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|   | (Mark One)  |                                                                                     |
|--------|------------------|------------------------------------------------------------------------------------------|
|   | x                | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934    |
|   |             | For the Fiscal Year Ended December 31, 2010                                              |
|   |             | or                                                                                       |
|   | r                | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|  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 |

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Table 

| Part I     |                                                                                                              | Page      |
|------------|-------------------------------------------------------------------------------------------------------------------|-----------|
|       |                                                                                                              |      |
| ITEM 1.    | Business                                                                                                          |  3   |
| ITEM 1A.   | Risk Factors                                                                                                      | 9         |
| ITEM 1B.   | Unresolved Staff Comments                                                                                         |   9  |
| ITEM 2.    | Properties                                                                                                        |   9  |
| ITEM 3.    | Legal Proceedings                                                                                                 |   9  |
|       |                                                                                                              |      |
| Part II    |                                                                                                              |      |
|       |                                                                                                              |      |
| ITEM 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities | 11        |
| ITEM 6.    | Selected Financial Data                                                                                           | 12        |
| ITEM 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                       | 13        |
| ITEM 7A.   | Quantitative and Qualitative Disclosures About Market Risk.                                                       | 22        |
| ITEM 8.    | Financial Statements and Supplementary Data                                                                       | 23        |
| ITEM 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              | 23        |
| ITEM 9A.   | Controls and Procedures                                                                                           | 23        |
| ITEM 9B.   | Other Information                                                                                                 | 24        |
|       |                                                                                                              |      |
| Part III   |                                                                                                              |      |
|       |                                                                                                              |      |
| ITEM 10.   | Directors, Executive Officers and Corporate Governance of the Registrant                                          | 25        |
| ITEM 11.   | Executive Compensation                                                                                            |   27 |
| ITEM 12.   | Security Ownership of Certain Beneficial Owners and Management                                                    | 28        |
| ITEM 13.   | Certain Relationships and Related Transactions and Directors Independence                                         | 29        |
| ITEM 14.   | Principal Accountant Fees and Services                                                                            | 29        |
|       |                                                                                                              |      |
| Part IV    |                                                                                                              |      |
|       |                                                                                                              |      |
| ITEM 15.   | Exhibits, Financial Statement Schedules                                                                           | 30        |
|       |                                                                                                              |      |
| SIGNATURES |                                                                                                              | 32        |

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ITEM 

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

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|                                                              |   | 2010   |       |   | 2009   |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| I. Annualized Premiums and Annuity Deposits In Force:             |   |   |       |   |   |   |
| Ordinary Life Insurance                                           |   | $      | 229,000    |   |   | $      | 234,000 |   |
| Individual Annuities(1)                                           |   |   | 53,000     |   |   |   | 60,000 |   |
| Group Dental Insurance                                            |   |   | 36,859,000 |   |   |   | 38,372,000 |   |
| Miscellaneous A&H Insurance                                   |   |   | 1,577,000  |   |   |   | 1,667,000 |   |
|                                                              |   |   |       |   |   |   |   |   |
|           Total |   | $      | 38,718,000 |   |   | $      | 40,333,000 |   |

| II. Collected Premiums and Annuity Deposits:                       |   |   |        |   |   |
|--------------------------------------------------------------------|--------|--------|-------------|--------|--------|
| Ordinary Life Insurance                                            |   | $      | 226,000     |   |   | $ | 242,000 |   |
| Individual Annuities(1)                                            |   |   | 49,000      |   |   |   | 64,000 |   |
| Group Dental Insurance                                             |   |   | 36,021,000  |   |   |   | 40,202,000 |   |
| Miscellaneous A&H Insurance                                    |   |   | 1,577,000   |   |   |   | 1,714,000 |   |
|                                                               |   |   |        |   |   |   |   |   |
|           Total  |   | $      | 37,873,000  |   |   | $ | 42,222,000 |   |
|  III. Face Value of Insurance:                                |   |   |        |   |   |   |   |   |
| Ordinary Life Insurance                                            |   | $      | 29,162,000  |   |   | $ | 30,657,000 |   |
| Accidental Death Insurance                                         |   |   | 115,870,000 |   |   |   | 115,275,000 |   |
|                                                               |   |   |        |   |   |   |   |   |
|           Total  |   | $      | 145,032,000 |   |   | $ | 145,932,000 |   |
| (1) Classified as a deposit liability on the financial statements. |   |

|   State |   |   Life Premiums |    |   |   Annuity |   |   |  Accident andHealth |   |   |   Total |   |
|-------------------|--------|---------------------------|---------|--------|---------------------|--------|--------|--------------------------|--------|--------|-------------------|--------|
| Louisiana         |   | $                         | 21,000  |   |                | $      | -      |                     |   | $      | 3,358,000         |   |   | $ | 3,379,000 |   |
| Georgia           |   |                      | 20,000  |   |                |   | -      |                     |   |   | 3,171,000         |   |   |   | 3,191,000 |   |
| Arkansas          |   |                      | 24,000  |   |                |   | -      |                     |   |   | 2,814,000         |   |   |   | 2,838,000 |   |
| Indiana           |   |                      | 7,000   |   |                |   | -      |                     |   |   | 2,505,000         |   |   |   | 2,512,000 |   |
| Missouri          |   |                      | 11,000  |   |                |   | -      |                     |   |   | 2,368,000         |   |   |   | 2,379,000 |   |
| Ohio              |   |                      | 1,000   |   |                |   | -      |                     |   |   | 2,304,000         |   |   |   | 2,305,000 |   |
| Oregon            |   |                      | 1,000   |   |                |   | -      |                     |   |   | 1,926,000         |   |   |   | 1,927,000 |   |
| Michigan          |   |                      | 6,000   |   |                |   | -      |                     |   |   | 1,825,000         |   |   |   | 1,831,000 |   |
| Minnesota         |   |                      | 6,000   |   |                |   | -      |                     |   |   | 1,677,000         |   |   |   | 1,683,000 |   |
| All Other States  |   |                      | 129,000 |   |                |   | 49,000 |                     |   |   | 17,737,000        |   |   |   | 17,915,000 |   |
| Total             |   | $                         | 226,000 |   |                | $      | 49,000 |                     |   | $      | 39,685,000        |   |   | $ | 39,960,000 |   |

|   |   | Group Dental |       |   | Individual   |   |
|--------|--------|--------------|------------|--------|--------------|--------|
|   |   | Gross        |       |   | Dental Gross |   |
|   |   | Premiums     |       |   | Premiums     |   |
|   |   | Collected    |       |   | Collected    |   |
| 2010   |   | $            | 38,098,000 |   |         | $      | 1,336,000 |   |
| 2009   |   |         | 40,202,000 |   |         |   | 1,451,000 |   |
| 2008   |   |         | 41,382,000 |   |         |   | 1,602,000 |   |
| 2007   |   |         | 41,926,000 |   |         |   | 1,785,000 |   |
| 2006   |   |         | 42,132,000 |   |         |   | 1,988,000 |   |

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|                   |   |        |       |   | Incurred |   |
|------------------------|--------|-------------|------------|--------|----------|--------|
|                   |   | Gross       |       |   | Claims   |   |
| Group Dental Insurance |   | Claims Paid |       |   | Ratio    |   |
| 2010                   |   | $           | 23,985,000 |   |     |   | 62.8 | % |
| 2009                   |   |        | 25,124,000 |   |     |   | 62.3 | % |
| 2008                   |   |        | 26,290,000 |   |     |   | 61.9 | % |
| 2007                   |   |        | 26,340,000 |   |     |   | 61.8 | % |
| 2006                   |   |        | 27,127,000 |   |     |   | 64.1 | % |

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|                       |   | Gross     |        |   |        |   |        |        |   |   | Net       |   |
|----------------------------|--------|-----------|-------------|--------|-------------|--------|-------------|-------------|--------|--------|-----------|--------|
|                       |   | Insurance |        |   | Reinsurance |   |        | Reinsurance |   |   | Insurance |   |
|                       |   | In Force  |        |   | Ceded       |   |        | Assumed     |   |   | In Force  |   |
| Life Insurance             |   |      |        |   |        |   |        |        |   |   |      |   |
| 2010                       |   | $         | 29,162,000  |   |        | $      | 11,545,000  |        |   | $      | 0         |   |   | $ | 17,617,000 |   |
| 2009                       |   |      | 30,657,000  |   |        |   | 10,933,000  |        |   |   | 0         |   |   |   | 19,724,000 |   |
| 2008                       |   |      | 33,696,000  |   |        |   | 11,111,000  |        |   |   | 0         |   |   |   | 22,585,000 |   |
| 2007                       |   |      | 43,879,000  |   |        |   | 14,074,000  |        |   |   | 0         |   |   |   | 29,805,000 |   |
| 2006                       |   |      | 43,645,000  |   |        |   | 15,333,000  |        |   |   | 0         |   |   |   | 28,312,000 |   |
|                       |   |      |        |   |        |   |        |        |   |   |      |   |   |   |   |   |
|                       |   |      |        |   |        |   |        |        |   |   |      |   |   |   |   |   |
| Accidental Death Insurance |   |      |        |   |        |   |        |        |   |   |      |   |   |   |   |   |
| 2010                       |   | $         | 115,870,000 |   |        | $      | 104,283,000 |        |   | $      | 0         |   |   | $ | 11,587,000 |   |
| 2009                       |   |      | 115,275,000 |   |        |   | 103,748,000 |        |   |   | 0         |   |   |   | 11,527,000 |   |
| 2008                       |   |      | 120,625,000 |   |        |   | 108,562,000 |        |   |   | 0         |   |   |   | 12,063,000 |   |
| 2007                       |   |      | 120,655,000 |   |        |   | 108,590,000 |        |   |   | 0         |   |   |   | 12,065,000 |   |
| 2006                       |   |      | 112,085,000 |   |        |   | 100,877,000 |        |   |   | 0         |   |   |   | 11,208,000 |   |
|                       |   |      |        |   |        |   |        |        |   |   |      |   |   |   |   |   |

|   Year |   | BNLAC Statutory Net Investment Income |      |   |   Net Return on Mean Invested Assets |   |
|------------------|--------|--------------------------------------------|-----------|--------|------------------------------------------------|--------|
| 2010             |   | $                                          | 742,791   |   |                                           |   | 3.4 | % |
| 2009             |   |                                       | 923,830   |   |                                           |   | 3.8 | % |
| 2008             |   |                                       | 960,753   |   |                                           |   | 3.8 | % |
| 2007             |   |                                       | 1,123,716 |   |                                           |   | 4.8 | % |
| 2006             |   |                                       | 1,005,774 |   |                                           |   | 4.6 | % |

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| a)  | Premiums are reported as earned over the premium paying period.  Benefits and expenses are associated with earned premiums so as to result in the matching of expenses with the related premiums over the life of the contracts.  This is accomplished through the provision for liabilities for future policy benefits and the deferral and amortization of acquisition costs; |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)  | Certain assets designated as "non-admitted assets" for statutory purposes are reinstated to the accounts; |
|----------|-----------------------------------------------------------------------------------------------------------|

| c)  | The asset valuation reserve is reclassified as retained earnings rather than as a liability.  The interest maintenance reserve is reclassified from a liability to investment income; |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d)  | Premium payments received on annuities are not reported as revenue but are recorded as increases to a deposit liability account. The profits are then deferred over the life of the policy instead of being realized when the payments are received; |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e)  | Realized gains and losses from the sale of investments are reclassified to a separate component of summary of operations.  Taxes thereon are included in the tax provision; and |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f)  | Investments in fixed maturity securities that are available for sale are carried at fair value with the unrealized appreciation (depreciation) recorded to shareholders’ equity. |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|     Period                                                      |   | (a)Total number of shares purchasedNote 1 |   |   | (b)Average price paid per share |    | (c)Total number of shares purchased as part of publicly announced plans or programs |   | (d)Maximum number of shares that may yet be purchased under the plans or programs |
|-------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|---------------------------------|---------|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|
| Month #1, January 1 thru 31, 2010                                                   |   |                                      | 13,706 |   |                            | $       | 1.25                                                                                |   | None                                                                              |   | None |
| Month #2, February 1 thru 28, 2010                                                  |   |                                      | -      |   |                            | $  | -                                                                                   |   | None                                                                              |   | None |
| Month #3, March 1 thru 31, 2010                                                     |   |                                      | 12,582 |   |                            | $       | 1.37                                                                                |   | None                                                                              |   | None |
| Month #4, April 1 thru 30, 2010                                                     |   |                                      | 1,860  |   |                            | $       | 1.37                                                                                |   | None                                                                              |   | None |
| Month #5, May 1 thru 31, 2010                                                       |   |                                      | -      |   |                            | $  | -                                                                                   |   | None                                                                              |   | None |
| Month #6, June 1 thru 30, 2010                                                      |   |                                      | 22,381 |   |                            | $       | 1.25                                                                                |   | None                                                                              |   | None |
| Month #7, July 1 thru 31 2010                                                       |   |                                      | 4,200  |   |                            | $       | 1.25                                                                                |   | None                                                                              |   | None |
| Month #8, August 1 thru 31, 2010                                                    |   |                                      | -      |   |                            | $  | -                                                                                   |   | None                                                                              |   | None |
| Month #9 September 1 thru 30, 2010                                                  |   |                                      | 14,706 |   |                            | $       | 1.25                                                                                |   | None                                                                              |   | None |
| Month #10 October 1 thru 31, 2010                                                   |   |                                      | 2,954  |   |                            | $       | 1.25                                                                                |   | None                                                                              |   | None |
| Month #11 November 1 thru 30, 2010                                                  |   |                                      | -      |   |                            | $  | -                                                                                   |   | None                                                                              |   | None |
| Month #12 December 1 thru 31, 2010                                                  |   |                                      | 11,448 |   |                            | $       | 1.12                                                                                |   | None                                                                              |   | None |
|              Total |   |                                      | 83,837 |   |                            | $       | 1.26                                                                                |   |                                                                              |   |   |

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|       Plan Category |   | ANumber of Securities to be issued upon exercise of outstanding options |   |   | BWeighted Average exercise price of outstanding options |   |   | CNumber of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A) |   |
|---------------------------------------------------|--------|-------------------------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                              |   |                                                                    |   |   |                                                    |   |   |                                                                                                                                        |   |
| Not approved by security holders                  |   |                                                                    |   |   |                                                    |   |   |                                                                                                                                        |   |
| Employee Plan                                     |   |                                                                    | 46,550 |   |                                                    | $      | 1.12   |                                                                                                                                        |   |   | 98,000 |   |

ITEM 

|                             |   |   | 2010       | *      |   |   | 2009       |   |   |   | 2008       |   |   |   | 2007       |   |   |   | 2006       |   |
|----------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
| Total Income                     |   | $      | 43,227,461 |   |   | $      | 45,229,138 |   |   | $      | 46,455,107 |   |   | $      | 48,084,920 |   |   | $      | 47,646,337 |   |
| Net Income                       |   | $      | 2,234,716  |   |   | $      | 2,817,845  |   |   | $      | 2,366,472  |   |   | $      | 3,449,368  |   |   | $      | 2,564,243  |   |
| Net Income Per Common Share |   | $      | .15        |   |   | $      | .19        |   |   | $      | .16        |   |   | $      | .22        |   |   | $      | .16        |   |
| Total Assets                     |   | $      | 27,927,169 |   |   | $      | 31,368,041 |   |   | $      | 30,012,783 |   |   | $      | 30,301,075 |   |   | $      | 27,009,634 |   |
| Total Liabilities                |   | $      | 10,313,323 |   |   | $      | 10,636,929 |   |   | $      | 11,404,366 |   |   | $      | 13,004,202 |   |   | $      | 12,497,130 |   |
| Average Shares Outstanding       |   |   | 15,102,610 |   |   |   | 15,137,299 |   |   |   | 15,211,961 |   |   |   | 15,602,725 |   |   |   | 16,481,342 |   |

|   | *This information should be read in conjunction with the disclosure concerning the Management's Discussion and Analysis of Financial Condition and the audited Financial Statements and Notes thereto set forth elsewhere in this Form 10-K. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                       |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|----------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                       |   |   |    |   |   |   |    |   |   |
| Current tax provisions     |   | $      | 480,080 |   |   | $      | 647,381 |   |   | $ | 663,441 |   |
| Deferred tax provision     |   |   | 67,000  |   |   |   | (50,000 | )      |   |   | (68,602 | ) |
|                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Total income tax provision |   | $      | 547,080 |   |   | $      | 597,381 |   |   | $ | 594,839 |   |

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|                                        |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|---------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                        |   |   |      |   |   |   |      |   |   |
| Book income before tax                      |   | $      | 2,781,796 |   |   | $      | 3,415,226 |   |   | $ | 2,961,311 |   |
|                                        |   |   |      |   |   |   |      |   |   |   |   |   |
| Income tax computed at statutory rate (34%) |   | $      | 945,810   |   |   | $      | 1,161,177 |   |   | $ | 1,006,845 |   |
| Valuation allowance for AMT credit          |   |   | 99,000    |   |   |   | 10,770    |   |   |   | (17,000 | ) |
| Revision of valuation allowance             |   |   | (31,000   | )      |   |   | 18,356    |   |   |   | 94,052 |   |
| Rate differential                           |   |   | (466,730  | )      |   |   | (592,922  | )      |   |   | (489,058 | ) |
|                                        |   |   |      |   |   |   |      |   |   |   |   |   |
| Total income tax provision (benefit)        |   | $      | 547,080   |   |   | $      | 597,381   |   |   | $ | 594,839 |   |

| Expiring |   | NOL    |    |
|----------|--------|--------|---------|
|     |   |   |    |
| 2011     |   | $      | 66,000  |   |
| 2012     |   |   | 193,000 |   |
| 2018     |   |   | 105,000 |   |
| 2019     |   |   | 32,000  |   |
| 2020     |   |   | 59,000  |   |
| 2028     |   |   | 31,000  |   |
|     |   | $      | 486,000 |   |

|                                                  |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|-------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Income from Operations before Income Taxes            |   | $      | 2,781,796  |   |   | $      | 3,415,226  |   |   | $ | 2,961,311 |   |
| Book Value Per Share                                  |   | $      | 1.17       |   |   | $      | 1.37       |   |   | $ | 1.22 |   |
| Stockholders' Equity                                  |   | $      | 17,613,846 |   |   | $      | 20,731,111 |   |   | $ | 18,608,417 |   |
| Statutory Capital and Surplus of Insurance Subsidiary |   | $      | 16,157,260 |   |   | $      | 19,129,993 |   |   | $ | 16,964,513 |   |
| A.M. Best Financial Rating                            |   |   | B+         |   |   |   | B+         |   |   |   | B+ |   |

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| Portfolio Designated “Held to Maturity” December 31, 2010             |   |  Amortized Book Value |       |   | Gross Unrealized Gains |   |          | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|----------------------------------------------------------------------------------------|--------|----------------------------|------------|--------|------------------------|--------|---------------|-------------------------|--------|--------|------------------------|--------|
| US Treasury securities and obligations of US government corporations and agencies |   | $                          | 4,650,534  |   |                   | $      | 50,212        |                    |   | $      | 28,175                 |   |   | $ | 4,672,571 |   |
| Canadian government securities                                                         |   |                       | 478,623    |   |                   |   | -             |                    |   |   | 3,095                  |   |   |   | 475,528 |   |
| Corporate securities                                                                   |   |                       | 2,820,080  |   |                   |   | 145,051       |                    |   |   | 93,121                 |   |   |   | 2,872,010 |   |
| Mortgage-backed securities GNMA & FNMA CMO                                         |   |                       | 6,757,202  |   |                   |   |  308,004 |                    |   |   | 28,204                 |   |   |   | 7,037,002 |   |
|                                                                                   |   |                       |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Totals                                                                                 |   | $                          | 14,706,439 |   |                   | $      | 503,267       |                    |   | $      | 152,595                |   |   | $ | 15,057,111 |   |

| Less Than Investment Grade Bonds December 31, 2010 |   |  S&PRating |   |  Amortized Book Value |    |   | Gross Unrealized Gains |    |   | Gross Unrealized Losses |   |    | Estimated Market Value |   |
|---------------------------------------------------------|--------|---------------------|--------|----------------------------|---------|--------|------------------------|---------|--------|-------------------------|--------|---------|------------------------|--------|
| CIT Group, Inc.                                         |   | Not rated           |   | $                          | 71,948  |   |                   | $  | 583    |                    |   | $  | -                      |   |   | $  | 72,531 |   |
| Provident Companies Inc.                                |   | BBB-                |   |                       | 139,948 |   |                   |    | 22,097 |                    |   |    | -                      |   |   |   | 162,045 |   |
| MBIA Global                                             |   | BB+                 |   |                       | 200,000 |   |                   |    | -      |                    |   |    | 47,480                 |   |   |   | 152,520 |   |
| American General Finance                                |   | BB+                 |   |                       | 200,000 |   |                   |    | -      |                    |   |    | 29,440                 |   |   |   | 170,560 |   |
|                                                    |   |                |   |                       |    |   |                   |    |   |                    |   |    |                   |   |   |   |   |   |
| Totals                                                  |   |                |   | $                          | 611,896 |   |                   | $       | 22,680 |                    |   | $       | 76,920                 |   |   | $ | 557,656 |   |

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| Long-Term Contractual Obligations *            |   | Total |      |   | < 1 Year |   |      | 1-3 Years |   |   | 3-5 Years |   |   | > 5 Years |      |
|------------------------------------------------|--------|-------|-----------|--------|-------------|--------|-----------|-----------|--------|--------|-----------|--------|--------|--------------|-----------|
| Bonds and Related Future Interest Payable**    |   | $     | 1,657,000 |   |        | $      | 78,000    |      |   | $      | 156,000   |   |   | $            | 1,423,000 |   |   | $ | - |   |
| Operating Lease Obligations                    |   | $     | 938,000   |   |        | $      | 377,000   |      |   | $      | 561,000   |   |   | $            | -         |   |   | $ | - |   |
| Liability for Future Policy Benefits (Note A.) |   | $     | 8,067,452 |   |        | $      | 1,106,508 |      |   | $      | 1,740,298 |   |   | $            | 1,217,545 |   |   | $ | 4,003,101 |   |
| Policy Claims Payable (Note B.)                |   | $     | 1,353,770 |   |        | $      | 1,353,770 |      |   | $      | -         |   |   | $            | -         |   |   | $ | - |   |
| Liability for Annuity Deposits (Note C.)       |   | $     | 4,428,215 |   |        | $      | 83,208    |      |   | $      | 134,858   |   |   | $            | 179,094   |   |   | $ | 4,031,055 |   |
| Supplementary Contracts (Note D.)              |   | $     | 30,099    |   |        | $      | 1,495     |      |   | $      | 2,948     |   |   | $            | 2,882     |   |   | $ | 22,774 |   |

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| Name                |   | Age    |   |   | First Became Director or Executive Officer |   | Position |
|---------------------|--------|--------|--------|--------|--------------------------------------------|--------|----------|
| Wayne E. Ahart      |   |   | 70     |   |                                       |   | 1984     |   | Chairman of the Board and Director |
| C. Donald Byrd      |   |   | 69     |   |                                       |   | 1984     |   | Vice Chairman of the Board and Director |
| Kenneth Tobey       |   |   | 52     |   |                                       |   | 1994     |   | President and Director |
| Barry N. Shamas     |   |   | 63     |   |                                       |   | 1984     |   | Executive Vice President, Treasurer, Chief Operating Officer, Chief Financial Officer and Director |
| Cecil Alexander     |   |   | 74     |   |                                       |   | 1994     |   | Director |
| Richard Barclay     |   |   | 73     |   |                                       |   | 1994     |   | Director |
| Eugene A. Cernan    |   |   | 76     |   |                                       |   | 1994     |   | Director |
| Hayden Fry          |   |   | 81     |   |                                       |   | 1984     |   | Director |
| John Greig          |   |   | 75     |   |                                       |   | 1984     |   | Director |
| Roy Ledbetter       |   |   | 80     |   |                                       |   | 1994     |   | Director |
| John E. Miller      |   |   | 81     |   |                                       |   | 1994     |   | Director |
| C. James McCormick  |   |   | 85     |   |                                       |   | 1984     |   | Director |
| Robert R. Rigler    |   |   | 87     |   |                                       |   | 1989     |   | Director |
| L. Stan Schoelerman |   |   | 85     |   |                                       |   | 1984     |   | Director |

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|  Title of Class |   |  Name and Address of Beneficial Owner |   | Amount and Nature of Beneficial Ownership(1) |   | Percent of Class as of December 31, 2010 |
|----------------------|--------|--------------------------------------------|--------|----------------------------------------------|--------|------------------------------------------|
|                 |   |                                       |   |                                         |   |                                     |
| Common Stock         |   | Wayne E. Ahart                             |   | 4,712,216(2)                                 |   | 31.24%                                   |
|                 |   | 8017 Cobblestone                           |   |                                         |   |                                     |
|                 |   | Austin, TX  78735                |   |                                         |   |                                     |
|                 |   |                                       |   |                                         |   |                                     |
| Common Stock         |   | Barry N. Shamas                            |   | 2,801,816(3)                                 |   | 18.58%                                   |
|                 |   | 1095 Hidden Hills Dr                       |   |                                         |   |                                     |
|                 |   | Dripping Springs, TX 78620                 |   |                                         |   |                                     |
|                 |   |                                       |   |                                         |   |                                     |
| Common Stock         |   | C. Don Byrd                                |   | 1,852,719 (4)                                |   | 12.28%                                   |
|                 |   | 1725 S. 50th Unit 144                      |   |                                         |   |                                     |
|                 |   | W. Des Moines, IA 50265                    |   |                                         |   |                                     |
|                 |   |                                       |   |                                         |   |                                     |
| Common Stock         |   | Kenneth Tobey                              |   | 1,161,762                                    |   | 7.70%                                    |
|                 |   | 23 Tennyson                                |   |                                         |   |                                     |
|                 |   | N. Little Rock, AR 72116                   |   |                                         |   |                                     |

|   | (1) To the Company's knowledge, all shares are beneficially owned by, and the sole voting and investment power is held by the persons named, except as otherwise indicated. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) This includes 133,290 shares owned directly by Wayne Ahart and Wayne Ahart’s indirect ownership of  1,200,000 shares which are owned by National Iowa Corporation and 686,037 shares which are owned by Arkansas National Corporation.  Wayne Ahart controls both National Iowa Corporation and Arkansas National Corporation and votes the shares of the Company’s common stock owned by both corporations.   LeRene Ahart, as a shareholder in National Iowa Corporation and Arkansas National Corporation, has an indirect pecuniary interest in 1,200,000 shares of the Company’s common stock owned by National Iowa Corporation and 649,363 shares of the Company’s common stock owned by Arkansas National Corporation.  Wayne Ahart has voting control of all 2,400,000 shares of the Company’s common stock owned by  National Iowa Corporation and all 2,178,926 shares of the Company’s common stock owned by Arkansas National Corporation plus the 133,290 shares which are owned directly by Wayne Ahart.  Consequently, Wayne Ahart has voting control of 4,712,216 (31.16%) shares of the Company’s common stock. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (3) Includes 1,400,000 shares held in the name of Life Industries of Iowa, Inc., and 1,335,171 shares held in the name of Arkansas Industries   Corporation, both of which are controlled by Mr. Shamas. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) All of Mr. Byrd's shares are subject to a right of first refusal of the Company to acquire said shares on the same terms and conditions as any proposed sale or other transfer by Mr. Byrd. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  Title of Class |   |  Name of Beneficial Owner                     |   | Amount and Nature of Beneficial Ownership1 |   | Percent of Class as of December 31, 2009 |
|----------------------|--------|----------------------------------------------------|--------|--------------------------------------------|--------|------------------------------------------|
| Common               |   | Wayne E. Ahart                                     |   | 4,712,2162                                 |   | 31.24%                                   |
| Common               |   | Cecil L. Alexander                                 |   | 37,088                                     |   | 0.25%                                    |
| Common               |   | Richard L Barclay                                  |   | 48,788                                     |   | 0.32%                                    |
| Common               |   | Ken Barr                                           |   | 7,300                                      |   | 0.05%                                    |
| Common               |   | Tammy Barr                                         |   | 20,300                                     |   | 0.14%                                    |
| Common               |   | C. Donald Byrd                                     |   | 1,852,7193                                 |   | 12.28%                                   |
| Common               |   | Eugene A. Cernan                                   |   | 37,088                                     |   | 0.25%                                    |
| Common               |   | Jeffrey A. Drees                                   |   | 38,843                                     |   | 0.26%                                    |
| Common               |   | Hayden Fry                                         |   | 69,272                                     |   | 0.47%                                    |
| Common               |   | John Greig                                         |   | 50,353                                     |   | 0.33%                                    |
| Common               |   | Roy E. Ledbetter                                   |   | 37,088                                     |   | 0.25%                                    |
| Common               |   | C. James McCormick                                 |   |  13,708                               |   | 0.09%                                    |
| Common               |   | John E. Miller                                     |   | 47,111                                     |   | 0.31%                                    |
| Common               |   | Jerry Ouzts                                        |   | 20,000                                     |   | 0.13%                                    |
| Common               |   | Pamela C. Randolph                                 |   | 10,905                                     |   | 0.07%                                    |
| Common               |   | Robert R Rigler                                    |   | 3,295                                      |   | 0.02%                                    |
| Common               |   | Barry N. Shamas                                    |   | 2,801,8164                                 |   | 18.58%                                   |
| Common               |   | Stanley Schoelerman                                |   | 20,000                                     |   | 0.13%                                    |
| Common               |   | Kenneth Tobey                                      |   | 1,161,762                                  |   | 7.70%                                    |
| Common               |   | All Officers and Directors as a group (19 persons) |   | 10,989,652                                 |   | 72.87%                                   |

|   | (1) To the Company's knowledge all shares are beneficially owned by the persons named, except as otherwise indicated, and they hold the sole voting and investment power. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) This includes 133,290 shares owned directly by Wayne Ahart and Wayne Ahart’s indirect ownership of   1,200,000 shares which are owned by National Iowa Corporation and 686,037 shares which are owned by Arkansas National Corporation.  Wayne Ahart controls both National Iowa Corporation and Arkansas National Corporation and votes the shares of the Company’s common stock owned by both corporations.   LeRene Ahart, as a shareholder in National Iowa Corporation and Arkansas National Corporation, has an indirect pecuniary interest in 1,200,000 shares of the Company’s common stock owned by National Iowa Corporation and 649,363 shares of the Company’s common stock owned by Arkansas National Corporation.  Wayne Ahart has voting control of all 2,400,000 shares of the Company’s common stock owned by National Iowa Corporation and all 2,178,926 shares of the Company’s common stock owned by Arkansas National Corporation plus the 133,290 shares which are owned directly by Wayne Ahart.  Consequently, Wayne Ahart has voting control of 4,712,216 (30.99%) shares of the Company’s common stock. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) All of Mr. Byrd's shares are subject to a right of first refusal of the Company to acquire said shares on the same terms and conditions as any proposed sale or other transfer by Mr. Byrd. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) Includes 1,400,000 shares held in the name of Life Industries of Iowa, Inc., and 1,335,171 shares held in the name of Arkansas Industries Corporation, both of which are controlled by Mr. Shamas. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| No.  |   | Description                                                                                                                                                                                         |   | Page or Method of Filing                                                                                                                                           |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1  |   | Articles of Incorporation of BNL Financial Corporation, dated January 27, 1984 and Amendment to Articles of Incorporation of BNL Financial Corporation, dated November 13, 1987.               |   | Incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the period ending December 31, 1993.                                      |
| 3.2  |   | By-laws of BNL Financial Corporation.                                                                                                                                                               |   | Incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement No. 33-70318.                                                          |
| 4.1  |   | Instruments defining the rights of security holders, including indentures.                                                                                                                          |   | Incorporated by reference to Exhibit 4 of the Company's Registration Statement No. 2-94538 and Exhibits 3.5 and 4 of Post-Effective Amendment No. 3 thereto.  |
| 4.2  |   | Articles of Incorporation of BNL Financial Corporation, dated January 27, 1984 and Amendment to Articles of Incorporation on BNL Financial Corporation, dated November 13, 1987.                    |   | Incorporated by reference to Exhibits 4.2 of the Company's Annual Report on Form 10-KSB for the period ending December 31, 1998.                              |
| 10.1 |   | Form of Agreement between Commonwealth Industries Corporation, American Investors Corporation and Wayne E. Ahart regarding rights to purchase shares of the Company.                                |   | Incorporated by reference to Exhibit I of the Company's Quarterly Report on 10-QSB for the period ended September 30, 1994.                              |
| 10.2 |   | Agreement dated December 21, 1990 between Registrant and C. Donald Byrd granting Registrant right of first refusal as to future transfers of Mr. Byrd's shares of the Company's common stock.  |   | Incorporated by reference to Exhibit I of the Company's Quarterly Report on 10-QSB for the period ended March 31, 1996.                                  |

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| 10.3 |   | Convertible Debenture Agreement dated July 25, 2001 between BNL Equity Corporation and EPSI Benefits Inc.                              |   | Incorporated by reference to Exhibit 10.9 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                                                       |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.4 |   | Claims Service Agreement dated  June 1, 1999 between Brokers National Life Assurance Company and Employer Plan Services Inc. |   | Incorporated by reference to Exhibit 10.5 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                                                       |
| 10.5 |   | Office lease agreement dated January 21, 2006, between Brokers National Life Assurance Company and KIMCO for premises in Austin.  |   | Incorporated by reference to Exhibit 10.6 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                                                       |
| 10.6 |   | Line of Credit Agreement dated October 15, 2004 between Brokers National Life Assurance Company and Employer Plan Services Inc.   |   | Incorporated by reference to Exhibit 10.7 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                                                       |
| 10.7 |   | Marketing Agreement dated July 25, 2001 between BNL Equity Corporation and Employer Plan Services Inc. and EPSI Benefits Inc.          |   | Incorporated by reference to Exhibit 10.8 of the Company's Annual Report on 10-K for the period ended December 31, 2005.                                                                                                       |
| 10.8 |   | Outsourcing Agreement dated May 1, 2007 between Brokers National Life Assurance Company and Virtual Item Processing Systems, Inc.      |   | Incorporated by reference to Exhibit 10.9 of the Company's Annual Report on 10-K for the period ended December 31, 2006.                                                                                                       |
| 10.9 |   | Amended Convertible Debenture Date July 14, 2008 between BNL Financial Corporation and EPSI Benefits Inc.                              |   | Incorporated by reference to Exhibit 1 of the Company’s periodic Report on Form 8-K dated July 14, 2008.                                                                                                                 |
| 11   |   | Statement Re computation of per share earnings.                                                                                        |   | Reference is made to the 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 Officer Section 302                                                                         |   | Filed herewith – E1                                                                                                                                                                                                           |
| 31.2 |   | Certification of Chief Financial Officer Section 302                                                                              |   | Filed herewith – E2                                                                                                                                                                                                           |
| 32   |   | Certification of Chief Executive Officer and Chief Financial Officer Section 906                                                  |   | Attached hereto – E3                                                                                                                                                                                                          |

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SIGNATURES

|   | BNL FINANCIAL CORPORATION |                    |
|--------|---------------------------|-------------------------|
|   |                      |                    |   |
|   | By:                       | /s/ Wayne E. Ahart |   |
|   |                      | Wayne E. Ahart          |   |
|   |                      | Chairman of the Board   |   |
|   |                      |                    |   |

|                               |   |                                                                                                                                            |   |                   |
|------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|
| SIGNATURE                          |   | TITLE                                                                                                                                           |   | DATE                   |
|   /s/ Wayne E. Ahart     |   |                                                                                                                                            |   |   03/29/2011 |
| Wayne E. Ahart                     |   | Chairman of the Board, Director (Principal Executive Officer)                                                                                   |   |                   |
|   /s/ C. Donald Byrd     |   |                                                                                                                                            |   |   03/29/2011 |
| C. Donald Byrd                     |   | Vice Chairman of the Board and Director                                                                                                         |   |                   |
|   /s/ Kenneth Tobey      |   |                                                                                                                                            |   |   03/29/2011 |
| Kenneth Tobey                      |   | President and Director                                                                                                                          |   |                   |
|   /s/ Barry N. Shamas    |   |                                                                                                                                            |   |   03/29/2011 |
| Barry N. Shamas                    |   | Executive Vice President, Treasurer, Chief Operating Officer, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |   |                   |
|   /s/ Hayden Fry         |   |                                                                                                                                            |   |   03/29/2011 |
| Hayden Fry                         |   | Director                                                                                                                                        |   |                   |
|   /s/ John Greig         |   |                                                                                                                                            |   |   03/29/2011 |
| John Greig                         |   | Director                                                                                                                                        |   |                   |
|   /s/ C. James McCormick |   |                                                                                                                                            |   |   03/29/2011 |
| C. James McCormick                 |   | Director                                                                                                                                        |   |                   |

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|   /s/ Robert R. Rigler    |   |     |   |   03/29/2011 |
|-------------------------------------|--------|----------|--------|------------------------|
| Robert R. Rigler                    |   | Director |   |                   |
|   /s/ Stanley Schoelerman |   |     |   |   03/29/2011 |
| Stanley Schoelerman                 |   | Director |   |                   |
|   /s/ Cecil Alexander     |   |     |   |   03/29/2011 |
| Cecil Alexander                     |   | Director |   |                   |
|   /s/ Richard Barclay     |   |     |   |   03/29/2011 |
| Richard Barclay                     |   | Director |   |                   |
|   /s/ Eugene A. Cernan    |   |     |   |   03/29/2011 |
| Eugene A. Cernan                    |   | Director |   |                   |
|   /s/ Roy Ledbetter       |   |     |   |   03/29/2011 |
| Roy Ledbetter                       |   | Director |   |                   |
|   /s/ John E. Miller      |   |     |   |   03/29/2011 |
| John E. Miller                      |   | Director |   |                   |

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|                                                                                                               |   | Page Number of 2010Form 10-K |
|--------------------------------------------------------------------------------------------------------------------|--------|------------------------------|
| Item 15(a) Financial Statements                                                                                    |   |                         |
|                                                                                                               |   |                         |
| Report of Independent Accountants on Financial Statements                                                          |   | F-2                          |
|                                                                                                               |   |                         |
| Consolidated Balance Sheet, December 31, 2010 and 2009                                                             |   | F-3                          |
|                                                                                                               |   |                         |
| Consolidated Statement of Operations and Comprehensive Income for the years ended December 31, 2010, 2009 and 2008 |   | F-4                          |
|                                                                                                               |   |                         |
| Consolidated Statement of Changes in Shareholders' Equity for the years ended December 31, 2010, 2009 and 2008     |   | F-5                          |
|                                                                                                               |   |                         |
| Consolidated Statement of Cash Flows for the years ended December 31, 2010, 2009 and 2008                          |   | F-6                          |
|                                                                                                               |   |                         |
| Notes to Consolidated Financial Statements                                                                         |   | F-7                          |
|                                                                                                               |   |                         |
| Item 15(d) - Schedule II, Condensed Financial Information of Registrant                                            |   | F-23                         |
|                                                                                                               |   |                         |

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|                                                                                                                                                               |   | December 31, |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|------------|
| ASSETS                                                                                                                                                             |   | 2010         |       |   | 2009 |   |
|    Cash and cash equivalents                                                                                                                        |   | $            | 8,632,371  |   |   | $ | 8,090,103 |   |
|    Investments in fixed maturities at fair value, Available for Sale  (amortized cost $0; $42,000, respectively)                          |   |         |  -    |   |   |   |  146,720 |   |
|    Investments in fixed maturities at amortized cost, Held to Maturity  (fair value $15,057,111; $18,423,612, respectively)               |   |         | 14,706,439 |   |   |   | 18,358,628 |   |
|    Other long-term investments - (Note 4)                                                                                                           |   |         | 1,054,418  |   |   |   | 1,180,041 |   |
|    Investment in equity securities, at fair value       (cost $834,268, $711,915, respectively)                  |   |         | 909,124    |   |   |   | 674,671 |   |
|                Total Investments, Including Cash and Cash Equivalents                   |   |         | 25,302,352 |   |   |   | 28,450,163 |   |
|                                                                                                                                                               |   |         |       |   |   |   |   |   |
|    Accrued investment income                                                                                                                        |   |         | 90,093     |   |   |   | 128,469 |   |
|    Leasehold improvements, furniture and equipment, net                                                                                             |   |         | 784,529    |   |   |   | 835,367 |   |
|    Deferred policy acquisition costs                                                                                                                |   |         | 223,041    |   |   |   | 253,254 |   |
|    Policy loans                                                                                                                                     |   |         | 160,120    |   |   |   | 162,395 |   |
|    Receivable from reinsurer                                                                                                                        |   |         | 52,015     |   |   |   | 47,475 |   |
|    Premiums due and unpaid                                                                                                                          |   |         | 936,941    |   |   |   | 967,508 |   |
|    Deferred income tax assets                                                                                                                       |   |         | 40,274     |   |   |   | 106,000 |   |
|    Intangible assets                                                                                                                                |   |         | 119,593    |   |   |   | 125,408 |   |
|    Other assets                                                                                                                                     |   |         | 218,211    |   |   |   | 292,002 |   |
|                                                                                                                                                               |   |         |       |   |   |   |   |   |
|                Total Assets                                                             |   | $            | 27,927,169 |   |   | $ | 31,368,041 |   |
|                                                                                                                                                               |   |         |       |   |   |   |   |   |
| LIABILITIES                                                                                                                                                        |   |         |       |   |   |   |   |   |
|    Liabilities for future policy benefits                                                                                                           |   | $            | 2,057,715  |   |   | $ | 2,143,273 |   |
|    Policy claims payable                                                                                                                            |   |         | 1,353,770  |   |   |   | 1,348,590 |   |
|    Annuity deposits                                                                                                                                 |   |         | 2,384,264  |   |   |   | 2,505,778 |   |
|    Deferred annuity profits                                                                                                                         |   |         | 175,074    |   |   |   | 201,492 |   |
|    Premium deposit funds                                                                                                                            |   |         | 20,088     |   |   |   | 20,547 |   |
|    Supplementary contracts without life contingencies                                                                                               |   |         | 41,932     |   |   |   | 36,791 |   |
|    Advanced and unallocated premium                                                                                                                 |   |         | 1,154,715  |   |   |   | 968,159 |   |
|    Commissions payable                                                                                                                              |   |         | 536,781    |   |   |   | 615,455 |   |
|    Accrued taxes and expenses                                                                                                                       |   |         | 298,462    |   |   |   | 406,932 |   |
|    Bonds payable                                                                                                                                    |   |         | 1,300,708  |   |   |   | 1,323,388 |   |
|    Other liabilities                                                                                                                                |   |         | 989,814    |   |   |   | 1,066,525 |   |
|                Total Liabilities                                                        |   |         | 10,313,323 |   |   |   | 10,636,930 |   |
|                                                                                                                                                               |   |         |       |   |   |   |   |   |
|                                                                                                                                                               |   |         |       |   |   |   |   |   |
| SHAREHOLDERS’ EQUITY                                                                                                                                         |   |         |       |   |   |   |   |   |
|    Common stock, $.02 stated value, 45,000,000 shares authorized,       15,463,965 shares issued and outstanding |   |         | 309,279    |   |   |   | 309,279 |   |
|    Additional paid-in capital                                                                                                                       |   |         | 5,704,089  |   |   |   | 5,725,590 |   |
|    Accumulated other comprehensive income                                                                                                           |   |         | 45,581     |   |   |   | 36,042 |   |
|    Accumulated surplus                                                                                                                              |   |         | 12,041,213 |   |   |   | 15,092,975 |   |
|    Treasury stock, at cost, 382,030; 343,194; shares, respectively                                                                                  |   |         | (486,316   | ) |   |   | (432,775 | ) |
|                Total Shareholders' Equity                                               |   |         | 17,613,846 |   |   |   | 20,731,111 |   |
|                                                                                                                                                               |   |         |       |   |   |   |   |   |
|                Total Liabilities and Shareholders' Equity                               |   | $            | 27,927,169 |   |   | $ | 31,368,041 |   |

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|                                                                                                                                                                                                                                                                    |   | Year Ended December 31, |                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------------------------|
|                                                                                                                                                                                                                                                                    |   | 2010                    |                      |   | 2009 |   |   | 2008 |   |
| Income                                                                                                                                                                                                                                                                  |   |                    |                      |   |   |   |   |   |   |
|    Premium income                                                                                                                                                                                                                                        |   | $                       | 39,868,611                |   |   | $ | 41,609,604 |   |   | $ | 43,456,024 |   |
|    Net investment income                                                                                                                                                                                                                                 |   |                    | 951,019                   |   |   |   | 1,122,698 |   |   |   | 1,170,901 |   |
|    Marketing fees                                                                                                                                                                                                                                        |   |                    | -                         |   |   |   | 25,000 |   |   |   | - |   |
|    Vision insurance income                                                                                                                                                                                                                               |   |                    | 2,409,860                 |   |   |   | 2,386,148 |   |   |   | 2,263,529 |   |
|    Realized gain on debt retirements                                                                                                                                                                                                                     |   |                    | 4,536                     |   |   |   | 27,176 |   |   |   | 44,370 |   |
|    Realized gains on sales or maturities                                                                                                                                                                                                                 |   |                    | 139,605                   |   |   |   | 100,792 |   |   |   | 16,729 |   |
|    Realized losses on other than temporary        Impairments                                                                                                                                                    |   |                    | (146,170                  | ) |   |   | (42,280 | ) |   |   | (496,446 | ) |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                Total Income                                                                                                                                                                  |   |                    | 43,227,461                |   |   |   | 45,229,138 |   |   |   | 46,455,107 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
| Expenses                                                                                                                                                                                                                                                                |   |                    |                      |   |   |   |   |   |   |   |   |   |
|    Decrease in liability for future policy benefits                                                                                                                                                                                                      |   |                    | (90,098                   | ) |   |   | (66,596 | ) |   |   | (39,268 | ) |
|    Policy benefits and other insurance costs                                                                                                                                                                                                             |   |                    | 30,704,368                |   |   |   | 31,805,555 |   |   |   | 32,978,610 |   |
|    Amortization of deferred policy acquisition costs                                                                                                                                                                                                     |   |                    | 30,214                    |   |   |   | 30,308 |   |   |   | 40,564 |   |
|    Operating expenses                                                                                                                                                                                                                                    |   |                    | 8,457,312                 |   |   |   | 8,716,583 |   |   |   | 9,055,261 |   |
|    Taxes, other than on income                                                                                                                                                                                                                           |   |                    | 1,343,869                 |   |   |   | 1,328,062 |   |   |   | 1,458,629 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                 Total Expenses                                                                                                                                                          |   |                    | 40,445,665                |   |   |   | 41,813,912 |   |   |   | 43,493,796 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                 Income from Operations before                     Income Taxes |   |                    | 2,781,796                 |   |   |   | 3,415,226 |   |   |   | 2,961,311 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|    Provision for income taxes                                                                                                                                                                                                                            |   |                    | 547,080                   |   |   |   | 597,381 |   |   |   | 594,839 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                Net Income                                                                                                                                                                    |   | $                       | 2,234,716                 |   |   | $ | 2,817,845 |   |   | $ | 2,366,472 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
| Net income per common share (basic and diluted)                                                                                                                                                                                                                         |   | $                       | 0.15                      |   |   | $ | 0.19 |   |   | $ | 0.16 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
| Weighted average number of fully    paid common shares                                                                                                                                                                                              |   |                    | 15,102,610                |   |   |   | 15,137,299 |   |   |   | 15,211,961 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                Net Income (as above)                                                                                                                                                         |   | $                       | 2,234,716                 |   |   | $ | 2,817,845 |   |   | $ | 2,366,472 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax:                                                                                                                                                                                                                          |   |                    |                      |   |   |   |   |   |   |   |   |   |
|      Unrealized gains on securities:                                                                                                                                                                                                           |   |                    |                      |   |   |   |   |   |   |   |   |   |
|           Unrealized holding gain (loss) arising during period (net of $12,726, $10,463 and ($47,777) of deferred taxes in 2010, 2009 and 2008; respectively)                                                         |   |                    |     66,118 |   |   |   |     248,060 |   |   |   |  (516,795 | ) |
| Reclassification adjustment for (gain) loss included in net income                                                                                                                                                                                                      |   |                    | (56,579                   | ) |   |   | (51,084 | ) |   |   | 233,229 |   |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                 Other Comprehensive Income (Loss)                                                                                                                                       |   |                    | 9,539                     |   |   |   | 196,976 |   |   |   | (283,566 | ) |
|                                                                                                                                                                                                                                                                    |   |                    |                      |   |   |   |   |   |   |   |   |   |
|                 Comprehensive Income                                                                                                                                                    |   | $                       | 2,244,255                 |   |   | $ | 3,014,821 |   |   | $ | 2,082,906 |   |

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BNL 

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|                                                  |   | Common Stock |       |   | AdditionalPaid-In |   |    | Accumulated |   |   | AccumulatedOtherComprehensive |   |   | Treasury |       |
|-------------------------------------------------------|--------|--------------|------------|--------|-------------------|--------|---------|-------------|--------|--------|-------------------------------|--------|--------|----------|------------|
|                                                  |   | Shares       |       |   | Amount            |   |    | Capital     |   |   | Surplus                       |   |   | Income   |       |   | Stock |   |
| Balance, December 31, 2007                            |   |         | 15,463,965 |   |              | $      | 309,279 |        |   | $      | 5,751,240                     |   |   | $        | 11,426,539 |   |   | $ | 122,630 |   |   | $ | (312,816 | ) |
|                                                  |   |         |       |   |              |   |    |        |   |   |                          |   |   |     |       |   |   |   |   |   |   |   |   |   |
| Accumulated other  comprehensive income     |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | -          |   |   |   | (283,566 | ) |   |   | - |   |
| Purchase of treasury stock                            |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | -          |   |   |   | - |   |   |   | (20,858 | ) |
| Stock options exercised                               |   |         | -          |   |              |   | -       |        |   |   | (2,775                        | )      |   |     | -          |   |   |   | - |   |   |   | 12,626 |   |
| Dividends                                             |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | (760,356   | ) |   |   | - |   |   |   | - |   |
| Net income                                            |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | 2,366,472  |   |   |   | - |   |   |   | - |   |
| Balance, December 31, 2008                            |   |         | 15,463,965 |   |              | $      | 309,279 |        |   | $      | 5,748,465                     |   |   | $        | 13,032,655 |   |   | $ | (160,934 | ) |   | $ | (321,048 | ) |
|                                                  |   |         |       |   |              |   |    |        |   |   |                          |   |   |     |       |   |   |   |   |   |   |   |   |   |
| Accumulated other  comprehensive income     |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | -          |   |   |   | 196,976 |   |   |   |   |   |
| Purchase of treasury stock                            |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | -          |   |   |   | - |   |   |   | (155,352 | ) |
| Stock options exercised                               |   |         | -          |   |              |   | -       |        |   |   | (22,875                       | )      |   |     | -          |   |   |   | - |   |   |   | 43,625 |   |
| Dividends                                             |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | (757,525   | ) |   |   | - |   |   |   | - |   |
| Net income                                            |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | 2,817,845  |   |   |   | - |   |   |   | - |   |
| Balance, December 31, 2009                            |   |         | 15,463,965 |   |              | $      | 309,279 |        |   | $      | 5,725,590                     |   |   | $        | 15,092,975 |   |   | $ | 36,042 |   |   | $ | (432,775 | ) |
|                                                  |   |         |       |   |              |   |    |        |   |   |                          |   |   |     |       |   |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive income |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | -          |   |   |   |  9,539 |   |   |   | - |   |
| Purchase of treasury stock                            |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | -          |   |   |   | - |   |   |   | (105,046 | ) |
| Stock options exercised                               |   |         | -          |   |              |   | -       |        |   |   | (21,500                       | )      |   |     | -          |   |   |   | - |   |   |   | 51,500 |   |
| Dividends                                             |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | (5,286,478 | ) |   |   | - |   |   |   | - |   |
| Net income                                            |   |         | -          |   |              |   | -       |        |   |   | -                             |   |   |     | 2,234,716  |   |   |   | - |   |   |   | - |   |
| Balance, December 31, 2010                            |   |         | 15,463,965 |   |              | $      | 309,279 |        |   | $      | 5,704,090                     |   |   | $        | 12,041,213 |   |   | $ | 45,581 |   |   | $ | (486,316 | ) |

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BNL 

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|                                                                                                                                                                                     |   | Year Ended December 31, |            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------------|
|                                                                                                                                                                                     |   | 2010                    |            |   | 2009 |   |   | 2008 |   |
| Cash Flows from Operating Activities                                                                                                                                                     |   |                    |            |   |   |   |   |   |   |
|      Net income                                                                                                                                                 |   | $                       | 2,234,716       |   |   | $ | 2,817,845 |   |   | $ | 2,366,472 |   |
|      Adjustments to reconcile net income to net cash        provided by operating activities:                           |   |                    |            |   |   |   |   |   |   |   |   |   |
|             Realized (gain) loss on investments                                                                              |   |                    | (139,605        | ) |   |   | (61,548 | ) |   |   | 482,137 |   |
|             Realized (gain) loss on sale of furniture and equipment                                                          |   |                    | (1,948          | ) |   |   | 3,036 |   |   |   | (2,420 | ) |
|             Realized gain on debt extinguishments                                                                            |   |                    | (4,536          | ) |   |   | (27,176 | ) |   |   | (44,370 | ) |
|             Depreciation                                                                                                     |   |                    | 292,072         |   |   |   | 304,625 |   |   |   | 284,324 |   |
|             Decrease (increase) in deferred tax asset                                                                        |   |                    | 67,000          |   |   |   | (50,000 | ) |   |   | (68,602 | ) |
|             Increase in and amortization of deferred acquisition costs, and bond issuance cost                               |   |                    | 36,029          |   |   |   | 36,123 |   |   |   | 46,379 |   |
|             Accretion of bond premium (discount)                                                                             |   |                    | 18,640          |   |   |   | 17,529 |   |   |   | (11,652 | ) |
|         Change in assets and liabilities:                                                                                                        |   |                    |            |   |   |   |   |   |   |   |   |   |
|              Decrease in accrued investment income                                                                      |   |                    | 38,375          |   |   |   | 53,053 |   |   |   | 38,939 |   |
|              (Increase) decrease in receivable from reinsurer                                                           |   |                    | (4,540          | ) |   |   | (921 | ) |   |   | 6,829 |   |
|              Decrease in premiums due and unpaid                                                                        |   |                    | 30,566          |   |   |   | 145,793 |   |   |   | 348,166 |   |
|              Decrease in liability for future policy benefits                                                           |   |                    | (85,558         | ) |   |   | (65,675 | ) |   |   | (46,097 | ) |
|              Increase (decrease) in policy claims payable                                                               |   |                    | 5,180           |   |   |   | (363,550 | ) |   |   | (594,149 | ) |
|              Increase (decrease) in annuity deposits and deferred profits                                               |   |                    | (147,932        | ) |   |   | (47,177 | ) |   |   | 37,743 |   |
|              Decrease in premium deposit funds                                                                          |   |                    | (459            | ) |   |   | (1,301 | ) |   |   | (3,469 | ) |
|              Increase (decrease) in advanced and unallocated premium                                                    |   |                    | 186,556         |   |   |   | (67,964 | ) |   |   | (1,183,306 | ) |
|              Increase (decrease) in commissions payable                                                                 |   |                    | (78,674         | ) |   |   | 19,967 |   |   |   | 81,474 |   |
|              Other, (decrease) increase                                                                                 |   |                    | (111,969        | ) |   |   | (319,430 | ) |   |   | 266,181 |   |
|                     Net Cash Provided by Operating Activities                        |   |                    | 2,333,912       |   |   |   | 2,393,229 |   |   |   | 2,004,579 |   |
|                                                                                                                                                                                     |   |                    |            |   |   |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities                                                                                                                                                     |   |                    |            |   |   |   |   |   |   |   |   |   |
|      Proceeds from sales of investments                                                                                                                         |   |                    | 81,686          |   |   |   | - |   |   |   | 4,375 |   |
|      Proceeds from maturity or redemption – Available For Sale                                                                                            |   |                    | 196,000         |   |   |   | 482,964 |   |   |   | - |   |
|      Proceeds from maturity or redemption - Held to Maturity Investments                                                                                        |   |                    | 10,787,326      |   |   |   | 13,340,133 |   |   |   | 12,002,977 |   |
|      Proceeds from sale of furniture and equipment                                                                                                              |   |                    | 20,498          |   |   |   | 2,959 |   |   |   | 17,000 |   |
|      Purchase of equity securities                                                                                                                              |   |                    | (270,473        | ) |   |   | (12,086 | ) |   |   | (330,601 | ) |
|      Purchase of furniture, equipment and leasehold improvements                                                                                                |   |                    | (259,784        | ) |   |   | (97,316 | ) |   |   | (200,122 | ) |
|      Purchase of fixed maturity securities, Held to Maturity                                                                                                    |   |                    | (6,989,863      | ) |   |   | (12,071,571 | ) |   |   | (12,631,782 | ) |
|      Other Investments - Line of credit - receipt                                                                                                               |   |                    | 27,215          |   |   |   | 44,568 |   |   |   | 40,863 |   |
|                      Net Cash Provided by (Used in) Investing Activities        |   |                    | 3,592,605       |   |   |   | 1,689,651 |   |   |   | (1,097,290 | ) |
|                                                                                                                                                                                     |   |                    |            |   |   |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities                                                                                                                                                     |   |                    |            |   |   |   |   |   |   |   |   |   |
|      Purchase of treasury stock                                                                                                                                 |   |                    | (105,041        | ) |   |   | (155,352 | ) |   |   | (16,686 | ) |
|      Dividends to shareholders                                                                                                                                  |   |                    | (5,286,478      | ) |   |   | (757,525 | ) |   |   | (760,358 | ) |
|      Net change in supplementary contracts                                                                                                                      |   |                    | 5,141           |   |   |   | 2,686 |   |   |   | 28,200 |   |
|      Stock options exercised                                                                                                                                    |   |                    | 30,000          |   |   |   | 20,750 |   |   |   | 12,875 |   |
|      Debt extinguishments                                                                                                                                       |   |                    | (27,871         | ) |   |   | (92,717 | ) |   |   | (119,922 | ) |
|                       Net Cash Used in Financing Activities                |   |                    | (5,384,249      | ) |   |   | (982,158 | ) |   |   | (855,891 | ) |
|                        Net Increase in Cash and Cash Equivalents      |   |                    | 542,268         |   |   |   | 3,100,722 |   |   |   | 51,398 |   |
|                        Cash and Cash Equivalents, Beginning of Period |   |                    |  8,090,103 |   |   |   |  4,989,381 |   |   |   |  4,937,983 |   |
|                                                                                                                                                                                     |   |                    |            |   |   |   |   |   |   |   |   |   |
|                       Cash and Cash Equivalents, End of Period             |   | $                       | 8,632,371       |   |   | $ | 8,090,103 |   |   | $ | 4,989,381 |   |

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1.  
Summary 

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|                |   | December 31, |       |
|---------------------|--------|--------------|------------|
|                |   | 2010         |       |   | 2009 |   |   | 2008 |   |
|                |   |         |       |   |   |   |   |   |   |
| Capital and Surplus |   | $            | 16,157,260 |   |   | $ | 19,129,993 |   |   | $ | 16,964,513 |   |
|                |   |         |       |   |   |   |   |   |   |   |   |   |
| Net Income          |   | $            | 2,291,573  |   |   | $ | 2,733,185 |   |   | $ | 2,630,151 |   |
|                |   |         |       |   |   |   |   |   |   |   |   |   |

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|                                                 |   | December 31, 2010 |      |   | December 31, 2009  |   | December 31, 2008 |
|------------------------------------------------------|--------|-------------------|-----------|--------|--------------------|--------|-------------------|
|                                                 |   | Income            |      |   | Capital andSurplus |   |              | Income |   |   | Capital andSurplus |   |   | Income |   |   | Capital andSurplus |   |
| Consolidated reporting under                         |   |              |      |   |               |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   generally accepted accounting principles |   | $                 | 2,234,716 |   |               | $      | 17,613,846        |   |   | $ | 2,817,845 |   |   | $ | 20,731,111 |   |   | $ | 2,366,472 |   |   | $ | 18,608,417 |   |
| Attributable to Parent Company                       |   |              | (113,277  | )      |               |   | 75,802            |   |   |   | (44,533 | ) |   |   | 150,598 |   |   |   | (267,204 | ) |   |   | 284,758 |   |
|                                                 |   |              |      |   |               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Brokers National Life Assurance Company              |   |              | 2,347,993 |   |               |   | 17,538,044        |   |   |   | 2,862,378 |   |   |   | 20,580,513 |   |   |   | 2,633,676 |   |   |   | 18,323,659 |   |
|                                                 |   |              |      |   |               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred acquisition costs                           |   |              | 30,216    |   |               |   | (223,041          | ) |   |   | 30,308 |   |   |   | (253,254 | ) |   |   | 40,564 |   |   |   | (283,561 | ) |
| Reserve and premium adjustments                      |   |              | (34,824   | )      |               |   | 184,169           |   |   |   | (15,698 | ) |   |   | 209,877 |   |   |   | 11,899 |   |   |   | 206,302 |   |
| Interest maintenance reserve/AVR                     |   |              | (96,535   | )      |               |   | (762,688          | ) |   |   | (36,511 | ) |   |   | (608,509 | ) |   |   | 22,322 |   |   |   | (426,376 | ) |
| Unrealized appreciation of securities                |   |              | -         |   |               |   | 74,856            |   |   |   | - |   |   |   | (46,334 | ) |   |   | - |   |   |   | (270,084 | ) |
| Annuity deposits and related adjustments             |   |              | 600       |   |               |   | 175,075           |   |   |   | (66,258 | ) |   |   | 201,492 |   |   |   | 21,896 |   |   |   | 231,263 |   |
| Income tax credit                                    |   |              | (58,000   | )      |               |   | (75,726           | ) |   |   | (53,000 | ) |   |   | 30,000 |   |   |   | (59,000 | ) |   |   | 10,000 |   |
| Other                                                |   |              | 102,123   |   |               |   | (753,429          | ) |   |   | 11,966 |   |   |   | (983,792 | ) |   |   | (41,206 | ) |   |   | (826,690 | ) |
|                                                 |   |              |      |   |               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    BNLAC Statutory Basis              |   | $                 | 2,291,573 |   |               | $      | 16,157,260        |   |   | $ | 2,733,185 |   |   | $ | 19,129,993 |   |   | $ | 2,630,151 |   |   | $ | 16,964,513 |   |

|                       |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|----------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                       |   |   |    |   |   |   |    |   |   |
| Current tax provisions     |   | $      | 480,080 |   |   | $      | 647,381 |   |   | $ | 663,441 |   |
| Deferred tax provision     |   |   | 67,000  |   |   |   | (50,000 | )      |   |   | (68,602 | ) |
|                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Total income tax provision |   | $      | 547,080 |   |   | $      | 597,381 |   |   | $ | 594,839 |   |

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|                                        |   | 2010   |      |   | 2009   |   |      | 2008   |   |
|---------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                        |   |   |      |   |   |   |      |   |   |
| Book income before tax                      |   | $      | 2,781,796 |   |   | $      | 3,415,226 |   |   | $ | 2,961,311 |   |
|                                        |   |   |      |   |   |   |      |   |   |   |   |   |
| Income tax computed at statutory rate (34%) |   | $      | 945,810   |   |   | $      | 1,161,177 |   |   | $ | 1,006,845 |   |
| Valuation allowance for AMT credit          |   |   | 99,000    |   |   |   | 10,770    |   |   |   | (17,000 | ) |
| Revision of valuation allowance             |   |   | (31,000   | )      |   |   | 18,356    |   |   |   | 94,052 |   |
| Rate differential                           |   |   | (466,730  | )      |   |   | (592,922  | )      |   |   | (489,058 | ) |
|                                        |   |   |      |   |   |   |      |   |   |   |   |   |
| Total income tax provision                  |   | $      | 547,080   |   |   | $      | 597,381   |   |   | $ | 594,839 |   |
|                                        |   |   |      |   |   |   |      |   |   |   |   |   |

|  Expiring |   | NOL    |    |
|----------------|--------|--------|---------|
|           |   |   |    |
| 2011           |   | $      | 66,000  |   |
| 2012           |   |   | 193,000 |   |
| 2018           |   |   | 105,000 |   |
| 2019           |   |   | 32,000  |   |
| 2020           |   |   | 59,000  |   |
| 2028           |   |   | 31,000  |   |
|           |   | $      | 486,000 |   |

| Portfolio Designated “Held to Maturity” (Note 1) December 31, 2010 |   |  Amortized Cost |       |   | Gross Unrealized Gains |   |          | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|-------------------------------------------------------------------------------------|--------|----------------------|------------|--------|------------------------|--------|---------------|-------------------------|--------|--------|------------------------|--------|
| US Treasury securities and obligations of US government corporations and agencies   |   | $                    | 4,650,534  |   |                   | $      | 50,212        |                    |   | $      | 28,175                 |   |   | $ | 4,672,571 |   |
| Canadian government securities                                                      |   |                 | 478,623    |   |                   |   | -             |                    |   |   | 3,095                  |   |   |   | 475,528 |   |
| Corporate securities                                                                |   |                 | 2,820,080  |   |                   |   | 145,051       |                    |   |   | 93,121                 |   |   |   | 2,872,010 |   |
| Mortgage-backed securities GNMA & FNMA CMO                                      |   |                 | 6,757,202  |   |                   |   |  308,004 |                    |   |   | 28,204                 |   |   |   | 7,037,002 |   |
|                                                                                |   |                 |       |   |                   |   |          |                    |   |   |                   |   |   |   |   |   |
| Totals                                                                              |   | $                    | 14,706,439 |   |                   | $      | 503,267       |                    |   | $      | 152,595                |   |   | $ | 15,057,111 |   |

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| Portfolio Designated “Held to Maturity”(Note 1) December 31, 2009      |   |   Amortized Cost |       |   |  Gross Unrealized Gains |   |          |  Gross Unrealized Losses |   |   |  Estimated Market Value |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------|------------|--------|------------------------------|--------|---------------|-------------------------------|--------|--------|------------------------------|--------|
| US Treasury securities and obligations of US government corporations and agencies       |   | $                          | 6,735,952  |   |                         | $      | 40,338        |                          |   | $      | 75,870                       |   |   | $ | 6,700,420 |   |
| Corporate securities                                                                    |   |                       | 3,741,414  |   |                         |   | 156,296       |                          |   |   | 175,440                      |   |   |   | 3,722,270 |   |
| Mortgage-backed securities GNMA and FNMA CMO                                            |   |                       | 7,881,262  |   |                         |   |  167,694 |                          |   |   | 48,034                       |   |   |   | 8,000,922 |   |
|                                                                                    |   |                       |       |   |                         |   |          |                          |   |   |                         |   |   |   |   |   |
| Totals                                                                                  |   | $                          | 18,358,628 |   |                         | $      | 364,328       |                          |   | $      | 299,344                      |   |   | $ | 18,423,612 |   |
|                                                                                    |   |                       |       |   |                         |   |          |                          |   |   |                         |   |   |   |   |   |
| Portfolio Designated “Available for Sale”(Note 1) December 31, 2009    |   |                       |       |   |                         |   |          |                          |   |   |                         |   |   |   |   |   |
| US Treasury securities and obligations of  US government corporations and agencies |   | $                          | 42,000     |   |                         | $      | 104,720       |                          |   | $      | -                            |   |   | $ | 146,720 |   |
|                                                                                    |   |                       |       |   |                         |   |          |                          |   |   |                         |   |   |   |   |   |
| Totals                                                                                  |   | $                          | 42,000     |   |                         | $      | 104,720       |                          |   | $      | -                            |   |   | $ | 146,720 |   |

|                                   |   | Held to Maturity     |       |
|----------------------------------------|--------|----------------------|------------|
|                                   |   | December 31, 2010    |       |
|                                   |   |  Amortized Cost |       |   | Estimated Market Value |   |
|                                   |   |                 |       |   |   |   |
| Due in one year or less                |   | $                    | 1,339,914  |   |   | $ | 1,360,319 |   |
| Due after one year through five years  |   |                 | 2,670,688  |   |   |   | 2,711,424 |   |
| Due after five years through ten years |   |                 | 2,283,723  |   |   |   | 2,290,000 |   |
| Due after ten years                    |   |                 | 1,403,598  |   |   |   | 1,381,341 |   |
|                                   |   |                 | 7,697,923  |   |   |   | 7,743,084 |   |
|                                   |   |                 |       |   |   |   |   |   |
| Mortgage-backed securities             |   |                 | 7,008,516  |   |   |   | 7,314,027 |   |
|                                   |   |                 |       |   |   |   |   |   |
|                                   |   | $                    | 14,706,439 |   |   | $ | 15,057,111 |   |

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Table of Contents

|                                         |   | 2010   |    |   | 2009        |   |
|----------------------------------------------|--------|--------|---------|--------|-------------|--------|
|                                         |   | Cost   |    |   | MarketValue |   |   | Cost |   |   | MarketValue |   |
|                                         |   |   |    |   |        |   |   |   |   |   |   |   |
| Banks, trusts and insurance companies   |   | $      | 81,183  |   |        | $      | 10,050 |   |   | $ | 93,269 |   |   | $ | 41,901 |   |
| Industrial, savings and loans and other |   |   | 753,085 |   |        |   | 899,074 |   |   |   | 618,646 |   |   |   | 632,770 |   |
|                                         |   |   |    |   |        |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   | $      | 834,268 |   |        | $      | 909,124 |   |   | $ | 711,915 |   |   | $ | 674,671 |   |

|                                                  |   | 2010   |    |   | 2009   |   |      | 2008   |   |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|-----------|--------|--------|
|                                                  |   |   |    |   |   |   |      |   |   |
| Interest on debt securities and cash investments |   | $      | 950,142 |   |   | $      | 1,127,883 |   |   | $ | 1,174,759 |   |
| Dividends on equity securities                        |   |   | 16,986  |   |   |   | 12,309    |   |   |   | 11,989 |   |
|                                                  |   |   |    |   |   |   |      |   |   |   |   |   |
|                                                  |   |   | 967,128 |   |   |   | 1,140,192 |   |   |   | 1,186,748 |   |
| Investment expenses                                   |   |   | (16,109 | )      |   |   | (17,494   | )      |   |   | (15,847 | ) |
|                                                  |   |   |    |   |   |   |      |   |   |   |   |   |
| Net Investment Income                                 |   | $      | 951,019 |   |   | $      | 1,122,698 |   |   | $ | 1,170,901 |   |

|              |   | 2010   |    |   | 2009   |   |   | 2008   |   |
|-------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|              |   |   |    |   |   |   |   |   |   |
| Debt securities   |   | $      | 57,921  |   |   | $      | 70,402 |   |   | $ | (482,137 | ) |
| Equity securities |   |   | (66,434 | )      |   |   | (8,854 | )      |   |   | - |   |
| Fixed assets      |   |   | 1,948   |   |   |   | (3,036 | )      |   |   | 2,420 |   |
|              |   |   |    |   |   |   |   |   |   |   |   |   |
|              |   | $      | (6,565  | )      |   | $      | 58,512 |   |   | $ | (479,717 | ) |

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Table of Contents

|                                        |   | 2010   |    |
|---------------------------------------------|--------|--------|---------|
| Beginning Balance                           |   | $      | 246,862 |   |
| Additions charged to operations             |   |   | 146,170 |   |
| Direct write downs                          |   |   | (90,043 | ) |
| Recoveries previously charged to operations |   |   | -       |   |
|                                        |   |   |    |   |
| Ending Balance                              |   | $      | 302,989 |   |

|                                                                                                                                                                                                                                                                                                        |   | Less than 12 Months |      |   | 12 Months or Greater |   |   | Total      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|----------------------|--------|--------|------------|--------|
| Description of Securities                                                                                                                                                                                                                                                                                   |   | Fair Value          |      |   | Unrealized Losses    |   |   | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Investment in Fixed Maturities,   Held to Maturity                                        |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                        |   |                |      |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |
| US Treasury securities and obligations of US    government corporations and agencies                                                                                                                                                                                                         |   | $                   | 2,371,683 |   |                 | $      | 28,175 |       |   | $ | - |   |   | $ | - |   |   | $ | 2,371,683 |   |   | $ | 28,175 |   |
| Canadian government securities                                                                                                                                                                                                                                                                              |   |                | 475,528   |   |                 |   | 3,095  |       |   |   | - |   |   |   | - |   |   |   | 475,528 |   |   |   | 3,095 |   |
| Corporate securities                                                                                                                                                                                                                                                                                        |   |                | 94,984    |   |                 |   | 8,614  |       |   |   | 665,493 |   |   |   | 84,507 |   |   |   | 760,477 |   |   |   | 93,121 |   |
| Mortgage-backed securities GNMA and FNMA CMO                                                                                                                                                                                                                                                           |   |                | 443,351   |   |                 |   | 24,338 |       |   |   | 300,295 |   |   |   | 3,866 |   |   |   | 743,646 |   |   |   | 28,204 |   |
|               Totals                                                                                                                                                                                                                  |   | $                   | 3,385,546 |   |                 | $      | 64,222 |       |   | $ | 965,788 |   |   | $ | 88,373 |   |   | $ | 4,351,334 |   |   | $ | 152,595 |   |

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Table of Contents

|                                                                                       |   | Less than 12 Months |   |   | 12 Months or Greater |   |   | Total      |   |
|--------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|----------------------|--------|--------|------------|--------|
| Description of Securities                                                                  |   | Fair Value          |   |   | Unrealized Losses    |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
| Other Long-Term Investments                                                                |   | $                   | -      |   |                 | $      | -      |       |   | $ | 876,423 |   |   | $ | 177,995 |   |   | $ | 876,423 |   |   | $ | 177,995 |   |
|               Totals |   | $                   | -      |   |                 | $      | -      |       |   | $ | 876,423 |   |   | $ | 177,995 |   |   | $ | 876,423 |   |   | $ | 177,995 |   |
|                                                                                       |   |                |   |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities                                                                          |   | $                   | -      |   |                 | $      | -      |       |   | $ | 129,389 |   |   | $ | 148,585 |   |   | $ | 129,389 |   |   | $ | 148,585 |   |
|               Totals |   | $                   | -      |   |                 | $      | -      |       |   | $ | 129,389 |   |   | $ | 148,585 |   |   | $ | 129,389 |   |   | $ | 148,585 |   |

| Corporate Bonds December 31, 2010 |   |  S&PRating |   |   |  Amortized Book Value |   |    | Gross Unrealized Losses |   |   | Estimated Market Value |   |
|----------------------------------------|--------|---------------------|--------|--------|----------------------------|--------|---------|-------------------------|--------|--------|------------------------|--------|
| MBIA                                   |   |                | B      |   |                       | $      | 200,000 |                    |   | $      | 47,480                 |   |   | $ | 152,520 |   |
| American General Finance               |   |                | B      |   |                       |   | 200,000 |                    |   |   | 29,440                 |   |   |   | 170,560 |   |
|                                   |   |                |   |   |                       |   |    |                    |   |   |                   |   |   |   |   |   |
| Totals                                 |   |                |   |   |                       | $      | 400,000 |                    |   | $      | 76,920                 |   |   | $ | 323,080 |   |

| Equity Securities December 31, 2010 |   |   Cost |    |   | Gross Unrealized Losses |   |    | Estimated Market Value |   |
|------------------------------------------|--------|------------------|---------|--------|-------------------------|--------|---------|------------------------|--------|
| Garmin LTD                               |   | $                | 220,322 |   |                    | $      | 111,857 |                   |   | $ | 108,465 |   |
| Regions Financial Corporation            |   |             | 30,370  |   |                    |   | 23,370  |                   |   |   | 7,000 |   |
| International Assets Holding Company     |   |             | 27,282  |   |                    |   | 13,358  |                   |   |   | 13,924 |   |
|                                     |   |             |    |   |                    |   |    |                   |   |   |   |   |
| Totals                                   |   | $                | 277,974 |   |                    | $      | 148,585 |                   |   | $ | 129,389 |   |

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Table of Contents

|    Description                                                                                                                                                |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |       |   | Significant OtherObservable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   |   Total |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|------------|--------|---------------------------------------------|--------|--------|------------------------------------------|--------|--------|-------------------|--------|
| Trading Securities                                                                                                                                                                |   |                                                          |       |   |                                        |   |   |                                     |   |   |              |   |
|    Equity Securities – Banks                                                                                                                                 |   | $                                                             | 10,050     |   |                                        | $      | -      |                                     |   | $      | -                 |   |   | $ | 10,050 |   |
|    Equity Securities – Industrial        and Other                                                                   |   |                                                          | 899,074    |   |                                        |   | -      |                                     |   |   | -                 |   |   |   | 899,074 |   |
|            Total Trading Securities                                                                                        |   | $                                                             | 909,124    |   |                                        | $      | -      |                                     |   | $      | -                 |   |   | $ | 909,124 |   |
|                                                                                                                                                                              |   |                                                          |       |   |                                        |   |   |                                     |   |   |              |   |   |   |   |   |
| Fixed Maturities , Held to Maturity                                                                                                                                               |   |                                                          |       |   |                                        |   |   |                                     |   |   |              |   |   |   |   |   |
| US Treasury Securities and    Obligations of  US Government    Corporations and Agencies                                        |   | $                                                             | 4,672,571  |   |                                        | $      | -      |                                     |   | $      | -                 |   |   | $ | 4,672,571 |   |
| Canadian Government Securities                                                                                                                                                    |   |                                                          | 475,528    |   |                                        |   | -      |                                     |   |   | -                 |   |   |   | 475,528 |   |
| Corporate Securities                                                                                                                                                              |   |                                                          | 2,719,490  |   |                                        |   | -      |                                     |   |   | 152,520           |   |   |   | 2,872,010 |   |
| Mortgage-Backed Securities   GNMA and FNMA CMO                                                                                                                     |   |                                                          | 7,037,002  |   |                                        |   | -      |                                     |   |   | -                 |   |   |   | 7,037,002 |   |
|           Total Fixed Maturities,             Held to Maturity |   | $                                                             | 14,904,591 |   |                                        | $      | -      |                                     |   | $      | 152,520           |   |   | $ | 15,057,111 |   |

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Table of Contents

|    Description                                                                                 |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |       |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   |   Total |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|------------|--------|----------------------------------------------|--------|--------|------------------------------------------|--------|--------|-------------------|--------|
|                                                                                                               |   |                                                          |       |   |                                         |   |   |                                     |   |   |              |   |
| Other Long Term Investments                                                                                        |   | $                                                             | -          |   |                                         | $      | -      |                                     |   | $      | 876,423           |   |   | $ | 876,423 |   |
| Cash                                                                                                               |   |                                                          | 2,879,907  |   |                                         |   | -      |                                     |   |   | -                 |   |   |   | 2,879,907 |   |
| Cash Equivalents                                                                                                   |   |                                                          | 5,752,464  |   |                                         |   | -      |                                     |   |   | -                 |   |   |   | 5,752,464 |   |
|           Total Other Investments                                |   | $                                                             | 8,632,371  |   |                                         | $      | -      |                                     |   | $      | 876,423           |   |   | $ | 9,508,794 |   |
|                                                                                                               |   |                                                          |       |   |                                         |   |   |                                     |   |   |              |   |   |   |   |   |
|                  Total Assets |   | $                                                             | 24,446,086 |   |                                         | $      | -      |                                     |   | $      | 1,028,943         |   |   | $ | 25,475,029 |   |

|                                                               |   | Other Long-term Investments |    |   | Fixed Maturity |   |    |  Total |   |
|--------------------------------------------------------------------|--------|-----------------------------|---------|--------|----------------|--------|---------|-------------|--------|
| Fair value, beginning of period                                    |   | $                           | 769,663 |   |           | $      | 90,000  |        |   | $ | 859,663 |   |
| Included in earnings:                                              |   |                        |    |   |           |   |    |        |   |   |   |   |
|     Other than temporary decline in fair value |   |                        | (98,407 | )      |           |   |    |        |   |   | (98,407 | ) |
| Purchases, sales, issuances and settlements                        |   |                        | (27,215 | )      |           |   | -       |        |   |   | (27,215 | ) |
| Temporary increase in fair value                                   |   |                        | 232,382 |   |           |   | 62,520  |        |   |   | 294,902 |   |
|                                                               |   |                        |    |   |           |   |    |        |   |   |   |   |
| Fair value, end of period                                          |   | $                           | 876,423 |   |           | $      | 152,520 |        |   | $ | 1,028,943 |   |

|                                                                                        |   | 2010     |       |   |   | 2009   |       |   |
|---------------------------------------------------------------------------------------------|--------|----------|------------|--------|--------|--------|------------|--------|
|                                                                                        |   | Carrying |       |   | Fair   |   |       |   | Carrying |   |   | Fair |   |   |
| Assets                                                                                      |   | Amount   |       |   | Value  |   |       |   | Amount |   |   | Value |   |   |
|    Cash and Cash Equivalents (Note 1)                                        |   | $        | 8,632,371  |   |   | $      | 8,632,371  |   | (a) |   | $ | 8,090,103 |   |   | $ | 8,090,103 |   | (a) |
|    Investments-fixed maturity, available for sale (Note 4 & Note 1) |   |     | -          |   |   |   | -          |   | (b) |   |   | 146,720 |   |   |   | 146,720 |   | (b) |
|    Investments-fixed maturity, held to maturity (Note 4 & Note 1)   |   |     | 14,706,439 |   |   |   | 15,057,111 |   | (b) |   |   | 18,358,628 |   |   |   | 18,423,612 |   | (b) |
|    Investments –equity securities (Note 4 & Note 1)                |   |     | 909,124    |   |   |   | 909,124    |   | (b) |   |   | 674,671 |   |   |   | 674,671 |   | (b) |
|    Other long term investments (Note 4)                                      |   |     | 1,054,418  |   |   |   | 876,423    |   | (b) |   |   | 1,180,041 |   |   |   | 769,663 |   | (b) |
|    Other financial instruments-Assets                                        |   |     | 305,386    |   |   |   | 305,386    |   | (a) |   |   | 357,284 |   |   |   | 357,284 |   | (a) |
|                                                                                        |   |     |       |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|    Total financial instruments-Assets                                        |   | $        | 25,607,738 |   |   | $      | 25,780,415 |   |   |   | $ | 28,807,447 |   |   | $ | 28,462,053 |   |   |
|                                                                                        |   |     |       |   |   |
| Liabilities                                                                                 |   |     |       |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|    Premium deposit funds                                                     |   | $        | 20,088     |   |   | $      | 20,088     |   | (a) |   | $ | 20,547 |   |   | $ | 20,547 |   | (a) |
|    Bonds payable                                                             |   |     | 1,300,708  |   |   |   | 1,300,708  |   | (a) |   |   | 1,323,388 |   |   |   | 1,323,388 |   | (a) |
|    Supplementary contracts without life contingencies                        |   |     |       |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|        (Note 1)                                          |   |     | 41,932     |   |   |   | 41,932     |   | (a) |   |   | 36,791 |   |   |   | 36,791 |   | (a) |
|    Annuity deposits (Note 1)                                                 |   |     | 2,384,264  |   |   |   | 2,384,264  |   | (a) |   |   | 2,505,778 |   |   |   | 2,505,778 |   | (a) |
|                                                                                        |   |     |       |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|    Total financial instruments-Liabilities                                   |   | $        | 3,746,992  |   |   | $      | 3,746,992  |   |   |   | $ | 3,886,504 |   |   | $ | 3,886,504 |   |   |

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Table of Contents

|   |   |   |    |
|--------|--------|--------|---------|
| 2011   |   | $      | 377,000 |   |
| 2012   |   |   | 374,000 |   |
| 2013   |   |   | 187,000 |   |
| 2014   |   |   | -       |   |
| 2015   |   |   | -       |   |
|   |   |   |    |   |
| Total  |   | $      | 938,000 |   |
|   |   |   |    |   |

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Table of Contents

|                                           |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Balance at January 1                           |   | $      | 1,350,486  |   |   | $      | 1,714,565  |   |   | $ | 2,306,594 |   |
|    Less reinsurance recoverable |   |   | 1,896      |   |   |   | 2,425      |   |   |   | 306 |   |
| Net Balance at January 1                       |   |   | 1,348,590  |   |   |   | 1,712,140  |   |   |   | 2,306,288 |   |
|                                           |   |   |       |   |   |   |       |   |   |   |   |   |
| Incurred related to:                           |   |   |       |   |   |   |       |   |   |   |   |   |
|    Current year                 |   |   | 25,021,674 |   |   |   | 25,966,203 |   |   |   | 27,310,819 |   |
|    Prior years                  |   |   | (94,863    | )      |   |   | (223,847   | )      |   |   | (510,993 | ) |
| Total Incurred                                 |   |   | 24,926,811 |   |   |   | 25,742,356 |   |   |   | 26,799,826 |   |
|                                           |   |   |       |   |   |   |       |   |   |   |   |   |
| Paid related to:                               |   |   |       |   |   |   |       |   |   |   |   |   |
|    Current year                 |   |   | 23,656,779 |   |   |   | 24,686,289 |   |   |   | 25,596,254 |   |
|    Prior years                  |   |   | 1,253,727  |   |   |   | 1,417,721  |   |   |   | 1,795,295 |   |
| Total Paid                                     |   |   | 24,910,506 |   |   |   | 26,104,010 |   |   |   | 27,391,549 |   |
|                                           |   |   |       |   |   |   |       |   |   |   |   |   |
| Net Balance at December 31                     |   |   | 1,353,770  |   |   |   | 1,348,590  |   |   |   | 1,712,140 |   |
|    Plus reinsurance recoverable |   |   | 11,125     |   |   |   | 1,896      |   |   |   | 2,425 |   |
| Balance at December 31                         |   | $      | 1,364,895  |   |   | $      | 1,350,486  |   |   | $ | 1,714,565 |   |

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Table of Contents

|  December 31, 2010                           |   | Gross Amount |       |   | Ceded To Other Companies |   |    | Assumed From Other Companies |   |   | Net Amounts |   |   | Percentage Of Amount Assumed To Net |       |
|---------------------------------------------------|--------|--------------|------------|--------|--------------------------|--------|---------|------------------------------|--------|--------|-------------|--------|--------|-------------------------------------|------------|
| Life insurance in force  (in thousands) |   | $            | 29,162     |   |                     | $      | 11,545  |                         |   | $      | -           |   |   | $                                   | 17,617     |   |   |   | 0.0 | % |
|                                              |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| Premiums-life & annuity insurance             |   | $            | 275,064    |   |                     | $      | 57,659  |                         |   | $      | -           |   |   | $                                   | 217,405    |   |   |   | 0.0 | % |
| Premiums-accident and health                      |   |         | 39,685,443 |   |                     |   | 92,483  |                         |   |   | -           |   |   |                                | 39,592,960 |   |   |   | 0.0 | % |
| Total insurance premiums                          |   | $            | 39,960,507 |   |                     | $      | 150,142 |                         |   | $      | -           |   |   | $                                   | 39,810,365 |   |   |   | 0.0 | % |
|                                              |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| December 31, 2009                                 |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| Life insurance in force  (in thousands) |   | $            | 30,657     |   |                     | $      | 10,933  |                         |   | $      | -           |   |   | $                                   | 19,724     |   |   |   | 0.0 | % |
|                                              |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| Premiums-life & annuity insurance             |   | $            | 305,978    |   |                     | $      | 78,329  |                         |   | $      | -           |   |   | $                                   | 227,649    |   |   |   | 0.0 | % |
| Premiums-accident and health                      |   |         | 41,916,448 |   |                     |   | 93,423  |                         |   |   | -           |   |   |                                | 41,823,025 |   |   |   | 0.0 | % |
| Total insurance premiums                          |   | $            | 42,222,426 |   |                     | $      | 171,752 |                         |   | $      | -           |   |   | $                                   | 42,050,674 |   |   |   | 0.0 | % |
|                                              |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| December 31, 2008                                 |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| Life insurance in force  (in thousands) |   | $            | 33,696     |   |                     | $      | 11,111  |                         |   | $      | -           |   |   | $                                   | 22,585     |   |   |   | 0.0 | % |
|                                              |   |         |       |   |                     |   |    |                         |   |   |        |   |   |                                |       |   |   |   |   |   |
| Premiums-life & annuity insurance             |   | $            | 330,934    |   |                     | $      | 56,256  |                         |   | $      | -           |   |   | $                                   | 274,678    |   |   |   | 0.0 | % |
| Premiums-accident and health                      |   |         | 43,693,176 |   |                     |   | 94,706  |                         |   |   | -           |   |   |                                | 43,598,470 |   |   |   | 0.0 | % |
| Total insurance premiums                          |   | $            | 44,024,110 |   |                     | $      | 150,962 |                         |   | $      | -           |   |   | $                                   | 43,873,148 |   |   |   | 0.0 | % |

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|                                   |   | Quarter Ended |        |
|----------------------------------------|--------|---------------|-------------|
| 2010                                   |   | March 31      |        |   | June 30 |   |   | September 30 |   |   | December 31 |   |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |
| Premium Income                         |   | $             | 10,133,970  |   |   | $ | 10,012,029 |   |   | $ | 10,012,944 |   |   | $ | 9,709,668 |   |
| Net Investment Income                  |   |          | 258,253     |   |   |   | 244,969 |   |   |   | 222,280 |   |   |   | 225,517 |   |
| Vision Insurance Income                |   |          | 582,883     |   |   |   | 598,126 |   |   |   | 618,271 |   |   |   | 610,580 |   |
| Realized Gains (Losses)                |   |          | (324        | ) |   |   | (11,692 | ) |   |   | (47,763 | ) |   |   | 57,750 |   |
| Expenses                               |   |          | (10,286,638 | ) |   |   | (10,584,845 | ) |   |   | (10,211,749 | ) |   |   | (9,909,513 | ) |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                             |   | $             | 688,144     |   |   | $ | 258,587 |   |   | $ | 593,983 |   |   | $ | 694,002 |   |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Per Share (Basic and Diluted) |   | $             | 0.05        |   |   | $ | 0.02 |   |   | $ | 0.04 |   |   | $ | 0.05 |   |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Income                   |   | $             | 707,374     |   |   | $ | 147,990 |   |   | $ | 725,681 |   |   | $ | 663,210 |   |

|                                   |   | Quarter Ended |        |
|----------------------------------------|--------|---------------|-------------|
| 2009                                   |   | March 31      |        |   | June 30 |   |   | September 30 |   |   | December 31 |   |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |
| Premium Income                         |   | $             | 10,545,125  |   |   | $ | 10,395,720 |   |   | $ | 10,266,460 |   |   | $ | 10,402,299 |   |
| Net Investment Income                  |   |          | 296,732     |   |   |   | 310,613 |   |   |   | 244,311 |   |   |   | 271,042 |   |
| Vision Insurance Income                |   |          | 601,519     |   |   |   | 587,522 |   |   |   | 600,993 |   |   |   | 596,114 |   |
| Marketing Fees                         |   |          | -           |   |   |   | - |   |   |   | - |   |   |   | 25,000 |   |
| Realized Gains                         |   |          | 12,165      |   |   |   | 6,514 |   |   |   | 41,823 |   |   |   | 25,186 |   |
| Expenses                               |   |          | (10,689,848 | ) |   |   | (10,888,639 | ) |   |   | (10,590,651 | ) |   |   | (10,242,155 | ) |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                             |   | $             | 765,693     |   |   | $ | 411,730 |   |   | $ | 562,936 |   |   | $ | 1,077,486 |   |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Per Share (Basic and Diluted) |   | $             | 0.05        |   |   | $ | 0.03 |   |   | $ | 0.04 |   |   | $ | 0.07 |   |
|                                   |   |          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Income                   |   | $             | 783,425     |   |   | $ | 466,922 |   |   | $ | 655,973 |   |   | $ | 1,108,501 |   |

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Item 

|                                                                                                                           |   |   |             |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------|--------|--------|--------|
|                                                                                                                           |   | 2010   |             |   | 2009   |   |
| Assets                                                                                                                         |   |   |             |   |   |   |
| Cash and cash equivalents                                                                                                      |   | $      | 238,050          |   |   | $      | 242,259 |   |
| Investments, at fair value                                                                                                     |   |   | -                |   |   |   | - |   |
|             Total Investments, Including Cash and Cash Equivalents |   |   |  238,050    |   |   |   |  242,259 |   |
|                                                                                                                           |   |   |             |   |   |   |   |   |
| Accrued investment income                                                                                                      |   |   | 7,809            |   |   |   | 7,809 |   |
| Loan to EBI                                                                                                                    |   |   | 1,054,418        |   |   |   | 1,152,825 |   |
| Investment in Unconsolidated Subsidiaries at equity (eliminated in consolidated statements)                                    |   |   |  17,538,045 |   |   |   |  20,580,514 |   |
| Income tax asset                                                                                                               |   |   | 19,000           |   |   |   | 28,000 |   |
| Other assets                                                                                                                   |   |   | 134,590          |   |   |   | 117,514 |   |
|                                                                                                                           |   |   |             |   |   |   |   |   |
|                   Total Assets       |   | $      | 18,991,912       |   |   | $      | 22,128,921 |   |

| Liabilities                                                                                                                                                                                                 |   |   |          |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|--------|--------|
| Bonds payable                                                                                                                                                                                               |   | $      | 1,300,708     |   |   | $      | 1,323,388 |   |
| Other liabilities                                                                                                                                                                                           |   |   | 77,358        |   |   |   | 74,423 |   |
|                 Total Liabilities                                                                                           |   |   | 1,378,066     |   |   |   | 1,397,811 |   |
|                                                                                                                                                                                                        |   |   |          |   |   |   |   |   |
| Shareholders' Equity                                                                                                                                                                                        |   |   |          |   |   |   |   |   |
|                                                                                                                                                                                                        |   |   |          |   |   |   |   |   |
| Common stock, $.02 stated value, 45,000,000 shares authorized; 15,463,965 shares issued and outstanding                                                                                                     |   |   |  309,279 |   |   |   |  309,279 |   |
| Additional paid-in capital                                                                                                                                                                                  |   |   | 5,704,090     |   |   |   | 5,725,590 |   |
| Retained earnings                                                                                                                                                                                           |   |   | 12,041,212    |   |   |   | 15,092,975 |   |
| Treasury stock, at cost, 382,030; 343,194 shares, respectively                                                                                                                                         |   |   | (486,316      | )      |   |   | (432,775 | ) |
| Unrealized appreciation of securities                                                                                                                                                                       |   |   | 45,581        |   |   |   | 36,041 |   |
|                          Total Shareholders' Equity                            |   |   | 17,613,846    |   |   |   | 20,731,110 |   |
|                                                                                                                                                                                                        |   |   |          |   |   |   |   |   |
|                          Total Liabilities and Shareholders’ Equity |   | $      | 18,991,912    |   |   | $      | 22,128,921 |   |

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|                                                                                                                         |   | 2010   |           |   | 2009   |   |          | 2008   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|--------|---------------|--------|--------|
| Income                                                                                                                       |   |   |           |   |   |   |          |   |   |
|     Net investment income                                                                                |   | $      | 203,853        |   |   | $      | 193,621       |   |   | $ | 206,082 |   |
|     Marketing fees                                                                                       |   |   | -              |   |   |   | 25,000        |   |   |   | - |   |
|     Realized gain on debt extinguishment                                                                 |   |   | 4,536          |   |   |   | 27,176        |   |   |   | 44,370 |   |
|     Realized gains (losses)                                                                              |   |   | (98,407        | )      |   |   | -             |   |   |   | (201,135 | ) |
|                 Total Income                 |   |   | 109,982        |   |   |   | 245,797       |   |   |   | 49,317 |   |
|                                                                                                                         |   |   |           |   |   |   |          |   |   |   |   |   |
| Expenses                                                                                                                     |   |   |           |   |   |   |          |   |   |   |   |   |
|     General and administrative                                                                           |   |   | 136,625        |   |   |   | 205,013       |   |   |   | 232,064 |   |
|      Interest expense                                                                               |   |   | 77,634         |   |   |   | 82,317        |   |   |   | 93,959 |   |
|                  Total Expenses         |   |   | 214,259        |   |   |   | 287,330       |   |   |   | 326,023 |   |
|                                                                                                                         |   |   |           |   |   |   |          |   |   |   |   |   |
|      Income from operations before income taxes                                                     |   |   | (104,277       | )      |   |   | (41,534       | )      |   |   | (276,706 | ) |
|      Provision for income taxes                                                                     |   |   | 9,000          |   |   |   | 3,000         |   |   |   | (9,502 | ) |
|                                                                                                                         |   |   |           |   |   |   |          |   |   |   |   |   |
|      Net income before equity in undistributed income of subsidiaries                               |   |   |  (113,277 | )      |   |   |  (44,534 | )      |   |   |  (267,204 | ) |
|      Equity in undistributed income of subsidiaries                                                 |   |   | 2,347,993      |   |   |   | 2,862,379     |   |   |   | 2,633,676 |   |
|                                                                                                                         |   |   |           |   |   |   |          |   |   |   |   |   |
|                    Net Income |   | $      | 2,234,716      |   |   | $      | 2,817,845     |   |   | $ | 2,366,472 |   |
|                                                                                                                         |   |   |           |   |   |   |          |   |   |   |   |   |
|  Net Income Per Common Share (Basic and Diluted)                                                                        |   | $      | .15            |   |   | $      | .19           |   |   | $ | .16 |   |

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|                                                                                                                                                |   |   |            |   |   |   |          |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|---------------|--------|--------|
|                                                                                                                                                |   | 2010   |            |   | 2009   |   |          | 2008   |   |
| Cash Flows from Operating Activities                                                                                                                |   |   |            |   |   |   |          |   |   |
|       Net income                                                                                                      |   | $      | 2,234,715       |   |   | $      | 2,817,845     |   |   | $ | 2,366,472 |   |
|       Adjustments to compute cash provided by operating activities                                               |   |   | (2,249,534      | )      |   |   | (2,934,999    | )      |   |   | (2,495,882 | ) |
|                Net Cash Used by Operating Activities                |   |   | (14,819         | )      |   |   | (117,154      | )      |   |   | (129,410 | ) |
|                                                                                                                                                |   |   |            |   |   |   |          |   |   |   |   |   |
| Cash Flows from Investing Activities                                                                                                                |   |   |            |   |   |   |          |   |   |   |   |   |
|       Proceeds from sales of investments                                                                              |   |   | -               |   |   |   | 200,000       |   |   |   | - |   |
|       Dividend from subsidiary                                                                                        |   |   | 5,400,000       |   |   |   | 800,000       |   |   |   | 1,300,000 |   |
| Net Cash Provided by Investing Activities                                                                                                           |   |   |  5,400,000 |   |   |   | 1,000,000     |   |   |   |  1,300,000 |   |
|                                                                                                                                                |   |   |            |   |   |   |          |   |   |   |   |   |
| Cash Flows from Financing Activities                                                                                                                |   |   |            |   |   |   |          |   |   |   |   |   |
|       Purchase of treasury stock                                                                                      |   |   | (105,041        | )      |   |   | (155,352      | )      |   |   | (20,858 | ) |
|       Dividends                                                                                                       |   |   | (5,286,478      | )      |   |   | (757,525      | )      |   |   | (760,356 | ) |
|       Stock options exercised                                                                                         |   |   | 30,000          |   |   |   | 66,499        |   |   |   | 15,401 |   |
|       Payments on long term debt                                                                                      |   |   | -               |   |   |   | -             |   |   |   | (50,687 | ) |
|       Debt extinguishments                                                                                            |   |   | (27,871         | )      |   |   | (92,717       | )      |   |   | (119,924 | ) |
|                Net Cash Used by Financing Activities                |   | $      | (5,389,390      | )      |   | $      | (939,095      | )      |   | $ | (936,424 | ) |
|                Net Increase (Decrease) in Cash and Cash Equivalents |   |   |  (4,209    | )      |   |   |  (56,249 | )      |   |   |  234,166 |   |
|                                                                                                                                                |   |   |            |   |   |   |          |   |   |   |   |   |
|                Cash and Cash Equivalents, Beginning of Period       |   |   | 242,259         |   |   |   | 298,508       |   |   |   | 64,342 |   |
|                                                                                                                                                |   |   |            |   |   |   |          |   |   |   |   |   |
|                Cash and Cash Equivalents, End of Period                  |   | $      | 238,050         |   |   | $      | 242,259       |   |   | $ | 298,508 |   |

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