FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

              (As last amended in Rel. No. 34-26589, eff. 4/12/93.)

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2003

                         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

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).        [X] Yes [ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

                                                              SHARES OUTSTANDING
          CLASS                                                At April 30, 2003
--------------------------------------------------------------------------------
Common Stock, no par value                                         1,515,778


                                       1
<PAGE>

                              HILLS BANCORPORATION
                               Index to Form 10-Q

                                     Part I
                              FINANCIAL INFORMATION

                                                                           Page
                                                                          Number

Item 1.        Financial Statements

               Consolidated balance sheets, March 31, 2003 (unaudited)
                   and December 31, 2002.                                      3
               Consolidated statements of income, (unaudited) for three
                   months ended March 31, 2003 and 2002.                       4
               Consolidated statements of comprehensive income, (unaudited)
                   for three months ended March 31, 2003 and 2002.             5
               Consolidated statements of stockholders' equity, (unaudited)
                   for three months ended March 31, 2003 and 2002.             6
               Consolidated statements of cash flows (unaudited) for three
                   months ended March 31, 2003 and 2002.                       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                             13


                                     Part II

                                OTHER INFORMATION

Item 1.        Legal proceedings                                              14

Item 2.        Changes in securities and use of proceeds                      14

Item 3.        Defaults upon senior securities                                14

Item 4.        Submission of matters to vote of security holders              14

Item 5.        Other information                                              14

Item 6.        Exhibits and reports on Form 8-K                               14

Signatures and Certifications                                              15-17


                                       2
<PAGE>


                              HILLS BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                      (Amounts in Thousands, Except Shares)


                                                        March 31,
                                                          2003      December 31,
                                                       (Unaudited)     2002*
                                                       -------------------------

ASSETS

Cash and due from banks ............................    $   31,103  $   32,647
Investment securities:
   Available for sale (amortized cost
     March 31, 2003 $186,216;
     December 31, 2002 $190,313) ...................       193,159     197,807
   Held to maturity (fair value
     March 31, 2003 $7,591;
     December 31, 2002 $8,303) .....................         7,347       8,022
Stock of Federal Home Loan Bank ....................         8,382       8,382
Federal funds sold .................................        54,244      32,514
Loans, net .........................................       816,133     780,857
Property and equipment, net ........................        22,063      21,500
Accrued interest receivable ........................         7,076       7,278
Deferred income taxes, net .........................         2,051       1,971
Other assets .......................................         7,192       7,569
                                                        ----------------------
                                                        $1,148,750  $1,098,547
                                                        ======================

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing deposits .......................    $  110,184  $  107,833
Interest-bearing deposits ..........................       733,703     694,488
                                                        ----------------------
   Total deposits ..................................    $  843,887  $  802,321
Securities sold under agreements to repurchase .....        27,827      20,798
Federal Home Loan Bank ("FHLB") borrowings .........       167,606     167,606
Accrued interest payable ...........................         1,982       2,134
Other liabilities ..................................         6,232       4,653
                                                        ----------------------
                                                        $1,047,534  $  997,512
                                                        ----------------------

REDEEMABLE COMMON STOCK HELD BY
   EMPLOYEE STOCK OWNERSHIP PLAN
   (ESOP) ..........................................    $   13,609  $   12,951
                                                        ----------------------

STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
   authorized 10,000,000 shares;
   issued March 31, 2003 - 1,501,054 shares;
   December 31, 2002 - 1,501,054 shares ............    $   10,541  $   10,541
Retained earnings ..................................        86,301      85,773
Accumulated other comprehensive income .............         4,374       4,721
                                                        ----------------------
                                                        $  101,216  $  101,035
Less maximum cash obligation related to
   ESOP shares .....................................        13,609      12,951
                                                        ----------------------
                                                        $   87,607  $   88,084
                                                        ----------------------
                                                        $1,148,750  $1,098,547
                                                        ======================

* Derived from audited financial statements.

See Notes to Financial Statements.

                                       3
<PAGE>


                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                   Three Months Ended March 31, 2003 and 2002
                (Amounts in Thousands, Except Per Share Amounts)


                                                            2003          2002
                                                           ---------------------

Interest income:
   Loans, including fees ...........................       $13,431       $12,927
   Investment securities:
     Taxable .......................................         1,680         1,917
     Nontaxable ....................................           602           516
   Federal funds sold ..............................           101           161
                                                           ---------------------
   Total interest income ...........................       $15,814       $15,521
                                                           ---------------------

Interest expense:
   Deposits ........................................       $ 4,560       $ 5,951
   Securities sold under ...........................            93           123
   FHLB borrowings .................................         2,242         1,916
                                                           ---------------------
   Total interest expense ..........................       $ 6,895       $ 7,990
                                                           ---------------------

   Net interest income .............................       $ 8,919       $ 7,531
Provision for loan losses ..........................           484           236
                                                           ---------------------

   Net interest income after provision .............       $ 8,435       $ 7,295
                                                           ---------------------
Other income:
   Loan origination fees ...........................       $   865       $   377
   Trust fees ......................................           619           619
   Deposit account charges and fees ................           873           730
   Other fees and charges ..........................           812           671
                                                           ---------------------
                                                           $ 3,169       $ 2,397
                                                           ---------------------
Other expenses:
   Salaries and employee benefits ..................       $ 3,680       $ 3,277
   Occupancy .......................................           456           417
   Furniture and equipment .........................           734           717
   Office supplies and postage .....................           326           281
   Other ...........................................         1,369         1,189
                                                           ---------------------
                                                           $ 6,565       $ 5,881
                                                           ---------------------
   Income before income taxes ......................       $ 5,039       $ 3,811

Federal and state income taxes .....................         1,658         1,188
                                                           ---------------------

   Net income ......................................       $ 3,381       $ 2,623
                                                           =====================

Earning per share:
     Basic .........................................       $  2.25       $  1.75
     Diluted .......................................          2.23          1.74

See Notes to Financial Statements

                                       4
<PAGE>

                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   Three Months Ended March 31, 2003 and 2002
                             (Amounts in Thousands)



                                                             2003         2002
                                                            --------------------
Net income .........................................        $3,381       $2,623

Other comprehensive income:
   unrealized holding gains (losses)
   arising during the period, net of
   income taxes 2003 ($204); 2002 $494 .............          (347)        (842)
                                                            --------------------
Comprehensive income ...............................        $3,034       $1,781
                                                            ====================

See Notes to Financial Statements.

                                       5
<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   Three Months Ended March 31, 2003 and 2002
                  (Amounts in Thousands, Except Share Amounts)
<TABLE>

                                                            Accumu-
                                                             lated    Maximum
                                                             Other     Cash
                                                            Compre-  Obligation
                                       Capital  Retained    hensive   To ESOP
                                        Stock   Earnings     Income    Shares      Total
                                       ---------------------------------------------------
<S>                                    <C>       <C>         <C>      <C>         <C>
Balance, December 31, 2002  ........   $10,541   $85,773     $4,721   $(12,951)   $ 88,084
    Change related to ESOP shares ..     - - -     - - -      - - -       (658)       (658)
    Net income .....................     - - -     3,381      - - -      - - -       3,381
    Cash dividends ($1.90 per share)     - - -    (2,853)     - - -      - - -      (2,853)
    Other comprehensive income .....     - - -     - - -       (347)     - - -        (347)
                                       ---------------------------------------------------
Balance, March 31, 2003 ............   $10,541   $86,301     $4,374   $(13,609)   $ 87,607
                                       ===================================================

Balance, December 31, 2001 $ .......   $10,397   $ 76,931    $3,021   $(12,194)   $ 78,155
       Change related to ESOP shares     - - -      - - -     - - -        297         297
    Net income .....................     - - -      2,623     - - -      - - -       2,623
    Cash dividends ($1.75 per share)     - - -     (2,622)    - - -      - - -      (2,622)
    Other comprehensive income .....     - - -      - - -      (842)     - - -        (842)
                                       ---------------------------------------------------
Balance, March 31, 2002 ............   $10,397   $ 76,932    $2,179   $(11,897)   $ 77,611
                                       ===================================================
</TABLE>
See Notes to Financial Statements.

                                       6
<PAGE>


                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three Months Ended March 31, 2003 and 2002
                             (Amounts in Thousands)
<TABLE>
                                                                                     2003        2002
                                                                                   --------------------
<S>                                                                                <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  3,381    $  2,623
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................        565         570
    Amortization ...............................................................      - - -          42
    Provision for loan losses ..................................................        484         236
    Deferred income taxes ......................................................        124          88
    (Increase) decrease in accrued interest receivable .........................        202        (110)
    Amortization of bond discount ..............................................        166          68
    (Increase) decrease in other assets ........................................        377        (760)
    Increase in accrued interest and other liabilities .........................      1,427       1,608
                                                                                   --------------------
       Net cash provided by operating activities ...............................   $  6,726    $  4,365
                                                                                   --------------------

CASH FLOWS FROM  INVESTING  ACTIVITIES
Proceeds  from  maturities of investment securities:
    Available for sale .........................................................   $ 16,500    $ 11,776
    Held to maturity ...........................................................        675         544
Purchase of investment securities available for sale ...........................    (12,569)    (21,119)
Federal funds sold, net ........................................................    (21,730)    (26,557)
Loans made to customers, net of collections ....................................    (35,760)    (26,560)
Purchases of property and equipment ............................................     (1,128)     (1,116)
                                                                                   --------------------
       Net cash (used in) investing activities .................................   $(54,012)   $(63,032)
                                                                                   --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits .......................................................   $ 41,566    $ 57,968
Net increase (decrease) in federal funds purchased
    and securities sold under agreements to repurchase .........................      7,029      (4,868)
Dividends paid .................................................................     (2,853)     (2,622)
                                                                                   --------------------
    Net cash provided by financing activities ..................................   $ 45,742    $ 50,478
                                                                                   --------------------
    Decrease in cash and due from banks ........................................   $ (1,544)   $ (8,189)
                                                                                   --------------------

CASH AND DUE FROM BANKS
    Beginning ..................................................................     32,647      37,070
                                                                                   --------------------
    Ending .....................................................................   $ 31,103    $ 28,881
                                                                                   ====================

SUPPLEMENTAL DISCLOSURES Cash payments for:

       Interest paid to depositors .............................................   $  4,712    $  5,971
       Interest paid on other obligations ......................................      2,335       2,039
       Income taxes ............................................................        725       - - -
    Non-cash financing activity,
       increase (decrease) in maximum cash obligation
       related to ESOP shares ..................................................        658        (297)
</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 operations
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 audited Financial  Statements for the
year ended December 31, 2002,  included in Hills  Bancorporation (the "Company")
Form 10-K filed with the Securities Exchange Commission on March 24, 2003.

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:

                                                                  March 31
                                                             -------------------
                                                               2003       2002
                                                             -------------------
                                                                (Amounts in
                                                                  thousands)

Agricultural .............................................   $ 40,737   $ 33,111
Commercial and financial .................................     47,097     39,966
Real estate:
    Construction .........................................     51,839     38,103
      Mortgage # .........................................    655,101    575,616
Loans to individuals .....................................     33,889     32,485
                                                             -------------------
                                                             $828,663   $719,281
Less allowance for loan losses ...........................     12,530     10,265
                                                             -------------------
                                                             $ 816,133  $709,016
                                                             ===================

#    Includes  loans  held for sale with a cost and fair  value of  $17,394  and
     $3,650 as of March 31, 2003 and 2002 respectively.

Changes in the allowance for loan losses are as follows:

                                                              Three Months
                                                             Ended March 31
                                                         ----------------------
                                                           2003          2002
                                                         ----------------------
                                                         (Amounts in thousands)

Balance, beginning .................................     $ 12,125      $  9,950
  Provision charged to expense .....................          484           236
  Recoveries .......................................          342           512
  Loans charged off ................................         (421)         (433)
                                                         --------      --------
Balance, ending ....................................     $ 12,530      $ 10,265
                                                         ========      ========

                                       8
<PAGE>

Non-performing  loan  information  for the three  months  ended March 31, was as
follows:

                                                              2003       2002
                                                          ----------------------
                                                          (Amounts in thousands)

Impaired loans, non-accrual ............................     $4,760     $4,283

Loans past due ninety days or more and still accruing ..      1,659      2,362

Restricted loans .......................................      - - -      - - -


Note 3. Earnings Per Share

Basic  earnings  per share  amounts are  computed  by  dividing  net income (the
numerator)  by the weighted  average  number of common shares  outstanding  (the
denominator) during the period. Diluted per share amounts assume the conversion,
exercise or issuance of all potential common stock equivalents unless the effect
is to reduce the loss or increase  the income per common  share from  continuing
operations.

Note 4. Recent Accounting Pronouncements

The  FASB has  issued  Statement  No.  143,  "Accounting  for  Asset  Retirement
Obligations"  which  requires  that the fair value of a  liability  for an asset
retirement  obligation  be recognized in the period in which it is incurred if a
reasonable  estimate of fair value can be made. The associated  asset retirement
costs are  capitalized as part of the carrying  amount of the long-lived  asset.
For  the  Company,   the  Statement  is  effective  January  1,  2003,  but  its
implementation didl not have any impact on the financial statements.

The FASB has issued Statement No. 145,  "Rescission of FASB Statements No. 4,44,
and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections."  This
statement  is  applicable  to debt  extinguishments  and  their  classification;
certain  sale-leaseback  transactions  and intangible  assets of motor carriers.
Implementation  of these  provisions  of the  Statement had no effect and is not
expected to have a material impact on the Company's financial statements.

The FASB has issued  Statement No. 146,  "Accounting  for Costs  Associated with
Exit or Disposal  Activities." The provisions of the Statement are effective for
exit or  disposal  activities  that  are  initiated  after  December  31,  2002.
Implementation of the Statement is not expected to have a material impact on the
Company's financial statements.

The  FASB  has  issued  Interpretation  No.  45,  "Guarantor's   Accounting  and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness of Others"- an interpretation of FASB Statements No. 5, 57, and 107
and rescission of FASB Interpretation No. 34." This Interpretation elaborates on
the  disclosures  to be made by a guarantor in its interim and annual  financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize,  at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing the guarantee. The initial recognition and measurement provisions of the
Interpretation  are  applicable on a prospective  basis to guarantees  issued or
modified  after  December 31, 2002.  Implementation  of these  provisions of the
Interpretation  is not  expected  to have a  material  impact  on the  Company's
consolidated   financial   statements.   The  disclosure   requirements  of  the
Interpretation  are  effective  for  financial  statements  of interim or annual
periods   ending  after  December  15,  2002,  and  have  been  adopted  in  the
consolidated financial statements for December 31, 2002.

                                       9
<PAGE>


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



The following is management's discussion and analysis of the financial condition
of  Hills   Bancorporation  and  subsidiary   ("Company")  at  March  31,  2003,
(unaudited)  when  compared with December 31, 2002 and the results of operations
for the three months ended March 31, 2003 and 2002 (unaudited). The accompanying
unaudited  financial  statements  should be read in  conjunction  with the Hills
Bancorporation  consolidated financial statements and related notes appearing in
the 2002 annual report previously filed on Form 10-K.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

The  discussion  following  contains  certain  forward-looking  statements  with
respect to the financial  condition,  the results of operations  and business of
the Company. These statements involve certain risks and uncertainties, which are
often inherent in the ongoing  operation of financial  institutions  such as the
Company's subsidiary bank.

Forward-looking  statements discuss matters that are not facts and are typically
identified by the words "believe,"  "expect,"  "anticipate," " target," " goal,"
"objective," " intend,"  "estimate," " will," "can," "would," "should," "could,"
"may" and similar  expressions.  They discuss  expectations about the future and
are not guarantees.  Forward-looking  statements  speak only as of the date they
are made,  and the Company  undertakes  no  obligation to update them to reflect
changes that occur after the date they are made.

There are several  factors - many of which are beyond the control of the Company
or its  subsidiary  Bank that could cause results to differ  significantly  from
expectations. Some of these factors are described below. There are factors other
than those described below that could cause results to differ from expectations.
Any factor  described below could by itself,  or together with one or more other
factors, adversely affect the business,  earnings and/ or financial condition of
the Company and its subsidiary Bank.

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.
There risks, which are not all inclusive, cannot be estimated.

FINANCIAL CONDITION AT MARCH 31, 2003 COMPARED TO DECEMBER 31, 2002.

Assets and Liabilities Review

Total assets grew to $1.149 billion at March 31, 2003,  compared to total assets
of $1.099  billion at  December  31,  2002.  The asset  growth of $50.2  million
included a net  increase  in federal  funds sold of $21.7  million  and net loan
growth of $35.3  million.  The loan growth  will be reduced to $17.4  million of
secondary  market  loans will be sold in April 2003  compared to $3.7 million of
March 31,  2002.  Interest  rates,  which help  drive  both new loan  growth and
secondary  market  loans,  including  refinances,  continue  to be at record low
levels compared to the last forty years.  Overall,  the local economy remains in
good  condition but  weaknesses  have been seen with some layoffs in employment.
Budget restraints continue to affect the University of Iowa and state government
spending.  In  addition,  the  national  economy has not  directly  affected the
Company,  but  obviously the war in Iraq and other  national  economic news will
affect the financial markets.

The growth of deposits in the first quarter of 2003 has been $41.6 million and a
total of $48.6 million when repurchase  agreements are included.  In the deposit
totals for both years presented,  the balances  include  temporary public funds,
which are not considered  core  deposits.  These funds were $20 million at March
31, 2003 and $28 million at March 31, 2002.  Borrowings  from the FHLB  remained
static at $167.6 million for the two periods presented.

Dividends and Equity

In January 2003, Hills Bancorporation paid a dividend of $2,853,000 or $1.90 per
share,  a 8.57%  increase from the $1.75 paid in January 2002.  After payment of
the dividend and the  adjustment for  accumulated  other  comprehensive  income,
stockholders'  equity  as of March  31,  2003  totaled  $87,607,000.  The  total
stockholders'  equity of Hills  Bancorporation  as of March 31, 2003, before the
reduction for the ESOP shares,  totaled 8.81% of total assets.  Under risk-based
capital rules, the total risk based capital is 12.49% of  risk-adjusted  assets,
and substantially in excess of required minimums.

                                       10
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002.

Net income, net interest income and other income

The  increase in net income of $758,000 is  accounted  for by three  significant
items,  which are increased  earning  assets,  improved net interest  margin and
increases in  secondary  market loans sold.  Net  interest  income  increased by
$1,388,000.  This  increase  is due to two  factors.  The first is that  average
earning  assets for the first three  months of 2003 were $121.8  million  higher
than the first three months of 2002.  The second factor is that the net interest
rate margin is approximately 14 basis points higher in the first quarter of 2003
than it was one year  ago.  Due to  continued  low  interest  rates  there  were
substantial  increases  in loan  origination  fees that total  $865,000  for the
quarter ended March 31, 2003 compared to $377,000 for the same period in 2002.

Trust fees were  unchanged  at  $619,000 in total  revenues  for each of the two
quarters shown.  The number of trust accounts under  management  increased as of
March 31, 2003  compared to the period ended March 31, 2002,  but the decline in
stock value,  had the effect of reducing  otherwise  expected  increases in fees
since they are based on asset value.  In addition,  deposit  account charges and
other fees increased $284,000 to a total of $1,685,000.  Approximately  $170,000
is due to changes in the fee structure on deposit  accounts and  additional  net
new accounts in the last year.  Credit card processing  fees increased  $114,000
but is offset by an increase in processing fee expenses of $127,000.

Provision for loan losses and allowance for loan losses

The  provision  for loan losses  increased  $248,000 to $484,000 for the quarter
ending March 31, 2003  compared to an expense of $236,000 for the quarter  ended
March 31, 2002.  The increase is due primarily to the  deterioration  of several
loans that are in the swine  production  segment of  agricultural  loans,  which
required an increase in the allowance for loan losses.

The allowance for loan losses totaled  $12,530,000 at March 31,2003  compared to
$10,265,000  at March 31, 2002.  The  percentage of the allowance to outstanding
loans was 1.51% and 1.43% at March 31, 2003 and 2002, respectively. The increase
in the allowance was based on management's consideration of a number of factors,
including  loan  concentrations,  loans  with  higher  credit  risks  (primarily
agricultural  loans)  and  overall  increases  in  net  loans  outstanding.  The
methodology used in 2003 is consistent with the prior years.

The University of Iowa continues to have a dominant effect on the economy of the
Bank's  primary trade area,  Johnson  County,  Iowa,  and in 2003 and 2002,  the
University  has helped the local  economy  remain  strong even when the national
economy has  experienced  weaknesses.  However,  in the last eighteen months the
economy of the state of Iowa has weakened and the University continues to suffer
from budget  cuts.  For its fiscal year  beginning  July 1, 2003 the  University
expects continued budget constraints.  The possible effects on the local economy
cannot be predicted, but are likely to weaken the economy in future years.

Other expenses and income taxes expense

Total other  expenses  increased  by $684,000  compared to the first  quarter of
2002.  The  increase  included  $403,000 of  additional  salaries  and  employee
benefits expense. Full-time equivalent employees increased by eighteen which was
principally the result of opening the new Cedar Rapids office in March, 2002 and
the new Marion office in February, 2003. Also other expenses other than salaries
and  benefits  increased a total of $281,000 or 10.79%.  Credit card  processing
fees,  which  composed part of the other  expenses,  increased  $127,000 and was
offset by $114,000 of increased fee income of credit card processing included in
the other income section.

Income tax expense was  $1,658,000  and  $1,188,000  for the three  months ended
March 31, 2003 and 2002,  respectively.  The corresponding  percentage of income
taxes  compared to income  before  income  taxes is 32.90% in 2003 and 31.17% in
2002.

Earnings per share

Earnings per share,  both basic and  diluted,  increased  for the quarter  ended
March 31, 2003  compared to 2002.  For the period ended March 31, 2003 basic and
diluted earnings per share were $2.25 and $2.23 in comparison to $1.75 and $1.74
for the quarter ended March 31, 2002.

                                       11
<PAGE>

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, 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 21.5%
of the Company's total assets at March 31, 2003.

Net cash provided from  operations is another  primary source of liquidity.  For
the three months ended March 31, 2003 and 2002,  net cash  provided by operating
activities was $6,726,000 and $4,365,000 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 March 31, 2003, 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 $116 million at March 31, 2003.

As additional liquidity, the Company has the ability to borrow up to $10 million
from the Federal Reserve Bank of Chicago, and two lines of credit with two banks
totaling $82 million,  that does require the pledging of  investment  securities
when drawn upon.

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 March 31, 2003.

                                       12
<PAGE>


                              HILLS BANCORPORATION
                                     ITEM 3.
                    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK



Market Risk Management

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 2003 changed significantly when compared to 2002.

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 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  re-pricing  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 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.

                              HILLS BANCORPORATION
                                     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.

                                       13
<PAGE>



                              HILLS BANCORPORATION

                           PART II - OTHER INFORMATION



Item 1.       Legal Proceedings

              There are no materials pending legal proceedings.

Item 2.       Changes in Securities and Use in Proceeds

              There were no changes in securities.

Item 3.       Defaults upon Senior Securities

              Hills Bancorporation has no senior securities.

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

              No matters were submitted to a vote of security holders during the
              quarter ended March 31, 2003

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

              (a)  Exhibits

                   Exhibit II - Statement Re Computation of Earnings Per Common
                   Share

                   Exhibit 99.1  Section 906 Certification by Dwight O.
                   Seegmiller

                   Exhibit 99.2  Section 906 Certification by James O. Pratt

              (b)  Reports on Form 8-K

                   No  reports on Form 8-K have been  filed  during the  quarter
                   ended March 31, 2003.

                                       14
<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      05/13/03                          By  /s/ Dwight O. Seegmiller
         ---------                              --------------------------------
                                                Dwight O. Seegmiller, President

Date      05/13/03                          By  /s/ James G. Pratt
         ---------                              --------------------------------
                                                James G. Pratt, Treasurer and
                                                Chief Accounting Officer

                                       15
<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:    05/13/03                            By  /s/ Dwight O. Seegmiller
         ---------                               -------------------------------
                                                 Dwight O. Seegmiller, President

                                       16
<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:    05/13/03                           By  /s/ James G. Pratt
         ---------                              --------------------------------
                                                James G. Pratt, Treasurer and
                                                Chief Accounting Officer

                                       17