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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 June 30, 2002
Commission file number: 0-12668
Hills Bancorporation
Incorporated in Iowa I.R.S. Employer Identification
No. 42-1208067
131 MAIN STREET, HILLS, IOWA 52235
Telephone number: (319) 679-2291
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
SHARES OUTSTANDING
CLASS At July 31, 2002
- --------------------------------------------------------------------------------
Common Stock, no par value 1,498,558
1
Item 1. Financial Statements
Consolidated balance sheets, June 30, 2002 (unaudited)
and December 31, 2001 3
Consolidated statements of income, (unaudited) for the
three and six months ended June 30, 2002 and 2001 4
Consolidated statements of comprehensive income, (unaudited)
for three and six months ended June 30, 2002 and 2001 5
Consolidated statements of stockholders' equity, (unaudited)
for three and six months ended June 30, 2002 and 2001 6
Consolidated statements of cash flows (unaudited) for six
months ended June 30, 2002 and 2001 7
Notes to consolidated financial statements 8 - 9
Item 2. Management's discussion and analysis of financial condition
and results of operations 10 - 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II
OTHER INFORMATION
Item 1. Legal proceedings 14
Item 2. Changes in securities 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
Exhibit 11. Computation of earnings per share
Exhibit 99. Certification of 10-Q filing
Signatures
2
HILLS BANCORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30,
2002 December 31,
Unaudited 2001*
------------------------
ASSETS
Cash and due from banks ............................. $ 26,951 $ 37,070
Investment securities:
Available for sale (amortized cost
June 30, 2002 $188,498;
December 31, 2001 $165,515) .................... 194,348 170,311
Held to maturity (fair value
June 30, 2002 $9,255;
December 31, 2001 $12,146) ..................... 8,940 11,840
Stock of Federal Home Loan Bank .................. 8,382 7,809
Federal funds sold .................................. 23,648 29,428
Loans, net .......................................... 738,110 682,692
Property and equipment, net ......................... 21,627 20,997
Accrued interest receivable ......................... 7,495 7,257
Deferred income taxes, net .......................... 1,395 1,873
Other assets ........................................ 7,319 6,828
-----------------------
$1,038,215 $ 976,105
=======================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing deposits ........................ $ 92,503 $ 92,179
Interest-bearing deposits ........................... 658,071 627,839
-----------------------
Total deposits ................................... $ 750,574 $ 720,018
Federal funds purchased and securities
sold under agreements to repurchase .............. 20,237 22,409
Federal Home Loan Bank notes ........................ 167,637 137,637
Accrued interest payable ............................ 2,510 2,683
Other liabilities ................................... 3,570 3,009
-----------------------
$ 944,528 $ 885,756
-----------------------
REDEEMABLE COMMON STOCK HELD BY EMPLOYEE STOCK
OWNERSHIP PLAN (ESOP) ............................. $ 12,493 $ 12,194
-----------------------
STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
authorized 10,000,000 shares;
issued June 30, 2002 - 1,498,558 shares;
December 31, 2001 - 1,498,558 shares ............. $ 10,397 $ 10,397
Retained earnings ................................... 79,605 76,931
Accumulated other comprehensive income,
unrealized gains on investment securities, net .. 3,685 3,021
-----------------------
$ 93,687 $ 90,349
Less maximum cash obligation related to
ESOP shares ...................................... 12,493 12,194
-----------------------
$ 81,194 $ 78,155
-----------------------
$1,038,215 $ 976,105
=======================
* Derived from audited financial statements.
See Notes to Financial Statements.
3
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three and Six Months Ended June 30, 2002 and 2001
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30 June 30
-------------------------------------
2002 2001 2002 2001
-------------------------------------
Interest Income:
Interest and fees on loans .......... $13,339 $13,175 $26,266 $26,169
Interest on investment securities:
Taxable ........................... 1,896 1,982 3,813 3,770
Non-taxable ....................... 581 475 1,097 932
Interest on federal funds sold ...... 112 299 273 812
-------------------------------------
Total interest income ............... $15,928 $15,931 $31,449 $31,683
-------------------------------------
Interest Expense:
Interest on deposits ................ $ 5,817 $ 6,857 $11,768 $13,927
Interest on securities sold under
agreements to repurchase .......... 89 160 212 343
Interest on FHLB borrowings ......... 1,973 1,766 3,889 3,513
-------------------------------------
Total interest expense .............. $ 7,879 $ 8,783 $15,869 $17,783
-------------------------------------
Net interest income ................. $ 8,049 $ 7,148 $15,580 $13,900
Provision for loan losses .............. 251 225 487 450
-------------------------------------
Net interest income after provision
for loan losses .................... $ 7,798 $ 6,923 $15,093 $13,450
-------------------------------------
Other income:
Loan origination fees ............... $ 242 $ 337 $ 619 $ 483
Trust fees .......................... 540 616 1,159 1,210
Deposit account charges and fees .... 791 792 1,521 1,502
Other fees and charges .............. 632 579 1,303 1,192
-------------------------------------
Other expenses:
Salaries and employee benefits ...... $ 3,440 $ 2,906 $ 6,717 $ 5,689
Occupancy ........................... 429 419 846 858
Furniture and equipment ............. 745 640 1,462 1,248
Office supplies and postage ......... 259 301 540 583
Other operating ..................... 1,306 1,301 2,495 2,440
-------------------------------------
$ 6,179 $ 5,567 $12,060 $10,818
-------------------------------------
Income before income taxes .......... $ 3,824 $ 3,680 $ 7,635 $ 7,019
Federal and state income taxes ......... 1,151 1,146 2,339 2,178
-------------------------------------
Net income .......................... $ 2,673 $ 2,534 $ 5,296 $ 4,841
=====================================
Earning per common share:
Basic ............................. $ 1.78 $ 1.69 $ 3.53 $ 3.23
Diluted ........................... 1.76 1.68 3.50 3.21
See Notes to Financial Statements
4
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Six Months Ended June 30, 2001 and 2000
(In Thousands, Except Per Share Data)
Three Six
Months Ended Months Ended
June 30 June 30
2002 2001 2002 2001
----------------------------------
Net Income ................................ $2,673 $2,534 $5,296 $4,841
----------------------------------
Other comprehensive income:
Unrealized gains (losses) on debt
securities ........................... 2,390 156 1,054 2,498
Income tax effect of unrealized gains
(losses) ............................. (884) (57) (390) (923)
----------------------------------
1,506 99 664 1,575
----------------------------------
Comprehensive Income ................... $4,179 $2,633 $5,960 $6,416
==================================
See Notes to Financial Statements.
5
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 2002 and 2001
(In Thousands, Except Per Share Data)
Accumu- Less
lated Maximum
Other Cash
Compre- Obligation
Capital Retained hensive To ESOP
Stock Earnings Income Shares Total
---------------------------------------------------
Balance, December 31, 2001 .......... $10,397 $76,931 $3,021 $(12,194) $78,155
Net income ........................ - - 5,296 - - - - 5,296
Change related to ESOP shares ..... - - - - - - (299) (299)
Cash dividends ($1.75 per share) .. - - (2,622) - - - - (2,622)
Other comprehensive income ........ - - - - 664 - - 664
---------------------------------------------------
Balance, June 30, 2002 ............. $10,397 $79,605 $3,685 $(12,493) $81,194
===================================================
Balance, December 31, 2000 .......... $10,197 $69,179 $ 698 $(11,550) $68,524
Net income ........................ - - 4,481 - - - - 4,841
Cash dividends ($1.60 per share) .. - - (2,393) - - - - (2,393)
Change related to ESOP shares ..... - - - - - - (300) (300)
Issuance of 1,683 shares of common
stock ........................... 44 - - - - - - 44
Income tax benefit related to stock
based compensation .............. - - 30 - - - - 30
Other comprehensive income ........ - - - - 1,575 - - 1,575
---------------------------------------------------
Balance, June 30, 2001 .............. $10,241 $71,657 $2,273 $(11,850) $72,321
===================================================
See Notes to Financial Statements.
6
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2002 and 2001
(In Thousands)
2002 2001
--------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..................................................................... $ 5,296 $ 4,841
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ............................................................... 1,140 964
Provision for loan losses .................................................. 487 450
Deferred income taxes ...................................................... 88 149
(Increase) decrease in accrued interest receivable ......................... (238) (316)
Amortization of bond discount .............................................. 160 58
(Increase) in other assets ................................................. (576) (559)
Amortization of intangibles ................................................ 85 171
Increase in accrued interest and other liabilities ......................... 388 41
--------------------
Net cash provided by operating activities ............................... $ 6,830 $ 5,799
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investment securities:
Available for sale ......................................................... $ 23,354 $ 34,587
Held to maturity ........................................................... 2,901 1,104
Purchase of investment securities available for sale ........................... (47,071) (55,397)
Federal funds sold, net ........................................................ 5,780 19,000
Loans made to customers, net of collections .................................... (55,905) (14,510)
Purchases of property and equipment ............................................ (1,770) (3,391)
--------------------
Net cash (used in) investing activities .................................... $(72,711) $(17,607)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits ....................................................... $ 30,556 $ 22,210
Net (decrease) in fed funds purchased and
securities sold under agreements to repurchase ............................. (2,172) (928)
Borrowings from FHLB ........................................................... 30,000 --
Dividends paid ................................................................. (2,622) (2,393)
--------------------
Net cash provided by financing activities .................................. $ 55,762 $ 18,963
--------------------
Increase (decrease) in cash and due from banks ............................. $(10,119) $ 7,155
CASH AND DUE FROM BANKS
Beginning .................................................................. 37,070 25,669
--------------------
Ending ..................................................................... $ 26,951 $ 32,824
====================
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest paid to depositors and others ..................................... $ 11,941 $ 14,079
Interest paid on other obligations ......................................... 4,101 3,856
Non-cash financing transaction,
decrease in maximum cash obligation related to ESOP shares ................. 299 300
See Notes to Financial Statements.
7
HILLS BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Interim Financial Statements
Interim consolidated financial statements have not been examined by independent
public accountants, but include all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are necessary for a
fair presentation of the results for these periods. The results of operation for
the interim periods are not necessarily indicative of the results for a full
year.
In reviewing these financial statements, reference should be made to the Notes
to Financial Statements contained in the Financial Statements for the year ended
December 31, 2001.
There were no changes in accounting policies which had a significant effect on
the interim consolidated financial statements for the periods presented except
as disclosed in Note 4 to the financial statements.
For purposes of reporting cash flows, cash and due from banks includes cash on
hand and amounts due from banks (including cash items in process of clearing).
Cash flows from demand deposits, NOW accounts, savings accounts, and federal
funds purchased and sold are reported net since their original maturities are
less than three months. Cash flows from loans and time deposits are presented as
net increases or decreases.
Note 2. Loans
The following tables set forth the composition of loans and the allowance for
loan losses:
(In thousands)
June 30
-------------------------
2002 2001
-------------------------
Agricultural ................................. $ 36,442 $ 32,213
Commercial and financial ..................... 40,444 39,311
Real estate, construction .................... 45,015 40,840
Real estate, mortgage ........................ 593,907 505,730
Loans to individuals ......................... 32,652 33,165
-------------------------
$748,460 $651,259
Less allowance for loan losses ............... 10,350 10,326
-------------------------
$738,110 $640,933
=========================
Transactions in the allowance for loan losses are as follows:
(In thousands)
Six Months
Ended June 30
--------------------------
2002 2001
--------------------------
Balance, beginning .......................... $ 9,950 $ 10,428
Provision charged to expense .............. 487 450
Net recoveries (charge-offs) .............. 87 (552)
--------------------------
Balance, ending ............................. $ 10,350 $ 10,326
==========================
8
The following summarizes the Company's nonaccrual, past due, restructured and
impaired loans:
(In thousands)
June 30
---------------------
2002 2001
---------------------
Non-accrual ........................................ $ 2,493 $ 1,993
Accruing loans, past due 90 days or more ........... 1,424 1,627
Restructured loan .................................. - - - -
Impaired loans ..................................... 11,761 7,708
Note 3. Earnings Per Share
Basic net income per share amounts are computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share are computed by dividing net income by the weighted average
number of common shares outstanding during the period plus the number of
potential dilutive common shares attributable to the Company's stock option
plan.
Note 4. Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board issued Statement 141,
"Business Combinations" and Statement 142, "Goodwill and Other Intangible
Assets." Statement 141 eliminated the pooling method for accounting for business
combinations; requires that intangible assets that meet certain criteria be
reported separately from goodwill; and requires negative goodwill arising from a
business combination to be recorded as an extraordinary gain. Statement 142
eliminated the amortization of goodwill and other intangibles that are
determined to have an indefinite life; and requires, at a minimum, annual
impairment tests for goodwill and other intangible assets that are determined to
have an indefinite life. The provisions of the Statements were implemented
effective January 1, 2002. The amortization of goodwill with an indefinite life
was suspended on January 1, 2002.. Annual goodwill amortization for 2002 is
expected to be approximately $92,000 less than in 2001.
9
PART I, ITEM 2.
HILLS BANCORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Information
Forward looking information relating to the financial results or strategies of
the Company are made in the Management's Discussion and Analysis. The following
paragraphs identify forward looking statements and the risks that need to be
considered when reading those statements.
Forward looking statements include such words as believe, expect, anticipate,
target, goal, objective and other words with similar meaning. The Company is
under no obligation to update such statements.
The risks involved in the operations and strategies of the Company include
competition from other financial institutions, changes in interest rates,
changes in economic or market conditions and changes in regulatory factors.
These risks, which are not all inclusive, cannot be estimated.
Recent Activities
Hills Bank and Trust Company opened its eleventh office on April 1, 2002. The
full service banking office in Cedar Rapids is located at 3610 Williams Blvd. SW
and is the second location in Cedar Rapids. The new 7,200 square foot one story
building has three drive-up lanes and a drive-up ATM. The office has been well
received during its first three months of operations.
Hills Bancorporation achieved a new milestone in the quarter ended March 31,
2002 as total assets exceeded one billion dollars. This growth continued in the
second quarter with total assets at June 30, 2002 at $1.038 billion and this
represents a $137 million increase in assets from June 30, 2001.
Financial Position
Net loans as of June 30, 2002 increased by $97.2 million since June 30, 2001 and
by $55.4 million since December 31, 2001 with the majority of this increase in
real estate loans. The local housing market has continued to create demand for
loans and refinancing of loans with interest rates still low. However, in recent
months with conditions in the state and national economy being unfavorable, it
will be difficult for the local economy to not be fazed in the coming months.
Hills Bancorporation also saw an increase of the investment securities by $29.5
million. These increases in loans and securities were funded by a significant
deposit growth, including repurchase agreements, since June30, 2001 of $80.3
million. Advances from the Federal Home Loan Bank have also provided a net $47
million since June30, 2001.
Due to the continued loan demand and challenges for funding sources,
asset-liability management continues to be very important. The asset-liability
process encompasses both the management of interest rate sensitivity and the
maintenance of adequate liquidity. Interest rate sensitivity management attempts
to provide the optimal level of net interest income while managing exposure to
risks associated with interest rate movements. Liquidity management involves
planning to meet anticipated funding needs. Management monitors the rate
sensitivity and liquidity positions on an on-going basis and, when necessary,
appropriate action is taken to minimize any adverse effects of rapid interest
rate movements or any unexpected liquidity concerns. The Company believes it
will be able to maintain sufficient liquidity.
Dividends and Equity
In January 2002, Hills Bancorporation paid a dividend of $2,622,000 or $1.75 per
share, a 9.38% increase from the $1.60 paid in January 2001. After payment of
the dividend and the adjustment for accumulated other comprehensive income,
stockholders' equity as of June 30, 2002 totaled $81,194,000. The total
stockholders' equity of Hills Bancorporation as of June 30, 2002, before the
reduction for the ESOP shares, totaled 9.02% of total assets. Under risk-based
capital rules, the total risk based capital is 12.75% of risk adjusted assets,
and substantially in excess of required minimums.
10
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, loans held for sale and
investment securities available for sale are readily marketable assets.
Maturities of all investment securities are managed to meet the Company's normal
liquidity needs. Investment securities available for sale may be sold prior to
maturity to meet liquidity needs, to respond to market changes or to adjust the
Company's interest rate risk position. Readily marketable assets, as defined
above, comprised 18.7% of the Company's total assets at June 30, 2002.
Net cash provided from operations is another primary source of liquidity. For
the six months ended June 30, 2002 and 2001, net cash provided by operating
activities was $6,830,000 and $5,799,000, 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 June 30, 2002, the Company had advances of $167,637,000 from the FHLB of Des
Moines. These advances were used as a means of providing both long and
short-term, fixed-rated funding for certain assets and managing interest rate
risk. The Company had additional borrowing capacity available from the FHLB of
approximately $83 million at June 30, 2002.
The combination of high levels of potentially liquid assets, low dependence on
volatile liabilities and additional borrowing capacity provided sufficient
liquidity for the Company through June 30, 2002.
Results of Operations
Net income for the quarter and six months ended June 30, 2002 compared to the
same periods in 2001 had increases of $139,000 and $455,000, respectively. For
the three and six month periods, the changes were the result of significant
increases in net interest income which was the result of increases in average
earning assets from the prior year. Average earning assets were approximately
$105 million higher for the six months ended June 30, 2002 compared to the same
period in 2001. Loan origination fees decreased over the prior year by $95,000
for the three months ended June 30th but increased $136,000 for the six month
period shown. Trust fees decreased for the quarter ended March 31, 2002 by
$76,000 and for the six months by $51,000 compared to the same periods in the
previous year. Even though trust accounts under management have increased, the
downturn in stock values that existed in 2001 and continued in 2002 had the
effect of reducing trust fees that are based on asset value of the account.
Deposit account charges and fees were $1,521,000 and $1,502,000 for the six
months ended June 30, 2002 and 2001, respectively. Other fees and charges as of
June 30, 2002 increased $111,000 to $1,303,000. This increase was due to volume
changes in various accounts.
The Bank's primary trade territory is Johnson County, Iowa. Due to the large
employment in the county by the University of Iowa and the University of Iowa
Hospitals and Clinics and the dependency on funding by the State of Iowa, which
is experiencing decreasing tax revenue, the Bank continues to monitor loan
delinquencies and other indicators of loan problems. The quality of the Bank's
loans has continued to be high because the portfolio is concentrated in well
collateralized real estate loans.
Other expenses for the quarter ended June 30, 2002 were $6,179,000 compared to
$5,567,000 for the same time frame in 2001. For the six months ended June 30,
2002 other expenses were $12,060,000, and increase of $1,242,000 from the first
six months in 2001. The changes for the six months included salaries and
benefits which accounted for $1,028,000 and were the direct result of salary
adjustments in 2002 and staff additions at various locations. The occupancy and
furniture and equipment expenses increased $202,000 and these increases were the
result of new locations that have been added and new equipment purchases both in
2001 and 2002.
Earnings per share, both basic and diluted, increased for the quarter ended June
30, 2002 compared to 2001. For the period ended June 30, 2002 basic and diluted
earnings per share were $1.78 and $1.76 in comparison to $1.69 and $1.68 for the
quarter ended June 30, 2001. The earnings per share for the six months ended
June 30, 2002 and June 30, 2001 were $3.53 and $3.23 for basic earnings per
share and $3.50 and $3.21 for diluted earnings per share.
11
Market Risk Management
Market risk is the risk of earnings volatility that results from adverse changes
in interest rates and market prices. The Company's market risk is comprised
primarily of interest rate risk arising from its core banking activities of
lending and deposit taking. Interest rate risk is the risk that changes in
market interest rates may adversely affect the Company's net interest income.
Management continually develops and applies strategies to mitigate this risk.
Management does not believe that the Company's primary market risk exposures and
how those exposures have been managed to-date in 2002 changed significantly when
compared to 2001.
Asset/Liability Management
The Company has a fully integrated asset/liability management system to assist
in managing the balance sheet. The process, which is used to project the results
of alternative investment decisions, includes the development of simulations
that reflect the effects of various interest rate scenarios on net interest
income. Management analyzes the simulations to manage interest rate risk, the
net interest margin and levels of net interest income.
The goal is to structure the balance sheet so that net interest margin
fluctuates in a narrow range during periods of changing interest rates. The
Company currently believes that net interest income would fall by less than 5
percent if interest rates increased or decreased by 300 basis points over a
one-year time horizon. This is within the Company's policy limits.
To improve net interest income and lessen interest rate risk, management
continues its strategy of de-emphasizing fixed-rate portfolio residential real
estate loans with long repricing periods. The Company continues to focus on
reducing interest rate risk by emphasizing growth in variable-rate consumer and
commercial loans. Other actions include the use of fixed-rate Federal Home Loan
Bank (FHLB) advances as alternatives to certificates of deposit, and active
management of the available for sale investment securities portfolio to provide
for cash flows that will facilitate interest rate risk management.
The highly competitive banking environment in Iowa also greatly impacts the
Company's net interest margin. The effect of competition on net interest income
is difficult to predict.
12
PART I, ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Market risk is the risk of loss arising from adverse changes in market prices
and rates. The Company's market risk is comprised primarily of interest rate
risk resulting from its core banking activities of lending and deposit
gathering. Interest rate risk measures the impact on earnings from changes in
interest rates and the effect on current fair market values of the Company's
assets, liabilities and off-balance sheet contracts. The objective is to measure
this risk and manage the balance sheet to avoid unacceptable potential for
economic loss. Management continually develops and applies strategies to
mitigate market risk. Exposure to market risk is reviewed on a regular basis by
the asset/liability committee at the bank. Management does not believe that the
Company's primary market risk exposures and how those exposures have been
managed to date in 2002 changed significantly when compared to 2001.
13
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
At the Annual Meeting held on April 15, 2002, the security holders
approved the following:
1. Election of Theodore H. Pacha, Ann Marie Rhodes, Ronald E. Stutsman
to three-year terms to the Board of Directors expiring at the 2005
Annual Meeting.
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 - Certification of Form 10-Q Filing
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended June 30, 2002.
14
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)
August 14, 2002 /s/ Dwight O. Seegmiller
- ----------------------- --------------------------------
Date Dwight O. Seegmiller, President
(Duly authorized officer of the
registrant)
August 14, 2002 /s/ James G. Pratt
- ------------------------ --------------------------------
Date James G. Pratt, Treasurer
(Principal Financial Officer)
15