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, 1996

                         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, 1996
          -----                                       ------------------

Common Stock, no par value                                1,463,604




                              HILLS BANCORPORATION
                               Index to Form 10-Q

                                     Part I
                              FINANCIAL INFORMATION


                                                                           Page
                                                                          Number

Item 1.   Financial Statements

          Consolidated  balance sheets,  March 31, 1996  (unaudited) 
          and December 31, 1995

          Consolidated  statements of income,  (unaudited)  for three
          months ended March 31, 1996 and 1995 

          Consolidated  statement of stockholders' equity,  (unaudited) 
          for three months ended March 31, 1996 and 1995 

          Consolidated  statements  of cash flows  (unaudited)  
          for three  months ended March 31, 1996 and 1995 

          Note 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                                  


SIGNATURES     



                              HILLS BANCORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                
                                                          March 31,
                                                            1996    December 31,
                                                          Unaudited     1995
                                                          --------- ------------
ASSETS
Cash and due from banks ...............................   $  10,163    $  11,883
Investment securities:
    Available for sale (amortized cost
      March 31, 1996 $103,715;
      December 31, 1995 $99,621) ......................     103,540      100,093
    Held to maturity (fair value
      March 31, 1996 $22,371;
      December 31, 1995 $21,754) ......................      22,180       21,443
Federal funds sold ....................................      11,345       16,080
Loans, net ............................................     321,659      318,546
Property and equipment, net ...........................       7,041        6,996
Accrued interest receivable ...........................       4,966        4,446
Deferred income taxes, net ............................       1,713        1,474
Other assets ..........................................       3,544        3,646
                                                          ---------    ---------
                                                          $ 486,151    $ 484,607
                                                          =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Noninterest-bearing deposits ..........................   $  36,300    $  42,927
Interest-bearing deposits .............................     357,841      349,330
                                                          ---------    ---------
    Total deposits ....................................   $ 394,141    $ 392,257
Federal funds purchased and securities
    sold under agreements to repurchase ...............       9,728       10,019
Federal Home Loan Bank notes ..........................      30,727       30,727
Accrued interest payable ..............................       1,835        1,885
Other liabilities .....................................       1,545        1,171
                                                          ---------    ---------
                                                          $ 437,976    $ 436,059
                                                          ---------    ---------

REDEEMABLE COMMON STOCK HELD BY
    EMPLOYEE STOCK OWNERSHIP PLAN
    (ESOP) ............................................   $   5,719    $   5,271
                                                          ---------    ---------

STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
    authorized 2,000,000 shares;
    issued 1,463,604 shares ...........................   $   8,925    $   8,925
Retained earnings .....................................      39,360       39,325
Unrealized gains (losses) on debt securities, net .....        (110)         298
                                                          ---------    ---------
                                                          $  48,175    $  48,548
Less, maximum cash obligation related to ESOP shares ..       5,719        5,271
                                                          ---------    ---------
                                                          $  42,456    $  43,277
                                                          ---------    ---------
                                                          $ 486,151    $ 484,607
                                                          =========    =========

*   Derived from audited financial statements.

See Notes to Financial Statements.



                              HILLS BANCORPORATION
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                   Three Months Ended March 31, 1996 and 1995
                      (In Thousands, Except Per Share Data)

                                                      1996       1995
                                                    -------------------
Interest income:
    Interest and fees on loans ..................   $  6,999   $  6,371
    Interest on investment securities
      Taxable ...................................      1,418      1,234
      Non-taxable ...............................        277        261
    Other interest income .......................        168         40
                                                    --------   ---------
    Total interest income .......................   $  8,862   $  7,906
                                                    --------   ---------

Interest expense:
    Interest on deposits ........................   $  4,243   $  3,669
    Interest on securities sold under
       agreements to repurchase .................        100         92
    Interest on FHLB notes ......................        489        366
                                                    --------   ---------

    Total interest expense ......................   $  4,832   $  4,127
                                                    --------   ---------
    Net interest income .........................   $  4,030   $  3,779

Provision for loan losses .......................        180        180
                                                    --------    --------

       Net interest income after
         provision for loan losses ..............   $  3,850   $  3,599
                                                    --------   ---------

Other income:
    Real estate origination fees ................   $    111   $     19
    Trust fees ..................................        185        151
    Deposit account charges and fees ............        375        373
    Other fees and charges ......................        281        250
                                                    --------   ---------
                                                    $    952   $     793
                                                    --------   ---------

Other expenses:
    Salaries and employee benefits ..............   $  1,550   $  1,340
    Occupancy expenses ..........................        212        190
    Furniture and equipment .....................        266        253
    F.D.I.C. insurance ..........................          2        209
    Office supplies and postage .................        176        177
    Other operating .............................        601        541
                                                    --------   ---------
                                                    $  2,807   $   2,710
                                                    --------   ---------
       Income before income taxes ...............   $  1,995   $  1,682

Federal and state income taxes ..................   $    569   $    465
                                                    --------   ---------

       Net income ...............................   $  1,426   $  1,217
                                                    ========   =========
                                                    
Per common share: 
     Net income                                     $    .97   $    .83
     Dividend, January ..........................        .95        .87
     Weighted average
        of common outstanding stock .............  1,473,069  1,472,397

See Note to Financial Statements




                              HILLS BANCORPORATION
            UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   Three Months Ended March 31, 1996 and 1995
                                 (In Thousands)



                                                           Capital     Retained   Unrealized    ESOP
                                                Total       Stock      Earnings     Losses   Obligations
                                               -------     -------     --------   ---------- -----------
                                                                              

Balance, January 1, 1996 .................     $43,277     $ 8,925     $39,325     $   298     $(5,271)
Net income ...............................       1,426           0       1,426           0           0
Change related to ESOP shares ............        (448)          0           0           0           0
                                                                         
Cash dividends ($.97 per share) ..........      (1,391)          0      (1,391)          0        (448)
Unrealized gains (losses) on debt
  securities, net ........................        (408)          0           0        (408)          0
                                               -------     -------     -------     -------     -------
Balance, March 31, 1996 ..................     $42,456     $ 8,925     $39,360     $  (110)    $(5,719)
                                               =======     =======     =======     =======     =======


Balance, January 1, 1995 .................     $36,447     $ 8,915     $35,336     $(2,594)    $(5,210)
Net income ...............................       1,217           0       1,217           0           0
Change related to ESOP shares ............         (55)          0           0           0         (55)
Cash dividends ($.95 per share) ..........      (1,268)          0      (1,268)          0           0
Unrealized gains (losses) on
  debt securities, net ...................       1,129           0           0       1,129           0
                                               -------     -------     -------     -------     -------
Balance, March 31, 1995 ..................     $37,470     $ 8,915     $35,285     $(1,465)    $(5,265)
                                               =======     =======     =======     =======     =======



See Notes to Financial Statements.



                              HILLS BANCORPORATION
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three Months Ended March 31, 1996 and 1995
                                 (In Thousands)


                                                                                     1996        1995
- -------------------------------------------------------------------------------------------------------
                                                                                          

CASH FLOWS FROM OPERATING ACTIVITIES
Net income .....................................................................   $  1,426    $  1,217
Adjustments to reconcile net income to
    net cash provided by operating activities:
    Depreciation ...............................................................        206         202
    Provision for loan losses ..................................................        180         180
    (Increase) decrease in accrued interest receivable .........................       (520)       (397)
    Amortization of bond discount ..............................................        135         138
    (Increase) in other assets .................................................        102         (12)
    Increase in accrued interest and other liabilities .........................        324         451
                                                                                   --------    --------
    Net cash provided by operating activities ..................................   $  1,853    $  1,779
                                                                                   --------    --------

CASH FLOWS FROM  INVESTING  ACTIVITIES
Proceeds  from  maturities of investment
  securities:
    Available for sale .........................................................   $  2,000    $  4,000
    Held to maturity ...........................................................        300         330
Purchase of investment securities:
    Available for sale .........................................................     (6,214)     (3,510)
    Held to maturity ...........................................................     (1,052)       (551)
Federal funds sold, net ........................................................      4,735       6,712
Loans made to customers, net of collections ....................................     (3,293)     (6,563)
Purchases of property and equipment ............................................       (251)       (379)
                                                                                   --------    --------
    Net cash (used in) investing activities ....................................   $ (3,775)   $     39
                                                                                   --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in deposits ........................................   $  1,884    $ (8,049)
    Net increase (decrease) in securities sold
       under agreements to repurchase ..........................................       (291)      1,498
    Borrowings from FHLB .......................................................    - - - -       5,000
    Dividends paid .............................................................     (1,391)     (1,268)
                                                                                   --------    --------
       Net cash provided by financing activities ...............................   $    202    $ (2,819)
                                                                                   --------    --------
       Increase in cash and due from banks .....................................   $ (1,720)   $ (1,001)

CASH AND DUE FROM BANKS
    Beginning ..................................................................   $ 11,883      10,805
                                                                                   --------    --------
    Ending .....................................................................   $ 10,163    $  9,804
                                                                                   ========    ========

SUPPLEMENTAL DISCLOSURES 
    Cash payments for:
       Interest paid to depositors and others ..................................   $  4,293    $  3,698
       Interest paid on other obligations ......................................        589         458
    Non-cash financing transactions:
       Increase in maximum cash obligation related
        to ESOP shares .........................................................        448         (55)
       Net unrealized gains (losses) on debt securities ........................       (647)      1,129



See Notes to Financial Statements.




                              HILLS BANCORPORATION
                    NOTE 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
                                                           ---------------------
                                                             1996         1995
                                                           ---------------------

Agricultural .........................................     $ 18,991     $ 19,000
Commercial and financial .............................       28,307       26,810
Real estate, construction ............................        8,510        7,937
Real estate, mortgage ................................      241,075      239,899
Loans to individual ..................................       31,618       31,640
                                                           --------     --------
                                                           $328,501     $325,286
Less allowance for loan losses .......................        6,842        6,740
                                                           --------     --------
                                                           $321,659     $318,546
                                                           ========     ========

Transactions in the allowance for loan losses are as follows:

                                                   (In thousands)
                                                    Three months
                                                    ended March 31
                                                 -------------------
                                                   1996        1995

Balance, beginning .........................      $6,740      $6,210
  Provision charged to expense .............         180         180
  Net charge-offs ..........................         (78)        (72)
                                                  ------      ------
Balance, ending ............................      $6,842      $6,318
                                                  ======      ======

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

                                                      (In thousands)
                                                         March 31
                                                     ----------------
                                                      1996      1995
                                                     ----------------

Nonaccrual ....................................      $  389   $     0
Accruing loans, past due 90 days or more ......       1,475     1,625
Restructured ..................................           0         0
Impaired ......................................       5,350     5,460

There are no impaired loans as of March 31, 1996


Note 3.  Stock Split

     On April 17, 1996, the Company  affected a three for one stock split in the
form of a stock  dividend  when it  issued a stock  dividend  of two  additional
shares for each share then held. The number of shares  outstanding and per share
information has been retroactively restated for all periods presented.



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


The  consolidated  balance  sheet of Hills  Bancorporation  as of March 31, 1996
reflects  total  assets of $486.2  million  which is an increase of $1.5 million
from  December  31,  1995.  Net loans are $321.7  million  which  represents  an
increase of $3.1 million from December 31, 1995. Compared to one year ago, total
assets have  increased  from $444.9 million to $486.2 million for an increase of
$41.3  million.  Also during this time,  net loans  increased  $14.5  million to
$321.7 million as of March 31, 1996.  These loan increases were primarily single
family  residential  loans in the  Iowa  City and  Coralville  area.  Investment
securities  total  $125.7  million as of March 31,  1996,  an  increase  of $4.2
million  from  December  31, 1995 and a $14.3  million  increase  in  investment
securities  since March 31, 1995.  Federal funds sold decreased during the first
quarter of 1996 by $4.7 million and have  increased from March 31, 1995 to March
31, 1996 by $10.6  million.  Interest rates on investment  securities  increased
during the last part of the quarter  ending  March 31, 1996  resulting  in a net
change in unrealized losses on investment  securities of $647,000.  This had the
effect of  decreasing  stockholders'  equity  by  $408,000  at March  31,  1996.
Comparing  the change in unrealized  losses  between March 31, 1995 to March 31,
1996 an increase in equity of $1,355,000 was shown.

Deposits (when federal funds purchased and securities  sold under  agreements to
repurchase  are  included)  as of March 31,  1996  totaled  $403.9  million,  an
increase of $1.6 million for the first three  months.  March 31, 1996  deposits,
including repos,  have grown $30.6 million from March 31, 1995.  Borrowings from
the FHLB have increased from  $25,758,000 to $30,727,000  during the last twelve
months with no increase in  borrowings  occurring in the first  quarter of 1996.
Asset-liability  management  encompasses  both the  management  of interest rate
sensitivity and the maintenance of adequate  liquidity.  Management  attempts to
provide  the  optimal  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  1996,  Hills  Bancorporation  paid a dividend of $.95 per share,  a
9.62%  increase  from the $.87  paid in January  1995.  The total  dividend  of
$1,391,000  is  deducted  from  stockholders'  equity  and is  reflected  in the
resulting   stockholders'   equity  as  of  March  31,   1996  of   $42,456,000.
Stockholders'  equity  at March 31,  1996 and  December  31,  1995  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 9.91%.  Under risk-based capital
rules, total capital is 14.59% of risk-adjusted assets,  compared to the current
8% requirement.

The  consolidated  net  income for the three  months  ended  March 31,  1996 was
$1,426,000 compared to $1,217,000 for the same period ended March 31, 1995. This
is an  increase  of $209,000  representing  earnings  per share for the three
months  of $.97  compared  to $.83  for the same  three  months  in 1995.  Net
interest income for 1996 is up by $251,000 over 1995 and is primarily the result
of earning  assets  being $34.9  million  higher in 1996  compared to 1995.  The
provisions  for loan  losses  are the same for both  quarters  presented  and is
reflective of  management's  overall opinion of the loan portfolio at this time,
the growth of the loan  portfolio,  and the level of the reserve as of March 31,
1996.




Other income of the bank was $952,000  compared to $793,000 for the three months
ended March 31, 1996 and 1995,  respectively.  Loan origination fees amounted to
$111,000  for the three  month  period  ended  March 31,  1996  compared to only
$19,000 in 1995.  The Trust  Department  fees were $185,000 and $151,000 for the
three  months  ending  March 31,  1996 and  1995,  respectively  and  represents
primarily an increase in accounts under management.

Other expenses have  increased from  $2,710,000 for the three months ended March
31, 1995 to $2,807,000 for the period ended March 31, 1996. Of this net increase
of $97,000,  salaries and employee benefits  accounted for a $210,000  increase.
This is a combination of salary increases and the number of full-time equivalent
employees increasing from March 31, 1995 to March 31, 1996 by ten employees. For
the quarter ending March 31, 1996 compared to the same period in 1995, the major
increase in net income is  accounted  for by a reduction  of F.D.I.C.  insurance
premiums.  The premium for 1996 will be $2,000 for the year compared to $424,000
for 1995. The occupancy,  furniture and equipment, office supplies and the other
operating expenses totaled $1,255,000 for the three months ending March 31, 1996
compared to  $1,161,000  for the same period in 1995.  Federal and state  income
taxes for 1996 are more than in 1995,  primarily the result of increased  income
before taxes.

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.

In February  1996, the Company  announced the stock  purchase of a Lisbon,  Iowa
bank  holding  company and the  purchase  of certain  assets and  assumption  of
deposits of the Kalona,  Iowa branch office of Boatmen's Bank of Iowa,  Inc. The
Lisbon bank has  approximately  $16.5  million in assets.  The Kalona office has
deposits of about $22 million.  It is expected  that both banks will be owned by
the Company and operated as separately  chartered banks.  Both  acquisitions are
subject to various regulatory approvals, including a separate state bank charter
for the Kalona Bank since it is presently an office  location of Boatmen's Bank.
It is anticipated that both  acquisitions will be completed in the third quarter
of 1996.

The  acquisitions  of the two banks is  expected  to  require an  investment  of
approximately  $6,000,000 and the funds for the  acquisitions are expected to be
provided by deposit growth and the maturities of investment securities.

Other than the previously  mentioned  acquisitions,  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.



                              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 March 31, 1996.

Item 5.       Other Information

              None

Item 6.       Exhibits and Reports on Form 8-K

              (a)  Exhibit
                   See exhibit 11 - Statement Re Computation of Earnings Per 
                   Common Share

                   See exhibit 27 - Financial Data Schedule

              (b)  Reports on Form 8-K
                   No  reports on Form 8-K have been  filed  during the  quarter
                   ended March 31, 1996.



                                   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)



May 14, 1996                         /s/ Dwight O. Seegmiller
- ------------------------------       -------------------------------
Date                                 Dwight O. Seegmiller, President

                                     (Duly authorized officer of the registrant)


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