EXHIBIT 99.1. REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.

         Management of Princeton National Bancorp, Inc. ("PNBC") is responsible
for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934. PNBC's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America. Internal control over financial reporting includes
those policies and procedures that:

         -        pertain to the maintenance of records that, in reasonable
                  detail, accurately and fairly reflect the transactions and
                  dispositions of the assets of PNBC;

         -        provide reasonable assurance that transactions are recorded as
                  necessary to permit preparation of financial statements in
                  accordance with accounting principles generally accepted in
                  the United States of America;

         -        provide reasonable assurance that receipts and expenditures of
                  PNBC are being made only in accordance with authorization of
                  management and directors of PNBC; and

         -        provide reasonable assurance regarding prevention or timely
                  detection of unauthorized acquisition, use or disposition of
                  assets that could have a material effect on the consolidated
                  financial statements.

         Internal control over financial reporting includes the controls
themselves, monitoring and internal auditing practices and actions taken to
correct deficiencies as identified.

         Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

         Management assessed the effectiveness of PNBC's internal control over
financial reporting as of December 31, 2004. Management based this assessment on
criteria for effective internal control over financial reporting described in
"Internal Control-Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Management's assessment included an
evaluation of the design of PNBC's internal control over financial reporting and
testing of the operational effectiveness of its internal control over financial
reporting. Management reviewed the results of its assessment with the Audit
Committee of the Board of Directors.

         Based on this assessment, management determined that, as of December
31, 2004, PNBC maintained effective internal control over financial reporting.

         KPMG LLP, the independent registered public accounting firm, that
audited and reported on the consolidated financial statements of PNBC included
in this report, has issued an attestation report on management's assessment of
internal control over financial reporting as of December 31, 2004.



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