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, 2000

                         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, 2000
--------------------------                                   -------------------
Common Stock, no par value                                         1,495,941


<PAGE>


                              HILLS BANCORPORATION

                               Index to Form 10-Q
                                     Part I

                              FINANCIAL INFORMATION


                                                                           Page
                                                                          Number

Item 1.  Financial Statements

         Consolidated balance sheets, September 30, 2000 (unaudited)
           and December 31, 1999
         Consolidated statements of income, (unaudited) for three and nine
           months ended September 30, 2000 and 1999
         Consolidated statements of comprehensive income, (unaudited) for
           three and nine months ended September 30, 2000 and 1999
         Consolidated statements of stockholders' equity, (unaudited)
           for three and nine months ended September 30, 2000 and 1999
         Consolidated statements of cash flows (unaudited) for nine
           months ended September 30, 2000 and 1999
         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 Except Shares)
<TABLE>
                                                          September 30,
                                                              2000       December 31,
                                                            Unaudited       1999*
                                                          ---------------------------
<S>                                                       <C>            <C>
ASSETS
Cash and due from banks ..................................   $  21,381    $  21,765
Investment securities:
   Available for sale (amortized cost
     September  30, 2000 $134,989;
     December 31, 1999 $133,516) .........................     134,337      131,961
   Held to maturity (fair value
     September  30, 2000 $16,675;
     December 31, 1999 $18,362) ..........................      16,577       18,307
   Stock of Federal Home Loan Bank .......................       7,927        5,930
Federal funds sold .......................................       5,510          206
Loans, net ...............................................     622,574      565,381
Property and equipment, net ..............................      14,338       11,646
Accrued interest receivable ..............................       7,647        6,376
Deferred income taxes, net ...............................       3,473        3,954
Other assets .............................................       8,014        8,440
                                                             ---------    ---------
                                                             $ 841,778    $ 773,966
                                                             =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing deposits .............................   $  73,872    $  66,794
Interest-bearing deposits ................................     547,532      495,292
                                                             ---------    ---------
   Total deposits ........................................   $ 621,404    $ 562,086
Federal funds purchased and securities
   sold under agreements to repurchase ...................      12,377       26,714
Federal Home Loan Bank notes .............................     125,669      108,700
Accrued interest payable .................................       2,535        2,040
Other liabilities ........................................       3,237        3,209
                                                             ---------    ---------
                                                             $ 765,222    $ 702,749
                                                             ---------    ---------
REDEEMABLE COMMON STOCK HELD BY
   EMPLOYEE STOCK OWNERSHIP PLAN
   (ESOP) ................................................   $  11,735    $  10,953
                                                             ---------    ---------
STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
   authorized 10,000,000 shares;
   issued September  30, 2000 - 1,495,941 shares;
   December 31, 1999 - 1,495,941 shares ..................   $  10,214    $  10,214
Retained earnings ........................................      66,754       61,984
Accumulated other comprehensive income,
   unrealized gains (losses) on investment securities, net        (412)        (981)
                                                             ---------    ---------
                                                             $  76,556    $  71,217
Less, maximum cash obligation related to
   ESOP shares ...........................................      11,735       10,953
                                                             ---------    ---------
                                                             $  64,821    $  60,264
                                                             ---------    ---------
                                                             $ 841,778    $ 773,966
                                                             =========    =========
<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, 2000 and 1999
                      (In Thousands, Except Per Share Data)
<TABLE>
                                         Three Months Ended   Nine Months Ended
                                         ------------------   -----------------
                                             September 30        September 30
                                          -----------------   -----------------
                                           2000      1999       2000      1999
                                          -------------------------------------
<S>                                       <C>       <C>       <C>       <C>
Interest income:
   Interest and fees on loans ..........  $12,950   $10,746   $36,813   $30,624
   Interest on investment securities:
     Taxable ...........................    1,832     1,788     5,567     5,315
     Non-taxable .......................      439       394     1,284     1,157
   Interest on federal funds sold ......       79        78       346       435
                                          -------   -------   -------   -------
   Total interest income ...............  $15,300   $13,006   $44,010   $37,531
                                          -------   -------   -------   -------

Interest expense:
   Interest on deposits ................  $ 6,536   $ 5,220   $17,870   $15,498
   Interest on securities sold under
     agreements to repurchase ..........      162       113       424       308
   Interest on FHLB borrowings .........    1,854     1,296     5,704     3,415
                                          -------   -------   -------   -------
   Total interest expense ..............  $ 8,552   $ 6,629   $23,998   $19,221
                                          -------   -------   -------   -------
   Net interest income .................  $ 6,748   $ 6,377   $20,012   $18,310
Provision for loan losses ..............      237       204       711       612
                                          -------   -------   -------   -------
   Net interest income after provision
     for loan losses ...................  $ 6,511   $ 6,173   $19,301   $17,698
                                          -------   -------   -------   -------
Other income:
   Loan origination fees ...............  $   110   $   121   $   222   $   525
   Trust fees ..........................      590       457     1,757     1,483
   Deposit account charges and fees ....      652       605     1,851     1,589
   Net losses on sale of investment
     securities ........................      - -      (214)      - -      (214)
   Other fees and charges ..............      534       464     1,710     1,382
                                          -------   -------   -------   -------
                                          $ 1,886   $ 1,433   $ 5,540   $ 4,765
                                          -------   -------   -------   -------

Other expenses:
   Salaries and employee benefits ......  $ 2,659   $ 2,429   $ 7,939   $ 7,244
   Occupancy ...........................      414       330     1,085       920
   Furniture and equipment .............      517       453     1,512     1,363
   Office supplies and postage .........      254       290       754       814
   Other operating .....................    1,183     1,045     3,514     3,050
                                          -------   -------   -------   -------
                                          $ 5,027   $ 4,547   $14,804   $13,391
                                          -------   -------   -------   -------
   Income before income taxes ..........  $ 3,370   $ 3,059   $10,037   $ 9,072
Federal and state income taxes .........    1,034       941     3,098     2,794
                                          -------   -------   -------   -------
   Net income ..........................  $ 2,336   $ 2,118   $ 6,939   $ 6,278
                                          =======   =======   =======   =======
Earning per common share:
     Basic .............................  $  1.56   $  1.41   $  4.63   $  4.20
     Diluted ...........................     1.55      1.40      4.60      4.17
</TABLE>
<PAGE>


                              HILLS BANCORPORATION

            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
             Three and Nine Months Ended September 30, 2000 and 1999
                                 (In Thousands)
<TABLE>

                                                  Three Months Ended     Nine Months Ended
                                                      September 30         September 30
                                                  -------------------    ------------------
                                                    2000       1999       2000       1999
                                                   -------    -------    -------    -------
<S>                                                <C>        <C>        <C>        <C>
Net Income .....................................   $ 2,336    $ 2,118    $ 6,939    $ 6,278
                                                   -------    -------    -------    -------
Other comprehensive income:
   Unrealized gains (losses) on debt securities      1,133       (371)       903     (2,527)
   Income tax effect of unrealized gains losses)      (419)       138       (334)       922
                                                   -------    -------    -------    -------
                                                   $   714    $  (233)   $   569    $(1,605)
                                                   -------    -------    -------    -------
   Comprehensive Income ........................   $ 3,050    $ 1,885    $ 7,508    $ 4,673
                                                   =======    =======    =======    =======
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION

            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Nine Months Ended September 30, 2000 and 1999
                                 (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, 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
                                             ========   ========    ======        ========    ========

                                                                                   Less
                                                                                  Maximum
                                                                   Accumulated     Cash
                                                                      Other      Obligation
                                              Capital   Retained   Comprehensive  To ESOP
                                               Stock    Earnings      Income       Shares      Total
                                             --------   --------   -------------  --------    --------

Balance, December 31, 1998 ................. $ 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
                                             =======    =======     ========      ========    ========
</TABLE>
See Notes to Financial Statements.
<PAGE>


                              HILLS BANCORPORATION

                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Nine Months Ended September 30, 2000 and 1999
                                 (In Thousands)
<TABLE>
                                                                                    2000        1999
                                                                                   --------    --------
<S>                                                                                <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  6,939    $  6,278
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................      1,020       1,071
    Provision for loan losses ..................................................        711         612
    Net losses on disposition of investment securities .........................      - - -         214
    Deferred income taxes ......................................................        147         (56)
    Compensation paid by issuance of common stock ..............................      - - -          20
    (Increase) decrease in accrued interest receivable .........................     (1,271)       (699)
    Amortization of bond discount ..............................................         52         339
    (Increase) in other assets .................................................        168      (1,401)
    Amortization of intangibles ................................................        258         258
    Increase in accrued interest and other liabilities .........................        523       1,291
                                                                                   --------    --------
    Net cash provided by operating activities ..................................   $  8,547    $  7,927
                                                                                   --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds  from  maturities  of investment securities:
    Available for sale .........................................................   $ 21,531    $ 26,837
    Held to maturity ...........................................................      1,651       2,055
    Proceeds from sales of available for sale securities .......................      - - -       9,003
    Purchase of available for sale investment securities .......................    (24,974)    (46,726)
    Federal funds sold, net ....................................................     (5,304)     36,605
    Loans made to customers, net of collections ................................    (57,904)    (76,098)
    Purchases of property and equipment ........................................     (3,712)     (1,483)
                                                                                   --------    --------
    Net cash (used in) investing activities ....................................   $(68,712)   $(49,807)
                                                                                   --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase in deposits ...................................................   $ 59,318    $ 14,672
    Net increase (decrease) in fed funds purchased and
       securities sold under agreements to repurchase ..........................    (14,337)     16,135
    Borrowings from FHLB .......................................................     40,000      25,000
    Payments on FHLB notes .....................................................    (23,031)    (12,032)
    Stock options exercised ....................................................      - - -         625
    Income tax benefits on stock options exercised .............................      - - -         308
    Dividends paid .............................................................     (2,169)     (1,911)
                                                                                   --------    --------
       Net cash provided by financing activities ...............................   $ 59,781    $ 42,797
                                                                                   --------    --------
       Increase (decrease) in cash and due from banks ..........................   $   (384)   $    917

CASH AND DUE FROM BANKS
    Beginning ..................................................................     21,765      16,427
                                                                                   --------    --------
    Ending .....................................................................   $ 21,381    $ 17,344
                                                                                   ========    ========

SUPPLEMENTAL DISCLOSURES
   Cash payments for:
       Interest paid to depositors and others ..................................   $ 17,375    $ 15,568
       Interest paid on other obligations ......................................      6,128       3,723
       Non-cash financing transaction, increase in maximum cash
         obligation related to ESOP shares .....................................        782       1,610
</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, 1999.

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
                                                     --------------------------
                                                       2000             1999
                                                     ---------        ---------

Agricultural ................................        $  29,090        $  29,394
Commercial and financial ....................           37,292           40,046
Real estate, construction ...................           44,340           39,706
Real estate, mortgage .......................          489,453          406,420
Loans to individuals ........................           32,447           30,058
                                                     ---------        ---------
                                                     $ 632,622        $ 545,624
Less allowance for loan losses ..............           10,048            9,227
                                                     ---------        ---------
                                                     $ 622,574        $ 536,397
                                                     =========        =========

Transactions in the allowance for loan losses are as follows:

                                                          (In thousands)
                                                            Nine Months
                                                         Ended September 30
                                                      -------------------------
                                                       2000              1999
                                                      --------         --------

Balance, beginning ...........................        $  9,750         $  8,856
  Provision charged to expense ...............             711              612
  Net charge-offs ............................            (413)            (241)
                                                      --------         --------
Balance, ending ..............................        $ 10,048         $  9,227
                                                      ========         ========

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

                                                      (In thousands)
                                                       September 30
                                                     -----------------
                                                      2000       1999
                                                     ------     ------

Nonaccrual .....................................     $   98     $- - -
Accruing loans, past due 90 days or more .......      2,215      1,083
Restructured loan ..............................      - - -      - - -
Impaired loans .................................     $8,908      9,343
<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



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

During the first nine  months of 2000 the  Company  expanded to a new market and
two  significant  construction  projects  were started in Hills and  Coralville,
respectively.  In  February  the Company  opened a new office in downtown  Cedar
Rapids, Iowa, our tenth location.  The construction of the new operations center
in Hills, began in March 2000, and continues to be on schedule with a completion
expected by  December  of 2000.  The total cost of the project is expected to be
approximately $3.1 million,  plus capitalized interest cost during construction.
Also  construction  began in June,  2000 of a 6,000 square foot  addition to the
Coralville  office,  which will be primarily for retail banking  services in the
growing  Coralville  market.  The Coralville project also includes a substantial
remodeling of the existing two story Coralville office.  Total project costs are
estimated to be approximately $2.1 million.

Financial Position

Total assets at  September  30, 2000 are $841.8  million and  represent a $103.2
million  increase in assets from one year ago. This increase in assets  included
an increase in net loans from  September 30, 1999 to September 30, 2000 of $86.2
million,  with primarily all the loan growth  attributable to real estate loans,
consistent  with loan  growth  over the last few years.  The local and  national
economy  continues to be strong despite recent  increases in interest rates. Our
asset growth was funded  primarily  by deposit  growth of $72.6  million,  while
federal  funds  purchased  and  securities  sold under  agreements to repurchase
decreased  by $14.3  million and a net  increase in Federal  Home Loan Bank note
advances of $37.0  million.  Due to the continued loan demand and challenges for
funding sources,  asset-liability management continues to be very important. The
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.  The Company
believes it will be able to maintain sufficient liquidity.

In January 2000, Hills Bancorporation paid a dividend of $2,169,000 or $1.45 per
share, an 11.54% increase from the $1.30 paid in January 1999.  After payment of
the  dividend  and  adjustment  for  accumulated  other  comprehensive   income,
stockholders'  equity as of September  30, 2000 totaled  $64,821,000.  The total
stockholders' equity of Hills Bancorporation as of September 30, 2000 before the
reduction for the ESOP shares,  totaled 9.09% of total assets.  Under risk-based
capital rules,  our total risk based capital is 13.70% of risk adjusted  assets,
and substantially in excess of required minimums.

Results of Operations

Net income for the quarter and nine months ended  September 30, 2000 compared to
the same periods in 1999 had increases of $218,000 and  $661,000,  respectively.
For both periods the changes were primarily the result of significant  increases
in net interest  income  which was the result of  increases  in average  earning
assets from the prior year.  Average  earning  assets  were  approximately  $100
million higher for the nine months ended September 30, 2000 compared to the same
period in 1999. Total other income increased over the prior year by $453,000 for
the three months ended September 30, 2000 and $775,000 for the nine month period
then ended.
<PAGE>

Loan origination fees for the nine months in 2000 are $303,000 less than 1999 as
a result of fewer real estate loan  refinancings  in 2000.  Trust fees,  deposit
account  charges  and other fees  increased  $250,000  for the three  months and
$864,000 for the nine months and were the direct results of volume  increased in
trust assets and deposit accounts  opened.  During the third quarter of 1999 the
Company  had  a  reduction  of  other  income  by  $214,000,  which  represented
investment  securities  losses taken to replace lower yielding  securities  with
higher  yielding  securities of similar risk and maturity.  For the year 2000 no
gains and losses on sale of investment securities have occurred.

Other   expenses   increased   $480,000  and  $1,413,000  for  the  two  periods
represented.  Of the  increase,  salaries and benefits  accounted  for $695,000,
occupancy and furniture and equipment  expense  $314,000 and all other  expenses
$404,000.  The salaries and employee benefits increase were the direct result of
salary  adjustments  in the first  quarter of 2000 and the two new offices added
during the last sixteen  months.  The Eastside  location of Hills Bank and Trust
Company  opened in June of 1999 and the Cedar Rapids office of Hills Bank opened
in February of 2000.  The two new locations  also accounted for a portion of the
increase in occupancy  expense and other  expense  increases  in  marketing  and
business  promotion.  Also  during  the year 2000 the banks have  introduced  an
on-line  banking  product  and  incurred  increased  promotion  expense for this
product.

Earnings per share,  both basic and  diluted,  increased  for the quarter  ended
September  30, 2000 compared to 1999.  For the quarter ended  September 30, 2000
basic and diluted earnings per share were $1.56 and $1.55 in comparison to $1.41
and $1.40 for the quarter ended  September 30, 1999.  The earnings per share for
the nine months ended September 30, 2000 and 1999 were $4.63 and $4.20 for basic
earnings per share and $4.60 and $4.17 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  form 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 2000 changed significantly when
compared to 1999.

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.

Our  objective 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 4
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.


<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, 2000.

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, 2000.
<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, 2000                    /s/ Dwight O. Seegmiller
------------------                   -------------------------------------------
Date                                 Dwight O. Seegmiller, President
                                     (Duly authorized officer of the registrant)


November 14, 2000                    /s/ James G. Pratt
-----------------                    -------------------------------------------
Date                                 James G. Pratt, Treasurer
                                     (Principal Financial Officer)