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, 2001

                         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, 2001
--------------------------                                   -------------------
Common Stock, no par value                                        1,498,348
<PAGE>


                              HILLS BANCORPORATION
                                Index to Form 10-Q

                                     Part I
                              FINANCIAL INFORMATION

Page

Number

Item 1.   Financial Statements

          Consolidated balance sheets, September 30, 2001 (unaudited)
             and December 31, 2000
          Consolidated statements of income, (unaudited) for three
             and nine months ended September 30, 2001 and 2000
          Consolidated statements of comprehensive income, (unaudited) for three
             and nine months ended September 30, 2001 and 2000.
          Consolidated statements of stockholders' equity, (unaudited)
             for nine months ended September 30, 2001 and 2000
          Consolidated statements of cash flows (unaudited) for nine
             months ended September 30, 2001 and 2000
          Notes to consolidated financial statements

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

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

                                     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,  December 31,
                                                               2001          2000*
                                                           ---------------------------
                                                            Unaudited
<S>                                                        <C>            <C>
ASSETS
Cash and due from banks ..................................   $ 27,875     $ 25,669
Investment securities:
   Available for sale (amortized cost
     September  30, 2001 $158,862;
     December 31, 2000 $136,661) .........................    164,956      137,768
   Held to maturity (fair value
     September 30, 2001 $13,436;
     December 31, 2000 $15,676) ..........................     13,046       15,509
   Stock of Federal Home Loan Bank .......................      7,809        7,789
Federal funds sold .......................................      9,584       28,065
Loans, net ...............................................    665,405      626,873
Property and equipment, net ..............................     19,329       16,499
Accrued interest receivable ..............................      7,702        7,522
Deferred income taxes, net ...............................      1,294        3,286
Other assets .............................................      7,863        6,770
                                                             ---------------------
                                                             $924,863     $875,750
                                                             =====================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing deposits .............................   $ 82,609     $ 76,087
Interest-bearing deposits ................................    609,051      576,619
                                                             ---------------------
   Total deposits ........................................   $691,660     $652,706
Federal funds purchased and securities
   sold under agreements to repurchase ...................     17,736       16,561
Federal Home Loan Bank notes .............................    120,637      120,668
Accrued interest payable .................................      2,814        2,865
Other liabilities ........................................      3,505        2,876
                                                             ---------------------
                                                             $836,352     $795,676
                                                             ---------------------
REDEEMABLE COMMON STOCK HELD BY
   EMPLOYEE STOCK OWNERSHIP PLAN
   (ESOP) ................................................   $ 11,860     $ 11,550
                                                             ---------------------
STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
   authorized 10,000,000 shares;
   issued September 30, 2001 1,498,348 shares;
   December 31, 2000 1,495,483 shares ....................   $ 10,332     $ 10,197
Retained earnings ........................................     74,336       69,179
Accumulated other comprehensive income,
   unrealized gains (losses) on investment securities, net      3,843          698
                                                             ---------------------
                                                             $ 88,511     $ 80,074
Less maximum cash obligation related to
   ESOP shares ...........................................     11,860       11,550
                                                             ---------------------
                                                             $ 76,651     $ 68,524
                                                             ---------------------
                                                             $924,863     $875,750
                                                             =====================
<FN>
* Derived from audited financial statements
</FN>
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
             Three and Nine Months Ended September 30, 2001 and 2000
                      (In Thousands, Except Per Share Data)


                                          Three Months Ended   Nine Months Ended
                                              September 30         September 30
                                           -----------------   -----------------
                                             2001     2000       2001      2000
                                           -------------------------------------
Interest Income:
   Interest and fees on loans ..........   $13,398   $12,950   $39,567   $36,813
   Interest on investment securities:
     Taxable ...........................     1,957     1,832     5,727     5,567
     Non-taxable .......................       493       439     1,425     1,284
   Interest on federal funds sold ......       184        79       996       346
                                           -------------------------------------
   Total interest income ...............   $16,032   $15,300   $47,715   $44,010
                                           -------------------------------------

Interest Expense:
   Interest on deposits ................   $ 6,577   $ 6,536   $20,504   $17,870
   Interest on securities sold under
     agreements to repurchase ..........       147       162       490       424
   Interest on FHLB borrowings .........     1,785     1,854     5,298     5,704
                                           -------------------------------------
   Total interest expense ..............   $ 8,509   $ 8,552   $26,292   $23,998
                                           -------------------------------------
   Net interest income .................   $ 7,523   $ 6,748   $21,423   $20,012

Provision for loan losses ..............       225       237       675       711
                                           -------------------------------------
   Net interest income after provision
   for loan loss .......................     7,298     6,511    20,748    19,301
                                           -------------------------------------
Other income:
   Loan origination fees ...............   $   219   $   110   $   702   $   222
   Trust fees ..........................       567       590     1,777     1,757
   Deposit account charges and fees ....       793       652     2,295     1,851
   Other fees and charges ..............       729       534     1,921     1,710
                                           -------------------------------------
                                           $ 2,308   $ 1,886   $ 6,695   $ 5,540
                                           -------------------------------------
Other expenses:
   Salaries and employee benefits ......   $ 2,938   $ 2,659   $ 8,627   $ 7,939
   Occupancy ...........................       490       414     1,348     1,085
   Furniture and equipment .............       681       517     1,929     1,512
   Office supplies and postage .........       322       254       905       754
   Other operating .....................     1,265     1,183     3,705     3,514
                                           -------------------------------------
                                           $ 5,696   $ 5,027   $16,514   $14,804
                                           -------------------------------------

   Income before income taxes ..........   $ 3,910   $ 3,370   $10,929   $10,037

Federal and state income taxes .........     1,230     1,034     3,408     3,098
                                           -------------------------------------
   Net income ..........................   $ 2,680   $ 2,336   $ 7,521   $ 6,939
                                           =====================================

Earnings per common share:
     Basic .............................   $  1.79   $  1.56   $  5.02   $  4.63
     Diluted ...........................      1.77      1.55      4.98      4.60
Cash dividends per common share ........        --        --   $  1.60   $  1.45

See Notes to Financial Statements
<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
             Three and Nine Months Ended September 30, 2001 and 2000
                      (In Thousands, Except Per Share Data)
<TABLE>
                                            Three Months Ended      Nine Months Ended
                                               September 30            September 30
                                           --------------------    --------------------
                                             2001        2000        2001         2000
                                           --------------------    --------------------
<S>                                        <C>         <C>         <C>         <C>
Net income .............................   $  2,680    $  2,336    $  7,521    $  6,939
Other comprehensive income:
   Unrealized gains on debt securities .      2,490       1,133       4,988         903
   Income tax effect of unrealized gains       (920)       (419)     (1,843)       (334)
                                           --------------------------------------------
          Other comprehensive income ...      1,570         714       3,145         569
                                           --------------------------------------------
   Comprehensive Income ................   $  4,250    $  3,050    $ 10,666    $  7,508
                                           ============================================
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Nine Months Ended September 30, 2001 and 2000
                                 (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, December 31, 2000 ..........   $10,197   $69,179      $   698      $(11,550)   $ 68,524
  Net income ........................       - -     7,521          - -           - -       7,521
  Cash dividends ($1.60 per share) ..       - -    (2,393)         - -           - -      (2,393)
  Change related to ESOP shares .....       - -       - -          - -          (310)       (310)
  Issuance of 2,865 shares of common
     stock ..........................       135       - -          - -           - -         135
  Income tax benefit related to stock
     based compensation .............       - -        29          - -           - -          29
  Other comprehensive income ........       - -       - -        3,145           - -       3,145
                                        --------------------------------------------------------
Balance, September 30, 2001 .........   $10,332   $74,336      $ 3,843      $(11,860)   $ 76,651
                                        ========================================================


Balance, December 31, 1999 ..........   $10,214   $61,984      $ (981)      $(10,953)   $ 60,264
  Net income ........................       - -     6,939         - -            - -       6,939
  Change related to ESOP shares .....       - -       - -         - -           (782)       (782)
  Cash dividends ($1.45 per share) ..       - -    (2,169)        - -            - -      (2,169)
  Other comprehensive income ........       - -       - -         569            - -        (569)
                                        --------------------------------------------------------
Balance, September 30, 2000 .........   $10,214   $66,754    $   (412)      $(11,735)   $ 64,821
                                        ========================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Nine Months Ended September 30, 2001 and 2000
                                 (In Thousands)
<TABLE>
                                                                                     2001        2000
                                                                                   --------------------
<S>                                                                                <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  7,521    $  6,939
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................      1,486       1,020
    Provision for loan losses ..................................................        675         711
    Compensation paid by issuance of common stock ..............................         91         - -
    Deferred income taxes ......................................................        149         147
    (Increase) decrease in accrued interest receivable .........................       (180)     (1,271)
    Amortization of bond discount ..............................................        102          52
    (Increase) decrease in other assets ........................................     (1,329)        168
    Amortization of intangibles ................................................        236         258
    Increase in accrued interest and other liabilities .........................        578         523
                                                                                   --------------------
       Net cash provided by operating activities ...............................   $  9,329    $  8,547
                                                                                   --------------------

CASH FLOWS FROM  INVESTING  ACTIVITIES
Proceeds  from  maturities of investment securities:
    Available for sale .........................................................   $ 42,587    $ 21,531
    Held to maturity ...........................................................      2,463       1,651
Purchase of investment securities, available for sale ..........................    (64,909)    (24,974)
Federal funds sold, net ........................................................     18,481       5,304)
Loans made to customers, net of collections ....................................    (39,207)    (57,904)
Purchases of property and equipment ............................................     (4,316)     (3,712)
                                                                                   --------------------
    Net cash (used in) investing activities ....................................   $(44,901)   $(68,712)
                                                                                   --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits ............................................   $ 38,954    $ 59,318
Net increase (decrease) in fed funds purchased and
    securities sold under agreements to repurchase .............................      1,175     (14,337)
Borrowings from FHLB ...........................................................        - -      40,000
Payments on FHLB notes .........................................................        (31)    (23,031)
Stock options exercised ........................................................         44         - -
Income tax benefits on stock options exercised .................................         29         - -
Dividends paid .................................................................     (2,393)     (2,169)
                                                                                   --------------------
    Net cash provided by financing activities ..................................   $ 37,778    $ 59,781
                                                                                   --------------------
    Increase (decrease) in cash and due from banks .............................   $  2,206    $   (384)

CASH AND DUE FROM BANKS
    Beginning ..................................................................     25,669      21,765
                                                                                   --------------------
    Ending .....................................................................   $ 27,875    $ 21,381
                                                                                   ====================
SUPPLEMENTAL DISCLOSURES Cash payments for:
    Interest paid to depositors and others .....................................   $ 20,555    $ 17,375
    Interest paid on other obligations .........................................      5,788       6,128
    Non-cash financing transaction,
      increase in maximum cash obligation related
      to ESOP shares ............................................................       310         782
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION
                   NOTES 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.

In reviewing these financial  statements,  reference should be made to the Notes
to Financial Statements contained in the Financial Statements for the year ended
December 31, 2000.

There were no changes in accounting  policies which had a significant  effect on
the interim consolidated financial statements for the periods presented.

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
                                                          2001          2000
                                                        ----------------------

Agricultural .........................                  $ 35,077     $  29,090
Commercial and financial .............                    39,349        37,292
Real estate, construction ............                    39,113        44,340
Real estate, mortgage ................                   529,272       489,453
Loans to individuals .................                    33,123        32,447
                                                        ----------------------
                                                        $675,934      $632,622
Less allowance for loan losses .......                    10,529        10,048
                                                        ----------------------
                                                        $665,405      $622,574
                                                        ======================

Transactions in the allowance for loan losses are as follows:

                                                           (In thousands)
                                                            Nine Months
                                                         Ended September 30
                                                      -------------------------
                                                        2001             2000
                                                      -------------------------

Balance, beginning ...........................        $ 10,428         $  9,750
  Provision charged to expense ...............             675              711
  Net charge-offs ............................            (574)            (413)
                                                      --------         --------
Balance, ending ..............................        $ 10,529         $ 10,048
                                                      ========         ========

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

                                                                (In thousands)
                                                                 September 30
                                                              2001         2000
                                                             -------------------

No accrual ...........................................       $1,896       $   98
Accruing loans, past due 90 days or more .............        1,812        2,215
Restructured loan ....................................        - - -        - - -
Impaired loans .......................................        9,901        8,908
<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.

Note 4. Recent Accounting Pronouncements

In July 2001, the Financial  Accounting  Standards  Board issued  Statement 141,
"Business  Combinations"  and  Statement  142,  "Goodwill  and Other  Intangible
Assets." Statement 141 eliminates the pooling method for accounting for business
combinations;  requires  that  intangible  assets that meet certain  criteria be
reported separately from goodwill; and requires negative goodwill arising from a
business  combination  to be recorded as an  extraordinary  gain.  Statement 142
eliminates  the  amortization  of  goodwill  and  other   intangibles  that  are
determined  to have an  indefinite  life;  and  requires,  at a minimum,  annual
impairment tests for goodwill and other intangible assets that are determined to
have  an  indefinite  life.  The  provisions  of the  Statements  are  generally
effective  January 1, 2002. The Company  anticipates  that the  amortization  of
substantially all goodwill will be suspended on January 1, 2001. Annual goodwill
amortization totals $261,000.

In July 2001,  the Securities and Exchange  Commission  issued Staff  Accounting
Bulletin No. 102,  "Selected Loan Loss Allowance  Methodology and  Documentation
Issues." The bulletin does not change accounting  guidance for the Allowance for
Loan Losses, but does provide significant  interpretation of the manner in which
institutions  should develop and document their  methodology for calculating the
allowance for loan losses, as well as measuring the adequacy of such. Management
is in the  early  stages of  comparing  its  documentation  and  methodology  to
determine what changes and  adjustments to the allowance for loan losses will be
needed. This process is anticipated to be completed in the 4th quarter of 2001.


<PAGE>


                                 PART I, ITEM 2.

                              HILLS BANCORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS


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.

Recent Activities

In  September,  2001 Hills  Bank and Trust  Company  signed a  contract  for the
construction of its second office in Cedar Rapids. The new 7,200 square foot one
story  building will have three  drive-up lanes and a drive-up ATM. The location
of  the  office  will  be on  Williams  Boulevard  in  Southwest  Cedar  Rapids.
Construction  started  the first week of  October  and it is  expected  that the
office  will open in the second  quarter of 2002.  The total  estimated  cost or
land, building and equipment is approximately $1,700,000.

Also,  the new Eastside Iowa City office is  progressing  well and completion is
expected at 2621 Muscatine Avenue in December, 2001. This will be a 5,800 square
foot one story  building  and similar to the new Cedar  Rapids  office will have
three drive-up lanes and a new drive-up ATM.

Financial Position

Total  assets  at  September  30,  2001  are  $924.9  million,  an  increase  of
$83.1million  from total assets of $841.8  million at September  30, 2000.  This
increase in assets  included an increase in net loans from September 30, 2000 to
September  30, 2001 of $42.8  million  with  primarily  all the increase in real
estate  loans.  Loan  growth in these types of loans  including  1-4 family home
loans is  consistent  with  loan  growth  over the  last few  years.  Investment
securities  increased $27.1 million from one year ago and was mainly in the area
of U.S.  Government Agency securities.  The asset growth was funded primarily by
deposit growth of $70.3 million. Due to the continued loan demand and challenges
for funding sources,  asset-liability management continues to be very important.
The asset-liability 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.  The Company
believes it will be able to maintain sufficient liquidity.

In the current year, as of October 2, 2001, the Federal  Reserve has lowered the
federal funds  borrowing  rates 400 basis points with nine changes.  The rate on
January 1, 2001 was 6.50% and as of October 2, 2001 is 2.50%. The rate is at its
lowest level since 1962.  The changes in these rates have a direct effect on the
financial  market  in  terms  of  interest  rates on U.S.  Treasury  and  Agency
securities  which the Banks  invest in and use as indices for setting  both loan
and deposit rates. Through September 30, 2001, the declining interest rates have
not had an adverse effect on the Company's net interest income.

In addition,  the stock market is usually  affected by the overall interest rate
climate.  Prior to the  terrorist  attacks  the  national  economy  was  already
experiencing some slowdown and the stock market had dropped significantly in the
last year. In our trade areas some employers have announced possible layoffs but
it is  difficult  to project at this time what  influence  it will have on Hills
Bancorporation. Loan growth has remained strong in the first nine months of 2001
and  with  low  rates,  loans  sold  on  the  secondary  market  have  generated
significant fee income for the Company.
<PAGE>

In January 2001, Hills Bancorporation paid a dividend of $2,393,000 or $1.60 per
share, a 10.34%  increase from the $1.45 paid in January 2000.  After payment of
the  dividend  and  adjustment  for  accumulated  other  comprehensive   income,
stockholders'  equity as of September  30, 2001 totaled  $76,651,000.  The total
stockholders' equity of Hills Bancorporation as of September 30, 2001 before the
reduction for the ESOP shares,  totaled 9.57% of total assets.  Under risk-based
capital rules,  the total risk based capital is 14.85% of risk adjusted  assets,
and substantially in excess of required minimums.

Liquidity

The  Company  actively  monitors  and manages its  liquidity  position  with the
objective of maintaining  sufficient cash flows to fund operations,  meet client
commitments, take advantage of market opportunities and provide a margin against
unforeseeable  liquidity  needs.  Federal  funds  sold,  loans held for sale and
investment   securities  available  for  sale  are  readily  marketable  assets.
Maturities of all investment securities are managed to meet the Company's normal
liquidity needs.  Investment  securities available for sale may be sold prior to
maturity to meet liquidity  needs, to respond to market changes or to adjust the
Company's  interest rate risk position.  Readily  marketable  assets, as defined
above, comprised 17.8% of the Company's total assets at September 30, 2001.

Net  cash  provided  from  Company  operations  is  another  primary  source  of
liquidity.  For the nine months  ended  September  30,  2001 and 2000,  net cash
provided by operating  activities was $9,329,000 and  $8,547,000,  respectively.
The  Company's  trend of  increasing  cash flows from  operations is expected to
continue in the foreseeable future due to the Company's growth.

The Company has  historically  maintained a stable deposit base and a relatively
low level of large  deposits,  which  result  in a low  dependence  on  volatile
liabilities.  As of September 30, 2001, the Company had advances of $120,637,000
from the FHLB of Des Moines.  These  advances  were used as a means of providing
both long and  short-term,  fixed-rated  funding for certain assets and managing
interest rate risk. The Company had additional borrowing capacity available from
the FHLB of approximately $186,000,000 at September 30, 2001.

The combination of high levels of potentially  liquid assets,  low dependence on
volatile  liabilities  and additional  borrowing  capacity  provided  sufficient
liquidity for the Company at September 30, 2001.

Results of Operations

Net income for the quarter and nine months ended  September 30, 2001 compared to
the same periods in 2000, had increases of $344,000 and $582,000,  respectively.
For both periods the changes were primarily the result of significant  increases
in net interest income, which was the result of growth in average earning assets
from the prior  year.  Average  earning  assets were  approximately  $79 million
higher for the nine months ended  September 30, 2001 compared to the same period
in 2000.  Total other income  increased  $422,000 and $1,155,000 for the quarter
and nine months ended  September  30, 2001  compared to the same period one year
ago.  Loan  origination  fees for the nine months in 2001 are $480,000 more than
2000 as a result of lower interest rates in 2001 for these types of loans. Trust
fees  are  approximately  $150,000  lower  than  expected  due to the  continued
declines in market value in assets under management primarily the result of loss
in stock  value.  The  majority of trust fees are based on a  percentage  of the
market value of the account.  Deposit  account  charges and other fees increased
$336,000  for the three  months and  $655,000  for the nine  months and were the
direct results of volume  increases in deposit  accounts opened and some changes
in fees charged.

Other expenses for the quarter ended September 30, 2001 were $5,696,000 compared
to  $5,027,000  for the  same  time  frame in 2000.  For the nine  months  ended
September 30, 2001 other  expenses were  $16,514,000,  an increase of $1,710,000
from the first nine months in 2000.  The major  changes for the nine months were
salaries and benefits which accounted for $688,000 and were the direct result of
salary  adjustments in 2001 and staff  additions at various  locations.  The new
operations center in Hills and the Coralville  expansion accounted for the major
change in the occupancy and furniture  and equipment  expenses  which  increased
$680,000. This increase included $314,000 of additional depreciation expense for
the new buildings and new equipment,  including computer upgrades throughout the
Banks.
<PAGE>

Earnings per share,  both basic and  diluted,  increased  for the quarter  ended
September  30, 2001 compared to 2000.  For the period ending  September 30, 2001
basic and diluted earnings per share were $1.79 and $1.77 in comparison to $1.56
and $1.55 for the quarter ended  September 30, 2000.  The earnings per share for
the nine months ended  September  30, 2001 and September 30, 2000 were $5.02 and
$4.63 for basic earnings per share and $4.98 and $4.60 for diluted  earnings per
share.

Market Risk Management

Market risk is the risk of earnings volatility that results from adverse changes
in interest  rates and market  prices.  The  Company's  market risk is comprised
primarily of interest  rate risk arising  from its core  banking  activities  of
lending  and  deposit  taking.  Interest  rate risk is the risk that  changes in
market  interest rates may adversely  affect the Company's net interest  income.
Management  continually  develops and applies  strategies to mitigate this risk.
Management does not believe that the Company's primary market risk exposures and
how those exposures have been managed to-date in 2001 changed significantly when
compared to 2000.

Asset/Liability Management

The Company has a fully integrated  asset/liability  management system to assist
in managing the balance sheet. The process, which is used to project the results
of alternative  investment  decisions,  includes the  development of simulations
that  reflect the effects of various  interest  rate  scenarios  on net interest
income.  Management  analyzes the  simulations to manage interest rate risk, the
net interest margin and levels of net interest income.

The  goal is to  structure  the  balance  sheet  so  that  net  interest  margin
fluctuates  in a narrow range during  periods of changing  interest  rates.  The
Company  currently  believes that net interest  income would fall by less than 5
percent if interest  rates  increased  or  decreased  by 300 basis points over a
one-year time horizon. This is within the Company's policy limits.

To  improve  net  interest  income  and lessen  interest  rate risk,  management
continues its strategy of de-emphasizing  fixed-rate portfolio  residential real
estate  loans with long  repricing  periods.  The Company  continues to focus on
reducing interest rate risk by emphasizing growth in variable-rate  consumer and
commercial loans.  Other actions include the use of fixed-rate Federal Home Loan
Bank  (FHLB)  advances  as  alternatives  to  certificates  of  deposit,  active
management of the available for sale investment  securities portfolio to provide
for cash flows that will facilitate interest rate risk management.

The highly  competitive  banking  environment  in Iowa also greatly  impacts the
Company's net interest margin.  The effect of competition on net interest income
is difficult to predict.

                                 PART 1, ITEM 3

                    QUANTITATIVE AND QUALITATIVE DISCLOSURES

                                ABOUT MARKET RISK

Market risk is the risk of loss arising from  adverse  changes in market  prices
and rates.  The  Company's  market risk is comprised  primarily of interest rate
risk  resulting  from  its  core  banking  activities  of  lending  and  deposit
gathering.  Interest  rate risk  measures the impact on earnings from changes in
interest  rates and the effect on current  fair market  values of the  Company's
assets, liabilities and off-balance sheet contracts. The objective is to measure
this risk and manage  the  balance  sheet to avoid  unacceptable  potential  for
economic  loss.  Management  continually  develops  and  applies  strategies  to
mitigate market risk.  Exposure to market risk is reviewed on a regular basis by
the asset/liability  committee at the bank. Management does not believe that the
Company's  primary  market  risk  exposures  and how those  exposures  have been
managed to date in 2001 changed significantly when compared to 2000.


<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 September 30, 2001.

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, 2001.

<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)


November 14, 2001                    /s/ Dwight O. Seegmiller
-----------------                    -------------------------------------------
Date                                 Dwight O. Seegmiller, President
                                     (Duly authorized officer of the registrant)


November 14, 2001                    /s/ James G. Pratt
-----------------                    -------------------------------------------
Date                                 James G. Pratt, Treasurer
                                     (Principal Financial Officer)