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, 2002

                         Commission file number: 0-12668


                              Hills Bancorporation

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

                       131 MAIN STREET, HILLS, IOWA 52235

                        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, 2002
--------------------------------------------------------------------------------
Common Stock, no par value                                        1,499,108


                                       1
<PAGE>

                              HILLS BANCORPORATION

                               Index to Form 10-Q

                                     Part I

                              FINANCIAL INFORMATION

                                                                           Page
                                                                          Number

Item 1.   Financial Statements

          Consolidated balance sheets, September 30, 2002 (unaudited)
            and December 31, 2001                                              3
          Consolidated statements of income, (unaudited) for three and nine
            months ended September 30, 2002 and 2001                           4
          Consolidated statements of comprehensive income, (unaudited) for
            three and nine months ended September 30, 2002 and 2001.           5
          Consolidated statements of stockholders' equity, (unaudited)
            for nine months ended September 30, 2002 and 2001                  6
          Consolidated statements of cash flows (unaudited) for nine
            months ended September 30, 2002 and 2001                           7
          Notes to consolidated financial statements                         8-9

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                        10-12

Item 3.   Quantitative and Qualitative Disclosures About Market Risk          13

Item 4.   Evaluation of Disclosures Controls                                  14


                                     Part II

                                OTHER INFORMATION

Item 1.   Legal proceedings                                                   15

Item 2.   Changes in securities                                               15

Item 3.   Defaults upon senior securities                                     15

Item 4.   Submission of matters to vote of security holders                   15

Item 5.   Other information                                                   15

Item 6.   Exhibits and reports on Form 8-K                                    15

Signatures and Certifications                                              16-18

Exhibit 11   Computation of earnings per share


                                       2
<PAGE>


                              HILLS BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                                      September 30,
                                                           2002     December 31,
                                                        Unaudited       2001*
                                                      --------------------------
ASSETS

Cash and due from banks .............................   $   35,750   $   37,070
Investment securities:
   Available for sale (amortized cost
     September 30, 2002 $184,712;
     December 31, 2001 $165,515) ....................      192,540      170,311
   Held to maturity (fair value
     September 30, 2002 $9,053;
     December 31, 2001 $12,146) .....................        8,734       11,840
   Stock of Federal Home Loan Bank ..................        8,382        7,809
Federal funds sold ..................................       22,549       29,428
Loans, net ..........................................      772,826      682,692
Property and equipment, net .........................       21,473       20,997
Accrued interest receivable .........................        7,727        7,257
Deferred income taxes, net ..........................          664        1,873
Other assets ........................................        7,551        6,828
                                                        -----------------------
                                                        $1,078,196   $  976,105
                                                        =======================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Noninterest-bearing deposits ........................   $   99,304   $   92,179
Interest-bearing deposits ...........................      689,120      627,839
                                                        -----------------------
   Total deposits ...................................   $  788,424   $  720,018
Federal funds purchased and securities
   sold under agreements to repurchase ..............       17,250       22,409
Federal Home Loan Bank notes ........................      167,606      137,637
Accrued interest payable ............................        2,407        2,683
Other liabilities ...................................        4,294        3,009
                                                        -----------------------
                                                        $  979,981   $  885,756
                                                        -----------------------
REDEEMABLE COMMON STOCK HELD BY
   EMPLOYEE STOCK OWNERSHIP PLAN
   (ESOP) ...........................................   $   12,656   $   12,194
                                                        -----------------------
STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
   authorized 10,000,000 shares;
   issued September 30, 2002 - 1,499,108 shares;
   December 31, 2001 - 1,498,558 shares .............   $   10,442   $   10,397
Retained earnings ...................................       82,841       76,931
Accumulated other comprehensive income,
   unrealized gains  on investment securities, net ..        4,932        3,021
                                                        -----------------------
                                                        $   98,215   $   90,349
Less maximum cash obligation related to
   ESOP shares ......................................       12,656       12,194
                                                        -----------------------
                                                        $   85,559   $   78,155
                                                        -----------------------
                                                        $1,078,196   $  976,105
                                                        =======================

* Derived from audited financial statements.

See Notes to Financial Statements.

                                       3
<PAGE>


                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
             Three and Nine Months Ended September 30, 2002 and 2001
                      (In Thousands, Except Per Share Data)



                                           Three Months Ended  Nine Months Ended
                                             September 30        September 30
                                           ------------------  -----------------
                                            2002      2001      2002      2001
                                           -------------------------------------
Interest Income:
   Interest and fees on loans ..........   $13,940   $13,398   $40,206   $39,567
   Interest on investment securities:
     Taxable ...........................     1,852     1,957     5,665     5,727
     Non-taxable .......................       584       493     1,681     1,425
   Interest on federal funds sold ......       134       184       407       996
                                           -------------------------------------
   Total interest income ...............   $16,510   $16,032   $47,959   $47,715
                                           -------------------------------------

Interest Expense:
   Interest on deposits ................   $ 5,528   $ 6,577   $17,296   $20,504
   Interest on securities sold under
   Interest on FHLB borrowings .........     2,343     1,785     6,232     5,298
                                           -------------------------------------

   Total interest expense ..............   $ 7,948   $ 8,509   $23,817   $26,292
                                           -------------------------------------
   Net interest income .................   $ 8,562   $ 7,523   $24,142   $21,423

Provision for loan losses ..............       244       225       731       675
                                           -------------------------------------

   Net interest income after provision

Other income:
   Loan origination fees ...............   $   407   $   219   $ 1,026   $   702
   Trust fees ..........................       605       567     1,764     1,777
   Deposit account charges and fees ....       845       793     2,366     2,295
Other expenses:
   Salaries and employee benefits ......   $ 3,351   $ 2,938   $10,068   $ 8,627
   Occupancy ...........................       453       490     1,299     1,348
   Furniture and equipment .............       684       681     2,146     1,929
   Office supplies and postage .........       304       322       844       905
   Other operating .....................     1,287     1,265     3,782     3,705
                                           -------------------------------------
                                           $ 6,079   $ 5,696   $18,139   $16,514
                                           -------------------------------------
   Income before income taxes ..........   $ 4,743   $ 3,910   $12,378   $10,929

Federal and state income taxes .........     1,507     1,230     3,846     3,408
                                           -------------------------------------

   Net income ..........................   $ 3,236   $ 2,680   $ 8,532   $ 7,521
                                           =====================================

Earning per common share:
     Basic .............................   $  2.15   $  1.79   $  5.69   $  5.02
     Diluted ...........................      2.14      1.77      5.64      4.98


See Notes to Financial Statements

                                       4
<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
             Three and Nine Months Ended September 30, 2002 and 2001
                      (In Thousands, Except Per Share Data)


                                           Three Months Ended  Nine Months Ended
                                              September 30       September 30
                                           -------------------------------------

                                             2002     2001       2002      2001
                                           -------------------------------------
Net Income .............................   $ 3,236   $ 2,680   $ 8,532   $ 7,521
                                           -------------------------------------

Other comprehensive income:
   Unrealized gains (losses) on debt
   Income tax effect of unrealized gains

   Comprehensive Income ................   $ 4,483   $ 4,250   $10,443   $10,666
                                           =====================================

See Notes to Financial Statements.

                                       5
<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Nine Months Ended September 30, 2002 and 2001
                      (In Thousands, Except Per Share Data)
<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, 2001 ...............   $10,397    $76,931     $ 3,021   $(12,194)   $78,155
    Net income ...........................       - -      8,532         - -        - -      8,532
    Change related to ESOP shares ........       - -        - -         - -       (462)      (462)
    Cash dividends ($1.75 per share) .....       - -     (2,622)        - -        - -     (2,622)
    Issuance of 550 shares of common stock        45        - -         - -        - -         45
    Other comprehensive income ...........       - -        - -       1,911        - -      1,911
                                             ----------------------------------------------------
Balance, September 30, 2002 ..............   $10,442    $82,841     $ 4,932   $(12,656)   $85,559
                                             ====================================================


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
                                             ====================================================
</TABLE>
See Notes to Financial Statements.


                                       6
<PAGE>


                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Nine Months Ended September 30, 2002 and 2001
                                 (In Thousands)
<TABLE>
                                                                                      2002        2001
                                                                                   ----------------------
<S>                                                                                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $   8,532    $   7,521
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................       1,711        1,486
    Provision for loan losses ..................................................         731          675
    Deferred income taxes ......................................................          88           91
    Compensation paid by issuance of common stock ..............................          45          149
    (Increase) decrease in accrued interest receivable .........................        (470)        (180)
    Amortization of bond discount ..............................................         230          102
    (Increase) in other assets .................................................        (850)      (1,329)
    Amortization of intangibles ................................................         127          236
    Increase in accrued interest and other liabilities .........................       1,009          578
                                                                                   ----------------------
       Net cash provided by operating activities ...............................   $  11,153    $   9,329
                                                                                   ----------------------

CASH FLOWS FROM  INVESTING  ACTIVITIES
Proceeds  from  maturities of investment securities:
    Available for sale .........................................................   $  44,657    $  42,587
    Held to maturity ...........................................................       3,106        2,463
Purchase of investment securities available for sale ...........................     (64,657)     (64,909)
Federal funds sold, net ........................................................       6,879       18,481
Loans made to customers, net of collections ....................................     (90,865)     (39,207)
Purchases of property and equipment ............................................      (2,187)      (4,316)
                                                                                   ----------------------
    Net cash (used in) investing activities ....................................   $(103,067)   $ (44,901)
                                                                                   ----------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease)  in deposits ...........................................   $  68,406    $  38,954
Net increase  (decrease) in fed funds purchased and
    securities sold under agreements to repurchase .............................      (5,159)       1,175
Borrowings from FHLB ...........................................................      30,000         --
Payments on FHLB notes .........................................................         (31)         (31)
Stock options exercised ........................................................        --             44
Income tax benefits on stock options exercised .................................        --             29
Dividends paid .................................................................      (2,622)      (2,393)
                                                                                   ----------------------
    Net cash provided by financing activities ..................................   $  90,594    $  37,778
                                                                                   ----------------------
    Increase (decrease) in cash and due from banks .............................   $  (1,320)   $   2,206
                                                                                   ----------------------

CASH AND DUE FROM BANKS
    Beginning ..................................................................      37,070       25,669
                                                                                   ----------------------
    Ending .....................................................................   $  35,750    $  27,875
                                                                                   ======================

SUPPLEMENTAL DISCLOSURES Cash payments for:
  Interest paid to depositors and others .......................................   $  17,572    $  20,555
  Interest paid on other obligations ...........................................       6,518        5,788
  Non-cash financing transaction,
    decrease in maximum cash obligation related
    to ESOP shares .............................................................         462          310
</TABLE>

See Notes to Financial Statements.

                                       7
<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, 2001.

There were no changes in accounting  policies which had a significant  effect on
the interim  consolidated  financial statements for the periods presented except
as disclosed in Note 4 to the financial statements.

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
                                                         2002             2001
                                                       -------------------------

Agricultural .................................         $ 37,323         $ 35,077
Commercial and financial .....................           39,436           39,349
Real estate, construction ....................           46,352           39,113
Real estate, mortgage ........................          624,130          529,272
Loans to individuals .........................           36,235           33,123
                                                       -------------------------
                                                       $783,476         $675,934
Less allowance for loan losses ...............           10,650           10,529
                                                       -------------------------
                                                       $772,826         $665,405
                                                       =========================

Transactions in the allowance for loan losses are as follows:

                                                            (In thousands)
                                                              Nine Months
                                                          Ended September 30
                                                        2002             2001
                                                      --------------------------

Balance, beginning ...........................        $  9,950         $ 10,428
  Provision charged to expense ...............             731              675
  Net recoveries (charge-offs) ...............             (31)            (574)
                                                      -------------------------
Balance, ending ..............................        $ 10,650         $ 10,529
                                                      ==========================

                                       8
<PAGE>

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

                                                              (In thousands)
                                                               September 30
                                                           ---------------------
                                                            2002          2001
                                                           ---------------------

Non-accrual ........................................       $ 1,998       $ 1,896
Accruing loans, past due 90 days or more ...........         2,417         1,812
Restructured loan ..................................          --           - - -
Impaired loans .....................................        12,353         9,901

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 eliminated 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
eliminated  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  were  implemented
effective  January 1, 2002. The amortization of goodwill with an indefinite life
was suspended on January 1, 2002.

In October 2002 the Financial  Accounting  Standards Board issued  Statement No.
147,  "Acquisitions  of Certain  Financial  Institutions"  which amended several
previously issued accounting  standards.  The Company has adopted FASB Statement
No. 147 in the third  quarter of 2002.  This  adoption of this  statement had no
material effect on current or prior financial statements.

                                       9
<PAGE>


                              HILLS BANCORPORATION
                                 PART I, ITEM 2.
                      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  period  ended  September  30,  2002  the  highlights  included  the
following:

o    Hills Bancorporation achieved a new milestone in the first quarter as total
     assets exceeded one billion  dollars.  This growth  continued in the second
     and third  quarters  with  total  assets at  September  30,  2002 at $1.078
     billion  and  this  represents  a $153  million  increase  in  assets  from
     September  30, 2001.  Also since  December  31, 2001 assets have  increased
     $102.1 million.

o    Hills Bank and Trust Company  opened its eleventh  office on April 1, 2002.
     The full service banking office in Cedar Rapids is located at 3610 Williams
     Blvd. SW and is the second  location in Cedar Rapids.  The new 7,200 square
     foot one story  building has three  drive-up  lanes and a drive-up ATM. The
     office has been well received during its first six months of operations.

o    In  August  of  2002,  Hills  Bank and  Trust  Company  began an  extensive
     remodeling on a property  located at 800 11th Street in Marion,  Iowa.  The
     building will be a two-story building with approximately  8,400 square feet
     with three  drive-up lanes and a drive-up ATM. The full service bank office
     is  scheduled  to open in January,  2003.  This office will be Hills Bank's
     third office in the Cedar Rapids area and the twelfth office of Hills Bank.

Financial Position

Total assets at September 30, 2002 are $1.078 billion compared to $976.1 million
in assets at  December  31,  2001.  The asset  changes  include a $90.1  million
addition in net loans and a $19.7  million  increase in  investment  securities.
Consistent  with the history of the Bank the  primary  growth in loans were real
estate  mortgage  loans,  including  growth in the 1 to 4 family  home loans and
multifamily  and  commercial  real estate  loans.  The growth in the  investment
securities is in U.S.  Government  Agency  securities and municipal  bonds.  The
asset growth was funded by deposit growth of $68.4 million and a net increase of
Federal Home Loan Bank advances of $30 million.  The local economy  continues to
be strong in terms of loan and deposit growth.  Interest rates continue to be at
forty year lows so that results in high loan demand and current  customers  that
wish to obtain  lower  rates on existing  borrowings.  These low rates have also
resulted in a high volume of loans sold on the secondary  market and significant
fee income.  The national  economy and the stock market  continues to have signs
that are not favorable and will at sometime effect the state and local economy.

Due  to  the  continued  loan  demand  and   challenges  for  funding   sources,
asset-liability  management continues to be very important.  The asset-liability
process  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.

                                       10
<PAGE>

Dividends and Equity

In January 2002, Hills Bancorporation paid a dividend of $2,622,000 or $1.75 per
share,  a 9.38%  increase from the $1.60 paid in January 2001.  After payment of
the dividend and the  adjustment for  accumulated  other  comprehensive  income,
stockholders'  equity as of September  30, 2002 totaled  $85,559,000.  The total
stockholders'  equity of Hills  Bancorporation  as of September 30, 2002, before
the  reduction  for the  ESOP  shares,  totaled  9.11% of  total  assets.  Under
risk-based   capital   rules,   the  total  risk  based  capital  is  12.77%  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 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.  Federal funds sold and investment  securities available for sale
comprised 19.9% of the Company's total assets at September 30, 2002.

Net cash provided from  operations is another  primary source of liquidity.  For
the nine  months  ended  September  30,  2002 and  2001,  net cash  provided  by
operating activities was $11,153,000 and $9,329,000, respectively.

The Company has  historically  maintained a stable deposit base and a relatively
low level of large deposits, which has mitigated the volatility in liquidity. As
of September 30, 2002, the Company had advances of $167,606,000 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 $83 million at September 30, 2002.

The combination of high levels of potentially  liquid assets,  low dependence on
volatile  liabilities  and additional  borrowing  capacity  provided  sufficient
liquidity for the Company through September 30, 2002.

Results of Operations

Net income for the quarter and nine months ended  September 30, 2002 compared to
the same periods in 2001 had increases of $556,000 and $1,011,000, respectively.
For the three and nine month periods, the changes were 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
$114 million higher for the nine months ended September 30, 2002 compared to the
same period in 2001.  Loan  origination  fees  increased  over the prior year by
$188,000 for the three months ended  September  30th but increased  $324,000 for
the nine month period.  Trust fees increased for the quarter ended September 30,
2002 by $38,000 but  decreased  for the nine  months by $13,000  compared to the
same periods in the previous year.  Even though trust accounts under  management
have increased,  the downturn in stock values that existed in 2001 and continued
in 2002 had the effect of reducing trust fees that are based on the asset values
of the accounts. Deposit account charges and fees were $2,366,000 and $2,295,000
for the nine months ended September 30, 2002 and 2001, respectively.  Other fees
and charges as of  September  30, 2002  increased  $29,000 to  $1,950,000.  This
increase was due to volume changes in various accounts.

The Bank's  primary trade  territory is Johnson  County,  Iowa. Due to the large
employment in the county by the  University  of Iowa and the  University of Iowa
Hospitals and Clinics and the dependency on funding by the State of Iowa,  which
is  experiencing  decreasing  tax  revenue,  the Bank  continues to monitor loan
delinquencies  and other indicators of loan problems.  The quality of the Bank's
loans has  continued to be high because the  portfolio is  concentrated  in well
collateralized real estate loans.

Other expenses for the quarter ended September 30, 2002 were $6,079,000 compared
to  $5,696,000  for the  same  time  frame in 2001.  For the nine  months  ended
September 30, 2002 other  expenses were  $18,139,000,  an increase of $1,625,000
from the first nine months in 2001.  The  changes  for the nine months  included
salaries and benefits which  accounted for $1,441,000 and were the direct result
of salary  adjustments  in 2002 and staff  additions at various  locations.  The
occupancy  and furniture and  equipment  expenses  increased  $168,000 and these
increases  were the  result  of new  locations  that  have  been  added  and new
equipment purchases both in 2001 and 2002.

                                       11
<PAGE>

Earnings per share,  both basic and  diluted,  increased  for the quarter  ended
September  30, 2002 compared to 2001.  For the quarter ended  September 30, 2002
basic and diluted earnings per share were $2.15 and $2.14 in comparison to $1.79
and $1.77 for the quarter ended  September 30, 2001.  The earnings per share for
the nine months ended  September  30, 2002 and September 30, 2001 were $5.69 and
$5.02 for basic earnings per share and $5.64 and $4.98 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 2002 changed significantly when
compared to 2001.

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,  and 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.

                                       12
<PAGE>


                              HILLS BANCORPORATION
                                 PART I, 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 2002 changed significantly when compared to 2001.


                                       13
<PAGE>

                              HILLS BANCORPORATION
                                 PART I, ITEM 4
                        EVALUATION OF DISCLOSURE CONTROLS



Based on their evaluation of the  effectiveness  of the registrant's  disclosure
controls and  procedures as of a date within 90 days prior to the filing date of
this quarterly report, the undersigned officers of the registrant have concluded
that such  disclosure  controls  and  procedures  are  adequate.  There  were no
significant  changes  in  internal  controls  or in  other  factors  that  could
significantly  affect internal  controls,  including any corrective actions with
regard to significant  deficiencies and material  weaknesses,  subsequent to the
date of the most recent evaluation by the undersigned officers of the registrant
of the design and operation of internal  controls which could  adversely  affect
the  registrant's  ability to record,  process,  summarize and report  financial
data.


                                       14
<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, 2002

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

              (a)  Exhibits

                   Exhibit 11   - Statement Re Computation of Earnings Per
                                  Common Share
                   Exhibit 99.1 - Certification pursuant to Section 906 of the
                                  Sarbanes-Oxley Act of 2002
                   Exhibit 99.2 - Certification pursuant to Section 906 of the
                                  Sarbanes-Oxley Act of 2002

              (b)  Reports on Form 8-K

                   No  reports on Form 8-K have been  filed  during the  quarter
                   ended September 30, 2002.



                                       15
<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 thereunto duly authorized.

                                                     HILLS BANCORPORATION

Date  November 14, 2002                      By  /s/ Dwight O. Seegmiller
      --------------------                       -------------------------------
                                                 Dwight O. Seegmiller, President

Date  November 14, 2002                      By  /s/ James G. Pratt
      -------------------                        -------------------------------
                                                 James G. Pratt, Treasurer and
                                                 Chief Accounting Officer


                                       16
<PAGE>


                                 CERTIFICATIONS

I, Dwight O. Seegmiller, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Hills Bancorporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002                     By  /s/ Dwight O. Seegmiller
       -------------------------                 -------------------------------
                                                 Dwight O. Seegmiller, President



                                       17
<PAGE>

                                 CERTIFICATIONS

I, James G. Pratt, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Hills Bancorporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002                 By  /s/ James G. Pratt
       -------------------                   -----------------------------------
                                             James G. Pratt, Treasurer and Chief
                                             Accounting Officer


                                       18