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 September 30, 1999


                         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 October 31, 1999
--------------------------                                   -------------------
Common Stock, no par value                                         1,493,867
<PAGE>


                              HILLS BANCORPORATION
                               Index to Form 10-Q

                                     Part I
                              FINANCIAL INFORMATION


                                                                           Page
                                                                          Number

Item 1.   Financial Statements

          Consolidated balance sheets, September 30, 1999 (unaudited)
            and December 31, 1998
          Consolidated statements of income, (unaudited) for three and nine
            months ended September 30, 1999 and 1998
          Consolidated statements of comprehensive income, (unaudited) for
            three and nine months ended September 30, 1999 and 1998.
          Consolidated statements of stockholders' equity, (unaudited)
            for nine months ended September 30, 1999 and 1998
          Consolidated statements of cash flows (unaudited) for nine
            months ended September 30, 1999 and 1998
          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)

<TABLE>
                                                          September 30,
                                                              1999       December 31,
                                                            Unaudited       1998*
                                                          ---------------------------
<S>                                                       <C>            <C>
ASSETS
Cash and due from banks ..................................   $  17,344    $  16,427
Investment securities:
   Available for sale (amortized cost
     September 30, 1999 $131,702;
     December 31, 1998 $121,974) .........................     131,036      123,835
   Held to maturity (fair value
     September 30, 1999 $19,273;
     December 31, 1998 $21,740) ..........................      19,114       21,168
   Stock of Federal Home Loan Bank .......................       4,931        4,347
Federal funds sold .......................................         206       36,811
Loans, net ...............................................     536,397      460,911
Property and equipment, net ..............................      11,605       11,193
Accrued interest receivable ..............................       6,584        5,885
Deferred income taxes, net ...............................       2,836        1,838
Other assets .............................................       8,515        7,372
                                                             ---------    ---------
                                                             $ 738,568    $ 689,787
                                                             =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Noninterest-bearing deposits .............................   $  63,010    $  68,100
Interest-bearing deposits ................................     485,813      466,051
                                                             ---------    ---------
   Total deposits ........................................   $ 548,823    $ 534,151
Federal funds purchased and securities
   sold under agreements to repurchase ...................      26,689       10,554
Federal Home Loan Bank notes .............................      88,700       75,732
Accrued interest payable .................................       1,978        2,048
Other liabilities ........................................       2,910        1,549
                                                             ---------    ---------
                                                             $ 669,100    $ 624,034
                                                             ---------    ---------
REDEEMABLE COMMON STOCK HELD BY
   EMPLOYEE STOCK OWNERSHIP PLAN
   (ESOP) ................................................   $  10,911    $   9,301
                                                             ---------    ---------
STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
   authorized 10,000,000 shares;
   issued September 30, 1999 - 1,493,867 shares;
   December 31, 1998 - 1,469,443 shares ..................   $   9,785    $   9,140
Retained earnings ........................................      60,103       55,428
Accumulated other comprehensive income,
   unrealized gains (losses) on investment securities, net        (420)       1,185
                                                             ---------    ---------
                                                             $  69,468    $  65,753
Less, maximum cash obligation related to
   ESOP shares ...........................................      10,911        9,301
                                                             ---------    ---------
                                                             $  58,557    $  56,452
                                                             ---------    ---------
                                                             $ 738,568    $ 689,787
                                                             =========    =========
</TABLE>
*  Derived from audited financial statements.

See Notes to Financial Statements.


<PAGE>


                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
             Three and Nine Months Ended September 30, 1999 and 1998
                      (In Thousands, Except Per Share Data)

<TABLE>

                                                          Three Months Ended      Nine Months Ended
                                                           1999        1998        1999       1998
                                                         --------------------    -------------------
<S>                                                      <C>         <C>         <C>        <C>
Interest Income:
   Interest and fees on loans ........................   $ 10,746    $  9,566    $ 30,624   $ 28,108
   Interest on investment securities:
     Taxable .........................................      1,788       1,698       5,315      5,064
     Non-taxable .....................................        394         354       1,157      1,019
   Interest on federal funds sold ....................         78         350         435        893
                                                         --------    --------    --------   --------
   Total interest income .............................   $ 13,006    $ 11,968    $ 37,531   $ 35,084
                                                         --------    --------    --------   --------

Interest Expense:
   Interest on deposits ..............................   $  5,220    $  5,185    $ 15,498   $ 15,253
   Interest on securities sold under
   Interest on FHLB borrowings .......................      1,296       1,106       3,415      3,277
                                                         --------    --------    --------   --------
   Total interest expense ............................   $  6,629    $  6,379    $ 19,221   $ 18,787
                                                         --------    --------    --------   --------
   Net interest income ...............................   $  6,377    $  5,589    $ 18,310   $ 16,297

Provision for loan losses ............................        204         304         612        712
                                                         --------    --------    --------   --------

   Net interest income after provision
     for loan losses .................................      6,173       5,285      17,698     15,585
                                                         --------    --------    --------   --------

Other income:
   Loan origination fees .............................   $    121    $    166    $    525   $    500
   Trust fees ........................................        457         403       1,483      1,266
   Deposit account charges and fees ..................        605         458       1,589      1,351
   Net gains (losses) on sale of investment securities       (214)       (214)       --
   Other fees and charges ............................        464         348       1,382      1,079
                                                         --------    --------    --------   --------
                                                         $  1,433    $  1,375    $  4,765   $  4,196
                                                         --------    --------    --------   --------
Other expenses:
   Salaries and employee benefits ....................   $  2,429    $  2,133    $  7,244   $  6,366
   Occupancy .........................................        330         284         920        859
   Furniture and equipment ...........................        453         421       1,363      1,249
   Office supplies and postage .......................        290         293         814        882
   Other operating ...................................      1,045         954       3,050      2,792
                                                         --------    --------    --------   --------
                                                         $  4,547    $  4,085    $ 13,391   $ 12,148
                                                         --------    --------    --------   --------
   Income before income taxes ........................   $  3,059    $  2,575    $  9,072   $  7,633
Federal and state income taxes .......................        941         756       2,794      2,237
                                                         --------    --------    --------   --------
   Net income ........................................   $  2,118    $  1,819    $  6,278   $  5,396
                                                         ========    ========    ========   ========
Earning per common share:
    Basic ............................................   $   1.41    $   1.24    $   4.20   $   3.68
     Diluted .........................................       1.40        1.22        4.17       3.62
</TABLE>

<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
             Three and Nine Months Ended September 30, 1999 and 1998
                      (In Thousands, Except Per Share Data)

<TABLE>

                                                    Three Months Ended    Nine Months Ended
                                                      September 30,         September 30,
                                                    ------------------    ------------------
                                                      1999      1998        1999       1998
                                                    ------------------    ------------------
<S>                                                 <C>        <C>        <C>        <C>
Net Income ......................................   $ 2,118    $ 1,819    $ 6,278    $ 5,396

Other comprehensive income:
   Unrealized gains (losses) on debt securities .      (371)     1,147     (2,527)     1,209
   Income tax effect of unrealized gains (losses)       138       (426)       922       (450)
                                                    -------    -------    -------    -------
Comprehensive Income ............................   $ 1,885    $ 2,540    $ 4,673    $ 6,155
                                                    =======    =======    =======    =======
</TABLE>

<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Nine Months Ended September 30, 1999 and 1998
                                 (In Thousands)
<TABLE>

                                                                                  Less
                                                                                 Maximum
                                                                 Accumulated      Cash
                                                                    Other      Obligation
                                            Capital   Retained  Comprehensive    To ESOP
                                             Stock    Earnings      Income       Shares      Total
                                            -------------------------------------------------------
<S>                                         <C>       <C>       <C>            <C>         <C>
Balance, January 1, 1999 ................   $ 9,140   $55,428      $ 1,185     $ (9,301)   $ 56,452
Net income ..............................     - - -     6,278        - - -        - - -       6,278
Change related to ESOP shares ...........     - - -     - - -        - - -       (1,610)     (1,610)
Cash dividends ($1.30 per share) ........     - - -    (1,911)       - - -        - - -      (1,911)
Other comprehensive income ..............     - - -     - - -       (1,605)       - - -      (1,605)
Issuance of 24,424 shares of common stock       645     - - -        - - -        - - -         645
Income tax benefit related to
   stock options exercised ..............     - - -       308        - - -        - - -         308
                                            -------------------------------------------------------
Balance, September 30, 1999 .............   $ 9,785   $60,103      $  (420)    $(10,911)   $ 58,557
                                            =======================================================


Balance, January 1, 1998 ................   $ 9,070   $49,627      $   485     $ (7,682)   $ 51,500
Net income ..............................     - - -     5,396        - - -        - - -       5,396
Change related to ESOP shares ...........     - - -     - - -        - - -       (1,120)     (1,120)
Cash dividends ($1.20 per share) ........     - - -    (1,763)       - - -        - - -      (1,763)
Other comprehensive income ..............     - - -     - - -          759        - - -         759
Tax savings on restricted stock issued ..     - - -        78        - - -        - - -          78
                                            -------------------------------------------------------
Balance, September 30, 1998 .............   $ 9,070  $ 53,338      $ 1,244     $ (8,802)   $ 54,850
                                            =======================================================
</TABLE>
See Notes to Financial Statements.

<PAGE>


                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Nine Months Ended September 30, 1999 and 1998
                                 (In Thousands)
<TABLE>

                                                                                      1999        1998
                                                                                   --------------------
<S>                                                                                <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  6,278    $  5,396
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................      1,071         987
    Provision for loan losses ..................................................        612         712
    Net gains (losses) on disposition of investment securities .................        214       - - -
    Deferred income taxes ......................................................        (56)      - - -
    Compensation paid by issuance of common stock ..............................         20       - - -
    (Increase) decrease in accrued interest receivable .........................       (699)       (500)
    Amortization of bond discount ..............................................        339         216
    (Increase) in other assets .................................................     (1,401)       (910)
    Amortization of intangibles ................................................        258         258
    Increase in accrued interest and other liabilities .........................      1,291        (106)
                                                                                   --------------------
    Net cash provided by operating activities ..................................   $  7,927    $  6,053
                                                                                   --------------------

CASH FLOWS FROM  INVESTING  ACTIVITIES  Proceeds  from  maturities of investment
securities:
    Available for sale .........................................................   $ 26,837    $ 19,599
    Held to maturity ...........................................................      2,055       2,286
Proceeds from sale of available-for-sale securities ............................      9,003       - - -
Purchase of investment securities, available for sale ..........................    (46,726)    (29,785)
Federal funds sold, net ........................................................     36,605     (17,349)
Loans made to customers, net of collections ....................................    (76,098)    (24,968)
Purchases of property and equipment ............................................     (1,483)     (2,173)
                                                                                   --------------------
    Net cash (used in) investing activities ....................................   $(49,807)   $(52,390)
                                                                                   --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits ........................................   $ 14,672    $ 22,478
    Net increase (decrease) in fed funds purchased and
       securities sold under agreements to repurchase ..........................     16,135        (682)
    Borrowings from FHLB .......................................................     25,000      40,000
Payments on FHLB notes .........................................................    (12,032)    (15,032)
    Stock options exercised ....................................................        625       - - -
    Income tax benefits on stock options exercised .............................        308          78
    Dividends paid .............................................................     (1,911)     (1,762)
                                                                                   --------------------
       Net cash provided by financing activities ...............................   $ 42,797    $ 45,080
                                                                                   --------------------
       (Decrease) in cash and due from banks ...................................   $    917    $ (1,257)

CASH AND DUE FROM BANKS
    Beginning ..................................................................     16,427      15,508
                                                                                   --------------------
    Ending .....................................................................   $ 17,344    $ 14,251
                                                                                   ====================

SUPPLEMENTAL DISCLOSURES Cash payments for:
       Interest paid to depositors and others ..................................   $ 15,568    $ 15,309
       Interest paid on other obligations ......................................      3,723       3,534
    Non-cash financing transactions:
       Increase in maximum cash obligation related
        to ESOP shares .........................................................      1,610       1,120
       Net unrealized gains (losses) on debt securities ........................     (2,557)      1,209
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



Note 1.  nterim 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)
                                                            September 30
                                                    ---------------------------
                                                      1999               1998
                                                    ---------------------------

Agricultural ...............................        $  29,394         $  33,946
Commercial and financial ...................           40,046            36,523
Real estate, construction ..................           39,706            24,512
Real estate, mortgage ......................          406,420           330,525
Loans to individuals .......................           30,058            29,994
                                                    ---------         ---------
                                                    $ 545,624         $ 455,500
Less allowance for loan losses .............           (9,227)           (8,483)
                                                    ---------         ---------
                                                    $ 536,397         $ 447,017
                                                    =========         =========

Transactions in the allowance for loan losses are as follows:

                                                           (In thousands)
                                                             Nine Months
                                                          Ended September 30
                                                       ------------------------
                                                         1999             1998
                                                       ------------------------

Balance, beginning ...........................         $ 8,856          $ 8,010
  Provision charged to expense ...............             612              712
  Net charge-offs ............................            (241)            (239)
                                                       -------          -------
Balance, ending ..............................         $ 9,227          $ 8,483
                                                       =======          =======

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


                                                  (In thousands)
                                                   September 30
                                                 ----------------
                                                  1999      1998
                                                 ----------------

Nonaccrual ....................................  $- - -    $- - -
Accruing loans, past due 90 days or more ......   1,083     1,825
Restructured loan .............................   - - -     - - -
Impaired loans ................................   9,343     7,996
<PAGE>



Note 3.  Earnings Per Share

Basic net income per share  amounts are  computed by dividing  net income by the
weighted average number of common shares outstanding during the period.  Diluted
earnings per share are  computed by dividing net income by the weighted  average
number of  common  shares  outstanding  during  the  period  plus the  number of
potential  dilutive  common shares  attributable  to the Company's  stock option
plan.

<PAGE>


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



The consolidated  balance sheet of Hills Bancorporation as of September 30, 1999
reflects total assets of $738.6  million,  which is an increase of $48.8 million
from December 31, 1998 and $84.3 million from  September 40, 1998.  Net loans as
of September 30, 1998 totaled $536.4  million,  which  represents an increase of
$75.5 million from December 31, 1998 and $89.4 million from  September 30, 1998.
The major  portion of the loan  increase was in real estate loans secured by 1-4
family properties.  The local and national economy continues to be strong which,
coupled  with  moderate  interest  rates,  have aided in the  increase  in loans
outstanding.  Investment  securities  as of September  30, 1999  totaled  $155.1
million,  an increase of $5.1  million  from  December 31, 1998 and $8.2 million
from September 30, 1998.

The growth in loans and investment securities since December 31, 1998 was funded
by a  combination  of an  increase  in total  deposits,  securities  sold  under
agreements to repurchase,  federal funds  purchased,  and Federal Home Loan Bank
borrowings.  In addition,  federal funds sold as of December 31, 1998  decreased
$36.6  million  and these funds were used to fund loan  growth.  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  1999,  Hills  Bancorporation  paid a dividend of $1.30 per share,  a
8.33%  increase  from the $1.20  paid in January  1998.  The total  dividend  of
$1,911,000  is  deducted  from  stockholders'  equity  and is  reflected  in the
resulting  stockholders'  equity  as  of  September  30,  1999  of  $58,557,000.
Stockholders'  equity at September  30, 1999 and  December 31, 1998  reflects an
adjustment for unrealized gain (losses) on debt securities, net of income taxes.
The total stockholders'  equity of Hills Bancorporation as of September 30, 1999
before the reduction for the ESOP shares, as a percent of total assets is 9.40%.
Under risk-based capital rules, total capital is 14.52% of risk adjusted assets,
compared to the current 8% requirement.

Net income for the quarter and nine months ended  September  30, 1999  increased
$299,000  and  $882,000,  respectively,  from the prior year  periods.  For both
periods the changes were  primarily the result of  significant  increases in net
interest  income  resulting  primarily from increases in average earning assets.
Average  earning  assets were  approximately  $66.4 million  higher for the nine
months  ended  September  30, 1999  compared  to the same period in 1998.  Other
income  increased  over the prior year by  $58,000  for the three  months  ended
September  30,  1999  and  $569,000  for  the  nine  month  period  shown.  Loan
origination fees were $45,000 less in the third quarter and are $525,000 for the
nine months of 1999  compared to $500,000 in 1998.  The decrease in  origination
fees is due primarily to reduced loan  originations  for the  secondary  market.
Trust fees  increased  $217,000  for the nine  months to  $1,483,000,  primarily
attributable to growth of trust assets under management. Deposit account charges
and fees  increased  $147,000  and  $238,000 for the three and nine months ended
September  30, 1999 compared to the same periods one year ago. Also other income
was  reduced  for  the  quarter  by  $214,000,   which  represented  investments
securities  losses  taken to  replace  lower  yielding  securities  with  higher
yielding securities of similar risk and maturity.

Other expenses for the nine months ended September 30, 1999 were  $13,391,000 or
an increase of $1,243,000 from the period ended September 30, 1998. Salaries and
employee  benefits  accounted for $878,000 of the increase,  attributable to new
staff  additions in 1999,  salary  adjustments in January 1999, and increases in
medical  insurance  claims over 1998 claims.  All other expenses  increased from
$5,782,000  at  September  30,  1998 to  $6,147,000  at  September  30,  1999 or
$365,000,  which was an increase of 6.31%. The major category that increased was
furniture and equipment, which was $1,249,000 in 1998 and $1,363,000 in 1999 and
was the result of major computer hardware and software additions in 1998.
<PAGE>


Earnings per share,  both basic and diluted,  increased for both the quarter and
the nine  months  ending  September  30, 1999  compared to 1998.  For the period
ending  September  30, 1999 basic and diluted  earnings per share were $1.41 and
$1.40 in  comparison  to $1.24 and $1.22 for the quarter  ending  September  30,
1998.  The earnings per share for the nine months ended  September  30, 1999 and
September  30, 1998 were $4.20 and $3.68 for basic  earnings per share and $4.17
and $3.62 for diluted earnings per share, respectively.

The  Company's  principal  sources of funds  continue 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.

Year 2000

The  Year  2000  poses  an  important  business  issue  regarding  how  existing
application  software  programs and operating  systems can accommodate this date
value.  Many computer programs that can only distinguish the final two digits of
the year  entered  are  expected  to read  entries for the Year 2000 as the Year
1900. Like most financial  service  providers,  the Company may be significantly
affected  by the Year 2000  issues due to the nature of  financial  information.
Software,  hardware and equipment  both within and outside the Company's  direct
control and with whom the Company electronically or operationally interfaces are
likely to be  affected.  If  computer  systems  are not  adequately  changed  to
identify  the  Year  2000,  many  computer  applications  could  fail or  create
erroneous  results.  As a result,  may calculations  that rely on the data field
information,  such  as  interest,  payment  or due  dates  and  other  operating
functions,  may generate results that could be significantly  misstated, and the
Company  could  experience  a temporary  inability to process  transactions  and
engage in normal business activities.

All of the significant  computer  programs of the Company that could be affected
by this issue are provided by major  third-party  vendors.  In 1998, the Company
completed  the  replacement/upgrading  of  most  of  its  computer  systems  and
programs,  as well as most  equipment,  in order to provide  cost-effective  and
efficient delivery of services to customers,  information to management,  and to
provide additional  capacity for processing  information and transactions due to
acquisitions.  The  third-party  vendors  have advised the Company that all such
computer systems and programs either are or shortly will be Year 2000 compliant.
The Company completed off-site testing of its major applications in 1998.

The total cost of the  Company's  Year 2000  efforts  over a two year period was
approximately $1,180,000 for capitalized hardware and software and an additional
$88,000 in expenses  charged to earnings in 1998. A  substantial  portion of the
costs capitalized were normal upgrades,  and all abandoned hardware and software
had previously been fully depreciated.  Management estimates the expenses of the
remediation  effort to make the  Company's  systems  Year 2000  ready will total
approximately  $40,000 in 1999,  and an estimated  $105,000 to be capitalized in
the last quarter of 1999. In addition, it is estimated that 2,000 man hours will
be  incurred  by Company  personnel  in 1999  related to Year 2000  issues at an
approximate  cost of $40,000.  The Company has completed a Year 2000 contingency
plan that  addresses,  among other  issues,  critical  operations  and potential
failures thereof, and strategies for business continuation. The contingency plan
includes  back up power  sources,  off-site  processing  of data and a  detailed
listing of  responsibilities  among various  employees of their contingency plan
duties. The plan was finalized during the third quarter of 1999.

The Company  could incur  losses if loan  payments  are delayed due to Year 2000
problems affecting significant borrowers. The Company is communicating with such
parties to assess their progress in evaluating and  implementing  any corrective
measures  required by them to be Year 2000 ready.  To date, the Company has been
advised by such parties that they have plans in place to address and correct the
issues associated with the Year 2000 problem; however, no assurance can be given
as to the adequacy of such plans or to the  timeliness of their  implementation.
As part of the  current  credit  approval  process,  new and  renewed  loans are
evaluated  as to  the  borrower's  Year  2000  readiness.  Management  does  not
anticipate significant loan losses related to this issue.
<PAGE>


Although   management  believes  the  Company's  computer  systems  and  service
providers will be Year 2000 ready, there can be no assurance that these systems,
or those systems of other companies on which the Company's systems rely, will be
fully functional in the Year 2000. Such failure could have a significant adverse
impact on the financial  condition and results of operations of the Company.  In
addition,  there could be a material effect to the financial statements if there
are  significant  interruptions  in basic  services,  such as the electric power
grid, telephone services or the banking system. These risks cannot be estimated.

Forward Looking Information

Forward looking  information  relating to the financial results or strategies of
the Company are made in the Management's  Discussion and Analysis. The following
paragraphs  identify  forward  looking  statements and the risks that need to be
considered when reading those statements.

Forward looking  statements include such words as believe,  expect,  anticipate,
target,  goal,  objective and other words with similar  meaning.  The Company is
under no obligation to update such statements.

The risks  involved in the  operations  and  strategies  of the Company  include
competition  from  other  financial  institutions,  changes in  interest  rates,
changes in economic or market  conditions  and  changes in  regulatory  factors.
These risks, which are not all inclusive, cannot be estimated.



<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 ending September 30, 1999.

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 September 30, 1999.


<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)



11/12/1999                           /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)