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:

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| | - | pertain to
 the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
 dispositions of the assets of PNBC;                                                            
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| | - | 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;
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| | - | provide
 reasonable assurance that receipts and expenditures of PNBC are being made
 only in accordance with authorization of management and directors of PNBC; and                                                   
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| | - | 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, 2007. 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, 2007, PNBC
maintained effective internal control over financial reporting.

BKD
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, 2007.

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