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, 1998


                         Commission file number: 0-12668


                              Hills Bancorporation


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

                          131 MAIN STREET, HILLS, IOWA

                        Telephone number: (319) 679-2291


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 [X] Yes [ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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

                                                              SHARES OUTSTANDING
        CLASS                                                 At April 30, 1998
--------------------------                                    ------------------
Common Stock, no par value                                         1,467,754





<PAGE>


                              HILLS BANCORPORATION
                               Index to Form 10-Q

                                     Part I
                              FINANCIAL INFORMATION


                                                                           Page
                                                                          Number

Item 1.  Financial Statements

         Consolidated balance sheets, March 31, 1998 (unaudited)
           and December 31, 1997                                
         Consolidated statements of income, (unaudited) for three
           months ended March 31, 1998 and 1997                    
         Consolidated statement of comprehensive income, (unaudited) for
           three months ended March 31, 1998 and 1997.              
         Consolidated statement of stockholders' equity, (unaudited)
           for three months ended March 31, 1998 and 1997          
         Consolidated statements of cash flows (unaudited) for three
           months ended March 31, 1998 and 1997               
         Notes to consolidated financial statements               

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


                                     Part II
                                OTHER INFORMATION

Item 1.  Legal proceedings                                   

Item 2.  Changes in securities                      

Item 3.  Defaults upon senior securities            

Item 4.  Submission of matters to vote of security holders 

Item 5.  Other information                       

Item 6.  Exhibits and reports on Form 8-K     

COMPUTATION OF EARNINGS PER SHARE 

SIGNATURES             



<PAGE>


                              HILLS BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                                          March 31, 
                                                            1998    December 31,
                                                          Unaudited     1997*
                                                          --------- ------------
ASSETS
Cash and due from banks ..............................     $ 14,304     $ 15,508
Investment securities:
   Available for sale (amortized cost
     March 31, 1998 $110,306;
     December 31, 1997 $108,718) .....................      111,258      109,486
   Held to maturity (fair value
     March 31, 1998 $23,947;
     December 31, 1997 $24,230) ......................       23,542       23,840
   Stock of Federal Home Bank ........................        4,738        4,738
Federal funds sold ...................................       18,262        2,447
Loans, net ...........................................      430,994      422,761
Property and equipment, net ..........................        9,984        9,437
Accrued interest receivable ..........................        5,428        5,441
Deferred income taxes, net ...........................        1,795        1,859
Other assets .........................................        7,170        7,585
                                                           --------     --------
                                                           $627,475     $603,102
                                                           ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Noninterest-bearing deposits .........................     $ 49,650     $ 52,174
Interest-bearing deposits ............................      431,007      427,596
                                                           --------     --------
   Total deposits ....................................     $480,657     $479,770
Federal funds purchased and securities
   sold under agreements to repurchase ...............        6,917        9,008
Federal Home Loan Bank notes .........................       75,764       50,764
Accrued interest payable .............................        1,956        2,060
Other liabilities ....................................        2,801        2,318
                                                           --------     --------
                                                           $568,095     $543,920
                                                           --------     --------

REDEEMABLE COMMON STOCK HELD BY
   EMPLOYEE STOCK OWNERSHIP PLAN
   (ESOP) ............................................     $  7,842     $  7,682
                                                           --------     --------

STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
   authorized 10,000,000 shares;
   issued March 31, 1998 and December 31,
   1997 - 1,467,754 shares ...........................     $  9,070     $  9,070
Retained earnings ....................................       49,709       49,627
Accumulated other comprehensive income,
   unrealized gains on investment securities, net ....          601          485
                                                           --------     --------
                                                           $ 59,380     $ 59,182
Less, maximum cash obligation related to
   ESOP shares .......................................        7,842        7,682
                                                           --------     --------
                                                           $ 51,538     $ 51,500
                                                           --------     --------
                                                           $627,475     $603,102
                                                           ========     ========

*  Derived from audited financial statements.

See Notes to Financial Statements.


<PAGE>


                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                   Three Months Ended March 31, 1998 and 1997
                      (In Thousands, Except Per Share Data)


                                                            1998          1997
                                                           -------       -------
Interest Income:
   Interest and fees on loans ......................       $ 9,175       $ 8,041
   Interest on investment securities:
     Taxable .......................................         1,680         1,673
     Non-taxable ...................................           335           294
   Interest on federal funds sold ..................           247            41
                                                           -------       -------
   Total interest income ...........................       $11,437       $10,049
                                                           -------       -------

Interest Expense:
   Interest on deposits ............................       $ 5,026       $ 4,603
   Interest on securities sold under
agreements to repurchase ...........................            88            89
   Interest on FHLB borrowings .....................         1,025           530
                                                           -------       -------

   Total interest expense ..........................       $ 6,139       $ 5,222
                                                           -------       -------
   Net interest income .............................       $ 5,298       $ 4,827

Provision for loan losses ..........................           204           195
                                                           -------       -------

   Net interest income after provision
for loan losses ....................................       $ 5,094       $ 4,632
                                                           -------       -------

Other income:
   Loan origination fees ...........................       $   152       $    59
   Trust fees ......................................           457           304
   Deposit account charges and fees ................           434           433
   Other fees and charges ..........................           373           329
                                                           -------       -------
                                                           $ 1,416       $ 1,125
                                                           -------       -------
Other expenses:
   Salaries and employee benefits ..................       $ 2,065       $ 1,790
   Occupancy .......................................           270           246
   Furniture and equipment .........................           410           327
   Office supplies and postage .....................           282           231
   Other operating .................................           873           866
                                                           -------       -------
                                                           $ 3,900       $ 3,460
                                                           -------       -------
   Income before income taxes ......................       $ 2,610       $ 2,297

Federal and state income taxes .....................           766           686
                                                           -------       -------

   Net income ......................................       $ 1,844       $ 1,611
                                                           =======       =======

Earning per common share:
     Basic .........................................       $  1.26       $  1.10
     Diluted .......................................          1.24          1.09

See Notes to Financial Statements




<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   Three Months Ended March 31, 1998 and 1997
                                 (In Thousands)



                                                            1997          1998
                                                           -------      -------
Net Income ...........................................     $ 1,844      $ 1,611

Other comprehensive income:
    Unrealized gains (losses) on debt securities .....         184         (220)
Income tax effect of unrealized gains (losses) .......         (59)          82
                                                           -------      -------

    Comprehensive income .............................     $ 1,969      $ 1,473
                                                           =======      =======


<PAGE>


                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   Three Months Ended March 31, 1998 and 1997
                                 (In Thousands)


<TABLE>

                                               Capital      Retained   Unrealized       ESOP
                                                Stock       Earnings  Gains (Losses) Obligations    Total
                                               ------------------------------------------------------------
<S>                                            <C>          <C>          <C>          <C>          <C>  
Balance, January 1, 1998 ........              $  9,070     $ 49,627     $    485     $ (7,682)    $ 51,500
Net income ......................                   - -        1,844          - -          - -        1,844
Change related to ESOP shares ...                   - -          - -          - -         (160)        (160)
Cash dividends ($1.20 per share)                    - -       (1,762)         - -          - -       (1,762)
Unrealized gains (losses) on debt
  securities, net ...............                   - -          - -          116          - -         116
                                               --------     --------     --------     --------     --------
Balance, March 31, 1998 .........              $  9,070     $ 49,709     $    601     $ (7,842)    $ 51,538
                                               ========     ========     ========     ========     ========



Balance, January 1, 1997 ........              $  8,997     $ 44,078     $    676     $ (6,416)    $ 47,335
Redemption of stock .............                    (7)         - -          - -          - -           (7)
Net income ......................                   - -        1,611          - -          - -        1,611
Change related to ESOP shares ...                   - -          - -          - -         (160)        (160)
Cash dividends ($1.05 per share)                    - -       (1,539)         - -          - -       (1,539)
Unrealized gains (losses) on
  debt securities, net ..........                   - -          - -         (138)         - -         (138)
                                               --------     --------     --------     --------     --------
Balance, March 31, 1997 .........              $  8,990     $ 44,150     $    538     $ (6,576)    $ 47,102
                                               ========     ========     ========     ========     ========
</TABLE>
See Notes to Financial Statements.



<PAGE>


                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three Months Ended March 31, 1998 and 1997
                                 (In Thousands)
<TABLE>

                                                                                     1998        1997
                                                                                   --------------------
<S>                                                                                <C>         <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  1,844    $  1,611
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................        329         268
    Provision for loan losses ..................................................        204         195
    (Increase) decrease in accrued interest receivable .........................         13        (265)
    Amortization of bond discount ..............................................         63          98
    (Increase) in other assets .................................................        325         140
    Amortization of intangibles ................................................         86          86
    Increase in accrued interest and other liabilities .........................        379         503
                                                                                   --------    --------
    Net cash provided by operating activities ..................................   $  3,243    $  2,636
                                                                                   --------    --------

CASH FLOWS FROM  INVESTING  ACTIVITIES  
Proceeds  from  maturities of investment securities:
    Available for sale .........................................................   $  7,350    $  2,270
    Held to maturity ...........................................................        400         276
Purchase of investment securities:
    Available for sale .........................................................     (9,103)     (6,591)
    Held to maturity ...........................................................      - - -      (1,452)
Federal funds sold, net ........................................................    (15,815)        900
Loans made to customers, net of collections ....................................     (8,437)    (14,802)
Purchases of property and equipment ............................................       (876)       (218)
                                                                                   --------    --------
    Net cash (used in) investing activities ....................................   $(26,481)   $(19,617)
                                                                                   --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits ........................................   $    887    $ (1,135)
    Net increase (decrease) in fed funds purchased and
       Securities sold under agreements to repurchase ..........................     (2,091)      6,906
    Borrowings from FHLB .......................................................     30,000      10,000
    Payments on FHLB notes .....................................................     (5,000)        (30)
    Redemption of common stock .................................................      - - -          (7)
    Dividends paid .............................................................     (1,762)     (1,539)
                                                                                   --------    --------
       Net cash provided by financing activities ...............................   $ 22,034    $ 14,195
                                                                                   --------    --------
       Increase in cash and due from banks .....................................   $ (1,204)   $ (2,786)

CASH AND DUE FROM BANKS
    Beginning ..................................................................     15,508      15,036
                                                                                   --------    --------
    Ending .....................................................................   $ 14,304    $ 12,250
                                                                                   ========    ========

SUPPLEMENTAL DISCLOSURES Cash payments for:
       Interest paid to depositors and others ..................................   $  5,130    $  4,687
       Interest paid on other obligations ......................................      1,113         619
    Non-cash financing transactions:
       Increase in maximum cash obligation related
        to ESOP shares .........................................................        160         160
       Net unrealized gains (losses) on debt securities ........................       (184)       (138)
</TABLE>
See Notes to Financial Statements.

<PAGE>


                              HILLS BANCORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


Note 1. Interim Financial Statements

        Interim  consolidated  financial  statements  have not been  examined by
        independent public accountants,  but include all adjustments (consisting
        only of normal recurring  accruals) which, in the opinion of management,
        are necessary for a fair  presentation of the results for these periods.
        The results of  operation  for the interim  periods are not  necessarily
        indicative of the results for a full year.

        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)
                                                  March 31
                                           ----------------------
                                             1998         1997
                                           ----------------------

          Agricultural .................   $  28,820    $  23,974
          Commercial and financial .....      36,583       31,314
          Real estate, construction ....      15,728        9,622
          Real estate, mortgage ........     328,868      292,068
          Loans to individual ..........      29,050       33,189
                                           ---------    ---------
                                           $ 439,049    $ 390,167
          Less allowance for loan losses      (8,055)      (7,296)
                                           ---------    ---------
                                           $ 430,994    $ 382,871
                                           =========    =========

              Transactions in the allowance for loan losses are as follows:

                                            (In thousands)
                                             Three Months
                                             ended March 31
                                           ------------------
                                            1998       1997
                                           ------------------

          Balance, beginning ...........   $ 8,010    $ 7,311
            Provision charged to expense       204        195
            Net charge-offs ............      (159)      (210)
                                           -------    -------
          Balance, ending ..............   $ 8,055    $ 7,296
                                           =======    =======

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

                                                         (In thousands)
                                                            March 31
                                                         ---------------
                                                          1998     1997
                                                         ---------------

          Nonaccrual .............................       $  - -   $  376
          Accruing loans, past due 90 days or more        1,259      929
          Restructured loan ......................          - -      - -
          Impaired loans .........................        8,653    6,435


<PAGE>


Note 3. Changes in Accounting Policies

        In June 1997, the FASB issued Statement #130,  "Reporting  Comprehensive
        Income",   and  Statement  #131,   "Disclosures  About  Segments  of  an
        Enterprise  and  Related   Information".   Statement  #130   establishes
        standards for reporting  comprehensive  income in financial  statements.
        Statement #131 expands certain reporting and disclosure requirements for
        segments from current  standards.  The  Statements are effective for the
        quarter  ended March 31, 1998.  The company has presented a Statement of
        Comprehensive Income. Statement #131 has no effect on the interim period
        financial statements.




<PAGE>


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


The  consolidated  balance  sheet of Hills  Bancorporation  as of March 31, 1998
reflects  total assets of $627.5  million  which is an increase of $24.4 million
from  December 31,  1997.  Net loans from $431.0  million  which  represents  an
increase of $18.8  million from  December  31,  1997.  Compared to one year ago,
total  assets  have  increased  from  $556.1  million to $627.5  million  for an
increase of $71.4  million.  Also during this time,  net loans  increased  $48.1
million  to $431.0  million as of March 31,  1998.  These  loan  increases  were
primarily single family  residential loans in the Iowa City and Coralville area.
Federal funds sold  increased  during the first quarter of 1998 by $15.8 million
and have increased from March 31, 1997 to March 31, 1998 by $18.1 million.  This
increase is  primarily  excess funds that will be used for loan demand and other
investments  during the balance of 1998.  In January and  February of 1998 Hills
Bank and Trust Company took  advantage of lower  interest rates on four and five
year advances  available  from the Federal Home Loan Bank and borrowed a net $25
million  since  December  31, 1997 and a net $40 million  since March 31,  1997.
These advances are secured by 1-4 family mortgage loans.

Total  deposits,  including  federal funds  purchased and securities  sold under
agreements to  repurchase,  total $487.6 million at March 31, 1998 and this is a
decrease of $1.2  million  from the  December  31, 1997  balances.  Deposits and
securities sold under agreements to repurchase  increased from $462.0 million at
March 31,1997 to $487.6 million at March 31, 1998, an increase of $25.6 million.
The large  increase on the  liability  side of the balance sheet is the increase
discussed  above in Federal  Home Loan Bank  notes.  Asset-liability  management
encompasses both the management of interest rate sensitivity and the maintenance
of adequate liquidity.  Interest rate sensitivity management attempts to provide
the  optimal  level of net  interest  income  while  managing  exposure to risks
associated with interest rate movements.  Liquidity management involves planning
to meet anticipated funding needs.  Management monitors the rate sensitivity and
liquidity positions on an on-going basis and, when necessary, appropriate action
is taken to minimize any adverse effects of rapid interest rate movements or any
unexpected liquidity concerns.

In January  1998,  Hills  Bancorporation  paid a dividend of $1.20 per share,  a
14.29%  increase  from the $1.05 paid in January  1997.  The total  dividend  of
$1,762,000  is  deducted  form  stockholders'  equity  and is  reflected  in the
resulting   stockholders'   equity  as  of  March  31,   1998  of   $51,538,000.
Stockholders'  equity  at March 31,  1998 and  December  31,  1997  reflects  an
adjustment for unrealized gain (losses) on debt securities, net of income taxes.
The total stockholders' equity of Hills Bancorporation  before the reduction for
the ESOP shares as a percent of total assets is 9.46%.  Under risk-based capital
rules, total capital is 15.11% of risk adjusted assets,  compared to the current
8% requirement.

Net income for the three months ending March 31, 1998 and 1997 is $1,844,000 and
$1,611,000 respectively. This is an increase of $233,000 or 14.46%. Earnings per
share,  both basic and diluted  increased for the quarter  ending March 31, 1998
compared  to 1997.  For the  period  ending  March 31,  1998  basic and  diluted
earnings per share were $1.26 and $1.24 in comparison to $1.10 and $1.09 for the
quarter  ending March 31, 1997. The increase in net income is due primarily to a
$471,000  increase in net interest  income due to the volume of average  earning
assets  increasing by approximately  $71 million between the two quarters ending
March 31, 1998 and 1997 respectively. Other income increased from the prior year
quarter  ending  March  31st by  $291,000,  which was the  result of trust  fees
increasing  $153,000  due  to an  increase  in  volume  of  trust  assets  under
management  and loan  origination  fees  rising  $93,000  as a  result  of lower
interest  rates.  Other  operating  expenses are up $440,000 as a result of more
full time  equivalent  employees,  increased  data  processing  expenses and the
addition of the Mount Vernon office of Hills Bank.

The  Bank's  principal  sources  of funds  continues  to be  prepayment  of loan
principal and current amortized loan payments.  In addition,  funds are provided
from current operations.  All of the funds are used to fulfill loan commitments,
make  short-term  investments,  and fund any  deposit  withdrawals  needed.  The
Company has no material  commitments or plans which will  materially  affect its
liquidity or capital resources. The acquisition of property and equipment may be
in cash purchases, or they may be financed if favorable terms are available


<PAGE>


                              HILLS BANCORPORATION
                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

              There are no material pending legal proceedings.

Item 2.       Changes in Securities

              There were no changes in securities.

Item 3.       Defaults upon Senior Securities

              Hills Bancorporation has no senior securities.

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

              No matters were submitted to a vote of security holders 
              during the quarter ending March 31, 1998.

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

              (a)  Exhibit
                   See exhibit II - Statement Re Computation of Earnings Per 
                   Common Share

              (b)  Reports on Form 8-K
                   No  reports on Form 8-K have been  filed  during the  quarter
                   ended March 31, 1998.



<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned and thereunto duly authorized.


                                     HILLS BANCORPORATION
                                     Registrant)



Date   MAY 14, 1998                  /s/ Dwight O. Seegmiller
       ------------------------      -------------------------------------------
                                     Dwight O. Seegmiller, President
                                     (Duly authorized officer of the registrant)



                                     /s/ James G. Pratt
                                     -------------------------------------------
                                     James G. Pratt, Treasurer
                                     (Principal Financial Officer)