SecProbe.io

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Mail Stop 6010

							September 2, 2005

Wayne E. Ahart
Chief Executive Officer
BNL Financial Corporation
2100 West William Cannon, Suite L
Austin, TX  78745

Re:	BNL Financial Corporation
	Form 10-K for the Fiscal Year Ended December 31, 2004
      File Number 0-16880

Dear Mr. Ahart:

	We have reviewed your filing and have the following comments.
In our comments, we ask you to provide us with information so we
may
better understand your disclosure. After reviewing this
information,
we may raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-K

Reinsurance, page 4
1. We note your disclosure in the first paragraph of this section
where you state that you reinsure with other insurance companies
portions of the risks you underwrite on the sales of life and
accident and health insurance.  As it appears that approximately
95%
of your revenue is derived from dental insurance, please explain
to
us why you do not discuss any reinsurance arrangements concerning
your dental insurance.  Additionally, please explain to us what
types
of insurance policies you reinsure with respect to your health
insurance.

Personnel, page 8
2. It appears you use ESPI an ESP as third party administrators to
process dental claims. It also appears you have several loan
agreements with them.  Please provide us with an analysis as to
whether your service agreements with ESPI and ESP and the loan
agreements with them are material contracts that should be filed.

Management`s Discussion and Analysis
Critical Accounting Policies, page 11
3. We note that you account for your accident and health policies
as
long duration contracts and record a liability for future policy
benefits. Please describe the specific provisions in your dental
insurance policies that served as the basis for your use of the
long
duration accounting model to account for these products. Provide
specific references to the applicable technical literature upon
which
you relied, including how you applied the guidance in paragraphs
7-14
of SFAS 60.
4. We note that in 2004 you increased the liability for future
policy
benefits by $611,410 based on new reserve rules prescribed by
state
insurance departments to "more properly match premiums and
benefits."
Please provide us with the following information.

* Explain your basis for concluding in prior years that statutory
reserves could be used for GAAP reporting purposes.
* Explain how you determined in prior years that dental premiums
and
benefits were properly matched on a GAAP basis.
* Explain the amount and nature of this mismatch between premiums
and
benefits under the prior reserve methodology for each applicable
period presented.
* Explain your basis for concluding that the new reserve method
will
result in a proper matching of dental premiums and benefits.
* Explain why recognition occurred in 2004 and was not required in
earlier periods.
5. We believe that your disclosures regarding claim reserves could
be
improved to better explain the judgments and uncertainties
surrounding these estimates and the potential impact on your
financial statements. Disclosure explaining the likelihood that
materially different amounts would be reported under different
conditions or using different assumptions is consistent with the
objective of Management`s Discussion and Analysis. Accordingly,
please provide us in a disclosure-type format the following
information for each of your lines of business.

* Range of claim reserve estimates as determined by your
actuaries.
* Key assumptions used to arrive at management`s best estimate of
claim reserves within that range and what specific factors led
management to believe this amount rather than any other amount
within
the range represented the best estimate of incurred losses.
* Changes in key assumptions you made to estimate claim reserves
at
each reporting date. Demonstrate the sensitivity of the level of
claim reserves to changes in key assumptions.
* More precise insight into the existence and effects on future
operations and financial condition of known trends in claim
frequency
and severity. Discuss the variability inherent in these trends and
the potential future impact on your earnings and cash flow so that
investors can ascertain the likelihood that your past performance
is
indicative of your future performance.
Long-term Contractual Obligations, page 14
6. We note that you have not included estimated payments
associated
with your liabilities for future policy benefits, policy claims
payable and annuity deposits in the contractual obligation table,
and
it would appear that these liabilities represent future legal
obligations of the Company. Due to the significance of these
future
legal obligations, we believe that inclusion of related future
payments in the contractual obligation table will allow investors
to
more fully evaluate your liquidity and capital resources. The
purpose
of Financial Reporting Release 67 is to obtain enhanced disclosure
concerning a registrant`s contractual payment obligations and the
exclusion of ordinary course items is inconsistent with the
objective
of the Item 303(a)(5) of Regulation S-K. Given your asset
liability
management processes, it appears that you possess the capability
for
estimating the future payments associated with these reserves
based
on your past experience. Please tell us why you omitted payments
associated with these liabilities from your contractual obligation
table.

*	*	*

      Please respond to the comments within 10 business days or
tell
us when you will provide us with a response.  Please furnish a
letter
that keys your response to our comments and provides the requested
information. Detailed letters greatly facilitate our review.
Please
file your letter on EDGAR under the form type label CORRESP.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceedings initiated by the Commission or any person under the
federal securities laws of the United States.

	In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.

      You may contact Frank Wyman at (202) 551-3660 or Kevin
Woody,
Accounting Branch Chief at (202) 551-3629 if you have questions
regarding comments on the financial statements and related
matters.
Please contact Song P. Brandon at (202) 551-3621, or me at (202)
551-
3710 with any other questions.

							Sincerely,

							Jeffrey P. Riedler
							Assistant Director

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Wayne E. Ahart
BNL Financial Corporation
September 2, 2005
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