FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
              (As last amended in Rel. No. 34-26589, eff. 4/12/93.)

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 1997


                         Commission file number: 0-12668


                              Hills Bancorporation


Incorporated in Iowa                              I.R.S. Employer Identification
                                                         No. 42-1208067

                          131 MAIN STREET, HILLS, IOWA

                        Telephone number: (319) 679-2291


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.

                                 [X] Yes [ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

                                                           SHARES OUTSTANDING
          CLASS                                            AT April 30, 1997
--------------------------                                 ------------------
Common Stock, no par value                                      1,465,204

<PAGE>


                              HILLS BANCORPORATION
                               Index to Form 10-Q

                                     Part I
                              FINANCIAL INFORMATION


                                                                           Page
                                                                          Number

Item 1.        Financial Statements

               Consolidated balance sheets, March 31, 1997 (unaudited)
                   and December 31, 1996                                   
               Consolidated statements of income, (unaudited) for three
                   months ended March 31, 1997 and 1996                   
               Consolidated statement of stockholders' equity, (unaudited)
                   for three months ended March 31, 1997 and 1996         
               Consolidated statements of cash flows (unaudited) for three
                   months ended March 31, 1997 and 1996                   
               Notes to consolidated financial statements                

Item 2.        Management's discussion and analysis of financial condition
                   and results of operations                             


                                                           Part II
                                                      OTHER INFORMATION

Item 1.        Legal proceedings                                         

Item 2.        Changes in securities                                   

Item 3.        Defaults upon senior securities                        

Item 4.        Submission of matters to vote of security holders          

Item 5.        Other information                                         

Item 6.        Exhibits and reports on Form 8-K                       

COMPUTATION OF EARNINGS PER SHARE                                       

SIGNATURES                                                                 
<PAGE>


                              HILLS BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                                         March 31,
                                                           1997     December 31,
                                                         Unaudited      1996*
                                                         ---------    --------
ASSETS
Cash and due from banks ..............................   $ 12,250     $ 15,036
Investment securities:
   Available for sale (amortized cost March 31, 1997 
     $113,736; December 31, 1996 $109,495) ...........    114,558      110,537
   Held to maturity (fair value March 31, 1997 
     $23,348; December 31, 1996 $22,232) .............     23,256       22,098
Federal funds sold ...................................        207        1,107
Loans, net ...........................................    382,871      368,264
Property and equipment, net ..........................      8,359        8,409
Accrued interest receivable ..........................      5,149        4,884
Deferred income taxes, net ...........................      1,441        1,359
Other assets .........................................      7,532        7,758
                                                         --------     --------
                                                         $555,623     $539,452
                                                         ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Noninterest-bearing deposits .........................   $ 46,406     $ 46,154
Interest-bearing deposits ............................    402,520      403,907
                                                         --------     --------
   Total deposits ....................................   $448,926     $450,061
Federal funds purchased and securities sold under 
     agreements to repurchase ........................     12,977        6,071
Federal Home Loan Bank notes .........................     35,765       25,795
Accrued interest payable .............................      1,868        1,952
Other liabilities ....................................      2,409        1,822
                                                         --------     --------
                                                         $501,945     $485,701
                                                         --------     --------

REDEEMABLE COMMON STOCK HELD BY EMPLOYEE STOCK 
   OWNERSHIP PLAN (ESOP) .............................   $  6,576     $  6,416
                                                         --------     --------

STOCKHOLDERS' EQUITY
Capital stock, common, no par value; authorized 
   10,000,000 shares; issued March 31, 1997- 
   1,465,204 shares; issued December 31, 1996 -
   1,465,384 shares ..................................   $  8,990     $  8,997
Retained earnings ....................................     44,150       44,078
Unrealized gains (losses) on debt securities, net ....        538          676
                                                         --------     --------
                                                         $ 53,678     $ 53,751
Less, maximum cash obligation related to ESOP shares .      6,576        6,416
                                                         --------     --------
                                                         $ 47,102     $ 47,335
                                                         --------     --------
                                                         $555,623     $539,452
                                                         ========     ========

*  Derived from audited financial statements.

See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                   Three Months Ended March 31, 1997 and 1996
                      (In Thousands, Except Per Share Data)


                                                       1997         1996
                                                    ----------   ----------
Interest income:
    Interest and fees on loans ..................   $    8,041   $    6,999
    Interest on investment securities
      Taxable ...................................        1,673        1,418
      Non-taxable ...............................          294          277
    Other interest income .......................           41          168
                                                    ----------    ---------
    Total interest income .......................   $   10,049    $   8,862
                                                    ----------    ---------

Interest expense:
    Interest on deposits ........................   $    4,603   $    4,243
    Interest on securities sold under
       agreements to repurchase .................           89          100
    Interest on FHLB notes ......................          530          489
                                                    ----------   ----------
    Total interest expense ......................   $    5,222   $    4,832
                                                    ----------   ----------
    Net interest income .........................   $    4,827   $    4,030
Provision for loan losses .......................          195          180
                                                    ----------   ----------
       Net interest income after
         provision for loan losses ..............   $    4,632   $    3,850
                                                    ----------   ----------

Other income:
    Real estate origination fees ................   $       59   $      111
    Trust fees ..................................          304          185
    Deposit account charges and fees ............          433          375
    Other fees and charges ......................          329          281
                                                    ----------   ----------
                                                    $    1,125   $      952
                                                    ----------   ----------
Other expenses:
    Salaries and employee benefits ..............   $    1,790   $    1,550
    Occupancy expenses ..........................          246          212
    Furniture and equipment .....................          327          266
    F.D.I.C. insurance ..........................           31            2
    Office supplies and postage .................          231          176
    Other operating .............................          835          601
                                                    ----------   ----------
                                                    $    3,460   $    2,807
                                                    ----------   ----------
       Income before income taxes ...............   $    2,297   $    1,995

Federal and state income taxes ..................   $      686   $      569
                                                    ----------   ----------

       Net income ...............................   $    1,611   $    1,426
                                                    ==========   ==========

Per common share: 
      Net income ................................   $     1.09   $      .97
      Dividend, January ....                              1.05          .95
       Weighted average of common outstanding
         stock ..................................    1,479,172    1,473,069

See Notes to Financial Statements
<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   Three Months Ended March 31, 1997 and 1996
                                 (In Thousands)

<TABLE>
                                                                Capital      Retained      Unrealized        ESOP
                                                     Total       Stock       Earnings        Losses       Obligations
                                                   --------    --------      --------      ----------     -----------
<S>                                                <C>         <C>           <C>           <C>            <C>   

Balance, January 1, 1997 ....................      $ 47,335    $  8,997      $ 44,078       $    676       $ (6,416)
Redemption of stock .........................            (7)         (7)        - - -          - - -          - - -
Net income ..................................         1,611       - - -         1,611          - - -          - - -
Change related to ESOP shares ...............          (160)      - - -         - - -          - - -           (160)
Cash dividends ($1.05 per share) ............        (1,539)      - - -        (1,539)         - - -          - - -
Unrealized gains (losses) on
  debt securities, net ......................          (138)      - - -         - - -           (138)         - - -
                                                   --------    --------      --------       --------       --------
Balance, March 31, 1997 .....................      $ 47,102    $  8,990      $ 44,150       $    538       $ (6,576)
                                                   ========    ========      ========       ========       ========


Balance, January 1, 1996 ....................      $ 43,277    $  8,925      $ 39,325       $    298       $ (5,271)
Net income ..................................         1,426       - - -         1,426          - - -          - - -
Change related to ESOP shares ...............          (448)      - - -         - - -          - - -           (448)
Cash dividends ($.95 per share) .............        (1,391)      - - -        (1,391)         - - -          - - -
Unrealized gains (losses) on debt
  securities, net ...........................          (408)      - - -         - - -           (408)         - - -
                                                   --------    --------      --------       --------       --------
Balance, March 31, 1996 .....................      $ 42,456    $  8,925      $ 39,360       $   (110)      $ (5,719)
                                                   ========    ========      ========       ========       ========
</TABLE>

See Notes to Financial Statements.

<PAGE>


                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three Months Ended March 31, 1997 and 1996
                                 (In Thousands)
<TABLE>
                                                                                     1997         1996
                                                                                   --------    --------
<S>                                                                                <C>         <C>  
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  1,611    $  1,426
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................        268         206
    Provision for loan losses                                                           195         180    
    (Increase) decrease in accrued interest receivable .........................       (265)       (520)
    Amortization of bond discount ..............................................         98         135
    (Increase) in other assets .................................................        140         102
    Amortization of intangibles ................................................         86       - - -
    Increase in accrued interest and other liabilities .........................        503         324
                                                                                   --------    --------
    Net cash provided by operating activities ..................................   $  2,636    $  1,853
                                                                                   --------    --------

CASH FLOWS FROM  INVESTING  ACTIVITIES  Proceeds  from  maturities 
    of investment ecurities:
    Available for sale .........................................................   $  2,270    $  2,000
    Held to maturity ...........................................................        276         300
Purchase of investment securities
    Available for sale .........................................................     (6,591)     (6,214)
    Held to maturity ...........................................................     (1,452)     (1,052)
Federal funds sold, net ........................................................        900       4,735
Loans made to customers, net of collections ....................................    (14,802)     (3,293)
Purchases of property and equipment ............................................       (218)       (251)
                                                                                   --------    -------- 
    Net cash (used in) investing activities ....................................   $(19,617)   $ (3,775)
                                                                                   --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits ........................................   $ (1,135)   $  1,884
    Net increase (decrease) in fed funds purchased and
       securities sold under agreements to repurchase ..........................      6,906        (291)
    Borrowings from FHLB .......................................................     10,000       - - -
    Payments on FHLB ...........................................................        (30)      - - -
    Redemption of common stock .................................................         (7)      - - -
    Dividends paid .............................................................     (1,539)     (1,391)
                                                                                   --------    --------
       Net cash provided by financing activities ...............................   $ 14,195    $    202
                                                                                   --------    --------
       Increase in cash and due from banks .....................................   $ (2,786)   $ (1,720)

CASH AND DUE FROM BANKS
    Beginning ..................................................................   $ 15,036      11,883
                                                                                   --------    --------
    Ending .....................................................................   $ 12,250    $ 10,163
                                                                                   ========    ========

SUPPLEMENTAL DISCLOSURES Cash payments for:
       Interest paid to depositors and others ..................................   $  4,687    $  4,293
       Interest paid on other obligations ......................................        619         589
    Non-cash financing transactions:
       Increase in maximum cash obligation related
        to ESOP shares .........................................................        160         448
       Net unrealized gains (losses) on debt securities ........................       (138)       (647)

</TABLE>
See Notes to Financial Statements 

<PAGE>


                              HILLS BANCORPORATION
                    NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


Note 1.       Interim Financial Statements

Interim consolidated  financial statements have not been examined by independent
public  accountants,  but include  all  adjustments  (consisting  only of normal
recurring  accruals)  which,  in the opinion of management,  are necessary for a
fair presentation of the results for these periods. The results of operation for
the interim  periods are not  necessarily  indicative  of the results for a full
year.

For purposes of reporting  cash flows,  cash and due from banks includes cash on
hand and amounts due from banks  (including  cash items in process of clearing).
Cash flows from demand deposits,  NOW accounts,  savings  accounts,  and federal
funds  purchased and sold are reported net since their  original  maturities are
less than three months. Cash flows from loans and time deposits are presented as
net increases or decreases.


Note 2.       Loans

The following  tables set forth the  composition  of loans and the allowance for
loan losses:

                                                            (In thousands)
                                                               March 31
                                                       -------------------------
                                                         1997             1996
                                                       --------         --------

Agricultural .................................         $ 23,974         $ 18,991
Commercial and financial .....................           31,314           28,307
Real estate, construction ....................            9,622            8,510
Real estate, mortgage ........................          292,068          241,075
Loans to individual ..........................           33,189           31,618
                                                       --------         --------
                                                       $390,167         $328,501
Less allowance for loan losses ...............            7,296            6,842
                                                       --------         --------
                                                       $382,871         $321,659
                                                       ========         ========

Transactions in the allowance for loan losses are as follows:

                                                            (In thousands)
                                                             Three months
                                                            ended March 31
                                                       ------------------------
                                                         1997             1996
                                                       -------          -------

Balance, beginning ...........................         $ 7,311          $ 6,740
  Provision charged to expense ...............             195              180
  Net charge-offs ............................            (210)             (78)
                                                       -------          -------
Balance, ending ..............................         $ 7,296          $ 6,842
                                                       =======          =======

The following summarizes the Company's  nonaccrual,  past due,  restructured and
impaired loans:

                                                                (In thousands)
                                                                   March 31
                                                             -------------------
                                                              1997         1996
                                                             ------       ------

Nonaccrual ...........................................       $  376       $  389
Accruing loans, past due 90 days or more .............          929        1,475
Restructured loan ....................................        - - -        - - -
Impaired loans .......................................        6,435        5,765


<PAGE>



                                 PART I, ITEM 2.
                              HILLS BANCORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF THE FINANCIAL CONDITION AND RESULTS OF OPERATION


The  consolidated  balance  sheet of Hills  Bancorporation  as of March 31, 1997
reflects  total assets of $555.6  million  which is an increase of $16.2 million
from  December  31,  1996.  Net loans are $382.9  million  which  represents  an
increase of $14.6  million from  December  31,  1996.  Compared to one year ago,
total  assets  have  increased  from  $486.2  million to $555.6  million  for an
increase of $69.4  million.  Also during this time,  net loans  increased  $61.2
million  to $382.9  million as of March 31,  1997.  These  loan  increases  were
primarily single family  residential loans in the Iowa City and Coralville area.
Investment  securities total $137.8 million as of March 31, 1997, an increase of
$5.2 million from December 31, 1996 and a $12.4  million  increase in investment
securities  since March 31, 1996.  Federal funds sold decreased during the first
quarter of 1997 by $.9 million and have  decreased  from March 31, 1996 to March
31, 1997 by $11.1 million.  As discussed in previous reports,  the addition of a
location in Lisbon,  Iowa in July of 1996 and Kalona,  Iowa in  September,  1996
accounted for approximately  $40 million in asset growth;  $22 million in loans;
$18 million in investment  securities and other assets;  and  approximately  $40
million in deposit growth.

Deposits (when federal funds purchased and securities  sold under  agreements to
repurchase  are  included)  as of March 31,  1997  totaled  $461.9  million,  an
increase of $5.8 million for the first three  months.  March 31, 1997  deposits,
including repos,  have grown $58.0 million from March 31, 1996.  Borrowings from
the FHLB have increased from  $30,727,000 to $35,765,000  during the last twelve
months with $5 million of the borrowings  occurring in the first quarter of 1997
after a payment  of $5  million  in August of 1996.  Asset-liability  management
encompasses both the management of interest rate sensitivity and the maintenance
of adequate liquidity.  Interest rate sensitivity management attempts to provide
the  optimal  level of net  interest  income  while  managing  exposure to risks
associated with interest rate movements.  Liquidity management involves planning
to meet anticipated funding needs.  Management monitors the rate sensitivity and
liquidity positions on an on-going basis and, when necessary, appropriate action
is taken to minimize any adverse effects of rapid interest rate movements or any
unexpected liquidity concerns.

In January  1997,  Hills  Bancorporation  paid a dividend of $1.05 per share,  a
10.53%  increase  from the $.95 paid in  January  1996.  The total  dividend  of
$1,539,000  is  deducted  from  stockholders'  equity  and is  reflected  in the
resulting   stockholders'   equity  as  of  March  31,   1997  of   $47,102,000.
Stockholders'  equity  at March 31,  1997 and  December  31,  1996  reflects  an
adjustment for unrealized gain (losses) on debt securities, net of income taxes.

The total stockholders' equity of Hills Bancorporation  before the reduction for
the ESOP shares as a percent of total assets is 9.66%.  Under risk-based capital
rules, total capital is 15.17% of risk-adjusted assets,  compared to the current
8% requirement.

The  consolidated  net  income for the three  months  ended  March 31,  1997 was
$1,611,000 compared to $1,426,000 for the same period ended March 31, 1996. This
is an  increase  of $185,000  representing  an earnings  per share for the three
months of $1.09 compared to $.97 for the same three months in 1996. Net interest
income  for 1997 is up by  $390,000  over 1996 and is  primarily  the  result of
earning  assets  being  $57.3  million  higher  in 1997  compared  to 1996.  The
provisions for loan losses are $195,000 and $180,000 for the quarters  presented
and is reflective of management's  overall opinion of the loan portfolio at this
time, the growth of the loan portfolio, and the level of the reserve as of March
31, 1997.

Other  income of the bank was  $1,125,000  compared  to  $952,000  for the three
months  ended  March 31,  1997 and 1996,  respectively.  Loan  origination  fees
amounted to $59,000 for the three month period ended March 31, 1997  compared to
only $111,000 in 1996. The Trust  Department fees were $304,000 and $185,000 for
the three months  ending March 31, 1997 and 1996,  respectively  and  represents
primarily an increase in accounts under management.  Deposit account charges and
other fees were $762,000  compared to $656,000 one year ago. These increases are
the result of more accounts and increased activity in existing accounts.
<PAGE>



Other expenses have  increased from  $2,807,000 for the three months ended March
31, 1997 to $3,460,000 for the period ended March 31, 1997. Of this net increase
of $653,000,  salaries and employee benefits  accounted for a $240,000 increase.
This is a combination of salary increases and the number of full-time equivalent
employees  increasing  from  March  31,  1996 to March 31,  1997 by  twenty-four
employees. The occupancy, furniture and equipment, office supplies and the other
operating expenses totaled $1,670,000 for the three months ending March 31, 1997
compared  to  $1,257,000  for the same  period in 1996.  These  expenses  are up
$413,000 as a result of the two new banks acquired with the resulting  occupancy
and  furniture  and  equipment  increases  and  increases  in  marketing,  other
professional   fees,  and  other  data   processing   charges   related  to  the
acquisitions.  Federal  and state  income  taxes for 1997 are more than in 1996,
primarily the result of increased income before taxes.

The  Bank's  principal  sources  of funds  continues  to be  prepayment  of loan
principal and current amortized loan payments.  In addition,  funds are provided
from current operations.  All of the funds are used to fulfill loan commitments,
make  short-term  investments,  and fund any  deposit  withdrawals  needed.  The
Company has no material  commitments or plans which will  materially  affect its
liquidity or capital resources. The acquisition of property and equipment may be
in cash purchases, or they may be financed if favorable terms are available.





<PAGE>


                              HILLS BANCORPORATION
                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

              There are no material pending legal proceedings.

Item 2.       Changes in Securities

              There were no changes in securities.

Item 3.       Defaults upon Senior Securities

              Hills Bancorporation has no senior securities.

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

              No matters were submitted to a vote of security holders during the
              quarter ended March 31, 1997.

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

              (a)  Exhibit
                   See exhibit II - Statement Re Computation of Earnings 
                   Per Common Share

              (b)  Reports on Form 8-K
                   No  reports on Form 8-K have been  filed  during the  quarter
                   ended March 31, 1997.





<PAGE>


                                   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 and thereunto duly authorized.

                                                  HILLS BANCORPORATION
                                                     (Registrant)



May 14, 1997                         /s/ Dwight O. Seegmiller
----------------------------         -------------------------------------------
Date                                 Dwight O. Seegmiller, President
                                     (Duly authorized officer of the registrant)



                                     /s/ James G. Pratt
                                     -------------------------------------------
                                     James G. Pratt, Treasurer
                                     (Principal Financial Officer)