | **$39,992,000**                |   | $37,000,000                |
| Accidental                  Death Insurance                   |   | **79,643,000**                 |   | 66,000,000                 |
|                                                          |   |                           |   |                       |
| Total                                                         |   | **$119,634,000**               |   | $103,000,000               |

| (1)                Classified                as a deposit liability on the financial statements. |   |   |
|--------------------------------------------------------------------------------------------------|--------|--------|

|   State               |   |   Life                Premiums |   |   Annuity     |   |  Accident                and Health |   |   Total |
|---------------------------------|--------|------------------------------------------|--------|-------------------------|--------|------------------------------------------|--------|-------------------|
| Georgia                         |   | $                16,530                  |   | $-                      |   | $4,052,489                               |   | $4,069,019        |
| Oregon                          |   | 1,235                                    |   | -                       |   | 3,227,506                                |   | 3,228,741         |
| Louisiana                       |   | 15,760                                   |   | -                       |   | 3,046,488                                |   | 3,062,248         |
| Minnesota                       |   | 7,543                                    |   | -                       |   | 2,972,646                                |   | 2,980,189         |
| Arkansas                        |   | 26,790                                   |   | -                       |   | 2,539,917                                |   | 2,566,707         |
| Michigan                        |   | 6,231                                    |   | -                       |   | 2,431,912                                |   | 2,438,143         |
| Indiana                         |   | 9,692                                    |   | -                       |   | 2,237,173                                |   | 2,246,865         |
| Ohio                            |   | 2,207                                    |   | -                       |   | 2,229,513                                |   | 2,231,720         |
| Idaho                           |   | 562                                      |   | -                       |   | 2,152,182                                |   | 2,152,744         |
| All                Other States |   | 208,860                                  |   | 83,662                  |   | 19,109,293                               |   | 19,401,815        |
| Total                           |   | $295,410                                 |   | $                83,662 |   | $43,999,119                              |   | $44,378,191       |

|                                  |   | Gross           |   |
|---------------------------------------|--------|-----------------|--------|
|                                  |   | Premiums        |   |
| Group                Dental Insurance |   | Collected       |   |
| **2005**                              |   | **$41,629,000** |   |
| 2004                                  |   | 40,681,000      |   |
| 2003                                  |   | 38,813,000      |   |
| 2002                                  |   | 39,734,000      |   |
| 2001                                  |   | 38,083,000      |   |

----

|                                  |   | Gross                      |   | Claims    |
|---------------------------------------|--------|----------------------------|--------|-----------|
| Group                Dental Insurance |   | Claims                Paid |   | Ratio     |
| **2005**                              |   | **26,046,000**             |   | **63.1%** |
| 2004                                  |   | 25,044,000                 |   | 62.3%     |
| 2003                                  |   | 24,279,000                 |   | 62.7%     |
| 2002                                  |   | 25,772,000                 |   | 64.9%     |
| 2001                                  |   | 24,821,000                 |   | 65.5%     |

**Agents'      Commissions**

**Reinsurance**

----

|                                      |   | Gross                   |   |            |   |                   |   | Net                     |
|-------------------------------------------|--------|-------------------------|--------|-----------------|--------|------------------------|--------|-------------------------|
|                                      |   | Insurance               |   | Reinsurance     |   | Reinsurance            |   | Insurance               |
|                                      |   | In                Force |   | Ceded           |   | Assumed                |   | In                Force |
| Life                Insurance             |   |                    |   |            |   |                   |   |                    |
| **2005**                                  |   | **$39,992,000**         |   | **$14,531,000** |   | **$                0** |   | **$25,461,000**         |
| 2004                                      |   | 37,207,000              |   | 11,752,000      |   | 0                      |   | 25,455,000              |
| 2003                                      |   | 37,832,000              |   | 12,782,000      |   | 0                      |   | 25,050,000              |
| 2002                                      |   | 37,045,000              |   | 11,443,000      |   | 0                      |   | 25,602,000              |
| 2001                                      |   | 34,515,000              |   | 9,098,000       |   | 0                      |   | 25,417,000              |
|                                      |   |                    |   |            |   |                   |   |                    |
|                                      |   |                    |   |            |   |                   |   |                    |
| Accidental                Death Insurance |   |                    |   |            |   |                   |   |                    |
| **2005**                                  |   | **$79,643,000**         |   | **$71,834,000** |   | **$                0** |   | **$7,809,000**          |
| 2004                                      |   | 65,629,000              |   | 59,238,000      |   | 0                      |   | 6,391,000               |
| 2003                                      |   | 52,095,000              |   | 46,885,500      |   | 0                      |   | 5,209,500               |
| 2002                                      |   | 44,000,000              |   | 39,600,000      |   | 0                      |   | 4,400,000               |
| 2001                                      |   | 37,000,000              |   | 37,000,000      |   | 0                      |   | 0                       |
|                                      |   |                    |   |            |   |                   |   |                    |

**Investments**

|    Year |   |   BNLAC                Statutory Net Investment Income |   |   Net                Return on Mean Invested Assets |   |
|------------------------|--------|------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
| **2005**               |   | **$853,563**                                                     |   | **4.0%**                                                      |   |
| 2004                   |   | 879,351                                                          |   | 4.4%                                                          |   |
| 2003                   |   | 854,548                                                          |   | 4.2%                                                          |   |
| 2002                   |   | 1,041,679                                                        |   | 5.6%                                                          |   |
| 2001                   |   | 977,578                                                          |   | 6.2%                                                          |   |

**Special      Factors Relating to Accounting and Regulatory Reporting of Insurance      Companies**

----

**Insurance      Regulations**

----

**Competition**

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**Personnel**

**ITEM      2. Properties**

**ITEM      3. Legal Proceedings**

----

**ITEM      4. Submission of Matters to a Vote of Security Holders**

----

**PART      II**

**ITEM      5. Market for Registrant’s Common Equity and Related Stockholder      Matters**

**Market      for Stock**

**Holders**

**Dividends**

**Equity      Compensation Plan Information**

*2002      Non-Director, Non-Executive Stock Option Plan, *

----

|     Plan                Category  |   | A  Number                of Securities to be issued upon exercise of outstanding                options |   | B  Weighted                Average exercise price of outstanding options |   | CNumber                of securities remaining available for future issuance under equity                compensation plans (excluding securities reflected in column                (A) |
|------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       |   |                                                                                                              |   |                                                                               |   |                                                                                                                                                                                     |
| Approved                by security holders                |   |                                                                                                              |   |                                                                               |   |                                                                                                                                                                                     |
|                                                       |   |                                                                                                              |   |                                                                               |   |                                                                                                                                                                                     |
|  Brokers                and Agents Plan               |   |  394,780                                                                                                     |   |  $.91                                                                         |   |  -                                                                                                                                                                                  |
|                                                       |   |                                                                                                              |   |                                                                               |   |                                                                                                                                                                                     |
| Not                approved by security holders            |   |                                                                                                              |   |                                                                               |   |                                                                                                                                                                                     |
|                                                       |   |                                                                                                              |   |                                                                               |   |                                                                                                                                                                                     |
| Employee                Plan                               |   | 108,000                                                                                                           |   | $.63                                                                               |   | 134,000                                                                                                                                                                                  |

**Transfer      Agent and Registrar**

**ITEM      6. Selected Financial Data**

|                                                                                                            |  **2005**                 |   |  2004                 |   |  2003                 |   |  2002                 |   |  2001                 |
|-----------------------------------------------------------------------------------------------------------------|--------------------------------|--------|----------------------------|--------|----------------------------|--------|----------------------------|--------|----------------------------|
| Total                Income..........................................................                           | **$46,614,276**                |   | $44,906,665                |   | $42,505,179                |   | $42,367,834                |   | $39,569,741                |
| Net                Income                ...............................................................        | **$                2,303,089** |   | $                2,652,503 |   | $                2,736,355 |   | $                2,500,727 |   | $                1,283,478 |
| Net                Income PerCommon                Share....................................................... |  **$                .13** |   |  $                .14 |   |  $                .14 |   |  $                .12 |   |  $                .06 |
| Total                Assets................................................................                     | **$26,621,477**                |   | $26,058,520                |   | $24,555,254                |   | $22,133,342                |   | $20,173,856                |
| Total                Liabilities.......................................................                         | **$13,498,115**                |   | $12,798,984                |   | $13,204,072                |   | $13,822,575                |   | $14,499,547                |
| Average                Shares Outstanding..............................                                         | **17,495,881**                 |   | 19,184,245                 |   | 20,082,075                 |   | 20,469,480                 |   | 22,802,610                 |

**ITEM      7. Management’s Discussion and Analysis of Financial Condition and Results of      Operations**

----

**Forward-Looking        Statements**

----

** **

----

----

**Deferred      Tax Asset**

|                                      | **2005**                     |   | 2004                     |   | 2003                     |   |
|-------------------------------------------|------------------------------|--------|--------------------------|--------|--------------------------|--------|
|                                      |                         |   |                     |   |                     |   |
| Current                tax provisions     | **$                448,040** |   | $                355,183 |   | $                519,949 |   |
| Deferred                tax provision     | **79,001**                   |   | 113,000                  |   | 85,036                   |   |
|                                      |                         |   |                     |   |                     |   |
| Total                income tax provision | **$527,041**                 |   | $468,183                 |   | $604,985                 |   |
|                                      |                         |   |                     |   |                     |   |

|                                                       |   | **                                       2005** |   |                                       2004 |   | 2003                             |   |
|------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                       |   |                                                                                                                                                               |   |                                                                                                                                                     |   |                             |   |
| Book                income before tax                      |   | **$2,830,130**                                                                                                                                                     |   | $3,120,686                                                                                                                                               |   | $3,341,340                       |   |
|                                                       |   |                                                                                                                                                               |   |                                                                                                                                                     |   |                             |   |
| Income                tax computed at statutory rate (34%) |   |  **$                962,244**                                                                                                                                 |   |  $                1,061,033                                                                                                                         |   |  $                1,136,056 |   |
| Valuation                allowance for AMT credit          |   | **106,891**                                                                                                                                                        |   | 126,317                                                                                                                                                  |   | 138,507                          |   |
| Revision                of valuation allowance             |   | **51,499**                                                                                                                                                         |   | (102,323)                                                                                                                                                |   | (101,550)                        |   |
| Rate                differential                           |   | **(593,593)**                                                                                                                                                      |   | (616,844)                                                                                                                                                |   | (568,028)                        |   |
|                                                       |   |                                                                                                                                                               |   |                                                                                                                                                     |   |                             |   |
| Total                income tax provision (benefit)        |   | **$                527,041**                                                                                                                                       |   | $                468,183                                                                                                                                 |   | $                604,985         |   |
|                                                       |   |                                                                                                                                                               |   |                                                                                                                                                     |   |                             |   |

----

| Expiring |   |  Carry                  Forwards |   |   |
|----------|--------|---------------------------------------|--------|--------|
|     |   |                                  |   |   |
| 2006     |   | $546,000                              |   |   |
| 2007     |   | 286,000                               |   |   |
| 2008     |   | 203,000                               |   |   |
| 2009     |   | 162,000                               |   |   |
| 2010     |   | 186,000                               |   |   |
| 2011     |   | 66,000                                |   |   |
| 2012     |   | 193,000                               |   |   |
| 2018     |   | 106,000                               |   |   |
| 2019     |   | 131,000                               |   |   |
| 2020     |   | 65,000                                |   |   |
| 2023     |   | 73,000                                |   |   |
| 2024     |   | 22,000                                |   |   |
|     |   |                                  |   |   |
|     |   | $2,039,000                            |   |   |

**Financial      Condition**

|                                                                 |   | **2005**              |   | 2004                  |   | 2003              |   |
|----------------------------------------------------------------------|--------|-----------------------|--------|-----------------------|--------|-------------------|--------|
| Income                from Operations before Income Taxes            |   |  **$2,830,130**  |   |  **$3,120,686**  |   |  $3,341,340  |   |
| Book                Value Per Share                                  |   | **$0.78**             |   | **$0.70**             |   | $0.55             |   |
| Statutory                Capital and Surplus of Insurance Subsidiary |   |  **$12,114,024** |   |  **$13,438,168** |   |  $12,348,394 |   |
| Stockholders'                Equity - GAAP                           |   | **$13,123,361**       |   | **$13,259,536**       |   | $10,690,735       |   |
| A.M.                Best Financial Rating                            |   | **B+**                |   | **B+**                |   | B+                |   |
|                                                                 |   |                  |   |                  |   |              |   |

**Liquidity      and Capital Resources**

----

| **Portfolio                  Designated “Held to Maturity”** December                  31, 2005    |   |   Amortized                  Cost |   |  Gross                  Unrealized Gains |   |  Gross                  Unrealized Losses |   |   Estimated                  Market Value |
|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|-----------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------------------------|
| US                  Treasury securities and obligations of US                  government corporations and agencies |   |  **$14,693,046**                       |   |  **$                  2,000**            |   |  **$                  331,792**           |   |  **$14,363,254**                               |
| Corporate                  securities                                                                               |   | **2,481,106**                               |   | **61,835**                                    |   | **56,535**                                     |   | **2,486,406**                                       |
| Mortgage-backed                  securitiesGNMA                                                                     |   |  **1,543,310**                         |   |  **811**                                 |   |  **59,077**                               |   |  **1,485,044**                                 |
|                                                                                                                |   |                                        |   |                                          |   |                                           |   |                                                |
| Totals                                                                                                              |   | **$18,717,462**                             |   | **$64,646**                                   |   | **$447,404**                                   |   | **$18,334,704**                                     |

| **Less                  Than Investment Grade Bonds** December                  31, 2005 |   |  S&PRating |   |   Amortized                  Cost |   |  Gross                  Unrealized Gains |   |  Gross                  Unrealized Losses |   |  Estimated                  Market Value |
|-----------------------------------------------------------------------------------------------|--------|---------------------|--------|---------------------------------------------|--------|-----------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------------------|
| Ford                  Motor Company                                                           |   | BB-                 |   | **$187,103**                                |   | **$**** -**                              |   | **$                  55,103**                  |   | **$132,000**                                  |
| General                  Motors Acceptance Corporation                                        |   | BB                  |   | **100,000**                                 |   | **-**                                         |   | **21,000**                                     |   | **79,00**                                     |
| Provident                  Companies Inc.                                                     |   | BB+                 |   | **149,371**                                 |   | **3,254**                                     |   | **-**                                          |   | **152,625**                                   |
| MCI                  Communications                                                           |   | B+                  |   | **157,129**                                 |   | **853**                                       |   | **-**                                          |   | **157,982**                                   |
|                                                                                          |   |                |   |                                        |   |                                          |   |                                           |   |                                          |
| Totals                                                                                        |   |                |   | **$593,603**                                |   | **$4,107**                                    |   | **$76,103**                                    |   | **$521,607**                                  |

----

|  **Long-Term                  Contractual Obligations ***                          |   |  **Total** |   |  **<                  1 Year** |   |  **1-3                  Years** |   |  **3-5                  Years** |   |  **>                  5 Years** |
|-----------------------------------------------------------------------------------------|--------|-----------------|--------|----------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|-----------------------------------------|
| **Bonds                  and Related Future Interest Payable****                        |   | **$2,691,000**  |   | **$105,000**                           |   | **$210,000**                         |   | **$210,000**                         |   | **$2,166,000**                          |
| **Operating                  Lease Obligations**                                        |   | **$1,669,000**  |   | **$208,000**                           |   | **$520,000**                         |   | **$470,000**                         |   | **$471,000**                            |
| **Liability                  for Future Policy Benefits****(Note                  A.)** |   | **$11,390,774** |   | **$1,493,772**                         |   | **$2,436,621**                       |   | **$1,724,592**                       |   | **$5,735,789**                          |
| **Policy                  Claims Payable (Note B.)**                                    |   | **$2,558,565**  |   | **$2,558,565**                         |   | **-**                                |   | **-**                                |   | **-**                                   |
| **Liability                  for Annuity Deposits (Note C.)**                           |   | **$6,540,152**  |   | **$100,776**                           |   | **$213,836**                         |   | **$230,072**                         |   | **$5,995,468**                          |
| **Supplementary                  Contracts (Note D.)**                                  |   | **$50,000**     |   | **$17,000**                            |   | **$33,000**                          |   | **-**                                |   | **-**                                   |

*****

**Notes          to Long-Term Contractual Obligations Table:**

**Special          Note          Relating          to Notes A, B, C and D and the information and presentation for liabilities          for          future policy benefits, policy claims payable, annuity deposits and          supplementary contracts.**

**NOTE          A, Liabilities for Future Policy Benefits.**

**NOTE        B, Policy Claims Payable.**

----

**NOTE      C, Annuity Deposits.**

**NOTE      D, Supplementary Contracts.**

|   |
|--------|

**Results      of Operations**

----

----

**Future      Marketing Plans **

**ITEM      7A. Quantitative and Qualitative Disclosures About Market      Risk.**

----

**ITEM        8. Financial Statements and Supplementary Data**

**ITEM      9. Changes in and Disagreements with Accountants on Accounting and Financial      Disclosure**

**ITEM      9A. Internal Controls and Procedures**

**ITEM      9B. Other Information**

----

**PART      III**

**ITEM      10. Directors and Executive Officers of the Registrant**

|    **Name**         |   |    **Age** |   |   **First                Became Director or Executive Officer** |   |    **Position**                                                                                                        |
|------------------------------------|--------|---------------------------|--------|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
| Wayne                E. Ahart      |   | 65                        |   | 1984                                                                      |   | Chairman                of the Board and Director                                                                                     |
| C.                Donald Byrd      |   | 64                        |   | 1984                                                                      |   | Vice                Chairman of the Board and Director                                                                                |
| Kenneth                Tobey       |   | 47                        |   | 1994                                                                      |   | President                and Director                                                                                                 |
| Barry                N. Shamas     |   | 58                        |   | 1984                                                                      |   | Executive                Vice President, Treasurer, Chief Operating Officer, Chief Financial                Officer and Director |
| Cecil                Alexander     |   | 69                        |   | 1994                                                                      |   | Director                                                                                                                              |
| Richard                Barclay     |   | 68                        |   | 1994                                                                      |   | Director                                                                                                                              |
| Eugene                A. Cernan    |   | 71                        |   | 1994                                                                      |   | Director                                                                                                                              |
| Hayden                Fry          |   | 76                        |   | 1984                                                                      |   | Director                                                                                                                              |
| John                Greig          |   | 70                        |   | 1984                                                                      |   | Director                                                                                                                              |
| Roy                Ledbetter       |   | 75                        |   | 1994                                                                      |   | Director                                                                                                                              |
| John                E. Miller      |   | 75                        |   | 1994                                                                      |   | Director                                                                                                                              |
| James                A. Mullins    |   | 71                        |   | 1984                                                                      |   | Director                                                                                                                              |
| C.                James McCormick  |   | 80                        |   | 1984                                                                      |   | Director                                                                                                                              |
| Robert                R. Rigler    |   | 82                        |   | 1989                                                                      |   | Director                                                                                                                              |
| L.                Stan Schoelerman |   | 80                        |   | 1984                                                                      |   | Director                                                                                                                              |
| Orville                Sweet       |   | 81                        |   | 1984                                                                      |   | Director                                                                                                                              |

**Identification      of Certain Significant Employees**

**Family      Relationships**

**Business      Experience**

**Wayne      E. Ahart**

**C.      Don Byrd**

**Kenneth      Tobey**

----

**Barry      N. Shamas**

**Cecil      L. Alexander**

**Richard      L. Barclay**

**Eugene      A. Cernan**

**Hayden      Fry**

**John      Greig**

**Roy      E. Ledbetter**

**C.      James McCormick**

----

**John      E. Miller**

**James      A. Mullins**

**Robert      R. Rigler**

**L.      Stanley Schoelerman**

**Orville      Sweet**

**Audit      Committee**

**Compensation      Committee**

**Code      of Ethics**

----

**ITEM      11. Executive Compensation**

**Executive      Compensation**

**SUMMARY      COMPENSATION TABLE**

| (A) Name                    and Principal Position | (B) Year | (C)                     Salary | (D) Bonus | (E)                    Other                    Annual Compensation | (F)Restricted                    Stock Award(s) | (G) Options/SARs                    (#) | (H) LTIP                    Payouts | (I)All                    OtherCompensation |
|---------------------------------------------------------|---------------|-------------------------------------|----------------|---------------------------------------------------------------------|-------------------------------------------------|----------------------------------------------|------------------------------------------|---------------------------------------------|

| Wayne                    E. Ahart, CEO                        | 2005       | $145,833       | $173,574       | $74,972       | $0       | -       | $0       | $0       |
|---------------------------------------------------------------|------------|----------------|----------------|---------------|----------|---------|----------|----------|
| "                                                             | 2004       | $127,500       | $150,098       | $76,629       | $0       | -       | $0       | $0       |
| "                                                             | 2003       | $125,000       | $184,288       | $42,658       | $0       | -       | $0       | $0       |
| Barry                    N. Shamas, Executive V.P.            |  2005 |  $129,186 |  $110,114 |  $38,159 |  $0 |  - |  $0 |  $0 |
| "                                                             | 2004       | $116,666       | $102,462       | $17,920       | $0       | -       | $0       | $0       |
| "                                                             | 2003       | $110,600       | $100,347       | $18,028       | $0       | -       | $0       | $0       |
| C.                    Donald Byrd, Vice Chairman of the Board |  2005 |  $111,666 |  $102,537 |  $31,542 |  $0 |  - |  $0 |  $0 |
| "                                                             | 2004       | $101,667       | $99,847        | $27,136       | $0       | -       | $0       | $0       |
| "                                                             | 2003       | $95,824        | $98,769        | $26,734       | $0       | -       | $0       | $0       |
| Kenneth                    Tobey, President                   |  2005 |  $101687  |  $101,704 |  $14,880 |  $0 |  - |  $0 |  $0 |
| "                                                             | 2004       | $91,667        | $99,016        | $11,104       | $0       | -       | $0       | $0       |
| "                                                             | 2003       | $79,583        | $105,099       | $9,369        | $0       | -       | $0       | $0       |

**Compensation      of Directors**

**Benefit      Plans**

*Agents’      Nonqualified Stock Option Plan*
*2002      Non-Director, Non-Executive Stock Option Plan.*

*2001      Incentive Bonus Plan*

----

**Indebtedness      of Management**

**ITEM      12. Security Ownership of Certain Beneficial Owners and      Management**

**Security      Ownership of Certain Beneficial Owners**

|    **Title                  of Class** |      |    **Name                  and Address of Beneficial Owner** |   |   **Amount                  and Nature of Beneficial Ownership****(1)** |   |   **Percent                  of Class as of****December                  31, 2005** |
|-------------------------------------------------------|--------------------------|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                                  |                     |                                                                        |   |                                                                              |   |                                                                                          |
| Common                  Stock                         |                     | Wayne                  E. Ahart                                             |   | 4,712,216(2)                                                                      |   | 28.00%                                                                                        |
|                                                  |                     | 8017                  Cobblestone                                           |   |                                                                              |   |                                                                                          |
|                                                  |                     | Austin,                  TX 78735                                           |   |                                                                              |   |                                                                                          |
|                                                  |                     |                                                                        |   |                                                                              |   |                                                                                          |
| Common                  Stock                         |                     | Barry                  N. Shamas                                            |   | 2,801,816(3)                                                                      |   | 16.65%                                                                                        |
|                                                  |                     | 1095                  Hidden Hills Dr                                       |   |                                                                              |   |                                                                                          |
|                                                  |                     | Dripping                  Springs, TX 78620                                 |   |                                                                              |   |                                                                                          |
|                                                  |                     |                                                                        |   |                                                                              |   |                                                                                          |
| Common                  Stock                         |                     | C.                  Don Byrd                                                |   | 1,615,743                  (4)                                                    |   | 9.60%                                                                                         |
|                                                  |                     | 1725                  S. 50th Unit 144                                      |   |                                                                              |   |                                                                                          |
|                                                  |                     | W.                  Des Moines, IA 50265                                    |   |                                                                              |   |                                                                                          |
|                                                  |                     |                                                                        |   |                                                                              |   |                                                                                          |
| Common                  Stock                         |                     | Kenneth                  Tobey                                              |   | 914,786                                                                           |   | 5.44%                                                                                         |
|                                                  |                     | 23                  Tennyson                                                |   |                                                                              |   |                                                                                          |
|                                                  |                     | N.                  Little Rock, AR 72116                                   |   |                                                                              |   |                                                                                          |

**Security        Ownership of Management**

|   **Title                  of Class** |   **Name                  of Beneficial Owner**               |   **Amount                  and Nature of Beneficial Ownership (1)** |   **Percent                  of Class as of December 31, 2005** |
|-------------------------------------------------|-------------------------------------------------------------------------|--------------------------------------------------------------------------------|---------------------------------------------------------------------------|
| Common                                          | Wayne                  E. Ahart                                         | 4,712,216                  (2)                                                 | 28.00%                                                                    |
| Common                                          | Cecil                  L. Alexander                                     | 37,088                                                                         | 0.22%                                                                     |
| Common                                          | Richard                  L Barclay                                      | 46,088                                                                         | 0.27%                                                                     |
| Common                                          | Tammy                  Barr                                             | 600                                                                            | 0.00%                                                                     |
| Common                                          | C.                  Donald Byrd                                         | 1,615,743                  (3)                                                 | 9.60%                                                                     |
| Common                                          | Eugene                  A. Cernan                                       | 37,088                                                                         | 0.22%                                                                     |
| Common                                          | Jeffrey                  A. Drees                                       | 18,843                                                                         | 0.11%                                                                     |
| Common                                          | Hayden                  Fry                                             | 69,047                                                                         | 0.41%                                                                     |
| Common                                          | John                  Greig                                             | 50,102                                                                         | 0.30%                                                                     |
| Common                                          | Roy                  Keppy                                              | 51,001                                                                         | 0.30%                                                                     |
| Common                                          | Roy                  E. Ledbetter                                       | 37,088                                                                         | 0.22%                                                                     |
| Common                                          | C.                  James McCormick                                     | 137,084                  (4)                                                   | 0.82%                                                                     |
| Common                                          | John                  E. Miller                                         | 47,111                                                                         | 0.28%                                                                     |
| Common                                          | James                  A Mullins                                        | 50,000                                                                         | 0.30%                                                                     |
| Common                                          | Jerry                  Ouzts                                            | 300                                                                            | 0.00%                                                                     |
| Common                                          | Pamela                  C. Randolph                                     | 2,905                                                                          | 0.02%                                                                     |
| Common                                          | Robert                  R Rigler                                        | 3,295                                                                          | 0.02%                                                                     |
| Common                                          | Chris                  Schenkel                                         | 37,088                                                                         | 0.22%                                                                     |
| Common                                          | L.                  Stanley Schoelerman                                 | 50,000                                                                         | 0.30%                                                                     |
| Common                                          | Barry                  N. Shamas                                        | 2,801,816                  (5)                                                 | 16.65%                                                                    |
| Common                                          | Orville                  Sweet                                          | 50,000                                                                         | 0.30%                                                                     |
| Common                                          | Kenneth                  Tobey                                          | 914,786                                                                        | 5.44%                                                                     |
| **Common**                                      | **All                  Officers and Directors as a group (22 persons)** |  **10,769,289**                                                           |  **64.00%**                                                          |

----

**ITEM      13. Certain Relationships and Related Transactions**

**ITEM      14. Principal Accountant fees and Services**

----

**PART      IV**

**ITEM      15. Exhibits, Financial Statement Schedules**

**(a)      1. Financial Statements**

**2.**

**3.      Exhibits**

| **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      |   | Office                lease assumption and assignment agreement dated September 1, 1998,                between                Brokers National Life Assurance Company and Walgreen Company and                Charles                H. Morrison for premises in Austin.  |   | Incorporated                by reference to Exhibit 10.9 of the Company's Annual Report on Form                10-KSB                for the period ending December 31, 1998.                                                  |
| 10.4      |   | Sublease                dated January 20, 2000 between Brokers National Life Assurance Company                and                PRG, Inc.                                                                                                                                      |   | Incorporated                by reference to Exhibit 10.10 of the Company's Annual Report on Form                10-KSB for the period ending December 31, 1998.                                                           |

----

| 10.5       |   | Claims                Service Agreement dated June 1, 1999, between Brokers National Life                Assurance Company and Employer Plan Services Inc.                                                                       |   | Filed                  herewith - E4 to E13                                                                                                                                                                                                                                                                                   |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  10.6 |   |  Office                lease agreement dated January 21, 2005 between Brokers National Life                Assurance Company and KIMCO for premises in Austin.                                                              |   |                  Filed                herewith - E14 to E31                                                                                                                                                                                                                                                              |
|  10.7 |   |  Line                of Credit Agreement dated October 15, 2004 between Brokers National                Life                Assurance Company  and Employer Plan Services                Inc.      |   |  Filed                herewith - E32 to E33                                                                                                                                                                                                                                                                              |
|  10.8 |   |  Marketing                Agreement dated July 25, 2001 between BNL Equity Corporation and                EPSI                Benefits Inc.                                                                                 |   |  Filed                herewith - E34 to E38                                                                                                                                                                                                                                                                              |
|  10.9 |   |  Convertible                Debenture Agreement dated July 25, 2001 between BNL Equity Corporation                and                EPSI Benefits Inc.                                                                     |   |  Filed                herewith - E39 to E40                                                                                                                                                                                                                                                                              |
| 11         |   | Statement                Re computation of per share earnings.                                                                                                                                                                        |   | Reference                is made to the explanation of the computation of per share earnings                as                shown in Note 1 to the Notes to Consolidated Financial Statements                filed                herewith under Item 14(a)(1) above which clearly describes the                same.  |
| 12         |   | Statements                re computation of ratios.                                                                                                                                                                                   |   | Not                applicable.                                                                                                                                                                                                                                                                                           |
| 16         |   | Letter                Re Change in Certifying Accountant.                                                                                                                                                                             |   | Incorporated                by reference to Exhibit I of the Company's periodic Report on Form                8-K                dated September 14, 1995.                                                                                                                                                               |
| 21         |   | Subsidiaries                of Registrant.                                                                                                                                                                                            |   | Filed                herewith.                                                                                                                                                                                                                                                                                           |
| 31.1       |   | Certification                of Chief Executive OfficerSection                302                                                                                                                                                |   | Filed                herewith - E1                                                                                                                                                                                                                                                                                            |
| 31.2       |   | Certification                of Chief Financial Officer Section                302                                                                                                                                               |   | Filed                herewith - E2                                                                                                                                                                                                                                                                                            |
| 32.1       |   | Certification                of Chief Executive OfficerSection                906                                                                                                                                                |   | Filed                herewith - E3                                                                                                                                                                                                                                                                                            |
| 32.2       |   | Certification                of Chief Financial OfficerSection                906                                                                                                                                                |   | Filed                herewith - E3                                                                                                                                                                                                                                                                                            |

**SIGNATURES**

|                                          |   |                                                                         |   |                   |
|-----------------------------------------------|--------|------------------------------------------------------------------------------|--------|------------------------|
| **SIGNATURE**                                 |   | **TITLE**                                                                    |   | **DATE**               |
|   /S/                Wayne E. Ahart |   |                                                                         |   |   03/31/2006 |
| Wayne                E. Ahart                 |   | Chairman                of the Board, Director (Principal Executive Officer) |   |                   |
|   /S/                C. Donald Byrd |   |                                                                         |   |   03/23/2006 |
| C.                Donald Byrd                 |   | Vice                Chairman of the Board and Director                       |   |                   |
|   /S/                Kenneth Tobey  |   |                                                                         |   |   03/23/2006 |
| Kenneth                Tobey                  |   | President                and Director                                        |   |                   |

----

|   /S/                Barry N. Shamas     |   |                                                                                                                                                                                              |   |   03/31/2006 |
|----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|
| Barry                N. Shamas                     |   | Executive                Vice President, Treasurer, Chief Operating Officer, Chief Financial                Officer and Director (Principal Financial and Accounting                Officer) |   |                   |
|   /S/                Hayden Fry          |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Hayden                Fry                          |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                John Greig          |   |                                                                                                                                                                                              |   |   03/23/2006 |
| John                Greig                          |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                C. James McCormick  |   |                                                                                                                                                                                              |   |   03/23/2006 |
| C.                James McCormick                  |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                James A. Mullins    |   |                                                                                                                                                                                              |   |   03/23/2006 |
| James                A. Mullins                    |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                Robert R. Rigler    |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Robert                R. Rigler                    |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                Stanley Schoelerman |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Stanley                Schoelerman                 |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                Orville Sweet       |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Orville                Sweet                       |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                Cecil Alexander     |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Cecil                Alexander                     |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                Richard Barclay     |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Richard                Barclay                     |   | Director                                                                                                                                                                                          |   |                   |
|   /S/                Eugene A. Cernan    |   |                                                                                                                                                                                              |   |   03/23/2006 |
| Eugene                A. Cernan                    |   | Director                                                                                                                                                                                          |   |                   |

----

|   /S/                Roy Ledbetter  |   |     |   |   03/23/2006 |
|-----------------------------------------------|--------|----------|--------|------------------------|
| Roy                Ledbetter                  |   | Director |   |                   |
|   /S/                John E. Miller |   |     |   |   03/23/2006 |
| John                E. Miller                 |   | Director |   |                   |

----

**Table        of Contents**

|                                                                                                                                                                        |   | Page                  Number of 2005Form                  10-K |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
| Item                  15(a) Financial Statements                                                                                                                            |   |                                                           |
|                                                                                                                                                                        |   |                                                           |
| Report                  of Independent Accountants on Financial Statements                                                                                                  |   | F-2                                                            |
|                                                                                                                                                                        |   |                                                           |
| Consolidated                  Balance Sheet, December 31, 2005 and 2004                                                                                                     |   | F-3                                                            |
|                                                                                                                                                                        |   |                                                           |
|  Consolidated                  Statement of Operations and Comprehensive Income for the years                  ended                  December 31, 2005, 2004 and 2003 |   |  F-4                                                      |
|                                                                                                                                                                        |   |                                                           |
|  Consolidated                  Statement of Changes in Shareholders' Equity for the years ended                  December                  31, 2005, 2004 and 2003     |   |  F-5                                                      |
|                                                                                                                                                                        |   |                                                           |
|  Consolidated                  Statement of Cash Flows for the years ended December 31, 2005,                  2004 and                  2003                          |   |  F-6                                                      |
|                                                                                                                                                                        |   |                                                           |
| Notes                  to Consolidated Financial Statements                                                                                                                 |   | F-7                                                            |
|                                                                                                                                                                        |   |                                                           |
| Item                  15(d) - Schedule II, Condensed Financial Information of                  Registrant                                                                   |   | F-21                                                           |
|                                                                                                                                                                        |   |                                                           |

----

**BNL        Financial Corporation and Subsidiaries**

**Report        of Independent Registered Public Accounting Firm**

----

**BNL        Financial Corporation and Subsidiaries**

**Consolidated        Balance Sheets**

|   | **December                  31,**  |   |
|--------|-----------------------------------------|--------|

| **ASSETS**                                                                                                                                                             |   | **2005** |           | 2004   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|----------------|--------|--------|
|  Cash                and cash equivalents                                                                                                                         |   | $        | 946,272        |   | $      | 3,809,913 |   |
| Investments                  in fixed maturities at fair value, Available for Sale (amortized                  cost                  $589,816; $598,521; respectively) |   |     | **600,756**    |   |   | 664,488 |   |
| Investments                  in fixed maturities at amortized cost, Held to Maturity (fair value                  $18,334,704; $16,957,702; respectively)              |   |     | **18,717,461** |   |   | 17,005,973 |   |
| Other                  long-term investments - (Note 4)                                                                                                                |   |     | **1,543,441**  |   |   | 1,557,407 |   |
| Investment                  in equity securities, at fair value (cost                  $356,056, $588,885, respectively)                                               |   |     | **357,792**    |   |   | 628,821 |   |
| Total                  Investments, Including Cash and Cash Equivalents                                                                                                |   |     | **22,165,722** |   |   | 23,666,602 |   |
|                                                                                                                                                                   |   |     |           |   |   |   |   |
| Accrued                  investment income                                                                                                                             |   |     | **185,286**    |   |   | 183,197 |   |
| Funds                  receivable on matured fixed security                                                                                                            |   |     | **807,500**    |   |   | - |   |
| Leasehold                  improvements, furniture and equipment, net                                                                                                  |   |     | **1,368,975**  |   |   | 434,799 |   |
| Deferred                  policy acquisition costs                                                                                                                     |   |     | **389,110**    |   |   | 346,373 |   |
| Policy                  loans                                                                                                                                          |   |     | **126,303**    |   |   | 153,470 |   |
| Receivable                  from reinsurer                                                                                                                             |   |     | **48,385**     |   |   | 34,121 |   |
| Premiums                  due and unpaid                                                                                                                               |   |     | **1,027,683**  |   |   | 855,959 |   |
| Income                  tax assets                                                                                                                                     |   |     | **37,000**     |   |   | 101,000 |   |
| Intangible                  assets                                                                                                                                     |   |     | **146,540**    |   |   | 154,483 |   |
| Other                  assets                                                                                                                                          |   |     | **318,973**    |   |   | 128,516 |   |
|                                                                                                                                                                   |   |     |           |   |   |   |   |
| Total                  Assets                                                                                                                                          |   | $        | 26,621,477     |   | $      | 26,058,520 |   |
|                                                                                                                                                                   |   |     |           |   |   |   |   |
| **LIABILITIES**                                                                                                                                                        |   |     |           |   |   |   |   |
| Liabilities                  for future policy benefits                                                                                                                |   | $        | 2,591,479      |   | $      | $                  2,268,652 |   |
| Policy                  claims payable                                                                                                                                 |   |     | **2,558,565**  |   |   | 2,235,929 |   |
| Annuity                  deposits                                                                                                                                      |   |     | **2,835,552**  |   |   | 2,783,838 |   |
| Deferred                  annuity profits                                                                                                                              |   |     | **339,429**    |   |   | 373,985 |   |
| Premium                  deposit funds                                                                                                                                 |   |     | **31,807**     |   |   | 36,024 |   |
| Supplementary                  contracts without life contingencies                                                                                                    |   |     | **36,981**     |   |   | 55,799 |   |
| Advanced                  and unallocated premium                                                                                                                      |   |     | **803,290**    |   |   | 659,498 |   |
| Commissions                  payable                                                                                                                                   |   |     | **501,821**    |   |   | 483,655 |   |
| Accrued                  taxes and expenses                                                                                                                            |   |     | **752,376**    |   |   | 810,437 |   |
| Bonds                  payable                                                                                                                                         |   |     | **1,747,178**  |   |   | 2,007,339 |   |
| Payable                  for Securities                                                                                                                                |   |     | **-**          |   |   | 650,000 |   |
| Other                  liabilities                                                                                                                                     |   |     | **1,299,637**  |   |   | 433,828 |   |
| Total                  Liabilities                                                                                                                                     |   |     | **13,498,115** |   |   | 12,798,984 |   |
|                                                                                                                                                                   |   |     |           |   |   |   |   |
|                                                                                                                                                                   |   |     |           |   |   |   |   |
| **SHAREHOLDERS’                  EQUITY**                                                                                                                        |   |     |           |   |   |   |   |
| Common                  stock, $.02 stated value, 45,000,000 shares authorized; 17,213,170;                  20,980,760 shares issued and outstanding, respectively    |   |     | **344,264**    |   |   | 419,616 |   |
| Additional                  paid-in capital                                                                                                                            |   |     | **7,608,519**  |   |   | 10,829,800 |   |
| Accumulated                  other comprehensive income                                                                                                                |   |     | **10,622**     |   |   | 90,165 |   |
| Accumulated                  surplus                                                                                                                                   |   |     | **5,412,928**  |   |   | 3,109,839 |   |
| Treasury                  stock, at cost, 383,879; 1,933,646; shares, respectively                                                                                     |   |     | **(252,971**   | **)**  |   | (1,189,884 | ) |
| Total                  Shareholders' Equity                                                                                                                            |   |     | **13,123,362** |   |   | 13,259,536 |   |
|                                                                                                                                                                   |   |     |           |   |   |   |   |
| Total                  Liabilities and Shareholders' Equity                                                                                                            |   | $        | 26,621,477     |   | $      | 26,058,520 |   |

----

**BNL        Financial Corporation and Subsidiaries**

**Consolidated        Statements of Operations and Comprehensive Income**

|                                                                                                                                                                                                                                                                                                                                                                                            |   | **Year                  Ended December 31,** |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                            |   | **2005**                                     |       | **2004** |   | **2003** |   |
| **Income**                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         |       |   |   |   |   |   |   |   |
|                     Premium income                                                                                                                                                                                                                                                                                                                                                    |   | $                                            | 44,303,827 |   | $ | 42,451,319 |   | $ | 40,270,571 |   |
|                     Net investment income                                                                                                                                                                                                                                                                                                                                             |   |                                         | 1,003,613  |   |   | 975,485 |   |   | 970,382 |   |
|                    Marketing fees (Note 4)                                                                                                                                                                                                                                                                                                                                                 |   |                                         | 115,233    |   |   | 165,275 |   |   | 146,107 |   |
|                    Vision insurance income                                                                                                                                                                                                                                                                                                                                                 |   |                                         | 1,051,720  |   |   | 695,046 |   |   | 538,765 |   |
|                    Realized gain on debt retirements                                                                                                                                                                                                                                                                                                                                       |   |                                         | 102,067    |   |   | 495,462 |   |   | 424,726 |   |
|                    Realized gains (losses)                                                                                                                                                                                                                                                                                                                                                 |   |                                         | 37,816     |   |   | 124,078 |   |   | 154,628 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                                              Total Income                                                                                                                                                                                                |   |                                         | 46,614,276 |   |   | 44,906,665 |   |   | 42,505,179 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
| **Expenses**                                                                                                                                                                                                                                                                                                                                                                                    |   |                                         |       |   |   |   |   |   |   |   |
|   Increase                  in liability for future policy benefits                                                                                                                                                                                                                                                                                                                   |   |                                         | 308,563    |   |   | 687,619 |   |   | 34,377 |   |
|                    Policy benefits and other insurance costs                                                                                                                                                                                                                                                                                                                               |   |                                         | 33,317,136 |   |   | 31,766,217 |   |   | 30,108,152 |   |
|                    Amortization of deferred policy acquisition costs                                                                                                                                                                                                                                                                                                                       |   |                                         | 22,467     |   |   | 29,973 |   |   | 30,403 |   |
|                    Operating expenses                                                                                                                                                                                                                                                                                                                                                      |   |                                         | 8,558,205  |   |   | 7,957,447 |   |   | 7,664,081 |   |
|                    Taxes, other than on income                                                                                                                                                                                                                                                                                                                                             |   |                                         | 1,577,775  |   |   | 1,344,723 |   |   | 1,326,826 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                                           Total Expenses                                                                                                                                                                                                                |   |                                         | 43,784,146 |   |   | 41,785,979 |   |   | 39,163,839 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                                           Income from Operations before                                             Income Taxes |   |                                         | 2,830,130  |   |   | 3,120,686 |   |   | 3,341,340 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                     Provision for income taxes                                                                                                                                                                                                                                                                                                                                        |   |                                         | 527,041    |   |   | 468,183 |   |   | 604,985 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                                           Net Income                                                                                                                                                                                                                    |   | $                                            | 2,303,089  |   | $ | 2,652,503 |   | $ | 2,736,355 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                     Net income per common share (basic and diluted)                                                                                                                                                                                                                                                                                                                   |   | $                                            | 0.13       |   | $ | 0.14 |   | $ | 0.14 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                     Weighted average number of fully paid                  common shares                                                                                                                                                                                                                                                                                              |   |                                         | 17,495,881 |   |   | 19,184,245 |   |   | 20,082,075 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|                                          Net Income (as above)                                                                                                                                                                                                               |   | $                                            | 2,303,089  |   | $ | 2,652,503 |   | $ | 2,736,355 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
| Other                  comprehensive income (loss), net of tax:                                                                                                                                                                                                                                                                                                                                 |   |                                         |       |   |   |   |   |   |   |   |
|                    Unrealized gains on securities:                                                                                                                                                                                                                                                                                                                                         |   |                                         |       |   |   |   |   |   |   |   |
|             Unrealized                  holding gain (loss) arising during period (net of $9,000 and $18,482                  of                  deferred taxes in 2005 and 2004; respectively)                                                                                                                                    |   |                                         | (51,490    | ) |   | 38,761 |   |   | 210,680 |   |
| Reclassification                  adjustment for gain included in net income                                                                                                                                                                                                                                                                                                                    |   |                                         | (28,052    | ) |   | (126,364 | ) |   | (154,627 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|         Other                  Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                              |   |                                         | (79,542    | ) |   | (87,603 | ) |   | 56,053 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |       |   |   |   |   |   |   |   |
|         Comprehensive                  Income                                                                                                                                                                                                                                                                                                           |   | $                                            | 2,223,547  |   | $ | 2,564,900 |   | $ | 2,792,408 |   |

----

**BNL        Financial Corporation and Subsidiaries**

**Consolidated        Statements of Changes in Shareholders’ Equity**

|   |   |                          |   |       |   |        | Accumulated   |     |
|--------|--------|-------------------------------|--------|------------|--------|-------------|---------------|----------|
|   |   |                          |   | Additional |   | Accumulated | Other         |     |
|   |   | Common                  Stock |   | Paid-In    |   | (Deficit)   | Comprehensive | Treasury |

|   | Shares |   | Amount |   | Capital |   | Surplus |   | Income |   | Stock |
|--------|--------|--------|--------|--------|---------|--------|---------|--------|--------|--------|-------|

|                                                        |                 |   |         |   |            |   |          |   |               |   |            |
|-------------------------------------------------------------|-----------------|--------|--------------|--------|-----------------|--------|---------------|--------|--------------------|--------|-----------------|
| Balance,                  December 31, 2002                 | 23,419,647      | $      | 468,393      | $      | 14,366,816      | $      | (2,279,019)   | $      | 121,715            | $      | (4,367,138)     |
|                                                        |            |   |         |   |            |   |          |   |               |   |            |
| Accumulated                  other comprehensive income     | -               |   | -            |   | -               |   | -             |   | 56,053             |   | -               |
| Sale                  of treasury stock                     | -               |   | -            |   | 5,317           |   | -             |   | -                  |   | 83,309          |
| Purchase                  of treasury stock                 | -               |   | -            |   | -               |   | -             |   | -                  |   | (505,355)       |
| Stock                  options exercised                    | 38,125          |   | 763          |   | 18,662          |   | -             |   | -                  |   | -               |
| Purchase                  of common stock                   | (52,153)        |   | (1,043)      |   | (25,033)        |   | -             |   | -                  |   | -               |
| Stock                  options granted                      | -               |   | -            |   | 10,940          |   | -             |   | -                  |   | -               |
| Retirement                  of treasury stock               | (2,424,859)     |   | (48,497)     |   | (3,588,791)     |   | -             |   | -                  |   | 3,637,288       |
| Net                  income                                 | -               |   | -            |   | -               |   | 2,736,355     |   | -                  |   | -               |
| Balance,                  December 31, 2003                 | 20,980,760      | $      | 419,616      | $      | 10,787,911      | $      | 457,336       | $      | 177,768            | $      | (1,151,896)     |
|                                                        |            |   |         |   |            |   |          |   |               |   |            |
| Accumulated                  other comprehensive income     |  -         |   |  -      |   |  -         |   |  -       |   |  (87,603)     |   |  -         |
| Sale                  of treasury stock                     | -               |   | -            |   | 23,239          |   | -             |   | -                  |   | 41,312          |
| Purchase                  of treasury stock                 | -               |   | -            |   | -               |   | -             |   | -                  |   | (619,262)       |
| Stock                  options exercised                    | -               |   | -            |   | 3,650           |   | -             |   | -                  |   | 20,761          |
| Stock                  options granted                      | -               |   | -            |   | 15,000          |   | -             |   | -                  |   | -               |
| Contingent                  Treasury Stock                  | -               |   | -            |   | -               |   | -             |   | -                  |   | 519,201         |
| See                  Note 6                                 |            |   |         |   |            |   |          |   |               |   |            |
| Net                  income                                 | -               |   | -            |   | -               |   | 2,652,503     |   | -                  |   | -               |
| Balance,                  December 31, 2004                 | 20,980,760      | $      | 419,616      | $      | 10,829,800      | $      | 3,109,839     | $      | 90,165             | $      | (1,189,884)     |
|                                                        |            |   |         |   |            |   |          |   |               |   |            |
| **Accumulated                  other comprehensive income** |  **-**     |   |  **-**  |   |  **-**     |   |  **-**   |   |  **(79,543)** |   |  **-**     |
| **Sale                  of treasury stock**                 | **-**           |   | **-**        |   | **(29,693)**    |   | **-**         |   | **-**              |   | **94,243**      |
| **Purchase                  of treasury stock**             | **-**           |   | **-**        |   | **-**           |   | **-**         |   | **-**              |   | **(2,435,698)** |
| **Stock                  options exercised**                | **-**           |   | **-**        |   | **4,634**       |   | **-**         |   | **-**              |   | **6,796**       |
| **Retirement                  of treasury stock**           | **(3,767,590)** |   | **(75,352)** |   | **(3,196,222)** |   | **-**         |   | **-**              |   | **3,271,574**   |
| **Net                  income**                             | **-**           |   | **-**        |   | **-**           |   | **2,303,089** |   | **-**              |   | **-**           |
| **Balance,                  December 31, 2005**             | **17,213,170**  | $      | **344,264**  | $      | **7,608,519**   | $      | **5,412,928** | $      | **10,622**         | $      | **(252,969)**   |

----

**BNL        Financial Corporation and Subsidiaries**

**Consolidated        Statements of Cash Flows**

|   |   | **Year                  Ended December 31,** |   |
|--------|--------|----------------------------------------------|--------|

|                                                                                                                                                                         |   |  **2005**                |   | 2004   |       | 2003   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|------------|--------|--------|
| **Cash                  Flows from Operating Activities**                                                                                                                    |   |                     |   |   |       |   |   |
|                     Net income                                                                                                                                     | **$**  | **2,303,089**                 |   | $      | 2,652,503  |   | $      | 2,736,355 |   |
|                     Adjustments to reconcile net income to net cash                      provided by operating activities:                     |   |                          |   |   |       |   |   |   |   |
|                           Realized gain on investments                                                                               |   | **(                  41,060** | **)**  |   | (131,796   | )      |   | (152,951 | ) |
|                           Realized (gain) loss on sale of furniture and equipment                                                    |   | **3,244**                     |   |   | 7,719      |   |   | (1,677 | ) |
|                           Realized gain on debt extinguishments                                                                      |   | **(102,067**                  | **)**  |   | (495,462   | )      |   | (424,726 | ) |
|                           Depreciation                                                                                               |   | **234,632**                   |   |   | 209,851    |   |   | 195,425 |   |
|                           Decrease in deferred tax asset                                                                             |   | **79,000**                    |   |   | 113,000    |   |   | 84,000 |   |
|                           Amortization of deferred acquisition costs, and bond issuance                  cost                        |   | **28,282**                    |   |   | 66,078     |   |   | 36,218 |   |
|                           Accretion of bond premium (discount)                                                                       |   | **(1,031**                    | **)**  |   | 3,749      |   |   | 24,473 |   |
|                           Common stock and stock options granted                                                                     |   | **-**                         |   |   | 15,000     |   |   | 31,440 |   |
|                      Change in assets and liabilities:                                                                                                        |   |                          |   |   |       |   |   |   |   |
|                          (Increase) decrease in accrued investment income                                                                 |   | **(2,089**                    | **)**  |   | 517        |   |   | 2,805 |   |
|                          (Increase) decrease in receivable from reinsurer                                                                 |   | **(14,264**                   | **)**  |   | (3,056     | )      |   | 1,171 |   |
|                          (Increase) decrease in premiums due and unpaid                                                                   |   | **(171,724**                  | **)**  |   | 203,991    |   |   | (138,942 | ) |
|                           Increase in liability for future policy benefits                                                           |   | **322,827**                   |   |   | 690,674    |   |   | 33,208 |   |
|          Increase                  (decrease) in policy claims payable                                                          |   | **322,636**                   |   |   | (343,063   | )      |   | 221,443 |   |
|                           Increase (decrease) in annuity deposits and deferred                  profits                              |   | **17,158**                    |   |   | (45,822    | )      |   | (121,962 | ) |
|                           Decrease in premium deposit funds                                                                          |   | **(4,217**                    | **)**  |   | (5,236     | )      |   | (3,565 | ) |
|                           Increase (decrease) in advanced and unallocated premium                                                    |   | **143,792**                   |   |   | (467,650   | )      |   | 387,292 |   |
|          Increase                  (decrease) in commissions payable                                                            |   | **18,166**                    |   |   | 50,398     |   |   | (12,211 | ) |
|                           Other, increase (decrease)                                                                                 |   | **(92,908**                   | **)**  |   | (3,157     | )      |   | 7,014 |   |
|                                    Net Cash Provided by Operating Activities            |   | **3,043,466**                 |   |   | 2,518,238  |   |   | 2,904,810 |   |
|                                                                                                                                                                         |   |                          |   |   |       |   |   |   |   |
| **Cash                  Flows from Investing Activities**                                                                                                                    |   |                          |   |   |       |   |   |   |   |
|                      Proceeds from sales of investments                                                                                                       |   | **64,129**                    |   |   | 1,150,475  |   |   | 1,102,540 |   |
|                      Proceeds from maturity or redemption - Available for Sale                  Investments                                                   |   | **206,460**                   |   |   | 793,634    |   |   | - |   |
|                      Proceeds from maturity or redemption - Held to Maturity                  Investments                                                     |   | **3,158,405**                 |   |   | 7,293,903  |   |   | 6,503,497 |   |
|                      Proceeds from sale of furniture and equipment                                                                                            |   | **-**                         |   |   | 58,388     |   |   | 10,976 |   |
|                      Purchase of equity securities                                                                                                            |   | **-**                         |   |   | (360,453   | )      |   | (163,885 | ) |
|                      Purchase of furniture, equipment and leasehold                  improvements                                                             |   | **(618,235**                  | **)**  |   | (224,757   | )      |   | (227,882 | ) |
|                      Purchase of fixed maturity securities, Held to Maturity                                                                                  |   | **(6,193,619**                | **)**  |   | (9,580,134 | )      |   | (11,756,299 | ) |
|                      Other Investments - Line of credit - receipt (advanced)                                                                                  |   | **13,966**                    |   |   | (30,000    | )      |   | (30,000 | ) |
|                                   Net Cash Used in Investing Activities                      |   | **(3,368,894**                | **)**  |   | (898,944   | )      |   | (4,561,053 | ) |
|                                                                                                                                                                         |   |                          |   |   |       |   |   |   |   |
| **Cash                  Flows from Financing Activities**                                                                                                                    |   |                          |   |   |       |   |   |   |   |
|                      Sale of treasury stock                                                                                                                   |   | **62,563**                    |   |   | 64,550     |   |   | 58,797 |   |
|     Purchase                  of treasury stock                                                                                                          |   | **(2,435,698**                | **)**  |   | (619,262   | )      |   | (477,023 | ) |
|                      Net change in supplementary contracts                                                                                                    |   | **(18,818**                   | **)**  |   | (13,797    | )      |   | (20,111 | ) |
|                      Stock options exercised                                                                                                                  |   | **11,430**                    |   |   | 24,411     |   |   | 19,425 |   |
|                      Debt extinguishments                                                                                                                     |   | **(157,690**                  | **)**  |   | (663,944   | )      |   | (187,063 | ) |
|                                    Net Cash Used in Financing Activities                |   | **(2,538,213**                | **)**  |   | (1,208,042 | )      |   | (605,975 | ) |
|                                    Net Increase (Decrease) in Cash and Cash Equivalents |   | **(2,863,641**                | **)**  |   | 411,252    |   |   | (2,262,218 | ) |
|                                    Cash and Cash Equivalents, Beginning of Period       |   | **3,809,913**                 |   |   | 3,398,661  |   |   | 5,660,879 |   |
|                                                                                                                                                                         |   |                          |   |   |       |   |   |   |   |
|                                   Cash and Cash Equivalents, End of Period                   | **$**  | **946,272**                   |   | $      | 3,809,913  |   | $      | 3,398,661 |   |

----

**1.        **
**Summary        of Significant Accounting Policies**

----

**1.        **
**Summary        of Significant Accounting Policies (continued)**

**2.        **
**Shareholders'        Equity**

----

**2.        **
**Shareholders'        Equity (continued)**

|   |   | December                  31, |   |
|--------|--------|-------------------------------|--------|

|                                 |   |  **2005** |           | 2004   |   | 2003       |   |
|--------------------------------------|--------|----------------|----------------|--------|--------|------------|--------|
|                                 |   |           |           |   |   |       |   |   |   |   |
| Capital                  and Surplus |   | **$**          | **12,114,024** |   | $      | 13,438,168 |   | $ | 12,348,394 |   |
|                                 |   |           |           |   |   |       |   |   |   |   |
| Net                  Income          |   | **$**          | **2,263,342**  |   | $      | 2,216,168  |   | $ | 2,383,349 |   |
|                                 |   |           |           |   |   |       |   |   |   |   |

----

**2.        **
**Shareholders'        Equity (continued)**

|   | **December                  31, 2005** |   | December                  31, 2004 |   | December                  31, 2003 |
|--------|----------------------------------------|--------|------------------------------------|--------|------------------------------------|

|                                                           |   |  **Income** |          | **Capital                  and****Surplus** |   |  Income   |   | Capital                  andSurplus |      |  Income |   | Capital                  andSurplus |   |
|----------------------------------------------------------------|--------|------------------|---------------|---------------------------------------------|--------|----------------|--------|-------------------------------------|-----------|--------------|--------|-------------------------------------|--------|
| Consolidated                  reporting under                  |   |             |          |                                        |   |           |   |                                |      |         |   |                                |   |   |   |   |   |   |   |
| generally                  accepted accounting principles      |   | **$**            | **2,303,089** |                                        | **$**  | **13,123,361** |   | $                                   | 2,652,503 |         | $      | 13,259,536                          |   | $ | 2,736,355 |   | $ | 10,690,735 |   |
| Attributable                  to Parent Company and BNL Equity |   |             | **74,933**    |                                        |   | **(559,877**   | **)**  |                                | 411,805   |         |   | (1,218,884                          | )      |   | 249,925 |   |   | (2,786,839 | ) |
|                                                           |   |             |          |                                        |   |           |   |                                |      |         |   |                                |   |   |   |   |   |   |   |
| Brokers                  National Life Assurance Company       |   |             | **2,228,156** |                                        |   | **13,683,239** |   |                                | 2,240,698 |         |   | 14,478,420                          |   |   | 2,486,430 |   |   | 13,477,574 |   |
|                                                           |   |             |          |                                        |   |           |   |                                |      |         |   |                                |   |   |   |   |   |   |   |
| Deferred                  acquisition costs                    |   |             | **(42,734**   | **)**                                       |   | **(389,110**   | **)**  |                                | 125,437   |         |   | (346,373                            | )      |   | 30,403 |   |   | (220,936 | ) |
| Reserve                  and premium adjustments               |   |             | **125,718**   |                                        |   | **200,520**    |   |                                | (14,650   | )            |   | 232,610                             |   |   | (14,650 | ) |   | 40,502 |   |
| Interest                  maintenance reserve/AVR              |   |             | **22,467**    |                                        |   | **(602,271**   | **)**  |                                | (91,609   | )            |   | (627,679                            | )      |   | (103,250 | ) |   | (519,676 | ) |
| Unrealized                  appreciation of securities         |   |             | **-**         |                                        |   | **145,714**    |   |                                | -         |         |   | 64,656                              |   |   | - |   |   | (209,113 | ) |
| Annuity                  deposits and related adjustments      |   |             | **(97,569**   | **)**                                       |   | **295,996**    |   |                                | (120,137  | )            |   | 373,985                             |   |   | (92,311 | ) |   | 518,659 |   |
| Income                  tax credit                             |   |             | **45,000**    |                                        |   | **61,000**     |   |                                | 79,000    |         |   | 33,000                              |   |   | 31,000 |   |   | (22,136 | ) |
| Other                                                          |   |             | **(17,696**   | **)**                                       |   | **(1,281,064** | **)**  |                                | (2,571    | )            |   | (770,451                            | )      |   | 45,728 |   |   | (716,480 | ) |
|                                                           |   |             |          |                                        |   |           |   |                                |      |         |   |                                |   |   |   |   |   |   |   |
| BNLAC                  Statutory Basis                         |   | **$**            | **2,263,342** |                                        | **$**  | **12,114,024** |   | $                                   | 2,216,168 |         | $      | 13,438,168                          |   | $ | 2,383,350 |   | $ | 12,348,394 |   |

**3.        **
**Income        Taxes**

|                                        |   | **2005** |        | **2004** |   | 2003        |   |
|---------------------------------------------|--------|----------|-------------|----------|--------|-------------|--------|
|                                        |   |     |        |     |   |        |   |
| Current                  tax provisions     |   | **$**    | **448,040** |     | **$**  | **335,183** |   | $ | 519,949 |   |
| Deferred                  tax provision     |   |     | **79,001**  |     |   | **113,000** |   |   | 85,036 |   |
|                                        |   |     |        |     |   |        |   |   |   |   |
| Total                  income tax provision |   | **$**    | **527,041** |     | **$**  | **468,183** |   | $ | 604,985 |   |
|                                        |   |     |        |     |   |        |   |   |   |   |

----

**3.        **
**Income        Taxes (continued)**

|                                                         |   | **2005** |          | 2004   |   | 2003      |   |
|--------------------------------------------------------------|--------|----------|---------------|--------|--------|-----------|--------|
|                                                         |   |     |          |   |   |      |   |
| Book                  income before tax                      |   | **$**    | **2,830,130** |   | $      | 3,120,686 |   | $ | 3,341,340 |   |
|                                                         |   |     |          |   |   |      |   |   |   |   |
| Income                  tax computed at statutory rate (34%) |   | **$**    | **962,244**   |   | $      | 1,061,033 |   | $ | 1,136,056 |   |
| Valuation                  allowance for AMT credit          |   |     | **106,891**   |   |   | 126,317   |   |   | 138,507 |   |
| Revision                  of valuation allowance             |   |     | **51,499**    |   |   | (102,323  | )      |   | (101,550 | ) |
| Rate                  differential                           |   |     | **(593,593**  | **)**  |   | (616,844  | )      |   | (568,028 | ) |
|                                                         |   |     |          |   |   |      |   |   |   |   |
| Total                  income tax provision                  |   | **$**    | **527,041**   |   | $      | 468,183   |   | $ | 604,985 |   |
|                                                         |   |     |          |   |   |      |   |   |   |   |

| Expiring |   |  Dollar                  Amount |   |
|----------|--------|--------------------------------------|--------|
|     |   |                                 |   |
| 2006     |   | $546,000                             |   |
| 2007     |   | 286,000                              |   |
| 2008     |   | 203,000                              |   |
| 2009     |   | 162,000                              |   |
| 2010     |   | 186,000                              |   |
| 2011     |   | 66,000                               |   |
| 2012     |   | 193,000                              |   |
| 2018     |   | 106,000                              |   |
| 2019     |   | 131,000                              |   |
| 2020     |   | 65,000                               |   |
| 2023     |   | 73,000                               |   |
| 2024     |   | 22,000                               |   |
|     |   |                                 |   |
|     |   | $2,039,000                           |   |

**4.        **
**Investments**

| **Portfolio                  Designated “Held to Maturity”****(Note                  1)** December                  31, 2005   |   |    Amortized                  Cost |           |   Gross                  Unrealized Gains |   |   Gross                  Unrealized Losses |   |    Estimated                  Market Value |        |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|----------------|-----------------------------------------------------|--------|------------------------------------------------------|--------|-----------------------------------------------------------|-------------|
| US                  Treasury securities and obligations of  US                  government corporations and agencies                       |   | **$**                                             | **14,693,046** |                                                | **$**  | **2,000**                                            |   | **$**                                                     | **331,792** |   | **$** | **14,363,254** |   |
| Corporate                  securities                                                                                                           |   |                                              | **2,481,106**  |                                                |   | **61,835**                                           |   |                                                      | **56,535**  |   |   | **2,486,406** |   |
| Mortgage-backed                  securities GNMA                                                                                                |   |                                              | **1,543,310**  |                                                |   | **811**                                              |   |                                                      | **59,077**  |   |   | **1,485,044** |   |
|                                                                                                                                            |   |                                              |           |                                                |   |                                                 |   |                                                      |        |   |   |   |   |
| Totals                                                                                                                                          |   | **$**                                             | **18,717,462** |                                                | **$**  | **64,646**                                           |   | **$**                                                     | **447,404** |   | **$** | **18,334,704** |   |
| **Portfolio                  Designated “Available for Sale”****(Note                  1)** December                  31, 2005 |   |                                              |           |                                                |   |                                                 |   |                                                      |        |   |   |   |   |
| US                  Treasury securities and obligations of US                  government corporations and agencies                             |   | **$**                                             | **402,712**    |                                                | **$**  | **74,294**                                           |   | **$**                                                     | **8,250**   |   | **$** | **468,756** |   |
| Corporate                  securities                                                                                                           |   |                                              | **187,103**    |                                                |   | **-**                                                |   |                                                      | **55,103**  |   |   | **132,000** |   |
|                                                                                                                                            |   |                                              |           |                                                |   |                                                 |   |                                                      |        |   |   |   |   |
| Totals                                                                                                                                          |   | **$**                                             | **589,815**    |                                                | **$**  | **74,294**                                           |   | **$**                                                     | **63,353**  |   | **$** | **600,756** |   |

----

**4.        **
**Investments        (continued)**

| **Portfolio                  Designated “Held to Maturity”****(Note                  1)** December                  31, 2004                                                         |   |    Amortized                  Cost |       |   Gross                  Unrealized Gains |   |   Gross                  Unrealized Losses |   |    Estimated                  Market Value |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|------------|-----------------------------------------------------|--------|------------------------------------------------------|--------|-----------------------------------------------------------|---------|
| US                  Treasury securities and obligations of                   US government corporations                          and  agencies |   | $                                                 | 12,386,696 |                                                | $      | 9,500                                                |   | $                                                         | 111,199 |   | $ | 12,284,997 |   |
| Corporate                  securities                                                                                                                                                                 |   |                                              | 2,676,720  |                                                |   | 88,353                                               |   |                                                      | 13,898  |   |   | 2,751,175 |   |
| Mortgage-backed                  securities GNMA                                                                                                                                                      |   |                                              | 1,942,557  |                                                |   | 3,190                                                |   |                                                      | 24,217  |   |   | 1,921,530 |   |
|                                                                                                                                                                                                  |   |                                              |       |                                                |   |                                                 |   |                                                      |    |   |   |   |   |
| Totals                                                                                                                                                                                                |   | $                                                 | 17,005,973 |                                                | $      | 101,043                                              |   | $                                                         | 149,314 |   | $ | 16,957,702 |   |
|  **Portfolio                  Designated “Available for Sale”****(Note                  1)** December                  31, 2004                                                 |   |                                              |       |                                                |   |                                                 |   |                                                      |    |   |   |   |   |
| US                  Treasury securities and obligations of  US                  government corporations and agencies                                                                             |   | $                                                 | 402,637    |                                                | $      | 73,601                                               |   | $                                                         | 1,750   |   | $ | 474,488 |   |
| Corporate                  securities                                                                                                                                                                 |   |                                              | 186,884    |                                                |   | 3,116                                                |   |                                                      | -       |   |   | 190,000 |   |
|                                                                                                                                                                                                  |   |                                              |       |                                                |   |                                                 |   |                                                      |    |   |   |   |   |
| Totals                                                                                                                                                                                                |   | $                                                 | 589,521    |                                                | $      | 76,717                                               |   | $                                                         | 1,750   |   | $ | 664,488 |   |

|   |   |  **Held                  to Maturity** |   |   |                  **Available                  for Sale** |   |   |   |   |
|--------|--------|---------------------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|--------|--------|
|   |   | December                  31, 2005          |   |   |  December                  31, 2005                      |   |   |   |   |

|                                                    |   | Amortized                  Cost |       | EstimatedMarket                  Value |   |  Amortized                  Cost |   | EstimatedMarket                  Value |    |
|---------------------------------------------------------|--------|---------------------------------|------------|----------------------------------------|--------|---------------------------------------|--------|----------------------------------------|---------|
| Due                  in one year or less                |   | $                               | 2,746,001  |                                   | $      | 2,704,579                             |   | $                                      | -       |   | $ | - |   |
| Due                  after one year through five years  |   |                            | 6,689,130  |                                   |   | 6,541,475                             |   |                                   | -       |   |   | - |   |
| Due                  after five years through ten years |   |                            | 4,550,000  |                                   |   | 4,470,750                             |   |                                   | -       |   |   | - |   |
| Due                  after ten years                    |   |                            | 3,189,021  |                                   |   | 3,132,856                             |   |                                   | 589,816 |   |   | 600,756 |   |
|                                                    |   |                            | 17,174,152 |                                   |   | 16,849,660                            |   |                                   | 589,816 |   |   | 600,756 |   |
|                                                    |   |                            |       |                                   |   |                                  |   |                                   |    |   |   |   |   |
| Mortgage-backed                  securities             |   |                            | 1,543,309  |                                   |   | 1,485,044                             |   |                                   | -       |   |   | - |   |
|                                                    |   |                            |       |                                   |   |                                  |   |                                   |    |   |   |   |   |
|                                                    |   | $                               | 18,717,461 |                                   | $      | 18,334,704                            |   | $                                      | 589,816 |   | $ | 600,756 |   |

----

**4.        **
**Investments        (continued)**

|                                                                            |   | 2005           |        | 2004                |   |
|---------------------------------------------------------------------------------|--------|----------------|-------------|---------------------|--------|
|                                                                            |   |  **Cost** |        | **Market****Value** |   |  Cost |   | MarketValue |   |
|                                                                            |   |           |        |                |   |   |   |   |   |
|  Banks,                  trusts and insurance                  companies   |   | **$**          | **81,183**  |                | **$**  | **81,660** |   | $ | 83,606 |   | $ | 86,983 |   |
|  Industrial,                  savings and                  loans and other |   |           | **274,873** |                |   | **276,132** |   |   | 505,279 |   |   | 541,838 |   |
|                                                                            |   |           |        |                |   |   |   |   |   |   |   |   |   |
|                                                                            |   | **$**          | **356,056** |                | **$**  | **357,792** |   | $ | 588,885 |   | $ | 628,821 |   |

|                                                                               |   | **2005** |          | 2004   |   | 2003    |   |
|------------------------------------------------------------------------------------|--------|----------|---------------|--------|--------|---------|--------|
|                                                                               |   |     |          |   |   |    |   |
| Interest                  on debt securities and cash                  investments |   | **$**    | **1,005,399** |   | $      | 984,799 |   | $ | 985,613 |   |
| Dividends                  on equity securities                                    |   |     | **11,484**    |   |   | 5,589   |   |   | 954 |   |
|                                                                               |   |     |          |   |   |    |   |   |   |   |
|                                                                               |   |     | **1,016,883** |   |   | 990,388 |   |   | 986,567 |   |
| Investment                  expenses                                               |   |     | **(13,270**   | **)**  |   | (14,903 | )      |   | (16,185 | ) |
|                                                                               |   |     |          |   |   |    |   |   |   |   |
| Net                  Investment Income                                             |   | **$**    | **1,003,613** |   | $      | 975,485 |   | $ | 970,382 |   |

|                               |   | **2005** |       | 2004   |   | 2003        |   |
|------------------------------------|--------|----------|------------|--------|--------|-------------|--------|
|                               |   |     |       |   |   |        |   |   |   |   |
| Debt                  securities   |   | **$**    | **3,273**  |   | **$**  | **123,075** |   | $ | 152,951 |   |
| Equity                  securities |   |     | **31,299** |   |   | **10,521**  |   |   | - |   |
| Fixed                  assets      |   |     | **3,244**  |   |   | **(9,519**  | **)**  |   | 1,677 |   |
|                               |   |     |       |   |   |        |   |   |   |   |
|                               |   | **$**    | **37,816** |   | **$**  | **124,077** |   | $ | 154,628 |   |

** **

----

**4.        Investments (continued)**

**5.        **
**Fair        Value of Financial Instruments**

|                                                                                                   |   | **2005**     |           |      |   | 2004           |   |
|--------------------------------------------------------------------------------------------------------|--------|--------------|----------------|-----------|--------|----------------|--------|
|                                                                                                   |   | **Carrying** |           | **Fair**  |   |           |   | Carrying |   | Fair |   |   |   |
| Assets                                                                                                 |   | **Amount**   |           | **Value** |   |           |   | Amount |   | Value |   |   |   |
|                                                                                                   |   |         |           |      |   |           |   |   |   |   |   |   |   |
| Cash                  and Cash Equivalents                                                             |   |         |           |      |   |           |   |   |   |   |   |   |   |
| (Note                  1)                                                                              |   | **$**        | **946,272**    |      | **$**  | **946,272**    |   |   | (a) |   | $ | 3,809,913 |   | $ | 3,809,913 |   |   | (a) |   |
| Funds                  receivable on matured fixed security                                            |   |         | **807,500**    |      |   | **807,500**    |   |   | (a) |   |   | - |   |   | - |   |   |   |   |
| Investments-fixed                  maturity, available for sale (Note                  4 & Note 1) |   |         | **600,756**    |      |   | **600,756**    |   |   | (b) |   |   | 664,488 |   |   | 664,488 |   |   | (b) |   |
| Investments-fixed                  maturity, held to maturity (Note                  4 & Note 1)   |   |         | **18,717,461** |      |   | **18,334,704** |   |   | (b) |   |   | 17,005,973 |   |   | 16,957,702 |   |   | (b) |  |
| Investments                  -equity securities                                                        |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                  4 & Note 1)                                                                 |   |         | **357,792**    |      |   | **357,792**    |   |   | (b) |   |   | 628,821 |   |   | 628,821 |   |   | (b) |  |
| Other                  long term investments (Note 4)                                                  |   |         | **1,543,441**  |      |   | **1,543,441**  |   |   | (a) |   |   | 1,557,407 |   |   | 1,557,407 |   |   | (a) |  |
| Preferred                  stock (Note 4 & Note 1)                                                 |   |         | **-**          |      |   | **-**          |   |   |   |   |   | 200,000 |   |   | 200,000 |   |   | (a) |  |
| Other                  financial instruments-Assets                                                    |   |         | **356,309**    |      |   | **356,309**    |   |   | (a) |   |   | 394,363 |   |   | 394,363 |   |   | (a) |  |
|                                                                                                   |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  financial instruments-Assets                                                    |   | **$**        | **23,329,531** |      | **$**  | **22,946,774** |   |   |   |   | $ | 24,260,965 |   | $ | 24,212,694 |   |   |   |   |
|                                                                                                   |   |         |           |      |   |           |   |   |   |   |   |   |
| Liabilities                                                                                            |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premium                  deposit funds                                                                 |   | **$**        | **31,897**     |      | **$**  | **31,897**     |   |   | (a) |   | $ | 36,024 |   | $ | 36,024 |   |   | (a) |  |
| Bonds                  payable                                                                         |   |         | **1,747,178**  |      |   | **1,747,178**  |   |   | (a) |   |   | 2,007,339 |   |   | 2,007,339 |   |   | (a) |  |
| Supplementary                  contracts without life contingencies                                    |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                  1)                                                                              |   |         | **36,981**     |      |   | **36,981**     |   |   | (a) |   |   | 55,799 |   |   | 55,799 |   |   | (a) |  |
|                                                                                                        |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Annuity                    deposits(Note 1)                                                            |   |         | **2,835,552**  |      |   | **2,835,552**  |   |   | (a) |   |   | 2,783,838 |   |   | 2,783,838 |   |   | (a) |   |
|                                                                                                   |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  financial instruments-Liabilities                                               |   | **$**        | **4,651,608**  |      | **$**  | **4,651,608**  |   |   |   |   | $ | 4,883,000 |   | $ | 4,883,000 |   |   |   |   |
|                                                                                                   |   |         |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**6.        **
**Commitments        and Contingencies and Supplemental Cash Flow        Information**

| 2006   |   | $      | 208,000   |   |
|--------|--------|--------|-----------|--------|
| 2007   |   |   | 256,000   |   |
| 2008   |   |   | 265,000   |   |
| 2009   |   |   | 230,000   |   |
| 2010   |   |   | 239,000   |   |
| 2011   |   |   | 224,000   |   |
| 2012   |   |   | 247,000   |   |
|   |   |   |      |   |
| Total  |   | $      | 1,669,000 |   |
|   |   |   |      |   |

----

**6.        **
**Commitments        and Contingencies and Supplemental Cash Flow Information        (continued)**

**7.        **
**Liability        for Unpaid Claims **

|                                          |   |     |           |   |   |       |   |
|-----------------------------------------------|--------|----------|----------------|--------|--------|------------|--------|
|                                          |   | **2005** |           | 2004   |   | 2003       |   |
| Balance                  at January 1         |   | **$**    | **2,235,929**  |   | $      | 2,588,992  |   | $ | 2,357,549 |   |
| less                  reinsurance recoverable |   |     | **-**          |   |   | 10,000     |   |   | - |   |
| Net                  Balance at January 1     |   |     | **2,235,929**  |   |   | 2,578,992  |   |   | 2,357,549 |   |
|                                          |   |     |           |   |   |       |   |   |   |   |
| Incurred                  related to:         |   |     |           |   |   |       |   |   |   |   |
| Current                  year                 |   |     | **27,633,450** |   |   | 26,649,186 |   |   | 25,356,105 |   |
| Prior                  years                  |   |     | **(28,226**    | **)**  |   | (252,342   | )      |   | (300,762 | ) |
| Total                  Incurred               |   |     | **27,605,224** |   |   | 26,396,844 |   |   | 25,055,343 |   |
|                                          |   |     |           |   |   |       |   |   |   |   |
| Paid                  related to:             |   |     |           |   |   |       |   |   |   |   |
| Current                  year                 |   |     | **25,074,885** |   |   | 24,412,258 |   |   | 22,777,113 |   |
| Prior                  years                  |   |     | **2,207,703**  |   |   | 2,327,649  |   |   | 2,056,787 |   |
| Total                  Paid                   |   |     | **27,282,588** |   |   | 26,739,907 |   |   | 24,833,900 |   |
|                                          |   |     |           |   |   |       |   |   |   |   |
| Net                  Balance at December 31   |   |     | **2,558,565**  |   |   | 2,235,929  |   |   | 2,578,992 |   |
| Plus                  reinsurance recoverable |   |     | **-**          |   |   | -          |   |   | 10,000 |   |
| Balance                  at December 31       |   | **$**    | **2,558,565**  |   | $      | 2,235,929  |   | $ | 2,588,992 |   |

**8.        **
**Reinsurance        **

----

**8.        **
**Reinsurance        (continued) **

|     **December                  31, 2005** |   |    Gross                  Amount |           |   Ceded                  To Other Companies |   |   Assumed                  From Other Companies |   |    Net                  Amounts |   |  Percentage                  Of Amount Assumed To Net |   |
|----------------------------------------------------------------|--------|-------------------------------------------------|----------------|-------------------------------------------------------|--------|-----------------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------------------|--------|
| Life                  insurance in force (in thousands)        |   | **$**                                           | **39,992**     |                                                  | **$**  | **14,531**                                                |   | **$**                                          | **-**  |                                                       | **$**  | **25,461** |   |   | **0.0** | **%** |
|                                                           |   |                                            |           |                                                  |   |                                                      |   |                                           |   |                                                       |   |   |   |   |   |   |
| Premiums-life                  insurance                       |   | **$**                                           | **294,370**    |                                                  | **$**  | **62,430**                                                |   | **$**                                          | **-**  |                                                       | **$**  | **231,940** |   |   | **0.0** | **%** |
| Premiums-accident                  and health                  |   |                                            | **44,090,958** |                                                  |   | **55,051**                                                |   |                                           | **-**  |                                                       |   | **44,035,907** |   |   | **0.0** | **%** |
| Total                  insurance premiums                      |   | **$**                                           | **44,385,328** |                                                  | **$**  | **117,481**                                               |   | **$**                                          | **-**  |                                                       | **$**  | **44,267,847** |   |   | **0.0** | **%** |

----

|                                                    |   |    Gross                  Amount |       |   Ceded                  To Other Companies |   |   Assumed                  From Other Companies |   |    Net                  Amounts |   |  Percentage                  Of Amount Assumed To Net |   |
|---------------------------------------------------------|--------|-------------------------------------------------|------------|-------------------------------------------------------|--------|-----------------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------------------|--------|
| December                  31, 2004                      |   |                                            |       |                                                  |   |                                                      |   |                                           |   |                                                       |   |   |   |   |   |   |
| Life                  insurance in force (in thousands) |   | $                                               | 37,207     |                                                  | $      | 11,752                                                    |   | $                                              | -      |                                                       | $      | 25,455 |   |   | 0.0% |   |
|                                                    |   |                                            |       |                                                  |   |                                                      |   |                                           |   |                                                       |   |   |   |   |   |   |
| Premiums-life                  insurance                |   | $                                               | 241,724    |                                                  | $      | 61,668                                                    |   | $                                              | -      |                                                       | $      | 180,056 |   |   | 0.0% |   |
| Premiums-accident                  and health           |   |                                            | 42,199,595 |                                                  |   | 35,937                                                    |   |                                           | -      |                                                       |   | 42,163,658 |   |   | 0.0% |   |
| Total                  insurance premiums               |   | $                                               | 42,441,319 |                                                  | $      | 97,605                                                    |   | $                                              | -      |                                                       | $      | 42,343,714 |   |   | 0.0% |   |
|                                                    |   |                                            |       |                                                  |   |                                                      |   |                                           |   |                                                       |   |   |   |   |   |   |
| December                  31, 2003                      |   |                                            |       |                                                  |   |                                                      |   |                                           |   |                                                       |   |   |   |   |   |   |
| Life                  insurance in force (in thousands) |   | $                                               | 37,832     |                                                  | $      | 12,782                                                    |   | $                                              | -      |                                                       | $      | 25,050 |   |   | 0.0% |   |
|                                                    |   |                                            |       |                                                  |   |                                                      |   |                                           |   |                                                       |   |   |   |   |   |   |
| Premiums-life                  insurance                |   | $                                               | 327,062    |                                                  | $      | 34,889                                                    |   | $                                              | -      |                                                       | $      | 292,173 |   |   | 0.0% |   |
| Premiums-accident                  and health           |   |                                            | 40,108,502 |                                                  |   | 31,535                                                    |   |                                           | -      |                                                       |   | 40,076,967 |   |   | 0.0% |   |
| Total                  insurance premiums               |   | $                                               | 40,435,564 |                                                  | $      | 66,424                                                    |   | $                                              | -      |                                                       | $      | 40,369,140 |   |   | 0.0% |   |

**9.        **
**Benefit        Plans for Certain Brokers/Agents and Employees**

*2002        Non-Director, Non-Executive Stock Option Plan, *

----

**10.        **
**Concentrations**

**11.        **
**Change        in Accounting Estimate**

**12.        Subsequent Events**

**13.        Unaudited Quarterly Results of Operations**

|                                                        |   | Quarter                  Ended |            |
|-------------------------------------------------------------|--------|--------------------------------|-----------------|
|                                                        |   | March                  31      |            | June                  30 |   | September                  30 |   | December                  31 |   |
| **2005**                                                    |   |                           |            |   |   |   |   |   |   |   |   |   |   |
| **Premium                  Income**                         |   | **$**                          | **10,898,491**  |   | **$** | **11,239,144** |   | **$** | **11,139,337** |   | **$** | **11,026,855** |   |
| **Net                  Investment Income**                  |   |                           | **249,206**     |   |   | **245,295** |   |   | **241,661** |   |   | **267,451** |   |
| **Marketing                  Fees**                         |   |                           | **29,016**      |   |   | **33,459** |   |   | **23,205** |   |   | **29,553** |   |
| **Vision                  Insurance Income**                |   |                           | **231,161**     |   |   | **244,042** |   |   | **263,591** |   |   | **312,926** |   |
| **Realized                  Gains (Losses)**                |   |                           | **51,769**      |   |   | **7,368** |   |   | **53,616** |   |   | **27,130** |   |
| **Expenses**                                                |   |                           | **(10,884,681** | **)** |   | **(11,330,984** | **)** |   | **(11,230,729** | **)** |   | **(10,864,792** | **)** |
|                                                        |   |                           |            |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income**                             |   | **$**                          | **574,962**     |   | **$** | **438,324** |   | **$** | **490,682** |   | **$** | **799,123** |   |
|                                                        |   |                           |            |   |   |   |   |   |   |   |   |   |   |
| **Earnings                  Per Share (Basic and Diluted)** |   | **$**                          | **0.03**        |   | **$** | **0.02** |   | **$** | **0.03** |   | **$** | **0.05** |   |
|                                                        |   |                           |            |   |   |   |   |   |   |   |   |   |   |
| **Comprehensive                  Income**                   |   | **$**                          | **525,424**     |   | **$** | **444,364** |   | **$** | **462,048** |   | **$** | **791,713** |   |

----

|                                                    |   | March                  31 |        | June                  30 |   | September                  30 |   | December                  31 |        |
|---------------------------------------------------------|--------|---------------------------|-------------|--------------------------|--------|-------------------------------|--------|------------------------------|-------------|
| 2004                                                    |   |                      |        |                     |   |                          |   |                         |        |   |   |   |   |
| Premium                  Income                         |   | $                         | 10,624,970  |                     | $      | 10,549,967                    |   | $                            | 10,688,038  |   | $ | 10,588,345 |   |
| Net                  Investment Income                  |   |                      | 234,847     |                     |   | 255,333                       |   |                         | 242,661     |   |   | 242,644 |   |
| Marketing                  Fees                         |   |                      | 41,668      |                     |   | 41,409                        |   |                         | 40,972      |   |   | 41,226 |   |
| Vision                  Insurance Income                |   |                      | 163,765     |                     |   | 170,903                       |   |                         | 175,243     |   |   | 185,135 |   |
| Realized                  Gains (Losses)                |   |                      | (495        | )                        |   | 320,398                       |   |                         | 114,716     |   |   | 184,920 |   |
| Expenses                                                |   |                      | (10,729,248 | )                        |   | (10,665,000                   | )      |                         | (10,602,428 | ) |   | (                  10,257,486 | ) |
|                                                    |   |                      |        |                     |   |                          |   |                         |        |   |   |   |   |
| Net                  Income                             |   | $                         | 335,507     |                     | $      | 673,010                       |   | $                            | 659,202     |   | $ | 984,784 |   |
|                                                    |   |                      |        |                     |   |                          |   |                         |        |   |   |   |   |
| Earnings                  Per Share (Basic and Diluted) |   | $                         | 0.02        |                     | $      | 0.03                          |   | $                            | 0.03        |   | $ | 0.04 |   |
|                                                    |   |                      |        |                     |   |                          |   |                         |        |   |   |   |   |
| Comprehensive                  Income                   |   | $                         | 345,936     |                     | $      | 566,349                       |   | $                            | 600,046     |   | $ | 1,052,569 |   |

----

**Item        15(d) - Schedule II, Condensed Financial Information of        Registrant**

**BNL        Financial Corporation (Parent Company)**

**Balance        Sheets**

|                                                                                                                                               |
|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   | **2005** |   | 2004 |   |
| **Assets**                                                                                                                                    |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                    |   | **$** | **69,788** |   | $ | 30,275 |   |
| Investments,                  at fair value                                                                                                   |   |   | **191,750** |   |   | 198,250 |   |
| Investment                  in equity securities, at fair value                                                                               |   |   | **870** |   |   | 575 |   |
| Total                  Investments, Including Cash and Cash Equivalents                                                                       |   |   | **262,408** |   |   | 229,100 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| Accrued                  investment income                                                                                                    |   |   | **10,630** |   |   | 9,771 |   |
| Loan                  to EPSI                                                                                                                 |   |   | **1,357,407** |   |   | 1,357,407 |   |
| Investment                  in Unconsolidated Subsidiaries and Affiliates,                  at equity (eliminated in consolidated statements) |   |   | **13,683,238** |   |   | 14,478,408 |   |
| Income                  tax asset                                                                                                             |   |   | **42,000** |   |   | 76,000 |   |
| Other                  assets                                                                                                                 |   |   | **187,382** |   |   | 198,570 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |
| Total                  Assets                                                                                                                 |   | **$** | **15,543,065** |   | $ | 16,349,256 |   |

|                                                                                                                                                                |   |   |           |   |   |       |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|------------|--------|
| **Liabilities**                                                                                                                                                     |   |   |           |   |   |       |   |
| Bonds                  payable                                                                                                                                      |   | **$**  | **1,747,178**  |   | $      | 2,007,339  |   |
| Loan                  from Brokers National Life Assurance Co.                                                                                                      |   |   | **569,788**    |   |   | 800,802    |   |
| Other                  liabilities                                                                                                                                  |   |   | **102,737**    |   |   | 281,579    |   |
| Total                  Liabilities                                                                                                                                  |   |   | **2,419,703**  |   |   | 3,089,720  |   |
|                                                                                                                                                                |   |   |           |   |   |       |   |
| **Shareholders'                  Equity**                                                                                                                           |   |   |           |   |   |       |   |
|                                                                                                                                                                |   |   |           |   |   |       |   |
| Common                  stock, $.02 stated value, 45,000,000 shares authorized; 17,213,170,                  20,980,760 shares issued and outstanding, respectively |   |   | **344,264**    |   |   | 419,616    |   |
| Additional                  paid-in capital                                                                                                                         |   |   | **7,608,519**  |   |   | 10,829,800 |   |
| Retained                  earnings                                                                                                                                  |   |   | **5,412,928**  |   |   | 3,109,839  |   |
| Treasury                  stock, at cost, 383,879; 1,933,646 shares, respectively                                                                                   |   |   | **(252,971**   | **)**  |   | (1,189,884 | )      |
| Unrealized                  appreciation of securities                                                                                                              |   |   | **10,622**     |   |   | 90,165     |   |
| Total                  Shareholders' Equity                                                                                                                         |   |   | **13,123,362** |   |   | 13,259,536 |   |
|                                                                                                                                                                |   |   |           |   |   |       |   |
| Total                  Liabilities and Shareholders’Equity                                                                                                    |   | **$**  | **15,543,065** |   | $      | 16,349,256 |   |

----

**Item        15(d) - Schedule II, Condensed Financial Information of        Registrant**

**BNL        Financial Corporation (Parent Company)**

**Statement        of Operations**

|                                                                                               |   |   |   | **2005**  |   |          |   | 2004  |   |   |   | 2003  |   |
|----------------------------------------------------------------------------------------------------|--------|--------|--------|----------------|--------|---------------|--------|------------|--------|--------|--------|------------|--------|
| **Income**                                                                                         |   |   |   |           |   |          |   |       |   |   |   |       |   |
| Net                  investment income                                                             |   |   |   |           | **$**  | **202,003**   |   |       |   |   | $      | 199,917    |   |   |   |   | $ | 5,146 |   |
| Marketing                  fees                                                                    |   |   |   |           |   | **115,232**   |   |       |   |   |   | 165,275    |   |   |   |   |   | - |   |
| Realized                  gain on debt extinguishment                                              |   |   |   |           |   | **102,067**   |   |       |   |   |   | 495,462    |   |   |   |   |   | 424,726 |   |
| Realized                  gains                                                                    |   |   |   |           |   | **-**         |   |       |   |   |   | 1,800      |   |   |   |   |   | 477 |   |
| Total                  Income                                                                      |   |   |   |           |   | **419,302**   |   |       |   |   |   | 862,454    |   |   |   |   |   | 430,349 |   |
|                                                                                               |   |   |   |           |   |          |   |       |   |   |   |       |   |   |   |   |   |   |   |
| **Expenses**                                                                                       |   |   |   |           |   |          |   |       |   |   |   |       |   |   |   |   |   |   |   |
| General                  and administrative                                                        |   |   |   |           |   | **141,873**   |   |       |   |   |   | 224,820    |   |   |   |   |   | 115,019 |   |
| Interest                  expense                                                                  |   |   |   |           |   | **168,496**   |   |       |   |   |   | 184,408    |   |   |   |   |   | 189,985 |   |
| Total                  Expenses                                                                    |   |   |   |           |   | **310,369**   |   |       |   |   |   | 409,228    |   |   |   |   |   | 305,004 |   |
|                                                                                               |   |   |   |           |   |          |   |       |   |   |   |       |   |   |   |   |   |   |   |
| Income                  from operations before income taxes                                        |   |   |   |           |   | **108,933**   |   |       |   |   |   | 453,226    |   |   |   |   |   | 125,345 |   |
| Provision                  for income taxes                                                        |   |   |   |           |   | **34,000**    |   |       |   |   |   | 41,421     |   |   |   |   |   | 53,000 |   |
|                                                                                               |   |   |   |           |   |          |   |       |   |   |   |       |   |   |   |   |   |   |   |
| Net                  income before equity in undistributed income                  of subsidiaries |   |   |   |           |   | **74,933**    |   |       |   |   |   | 411,805    |   |   |   |   |   | 72,345 |   |
| Equity                  in undistributed income of subsidiaries                                    |   |   |   |           |   | **2,228,156** |   |       |   |   |   | 2,240,698  |   |   |   |   |   | 2,664,010 |   |
|                                                                                               |   |   |   |           |   |          |   |       |   |   |   |       |   |   |   |   |   |   |   |
| Net                  Income                                                                        |   |   |   |           | **$**  | **2,303,089** |   |       |   |   | $      | 2,652,503  |   |   |   |   | $ | 2,736,355 |   |
|                                                                                               |   |   |   |           |   |          |   |       |   |   |   |       |   |   |   |   |   |   |   |
| Net                  Income Per Common Share (Basic and Diluted)                                   |   |   |   |           | **$**  | **.13**       |   |       |   |   | $      | .14        |   |   |   |   | $ | .14 |   |

----

**Item        15(d) - Schedule II, Condensed Financial Information of        Registrant**

**BNL        Financial Corporation (Parent Company)**

**Statements        of Cash Flows**

|                                                                                           |   |     |           |   |   |       |   |
|------------------------------------------------------------------------------------------------|--------|----------|----------------|--------|--------|------------|--------|
|                                                                                           |   | **2005** |           | 2004   |   | 2003       |   |
| **Cash                  Flows from Operating Activities**                                      |   |     |           |   |   |       |   |   |  |   |
| Net                  income                                                                    |   | **$**    | **2,303,089**  |   | $      | 2,652,503  |   | $ | 2,736,355 |   |
| Adjustments                  to compute cash provided by operating                  activities |   |     | **(2,468,796** | **)**  |   | (2,640,980 | )      |   | (2,932,546 | ) |
| Net                  Cash Provided (Used) by Operating Activities                              |   |     | **(165,707**   | **)**  |   | 11,523     |   |   | (196,191 | ) |
|                                                                                           |   |     |           |   |   |       |   |   |   |   |
| **Cash                  Flows from Investing Activities**                                      |   |     |           |   |   |       |   |   |   |   |
| Proceeds                  from maturity or redemption of investments                           |   |     | **-**          |   |   | -          |   |   | 100,000 |   |
| Purchase                  of fixed maturity security                                           |   |     | **-**          |   |   | -          |   |   | (100,000 | ) |
| Dividend                  from subsidiary                                                      |   |     | **2,950,000**  |   |   | 1,150,000  |   |   | 760,000 |   |
| Proceeds                  from sale of furniture and equipment                                 |   |     | **-**          |   |   | 1,800      |   |   | - |   |
| Net                  Cash Provided by Investing Activities                                     |   |     | **2,950,000**  |   |   | 1,151,800  |   |   | 760,000 |   |
|                                                                                           |   |     |           |   |   |       |   |   |   |   |
| **Cash                  Flows from Financing Activities**                                      |   |     |           |   |   |       |   |   |   |   |
| Purchase                  of treasury stock                                                    |   |     | **(2,432,056** | **)**  |   | (619,262   | )      |   | (421,065 | ) |
| Sale                  of treasury stock                                                        |   |     | **64,550**     |   |   | 64,550     |   |   | 62,550 |   |
| Stock                  options exercised                                                       |   |     | **11,430**     |   |   | 24,411     |   |   | 19,425 |   |
| Payments                  on long term debt                                                    |   |     | **(231,014**   | **)**  |   | -          |   |   | - |   |
| Debt                  extinguishments                                                          |   |     | **(157,690**   | **)**  |   | (666,643   | )      |   | (187,063 | ) |
| Net                  Cash Provided (Used) by Financing Activities                              |   |     | **(2,744,780** | **)**  |   | (1,196,944 | )      |   | (526,153 | ) |
| Net                  Increase (Decrease) in Cash and Cash Equivalents                          |   |     | **39,513**     |   |   | (33,621    | )      |   | 37,656 |   |
|                                                                                           |   |     |           |   |   |       |   |   |   |   |
| Cash                  and Cash Equivalents, Beginning of Period                                |   |     | **30,275**     |   |   | 63,896     |   |   | 26,240 |   |
|                                                                                           |   |     |           |   |   |       |   |   |   |   |
| Cash                  and Cash Equivalents, End of Period                                      |   | **$**    | **69,788**     |   | $      | 30,275     |   | $ | 63,896 |   |

----

**Exhibit        31.1**

**Certification        of Chief Executive Officer**

**Section        302**

**Exhibit        31.2**

**Certification        of Chief Financial Officer**

**Section        302**

**Exhibit        32.1**

**Exhibit        32.2**