FORM 10-Q

                        SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549



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

     For the quarterly period ended June 30, 1998


     Commission File No. 0-20050

                         Princeton National Bancorp, Inc.
              (Exact name of registrant as specified in its charter)

              Delaware                            36-32110283
       (State or other jurisdiction     (I.R.S. Employer Identification No.)
     of incorporation or organization)

                     606 S. Main Street, Princeton, IL 61356
              (Address of principal executive offices and Zip Code)

                                  (815) 875-4444
               (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                    Yes  X      No
                         -----     -----                         
     As of July 23, 1998, the registrant had outstanding 3,971,741 shares of its
$5 par value common stock.

                                Page 1 of 14 pages
<PAGE>
                          Part I: FINANCIAL INFORMATION


     The consolidated financial statements of Princeton National Bancorp, Inc.
and Subsidiary and management's discussion and analysis of financial condition
and results of operations are presented in the schedules as follows:

Schedule 1: Consolidated Balance Sheets
Schedule 2: Consolidated Statements of Income and Comprehensive Income
Schedule 3: Consolidated Statements of Stockholders' Equity
Schedule 4: Consolidated Statements of Cash Flows
Schedule 5: Note to Consolidated Financial Statements
Schedule 6: Management's Discussion and Analysis of
            Financial Condition and Results of Operations


                            Part II: OTHER INFORMATION


Item 4. Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Shareholders of Princeton National Bancorp, Inc. was
held on April 14, 1998, for the purpose of electing three directors each to
serve for a term of three years and approving a stock option plan.  Proxies for
the meeting were solicited by Management pursuant to Regulation 14A under the
Securities Exchange Act of 1934, and there was no solicitation in opposition to
Management's solicitation.

     All three of Management's nominees for director listed in the proxy
statement were elected.  The results of the vote were as follows:

<TABLE>
<CAPTION>
                              Shares
                              Voted            Shares
                               For            Withheld          Abstain
                              -------        ----------          -------
<S>                           <C>             <C>                <C>

Harold C. Hutchison, Jr.      2,319,491       16,820             8,800
Thomas R. Lasier              2,336,311            0             8,800
Stephen W. Samet              2,294,618       41,693             8,800

</TABLE>

     The results of the vote for the stock option plan were as follows (the plan
was approved):

<TABLE>
<CAPTION>
                                 For         Against             Abstain
                              --------       -------             -------
<S>                           <C>            <C>                 <C>

Stock Option Plan             1,832,659      310,655             65,043

</TABLE>

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits:

          27 - Financial Data Schedule for the period ended June 30, 1998.    

     (b)  No reports on Form 8-K were filed during the quarter ended June 30,
1998.
                                                                 
                                    SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              PRINCETON NATIONAL BANCORP, INC.


Date:  July 31, 1998          By /s/ Tony J. Sorcic
                                ------------------------------------
                                  Tony J. Sorcic
                                  President & Chief Executive Officer


Date:  July 31, 1998          By  /s/ Todd D. Fanning
                                ------------------------------------
                                  Todd D. Fanning
                                  Chief Financial Officer
          
                         2                                       
<PAGE>
      PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY             Schedule 1
          CONSOLIDATED BALANCE SHEETS
                 (in thousands)
<TABLE>
<CAPTION>                                    
                                             June 30,            December 31,
                                               1998                  1997
                                             ---------           ------------
                                            (Unaudited)
<S>                                         <C>                 <C>
ASSETS                                                                
Cash and due from banks                      $ 12,377            $ 21,268
Short-term funds                               14,895              11,900
Loans held for sale                             1,643               1,576  
Investment securities:                                                     
  Available-for-sale, at fair value           113,635             107,042
  Held-to-maturity (fair value of 
  $13,166 and $12,661 at June 30, 1998
  and December 31, 1997, respectively)         13,016              12,498
                                             --------            --------

       Total investment securities            126,651             119,540
                                             --------            --------
Loans:
  Gross loans                                 276,541             274,725
  Less: Unearned interest                         (73)               (120)
        Allowance for possible loan losses     (1,894)             (1,830) 
                                             --------            --------
       Net loans                              274,574             272,775
                                             --------            --------
Premises and equipment                          8,928               8,752
Interest receivable                             5,124               5,808
Goodwill and intangible assets, net of 
accumulated amortization                        5,124               5,272
Other assets                                    3,212               2,769
                                             --------            --------
       TOTAL ASSETS                          $452,528            $449,660
                                             --------            --------
                                             --------            --------

LIABILITIES
Deposits:
  Demand                                     $ 36,797            $ 42,333
  Interest-bearing demand                      86,498              87,364
  Savings                                      54,090              52,193
  Time                                        197,326             204,050
                                             --------            --------
       Total deposits                         374,711             385,940

Short-term borrowings                          30,102              13,237
Long-term borrowings                                0               3,750
Other liabilities                               4,271               4,065
                                             --------            --------

       TOTAL LIABILITIES                      409,084             406,992
                                             --------            --------

STOCKHOLDERS' EQUITY                                                       
Common stock:  $5 par value, 7,000,000 
  shares authorized; 4,139,841 issued at 
  June 30, 1998 and 4,139,917 issued at 
  December 31, 1997                            20,700              20,700
Surplus                                         6,232               6,235
Retained earnings                              18,278              16,869
Accumulated other comprehensive income, 
  net of tax                                      540                 560
Less: Cost of 168,100 treasury shares at 
  June 30, 1998 and 123,604 treasury shares 
  at December 31, 1997                         (2,306)             (1,396)
                                             --------            --------

       TOTAL STOCKHOLDERS' EQUITY              43,444              42,968
                                             --------            --------
       TOTAL LIABILITIES AND  
           STOCKHOLDERS' EQUITY              $452,528            $449,960
                                             --------            --------
                                             --------            --------

</TABLE>
    See accompanying note to consolidated financial statements
                         3                                       
<PAGE>
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                     Schedule 2
      CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

     (Unaudited)                   For the Three Months     For the Six Months
(In thousands, except share data)      Ended June 30             Ended June 30
                                   1998           1997        1998         1997
                                  ------         ------      ------       ------
<S>                            <C>            <C>         <C>          <C>

Interest income:
  Interest and fees on loans   $   6,242      $   6,002   $  12,366    $  11,709
  Interest and dividends on 
   investment securities           1,822          1,647       3,577        3,281
  Interest on short-term funds        74             34         160           84
                               ---------      ---------   ---------    ---------
                                                                 
       Total interest income       8,138          7,683      16,103       15,074

Interest expense:
  Interest on deposits             3,769          3,534       7,549        6,932
  Interest on short-term 
   borrowings                        270             98         443          192
  Interest on long-term 
   borrowings                          6             90          86          180
                               ---------      ---------   ---------     --------

       Total interest expense      4,045          3,722       8,078        7,304
                               ---------      ---------   ---------     --------

Net interest income                4,093          3,961       8,025        7,770
Provision for possible loan 
 losses                               73            207         128          312
                               ---------      ---------   ---------     --------

Net interest income after 
 provision  for possible 
 loan losses                       4,020          3,754       7,897        7,458

Non-interest income:
  Trust & farm management
   fees                              296            246         625          555
  Service charges on deposit 
   accounts                          372            333         697          653
  Other service charges              132            108         250          210
  Gain (loss) on sales of 
   securities                         11             71          21           68
  Loan servicing fees and 
   other charges                      84             40         159           70
  Other operating income              69             40         165          123
                                --------      ---------   ---------    ---------

       Total non-interest 
       income                        964            838       1,917        1,679

Non-interest expense:
  Salaries and employee 
   benefits                        1,796          1,653       3,600        3,319
  Occupancy                          249            238         500          487
  Equipment expense                  201            230         397          455
  FDIC/OCC assessments                48             45          94           54
  Goodwill and intangible 
   assets amortization               117            116         234          234
  Data processing                    118            165         290          332
  Other operating expense            804            658       1,562        1,316
                               ---------      ---------   ---------    ---------
       Total non-interest 
       expense                     3,333          3,105       6,677        6,197
                               ---------      ---------   ---------    ---------

Income before income taxes         1,651          1,487       3,137        2,940
Income tax expense                   433            390         814          766
                               ---------      ---------   ---------    ---------

Net income                     $   1,218      $   1,097   $   2,323    $   2,174
                               ---------      ---------   ---------    ---------
                               ---------      ---------   ---------    ---------

Basic and diluted earnings 
 per share:                         0.31           0.27        0.58         0.53
                                                                 
Weighted average shares 
 outstanding                   3,993,123      4,086,914   4,003,129    4,086,440

Dividends per share                 0.08           0.07        0.16         0.14
</TABLE>


                     See accompanying note to consolidated financial statements
                                           4                                    
                                                                 
<PAGE>                                                                
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                       Schedule 2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                            

<TABLE>
<CAPTION>
          (Unaudited)
(In thousands, except share data)

                              For the Three Months          For the Six Months
                                 Ended June 30                 Ended June 30   
                            1998           1997           1998           1997
                          --------       --------       --------       --------
<S>                       <C>            <C>            <C>            <C>

Net Income                $1,218         $1,097         $2,323         $2,174
  Other comprehensive 
   income, net of tax        

  Unrealized gains on 
   securities:                                                  
      Unrealized holding 
      gain (loss) 
      arising during 
      the period              64            433              1             75
      Less:  
       Reclassification 
       adjustment for 
       gains included
       in net income          11             71             21             68
                          ------         ------         ------         ------

  Other comprehensive 
   income                     53            362            (20)             7
                          ------         ------         ------         ------

Comprehensive income      $1,271         $1,459         $2,303         $2,181
                          ------         ------         ------         ------
                          ------         ------         ------         ------
</TABLE>


                 See accompanying note to consolidated financial statements

                                                     5
<PAGE>
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                       Schedule 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                 
               (Unaudited)

<TABLE>
<CAPTION>                                                             
                                             For the Six Months
                                                Ended June 30
                                               1998           1997
                                             ---------      ---------
                                                  (In thousands)

<S>                                          <C>            <C>
Balance, January 1                           $42,668        $40,197

  Net income                                   2,323          2,174
  Cash dividends                                (616)          (545)
  Other comprehensive income, net of tax         (20)             7
  Purchases of treasury stock                   (931)             0
  Sales of treasury stock                         20             32
                                             -------        -------

Balance, June 30                             $43,444        $41,865
                                             -------        -------
                                             -------        -------
</TABLE>

                 See accompanying note to consolidated financial statements   
                                                     6
<PAGE>
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                    Schedule 4
CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
               (Unaudited)
<TABLE>
<CAPTION>
                             For the Three Months          For the Six Months
                                Ended June 30                Ended June 30
                            1998           1997           1998           1997
                         ----------     ----------     ----------     ----------
<S>                      <C>            <C>            <C>            <C>
     (In thousands)
Operating activities:
  Net income             $ 1,218        $ 1,097        $ 2,323        $ 2,174
  Adjustments to 
   reconcile net income 
   to net cash provided 
   by operating 
   activities:
     Depreciation            159            226            312            452
     Provision for 
      possible loan 
      losses                  73            207            128            312
     Amortization of 
      goodwill and 
      other intangible 
      assets                 117            116            234            234
     Amortization of 
      premiums on 
      investment 
      securities, net of 
      accretion               44             18             85             58
     Gain on sales of 
      securities, net        (11)           (71)           (21)           (68)
     Loss on sales of 
      other real estate        0              1              0              1
     Loans originated 
      for sale            (4,438)        (1,597)        (9,912)        (2,265)
     Proceeds from sales 
      of loans originated 
      for sale             4,975          1,834          9,845          2,756
     (Decrease) increase 
       in accrued interest 
       payable               (76)            95           (166)           128
     (Increase) decrease 
      in accrued interest 
      receivable             (96)          (106)           684            775
     Increase in other 
      assets                (341)          (904)          (574)          (958)
     Increase in other 
      liabilities              0             86            381            444
                         -------        -------        -------        -------

       Net cash 
       provided by 
       operating 
       activities          1,624          1,002          3,319          4,043
                         -------        -------        -------        -------

Investing activities:
  Proceeds from sales 
   of investment 
   securities available-
   for-sale                2,008          3,247          5,016          3,488
  Proceeds from 
   maturities of 
   investment securities 
   available-for-sale      9,387         10,927         18,291         23,651
  Purchase of investment 
   securities available-
   for-sale              (14,516)       (10,532)       (29,992)       (19,811)
  Proceeds from 
   maturities of 
   investment securities 
   held-to-maturity           90             85            596            575
  Purchase of investment 
   securities held-to-
   maturity                 (285)          (623)        (1,115)          (893)
  Proceeds from sales of 
   other real estate 
   owned                       0            126             45            181
  Net increase in loans   (7,530)        (9,823)        (1,927)       (11,255)
  Purchases of premises 
   and equipment            (346)          (138)          (488)          (276)
                         -------        -------        -------        -------

   Net cash used for 
   investing activities  (11,192)        (6,731)        (9,574)        (4,340)
                         -------        -------        -------        -------

Financing activities:
  Net increase (decrease) 
   in deposits               376          9,553        (11,229)         8,408
  Net increase (decrease) 
   in short-term 
   borrowings             13,838          3,462         16,865         (2,503)
  Payments for long-
   term borrowings        (3,600)             0         (3,750)          (150)
  Dividends paid            (322)          (273)          (616)          (545)
  Purchase of treasury 
   stock                    (799)             0           (931)             0
  Sale of treasury 
   stock                      11             21             20             32
                         -------        -------        -------        -------

  Net cash provided by 
  financing activities     9,504         12,763            359          5,242
                         -------        -------        -------        -------

(Decrease) increase in 
 cash and cash 
 equivalents                 (64)         7,034         (5,896)         4,945
                         -------        -------        -------        -------
Cash and cash 
 equivalents at 
 beginning of quarter 
 and year                 27,336         19,044         33,168         21,133
                         -------        -------        -------        -------

Cash and cash 
 equivalents at 
 June 30                 $27,272        $26,078         27,272         26,078
                         -------        -------        -------        -------
                         -------        -------        -------        -------
-------------------------------------------------------------------------------
Supplemental disclosures 
of cash flow information:
    Cash paid during 
    the period for:                                            
      Interest            $3,845         $3,646         $7,715         $7,176
          Income taxes      $678           $784           $764           $934

Supplemental disclosures 
of non-cash flow 
activities:
    Amounts transferred 
    to other real estate 
    owned                    $34             $0            $34           $108   
                                                                 
</TABLE>                                                              
                 See accompanying note to consolidated financial statements   

                                    7
<PAGE>
                                                      Schedule 5



                              PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY
                                 Note to Consolidated Financial Statements
                                                (Unaudited)



The accompanying unaudited consolidated financial statements have been prepared 
in accordance with the instructions to Form 10-Q and do not include all of the 
information required by generally accepted accounting principles for complete 
financial statements and related footnote disclosures.  In the opinion
of management, all adjustments (consisting only of normal recurring accruals) 
considered for a fair presentation of the results for the interim period have 
been included.  For further information, refer to the financial statements and 
notes included in the Registrant's 1997 Annual Report on Form 10-K.  Results
of operations for interim periods are not necessarily indicative of the 
results that may be expected for the year. 
                                                     8
<PAGE>

                                                                   Schedule 6

                             PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY 
                                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                               FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                               June 30, 1998
                                                (unaudited)

     The following discussion provides information about Princeton National 
Bancorp, Inc.'s (PNB) financial condition and results of operations for the 
quarter and six months ended June 30, 1998.  This discussion should be read in 
conjunction with the attached consolidated financial statements and note
thereto.  Certain statements in this report constitute  forward-looking 
statements' within the meaning of Section 27A of the Securities Act of 1933 and 
Section 21E of the Securities Exchange Act of 1934.  PNB cautions that such 
forward-looking statements involve risks and uncertainties that may cause actual
results to differ materially from those expressed or implied.

STOCK DIVIDEND
--------------

     On April 14, 1998, the Board of Directors of PNB declared a three-for-two 
stock split in the form of a 50% stock dividend which was distributed May 15, 
1998 to shareholders of record on April 24, 1998. Each shareholder of record 
received one new share of common stock for each two shares owned as of the
record date.  Cash was paid in lieu of fractional shares.  Accordingly, all 
per share data stated in this Form 10-Q has been adjusted to reflect this 
dividend.

RESULTS OF OPERATIONS
---------------------

     Net income for the second quarter of 1998 was $1,218,000, or basic and 
diluted earnings per share of $0.31 as compared to net income of $1,097,000 in 
the second quarter of 1997, or basic and diluted earnings per share of $0.27.  
This represents an increase of $121,000 (11.0%) or $0.04 per share.  For the 
first six months of 1998, net income was $2,323,000, or basic and diluted 
earnings per share of $0.58, compared to $2,174,000, or basic and diluted 
earnings per share of $0.53 in the first six months of 1997.  Annualized 
return on average assets and return on average equity were 1.11% and 11.38%,
respectively, for the second quarter of 1998, compared with 1.06% and 10.77% 
for the second quarter of 1997.  For the six-month periods, the annualized 
returns on average assets and average equity were 1.06% and 10.93%, 
respectively, for 1998, compared to 1.06% and 10.79% in 1997.  

     Net interest income before any provision for loan losses was $4,093,000 
for the second quarter of 1998, compared to $3,961,000 for the second quarter
of 1997 (an increase of $132,000 or 3.3%).  Additionally, for the six-month 
periods, net interest income before any provision for loan losses was 
$8,025,000 for 1998, as compared to $7,770,000 for 1997, representing an 
increase of $255,000 (or 3.3%).  This increase is a result of an increase in 
average interest-earning assets from $378.9 million at June 30, 1997, to 
$407.6 million at June 30, 1998.  However, as of June 30, 1998, total loans 
represented 61.5% of total assets compared with 63.4% as of June 30, 1997.  
Accordingly, the net yield on interest-earning assets (on a fully taxable 
equivalent basis) decreased from 4.33% for the first six months of 1997 to 
4.17% for the first six months of 1998.

     Non-interest income increased by $126,000 (or 15.0%) during the second 
quarter of 1998 as compared to the second quarter of 1997 from $838,000 to 
$964,000.  For the first six months of 1998, non-interest income has 
increased to $1,917,000 from $1,679,000 in the first six months of 1997 (an 
increase of $238,000 or 14.2%).  With the exception of net gains from 
securities transactions, which decreased from $68,000 for the first six 
months of 1997 to $21,000 for the first six months of 1998, all categories had
increases over the same time frame.  Most notably, loan servicing fees increased
$89,000, trust and farm management fees increased $70,000, service charges on 
deposit accounts increased $44,000, and other service charges increased 
$40,000.  

     Non-interest expenses for the second quarter of 1998 were  $3,333,000, an 
increase of $228,000 (or 7.3%) from the second quarter of 1997.  1998 year-to-
date non-interest expenses at $6,677,000 have increased $480,000 (or 7.8%) 
from 1997.  This is due mainly to an increase in salaries and employee 
benefits of $281,000 (or 8.5%).  Also worth noting is an increase in other 
operating expenses from $1,316,000 for the first half of 1997, to $1,562,000 
for the first half of 1998.  This is a result of several small increases over 
many categories of PNB's operating expenses.  Offsetting these increases was
a $58,000 reduction in equipment expense, primarily reduced depreciation 
expense.

EARNINGS PER SHARE
------------------

     Basic income per share is computed by dividing net income by the weighted 
average number of shares outstanding which were 3,993,123 and 4,086,914 for the
quarters ending June 30, 1998 and 1997, respectively, and 4,003,129 and 
4,086,440 for the six-month periods ending June 30, 1998 and 1997, 
respectively.  There were no common stock equivalents during any of these 
periods, therefore diluted earnings per share is the same calculation.

ANALYSIS OF FINANCIAL CONDITION
-------------------------------

     Total assets at June 30, 1998 increased to $452,528,000 from $449,660,000 
at December 31, 1997 ($2.9 million or 0.6%).  This increase is attributable 
mainly to local governmental taxing bodies having large balances on deposit 
in customer repurchase agreements with the subsidiary bank at June 30 due to 
real estate tax collections during the latter part of June.  This increase is 
reflected in the short-term borrowings category as it increased from $13.2 
million at December 31, 1997 to $30.1 million at June 30, 1998.  Total 
deposits and repurchase agreements as a whole have decreased from $395.7 
million at December 31, 1997 to $392.7 million at June 30, 1998 (a decrease 
of $3.0 million or 0.8%). 

     While payoffs exceeded loan demand during the first three months of 1998, 
loan demand has been very strong during the second quarter of 1998.  
Accordingly, loan balances, net of unearned interest, increased to 
$278,111,000 at June 30, 1998, compared to $276,181,000 at December 31, 1997 
(an increase of $1.9 million or 0.7%).  Non-performing loans totaled $861,000 
or 0.31% of net loans at June 30, 1998, as compared to $837,000 or 0.30% of 
net loans at December 31, 1997.  Total investment securities increased from 
$119.5 million at December 31, 1997 to $126.7 million at June 30, 1998.

     During the first six months of 1998, PNB charged off $467,000 of loans 
and had recoveries of $404,000.  This compares to charge-offs of $449,000 and 
recoveries of $285,000 during the first six months of 1997.  The allowance for 
possible loan losses is based on factors that include the overall composition 
of the loan portfolio, types of loans, past loss experience, loan 
delinquencies, potential substandard and doubtful credits, and such other 
factors that, in management's reasonable judgment, warrant consideration.  
The adequacy of the allowance is monitored monthly.  During the first six months
of 1998, PNB recorded a loan loss expense of $128,000, compared to $312,000 
during the first six months of 1997.  As loan volume grows during the 
remainder of 1998, as anticipated, management expects to continue to increase 
the balance in the allowance for possible loan losses.  At June 30, 1998, the
balance in the allowance was $1,894,000 which is 0.68% of total loans, 
compared with $1,830,000 or 0.66% of total loans at December 31, 1997.

     At June 30, 1998, the recorded balance in loans for which impairment has 
been recognized in accordance with FASB Statement No. 114 totaled $136,000, 
all of which related to impaired loans which do not require a related 
allowance for possible loan losses as the carrying value of the loans is less 
than the discounted present value of expected future cash flows.  Interest 
recognized on impaired loans (during the portion of this quarter that they 
were impaired) is not considered material.

CAPITAL RESOURCES
-----------------

     Federal regulations require all financial institutions to evaluate capital 
adequacy by the risk-based capital method, which makes capital requirements 
more sensitive to the differences in the level of risk assets.  At June 30, 
1998, total risk-based capital was 14.49%, compared to 13.88% at December 31,
1997.  Similarly, the Tier 1 capital ratio also increased from 8.36% at 
December 31, 1997, to 8.72% at June 30, 1998.  Total stockholders' equity to 
total assets at June 30, 1998 increased to 9.60% from 9.49% at December 31, 
1997.  The Corporation's plan (announced in July, 1997) to repurchase 3% of its 
own stock was completed during the second quarter of 1998.  PNB has now 
repurchased a total of 122,656 shares of its own stock at an average cost of 
$16.43.  

     The Board of Directors announced on July 20, 1998 that it is implementing 
another stock repurchase program whereby up to 5% of its outstanding shares of 
common stock may be repurchased in the open market over the next twelve 
months.  It is anticipated that the repurchase program will have a positive 
impact on future diluted earnings per share.

LIQUIDITY
---------

     Liquidity is measured by a financial institution's ability to raise funds 
through deposits, borrowed funds, capital, or the sale of assets.  Additional 
sources of liquidity, including cash flow from  both the repayment of loans 
and the securitization of assets, are also considered in determining whether
liquidity is satisfactory.  Cash flows provided by financing and operating 
activities have been offset by those used for investing activities, resulting 
in a net decrease in cash and cash equivalents of $5,896,000 from December 
31, 1997 to June 30, 1998.  This usage was due to a net decrease in deposits, a
net increase in loans, and an increase in investments (purchases greater than 
sales and maturities), offset by a net increase in short-term borrowings.  
For more detailed cash flow information, see PNB's Consolidated Statement of 
Cash Flows.

IMPACT OF NEW ACCOUNTING STANDARDS
----------------------------------

     In June 1997, FASB Statement No. 131, "Disclosures about Segments of an 
Enterprise and Related Information" (FAS 131), was issued.  FAS 131 
establishes standards for the way public business enterprises are to report 
information about operating segments in annual financial statements and 
requires those enterprises to report selected information about operating 
segments in interim financial reports issued to shareholders.  FAS 131 is 
effective for financial periods beginning after December 15, 1997, and is 
not expected to have a material impact on the PNB.  

YEAR 2000 COMPLIANCE
--------------------

     The subsidiary bank has developed a comprehensive action plan to address 
potential issues relating to the Year 2000.  The subsidiary bank has 
successfully met all critical timeframes established by federal regulatory 
agencies.  Management will be conducting tests both internally and through 
third-party vendors to verify that all operating systems will be functional 
on January 1, 2000.  At this point, Management does not believe there will be 
a material impact on the corporation's results of operations, liquidity, or 
capital resources.

LEGAL PROCEEDINGS
-----------------

     There are various claims pending against PNB's subsidiary bank, arising in 
the normal course of business.  Management believes, based upon consultation 
with counsel, that liabilities arising from these proceedings, if any, will 
not be material to PNB's financial position.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------

     There has been no material change in market risk since December 31, 1997, 
as reported in the Corporation's Annual Report on Form 10-K.

EFFECTS OF INFLATION
--------------------

     The consolidated financial statements and related consolidated financial 
data presented herein have been prepared in accordance with generally accepted 
accounting principles and practices within the banking industry which require 
the measurement of financial position and operating results in terms of
historical dollars, without considering the changes in the relative 
purchasing power of money over time due to inflation.  Unlike most industrial 
companies, virtually all the assets and liabilities of a financial 
institution are monetary in nature.  As a result, interest rates have a more 
significant impact on a financial institution's performance than the effects 
of general levels of inflation.

                                                    13
<PAGE>
[ARTICLE]9


                                                       Exhibit 27
                                   
                                  
This schedule contains summary financial information extracted from the 
Princeton National Bancorp, Inc. and Subsidiary Consolidated Balance Sheets and 
Statements and Subsidiary Consolidated Balance Sheets and Statements of Income 
and is qualified in its entirety by reference to such financial statements.
                           
                                   
For the six-month period ending June 30, 1998:                   

<TABLE>
<S>                                <C>                      
Multiplier                         1,000          
Period-Type                        6-mos          
Fiscal-Year-End                    Dec-31-1997    
Period-End                         Jun-30-1998    
Cash                               $12,377        
Int-bearing-deposits               $337,914       
Fed Funds sold                     $9,500         
Trading-assets                     $0        
Investments-held-for-sale          $113,635       
Investments-carrying               $13,016        
Investments-market                 $13,166        
Loans                              $278,111       
Allowance                          $1,894         
Total-assets                       $452,528       
Deposits                           $374,711       
Short-term                         $30,102        
Liabilities-other                  $4,271         
Long-term                          $0        
Preferred-mandatory                $0        
Preferred                          $0        
Common                             $20,700        
Other-SE                           $22,744        
Total-liabilities-and-equity       $452,528       
Interest-loans                     $12,366        
Interest-invest.                   $3,577         
Interest-other                     $160      
Total-interest                     $16,103        
Interest-deposit                   $7,549         
Interest-expense                   $8,078         
Interest-income-net                $8,025         
Loan-losses                        $128      
Securities-gains                   $21       
Other-expenses                     $6,677         
Income-pretax                      $3,137         
Income-pre-extraordinary           $3,137         
Extraordinary                      $0        
Changes                            $0        
Net Income                         $2,323         
EPS-primary                        $0.58          
EPS-diluted                        $0.58          
Yield-Actual                       4.17%          
Loans-non                          $831      
Loans-past                         $30       
Loans-troubled                     $0        
Loans-problem                      $64       
Allowance-open                     $1,894         
Charge-offs                        $467      
Recoveries                         $404      
Allowance-close                    $1,894         
Allowance-domestic                 $1,894         
Allowance-foreign                  $0        
Allowance-unallocated              $0        
                                   
</TABLE>
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 41417}]
{"company-data": {"conformed-name": "PRINCETON NATIONAL BANCORP INC", "cik": "0000707855", "assigned-sic": "6021", "irs-number": "363210283", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-20050", "film-number": "98685788"}, "business-address": {"street1": "606 S MAIN ST", "city": "PRINCETON", "state": "IL", "zip": "61356", "phone": "8158754444"}}
FORM 10-Q

                        SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

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

     For the quarterly period ended June 30, 1998

     Commission File No. 0-20050

                         Princeton National Bancorp, Inc.
              (Exact name of registrant as specified in its charter)

              Delaware                            36-32110283
       (State or other jurisdiction     (I.R.S. Employer Identification No.)
     of incorporation or organization)

                     606 S. Main Street, Princeton, IL 61356
              (Address of principal executive offices and Zip Code)

                                  (815) 875-4444
               (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                    Yes  X      No
                         -----     -----                         
     As of July 23, 1998, the registrant had outstanding 3,971,741 shares of its
$5 par value common stock.

                                Page 1 of 14 pages
Part I: FINANCIAL INFORMATION

     The consolidated financial statements of Princeton National Bancorp, Inc.
and Subsidiary and management's discussion and analysis of financial condition
and results of operations are presented in the schedules as follows:

Schedule 1: Consolidated Balance Sheets
Schedule 2: Consolidated Statements of Income and Comprehensive Income
Schedule 3: Consolidated Statements of Stockholders' Equity
Schedule 4: Consolidated Statements of Cash Flows
Schedule 5: Note to Consolidated Financial Statements
Schedule 6: Management's Discussion and Analysis of
            Financial Condition and Results of Operations

                            Part II: OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Shareholders of Princeton National Bancorp, Inc. was
held on April 14, 1998, for the purpose of electing three directors each to
serve for a term of three years and approving a stock option plan.  Proxies for
the meeting were solicited by Management pursuant to Regulation 14A under the
Securities Exchange Act of 1934, and there was no solicitation in opposition to
Management's solicitation.

     All three of Management's nominees for director listed in the proxy
statement were elected.  The results of the vote were as follows:
Shares
                              Voted            Shares
                               For            Withheld          Abstain
                              -------        ----------          -------
Harold C. Hutchison, Jr.      2,319,491       16,820             8,800
Thomas R. Lasier              2,336,311            0             8,800
Stephen W. Samet              2,294,618       41,693             8,800
The results of the vote for the stock option plan were as follows (the plan
was approved):
For         Against             Abstain
                              --------       -------             -------
Stock Option Plan             1,832,659      310,655             65,043
Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits:

          27 - Financial Data Schedule for the period ended June 30, 1998.    

     (b)  No reports on Form 8-K were filed during the quarter ended June 30,
1998.
                                                                 
                                    SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              PRINCETON NATIONAL BANCORP, INC.

Date:  July 31, 1998          By /s/ Tony J. Sorcic
                                ------------------------------------
                                  Tony J. Sorcic
                                  President & Chief Executive Officer

Date:  July 31, 1998          By  /s/ Todd D. Fanning
                                ------------------------------------
                                  Todd D. Fanning
                                  Chief Financial Officer
          
                         2
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY             Schedule 1
          CONSOLIDATED BALANCE SHEETS
                 (in thousands)
June 30,            December 31,
                                               1998                  1997
                                             ---------           ------------
                                            (Unaudited)
ASSETS                                                                
Cash and due from banks                      $ 12,377            $ 21,268
Short-term funds                               14,895              11,900
Loans held for sale                             1,643               1,576  
Investment securities:                                                     
  Available-for-sale, at fair value           113,635             107,042
  Held-to-maturity (fair value of 
  $13,166 and $12,661 at June 30, 1998
  and December 31, 1997, respectively)         13,016              12,498
                                             --------            --------

       Total investment securities            126,651             119,540
                                             --------            --------
Loans:
  Gross loans                                 276,541             274,725
  Less: Unearned interest                         (73)               (120)
        Allowance for possible loan losses     (1,894)             (1,830) 
                                             --------            --------
       Net loans                              274,574             272,775
                                             --------            --------
Premises and equipment                          8,928               8,752
Interest receivable                             5,124               5,808
Goodwill and intangible assets, net of 
accumulated amortization                        5,124               5,272
Other assets                                    3,212               2,769
                                             --------            --------
       TOTAL ASSETS                          $452,528            $449,660
                                             --------            --------
                                             --------            --------

LIABILITIES
Deposits:
  Demand                                     $ 36,797            $ 42,333
  Interest-bearing demand                      86,498              87,364
  Savings                                      54,090              52,193
  Time                                        197,326             204,050
                                             --------            --------
       Total deposits                         374,711             385,940

Short-term borrowings                          30,102              13,237
Long-term borrowings                                0               3,750
Other liabilities                               4,271               4,065
                                             --------            --------

       TOTAL LIABILITIES                      409,084             406,992
                                             --------            --------

STOCKHOLDERS' EQUITY                                                       
Common stock:  $5 par value, 7,000,000 
  shares authorized; 4,139,841 issued at 
  June 30, 1998 and 4,139,917 issued at 
  December 31, 1997                            20,700              20,700
Surplus                                         6,232               6,235
Retained earnings                              18,278              16,869
Accumulated other comprehensive income, 
  net of tax                                      540                 560
Less: Cost of 168,100 treasury shares at 
  June 30, 1998 and 123,604 treasury shares 
  at December 31, 1997                         (2,306)             (1,396)
                                             --------            --------

       TOTAL STOCKHOLDERS' EQUITY              43,444              42,968
                                             --------            --------
       TOTAL LIABILITIES AND  
           STOCKHOLDERS' EQUITY              $452,528            $449,960
                                             --------            --------
                                             --------            --------
See accompanying note to consolidated financial statements
                         3
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                     Schedule 2
      CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)                   For the Three Months     For the Six Months
(In thousands, except share data)      Ended June 30             Ended June 30
                                   1998           1997        1998         1997
                                  ------         ------      ------       ------
Interest income:
  Interest and fees on loans   $   6,242      $   6,002   $  12,366    $  11,709
  Interest and dividends on 
   investment securities           1,822          1,647       3,577        3,281
  Interest on short-term funds        74             34         160           84
                               ---------      ---------   ---------    ---------
                                                                 
       Total interest income       8,138          7,683      16,103       15,074

Interest expense:
  Interest on deposits             3,769          3,534       7,549        6,932
  Interest on short-term 
   borrowings                        270             98         443          192
  Interest on long-term 
   borrowings                          6             90          86          180
                               ---------      ---------   ---------     --------

       Total interest expense      4,045          3,722       8,078        7,304
                               ---------      ---------   ---------     --------

Net interest income                4,093          3,961       8,025        7,770
Provision for possible loan 
 losses                               73            207         128          312
                               ---------      ---------   ---------     --------

Net interest income after 
 provision  for possible 
 loan losses                       4,020          3,754       7,897        7,458

Non-interest income:
  Trust & farm management
   fees                              296            246         625          555
  Service charges on deposit 
   accounts                          372            333         697          653
  Other service charges              132            108         250          210
  Gain (loss) on sales of 
   securities                         11             71          21           68
  Loan servicing fees and 
   other charges                      84             40         159           70
  Other operating income              69             40         165          123
                                --------      ---------   ---------    ---------

       Total non-interest 
       income                        964            838       1,917        1,679

Non-interest expense:
  Salaries and employee 
   benefits                        1,796          1,653       3,600        3,319
  Occupancy                          249            238         500          487
  Equipment expense                  201            230         397          455
  FDIC/OCC assessments                48             45          94           54
  Goodwill and intangible 
   assets amortization               117            116         234          234
  Data processing                    118            165         290          332
  Other operating expense            804            658       1,562        1,316
                               ---------      ---------   ---------    ---------
       Total non-interest 
       expense                     3,333          3,105       6,677        6,197
                               ---------      ---------   ---------    ---------

Income before income taxes         1,651          1,487       3,137        2,940
Income tax expense                   433            390         814          766
                               ---------      ---------   ---------    ---------

Net income                     $   1,218      $   1,097   $   2,323    $   2,174
                               ---------      ---------   ---------    ---------
                               ---------      ---------   ---------    ---------

Basic and diluted earnings 
 per share:                         0.31           0.27        0.58         0.53
                                                                 
Weighted average shares 
 outstanding                   3,993,123      4,086,914   4,003,129    4,086,440

Dividends per share                 0.08           0.07        0.16         0.14
See accompanying note to consolidated financial statements
                                           4
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                       Schedule 2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except share data)

                              For the Three Months          For the Six Months
                                 Ended June 30                 Ended June 30   
                            1998           1997           1998           1997
                          --------       --------       --------       --------
Net Income                $1,218         $1,097         $2,323         $2,174
  Other comprehensive 
   income, net of tax        

  Unrealized gains on 
   securities:                                                  
      Unrealized holding 
      gain (loss) 
      arising during 
      the period              64            433              1             75
      Less:  
       Reclassification 
       adjustment for 
       gains included
       in net income          11             71             21             68
                          ------         ------         ------         ------

  Other comprehensive 
   income                     53            362            (20)             7
                          ------         ------         ------         ------

Comprehensive income      $1,271         $1,459         $2,303         $2,181
                          ------         ------         ------         ------
                          ------         ------         ------         ------
See accompanying note to consolidated financial statements

                                                     5
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                       Schedule 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                 
               (Unaudited)
For the Six Months
                                                Ended June 30
                                               1998           1997
                                             ---------      ---------
                                                  (In thousands)
Balance, January 1                           $42,668        $40,197

  Net income                                   2,323          2,174
  Cash dividends                                (616)          (545)
  Other comprehensive income, net of tax         (20)             7
  Purchases of treasury stock                   (931)             0
  Sales of treasury stock                         20             32
                                             -------        -------

Balance, June 30                             $43,444        $41,865
                                             -------        -------
                                             -------        -------
See accompanying note to consolidated financial statements   
                                                     6
PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY                    Schedule 4
CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
               (Unaudited)
For the Three Months          For the Six Months
                                Ended June 30                Ended June 30
                            1998           1997           1998           1997
                         ----------     ----------     ----------     ----------
(In thousands)
Operating activities:
  Net income             $ 1,218        $ 1,097        $ 2,323        $ 2,174
  Adjustments to 
   reconcile net income 
   to net cash provided 
   by operating 
   activities:
     Depreciation            159            226            312            452
     Provision for 
      possible loan 
      losses                  73            207            128            312
     Amortization of 
      goodwill and 
      other intangible 
      assets                 117            116            234            234
     Amortization of 
      premiums on 
      investment 
      securities, net of 
      accretion               44             18             85             58
     Gain on sales of 
      securities, net        (11)           (71)           (21)           (68)
     Loss on sales of 
      other real estate        0              1              0              1
     Loans originated 
      for sale            (4,438)        (1,597)        (9,912)        (2,265)
     Proceeds from sales 
      of loans originated 
      for sale             4,975          1,834          9,845          2,756
     (Decrease) increase 
       in accrued interest 
       payable               (76)            95           (166)           128
     (Increase) decrease 
      in accrued interest 
      receivable             (96)          (106)           684            775
     Increase in other 
      assets                (341)          (904)          (574)          (958)
     Increase in other 
      liabilities              0             86            381            444
                         -------        -------        -------        -------

       Net cash 
       provided by 
       operating 
       activities          1,624          1,002          3,319          4,043
                         -------        -------        -------        -------

Investing activities:
  Proceeds from sales 
   of investment 
   securities available-
   for-sale                2,008          3,247          5,016          3,488
  Proceeds from 
   maturities of 
   investment securities 
   available-for-sale      9,387         10,927         18,291         23,651
  Purchase of investment 
   securities available-
   for-sale              (14,516)       (10,532)       (29,992)       (19,811)
  Proceeds from 
   maturities of 
   investment securities 
   held-to-maturity           90             85            596            575
  Purchase of investment 
   securities held-to-
   maturity                 (285)          (623)        (1,115)          (893)
  Proceeds from sales of 
   other real estate 
   owned                       0            126             45            181
  Net increase in loans   (7,530)        (9,823)        (1,927)       (11,255)
  Purchases of premises 
   and equipment            (346)          (138)          (488)          (276)
                         -------        -------        -------        -------

   Net cash used for 
   investing activities  (11,192)        (6,731)        (9,574)        (4,340)
                         -------        -------        -------        -------

Financing activities:
  Net increase (decrease) 
   in deposits               376          9,553        (11,229)         8,408
  Net increase (decrease) 
   in short-term 
   borrowings             13,838          3,462         16,865         (2,503)
  Payments for long-
   term borrowings        (3,600)             0         (3,750)          (150)
  Dividends paid            (322)          (273)          (616)          (545)
  Purchase of treasury 
   stock                    (799)             0           (931)             0
  Sale of treasury 
   stock                      11             21             20             32
                         -------        -------        -------        -------

  Net cash provided by 
  financing activities     9,504         12,763            359          5,242
                         -------        -------        -------        -------

(Decrease) increase in 
 cash and cash 
 equivalents                 (64)         7,034         (5,896)         4,945
                         -------        -------        -------        -------
Cash and cash 
 equivalents at 
 beginning of quarter 
 and year                 27,336         19,044         33,168         21,133
                         -------        -------        -------        -------

Cash and cash 
 equivalents at 
 June 30                 $27,272        $26,078         27,272         26,078
                         -------        -------        -------        -------
                         -------        -------        -------        -------
-------------------------------------------------------------------------------
Supplemental disclosures 
of cash flow information:
    Cash paid during 
    the period for:                                            
      Interest            $3,845         $3,646         $7,715         $7,176
          Income taxes      $678           $784           $764           $934

Supplemental disclosures 
of non-cash flow 
activities:
    Amounts transferred 
    to other real estate 
    owned                    $34             $0            $34           $108
See accompanying note to consolidated financial statements   

                                    7
Schedule 5

                              PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY
                                 Note to Consolidated Financial Statements
                                                (Unaudited)

The accompanying unaudited consolidated financial statements have been prepared 
in accordance with the instructions to Form 10-Q and do not include all of the 
information required by generally accepted accounting principles for complete 
financial statements and related footnote disclosures.  In the opinion
of management, all adjustments (consisting only of normal recurring accruals) 
considered for a fair presentation of the results for the interim period have 
been included.  For further information, refer to the financial statements and 
notes included in the Registrant's 1997 Annual Report on Form 10-K.  Results
of operations for interim periods are not necessarily indicative of the 
results that may be expected for the year. 
                                                     8
Schedule 6

                             PRINCETON NATIONAL BANCORP, INC. AND SUBSIDIARY 
                                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                               FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                               June 30, 1998
                                                (unaudited)

     The following discussion provides information about Princeton National 
Bancorp, Inc.'s (PNB) financial condition and results of operations for the 
quarter and six months ended June 30, 1998.  This discussion should be read in 
conjunction with the attached consolidated financial statements and note
thereto.  Certain statements in this report constitute  forward-looking 
statements' within the meaning of Section 27A of the Securities Act of 1933 and 
Section 21E of the Securities Exchange Act of 1934.  PNB cautions that such 
forward-looking statements involve risks and uncertainties that may cause actual
results to differ materially from those expressed or implied.

STOCK DIVIDEND
--------------

     On April 14, 1998, the Board of Directors of PNB declared a three-for-two 
stock split in the form of a 50% stock dividend which was distributed May 15, 
1998 to shareholders of record on April 24, 1998. Each shareholder of record 
received one new share of common stock for each two shares owned as of the
record date.  Cash was paid in lieu of fractional shares.  Accordingly, all 
per share data stated in this Form 10-Q has been adjusted to reflect this 
dividend.

RESULTS OF OPERATIONS
---------------------

     Net income for the second quarter of 1998 was $1,218,000, or basic and 
diluted earnings per share of $0.31 as compared to net income of $1,097,000 in 
the second quarter of 1997, or basic and diluted earnings per share of $0.27.  
This represents an increase of $121,000 (11.0%) or $0.04 per share.  For the 
first six months of 1998, net income was $2,323,000, or basic and diluted 
earnings per share of $0.58, compared to $2,174,000, or basic and diluted 
earnings per share of $0.53 in the first six months of 1997.  Annualized 
return on average assets and return on average equity were 1.11% and 11.38%,
respectively, for the second quarter of 1998, compared with 1.06% and 10.77% 
for the second quarter of 1997.  For the six-month periods, the annualized 
returns on average assets and average equity were 1.06% and 10.93%, 
respectively, for 1998, compared to 1.06% and 10.79% in 1997.  

     Net interest income before any provision for loan losses was $4,093,000 
for the second quarter of 1998, compared to $3,961,000 for the second quarter
of 1997 (an increase of $132,000 or 3.3%).  Additionally, for the six-month 
periods, net interest income before any provision for loan losses was 
$8,025,000 for 1998, as compared to $7,770,000 for 1997, representing an 
increase of $255,000 (or 3.3%).  This increase is a result of an increase in 
average interest-earning assets from $378.9 million at June 30, 1997, to 
$407.6 million at June 30, 1998.  However, as of June 30, 1998, total loans 
represented 61.5% of total assets compared with 63.4% as of June 30, 1997.  
Accordingly, the net yield on interest-earning assets (on a fully taxable 
equivalent basis) decreased from 4.33% for the first six months of 1997 to 
4.17% for the first six months of 1998.

     Non-interest income increased by $126,000 (or 15.0%) during the second 
quarter of 1998 as compared to the second quarter of 1997 from $838,000 to 
$964,000.  For the first six months of 1998, non-interest income has 
increased to $1,917,000 from $1,679,000 in the first six months of 1997 (an 
increase of $238,000 or 14.2%).  With the exception of net gains from 
securities transactions, which decreased from $68,000 for the first six 
months of 1997 to $21,000 for the first six months of 1998, all categories had
increases over the same time frame.  Most notably, loan servicing fees increased
$89,000, trust and farm management fees increased $70,000, service charges on 
deposit accounts increased $44,000, and other service charges increased 
$40,000.  

     Non-interest expenses for the second quarter of 1998 were  $3,333,000, an 
increase of $228,000 (or 7.3%) from the second quarter of 1997.  1998 year-to-
date non-interest expenses at $6,677,000 have increased $480,000 (or 7.8%) 
from 1997.  This is due mainly to an increase in salaries and employee 
benefits of $281,000 (or 8.5%).  Also worth noting is an increase in other 
operating expenses from $1,316,000 for the first half of 1997, to $1,562,000 
for the first half of 1998.  This is a result of several small increases over 
many categories of PNB's operating expenses.  Offsetting these increases was
a $58,000 reduction in equipment expense, primarily reduced depreciation 
expense.

EARNINGS PER SHARE
------------------

     Basic income per share is computed by dividing net income by the weighted 
average number of shares outstanding which were 3,993,123 and 4,086,914 for the
quarters ending June 30, 1998 and 1997, respectively, and 4,003,129 and 
4,086,440 for the six-month periods ending June 30, 1998 and 1997, 
respectively.  There were no common stock equivalents during any of these 
periods, therefore diluted earnings per share is the same calculation.

ANALYSIS OF FINANCIAL CONDITION
-------------------------------

     Total assets at June 30, 1998 increased to $452,528,000 from $449,660,000 
at December 31, 1997 ($2.9 million or 0.6%).  This increase is attributable 
mainly to local governmental taxing bodies having large balances on deposit 
in customer repurchase agreements with the subsidiary bank at June 30 due to 
real estate tax collections during the latter part of June.  This increase is 
reflected in the short-term borrowings category as it increased from $13.2 
million at December 31, 1997 to $30.1 million at June 30, 1998.  Total 
deposits and repurchase agreements as a whole have decreased from $395.7 
million at December 31, 1997 to $392.7 million at June 30, 1998 (a decrease 
of $3.0 million or 0.8%). 

     While payoffs exceeded loan demand during the first three months of 1998, 
loan demand has been very strong during the second quarter of 1998.  
Accordingly, loan balances, net of unearned interest, increased to 
$278,111,000 at June 30, 1998, compared to $276,181,000 at December 31, 1997 
(an increase of $1.9 million or 0.7%).  Non-performing loans totaled $861,000 
or 0.31% of net loans at June 30, 1998, as compared to $837,000 or 0.30% of 
net loans at December 31, 1997.  Total investment securities increased from 
$119.5 million at December 31, 1997 to $126.7 million at June 30, 1998.

     During the first six months of 1998, PNB charged off $467,000 of loans 
and had recoveries of $404,000.  This compares to charge-offs of $449,000 and 
recoveries of $285,000 during the first six months of 1997.  The allowance for 
possible loan losses is based on factors that include the overall composition 
of the loan portfolio, types of loans, past loss experience, loan 
delinquencies, potential substandard and doubtful credits, and such other 
factors that, in management's reasonable judgment, warrant consideration.  
The adequacy of the allowance is monitored monthly.  During the first six months
of 1998, PNB recorded a loan loss expense of $128,000, compared to $312,000 
during the first six months of 1997.  As loan volume grows during the 
remainder of 1998, as anticipated, management expects to continue to increase 
the balance in the allowance for possible loan losses.  At June 30, 1998, the
balance in the allowance was $1,894,000 which is 0.68% of total loans, 
compared with $1,830,000 or 0.66% of total loans at December 31, 1997.

     At June 30, 1998, the recorded balance in loans for which impairment has 
been recognized in accordance with FASB Statement No. 114 totaled $136,000, 
all of which related to impaired loans which do not require a related 
allowance for possible loan losses as the carrying value of the loans is less 
than the discounted present value of expected future cash flows.  Interest 
recognized on impaired loans (during the portion of this quarter that they 
were impaired) is not considered material.

CAPITAL RESOURCES
-----------------

     Federal regulations require all financial institutions to evaluate capital 
adequacy by the risk-based capital method, which makes capital requirements 
more sensitive to the differences in the level of risk assets.  At June 30, 
1998, total risk-based capital was 14.49%, compared to 13.88% at December 31,
1997.  Similarly, the Tier 1 capital ratio also increased from 8.36% at 
December 31, 1997, to 8.72% at June 30, 1998.  Total stockholders' equity to 
total assets at June 30, 1998 increased to 9.60% from 9.49% at December 31, 
1997.  The Corporation's plan (announced in July, 1997) to repurchase 3% of its 
own stock was completed during the second quarter of 1998.  PNB has now 
repurchased a total of 122,656 shares of its own stock at an average cost of 
$16.43.  

     The Board of Directors announced on July 20, 1998 that it is implementing 
another stock repurchase program whereby up to 5% of its outstanding shares of 
common stock may be repurchased in the open market over the next twelve 
months.  It is anticipated that the repurchase program will have a positive 
impact on future diluted earnings per share.

LIQUIDITY
---------

     Liquidity is measured by a financial institution's ability to raise funds 
through deposits, borrowed funds, capital, or the sale of assets.  Additional 
sources of liquidity, including cash flow from  both the repayment of loans 
and the securitization of assets, are also considered in determining whether
liquidity is satisfactory.  Cash flows provided by financing and operating 
activities have been offset by those used for investing activities, resulting 
in a net decrease in cash and cash equivalents of $5,896,000 from December 
31, 1997 to June 30, 1998.  This usage was due to a net decrease in deposits, a
net increase in loans, and an increase in investments (purchases greater than 
sales and maturities), offset by a net increase in short-term borrowings.  
For more detailed cash flow information, see PNB's Consolidated Statement of 
Cash Flows.

IMPACT OF NEW ACCOUNTING STANDARDS
----------------------------------

     In June 1997, FASB Statement No. 131, "Disclosures about Segments of an 
Enterprise and Related Information" (FAS 131), was issued.  FAS 131 
establishes standards for the way public business enterprises are to report 
information about operating segments in annual financial statements and 
requires those enterprises to report selected information about operating 
segments in interim financial reports issued to shareholders.  FAS 131 is 
effective for financial periods beginning after December 15, 1997, and is 
not expected to have a material impact on the PNB.  

YEAR 2000 COMPLIANCE
--------------------

     The subsidiary bank has developed a comprehensive action plan to address 
potential issues relating to the Year 2000.  The subsidiary bank has 
successfully met all critical timeframes established by federal regulatory 
agencies.  Management will be conducting tests both internally and through 
third-party vendors to verify that all operating systems will be functional 
on January 1, 2000.  At this point, Management does not believe there will be 
a material impact on the corporation's results of operations, liquidity, or 
capital resources.

LEGAL PROCEEDINGS
-----------------

     There are various claims pending against PNB's subsidiary bank, arising in 
the normal course of business.  Management believes, based upon consultation 
with counsel, that liabilities arising from these proceedings, if any, will 
not be material to PNB's financial position.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------

     There has been no material change in market risk since December 31, 1997, 
as reported in the Corporation's Annual Report on Form 10-K.

EFFECTS OF INFLATION
--------------------

     The consolidated financial statements and related consolidated financial 
data presented herein have been prepared in accordance with generally accepted 
accounting principles and practices within the banking industry which require 
the measurement of financial position and operating results in terms of
historical dollars, without considering the changes in the relative 
purchasing power of money over time due to inflation.  Unlike most industrial 
companies, virtually all the assets and liabilities of a financial 
institution are monetary in nature.  As a result, interest rates have a more 
significant impact on a financial institution's performance than the effects 
of general levels of inflation.

                                                    13
[ARTICLE]9

                                                       Exhibit 27
                                   
                                  
This schedule contains summary financial information extracted from the 
Princeton National Bancorp, Inc. and Subsidiary Consolidated Balance Sheets and 
Statements and Subsidiary Consolidated Balance Sheets and Statements of Income 
and is qualified in its entirety by reference to such financial statements.
                           
                                   
For the six-month period ending June 30, 1998:
Multiplier                         1,000          
Period-Type                        6-mos          
Fiscal-Year-End                    Dec-31-1997    
Period-End                         Jun-30-1998    
Cash                               $12,377        
Int-bearing-deposits               $337,914       
Fed Funds sold                     $9,500         
Trading-assets                     $0        
Investments-held-for-sale          $113,635       
Investments-carrying               $13,016        
Investments-market                 $13,166        
Loans                              $278,111       
Allowance                          $1,894         
Total-assets                       $452,528       
Deposits                           $374,711       
Short-term                         $30,102        
Liabilities-other                  $4,271         
Long-term                          $0        
Preferred-mandatory                $0        
Preferred                          $0        
Common                             $20,700        
Other-SE                           $22,744        
Total-liabilities-and-equity       $452,528       
Interest-loans                     $12,366        
Interest-invest.                   $3,577         
Interest-other                     $160      
Total-interest                     $16,103        
Interest-deposit                   $7,549         
Interest-expense                   $8,078         
Interest-income-net                $8,025         
Loan-losses                        $128      
Securities-gains                   $21       
Other-expenses                     $6,677         
Income-pretax                      $3,137         
Income-pre-extraordinary           $3,137         
Extraordinary                      $0        
Changes                            $0        
Net Income                         $2,323         
EPS-primary                        $0.58          
EPS-diluted                        $0.58          
Yield-Actual                       4.17%          
Loans-non                          $831      
Loans-past                         $30       
Loans-troubled                     $0        
Loans-problem                      $64       
Allowance-open                     $1,894         
Charge-offs                        $467      
Recoveries                         $404      
Allowance-close                    $1,894         
Allowance-domestic                 $1,894         
Allowance-foreign                  $0        
Allowance-unallocated              $0