FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 34-26589, eff. 4/12/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
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 October 31, 1999
- -------------------------- -------------------
Common Stock, no par value 1,493,867
<PAGE>
HILLS BANCORPORATION
Index to Form 10-Q
Part I
FINANCIAL INFORMATION
Page
Number
Item 1. Financial Statements
Consolidated balance sheets, September 30, 1999 (unaudited)
and December 31, 1998
Consolidated statements of income, (unaudited) for three and nine
months ended September 30, 1999 and 1998
Consolidated statements of comprehensive income, (unaudited) for
three and nine months ended September 30, 1999 and 1998.
Consolidated statements of stockholders' equity, (unaudited)
for nine months ended September 30, 1999 and 1998
Consolidated statements of cash flows (unaudited) for nine
months ended September 30, 1999 and 1998
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)
<TABLE>
September 30,
1999 December 31,
Unaudited 1998*
---------------------------
<S> <C> <C>
ASSETS
Cash and due from banks .................................. $ 17,344 $ 16,427
Investment securities:
Available for sale (amortized cost
September 30, 1999 $131,702;
December 31, 1998 $121,974) ......................... 131,036 123,835
Held to maturity (fair value
September 30, 1999 $19,273;
December 31, 1998 $21,740) .......................... 19,114 21,168
Stock of Federal Home Loan Bank ....................... 4,931 4,347
Federal funds sold ....................................... 206 36,811
Loans, net ............................................... 536,397 460,911
Property and equipment, net .............................. 11,605 11,193
Accrued interest receivable .............................. 6,584 5,885
Deferred income taxes, net ............................... 2,836 1,838
Other assets ............................................. 8,515 7,372
--------- ---------
$ 738,568 $ 689,787
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Noninterest-bearing deposits ............................. $ 63,010 $ 68,100
Interest-bearing deposits ................................ 485,813 466,051
--------- ---------
Total deposits ........................................ $ 548,823 $ 534,151
Federal funds purchased and securities
sold under agreements to repurchase ................... 26,689 10,554
Federal Home Loan Bank notes ............................. 88,700 75,732
Accrued interest payable ................................. 1,978 2,048
Other liabilities ........................................ 2,910 1,549
--------- ---------
$ 669,100 $ 624,034
--------- ---------
REDEEMABLE COMMON STOCK HELD BY
EMPLOYEE STOCK OWNERSHIP PLAN
(ESOP) ................................................ $ 10,911 $ 9,301
--------- ---------
STOCKHOLDERS' EQUITY
Capital stock, common, no par value;
authorized 10,000,000 shares;
issued September 30, 1999 - 1,493,867 shares;
December 31, 1998 - 1,469,443 shares .................. $ 9,785 $ 9,140
Retained earnings ........................................ 60,103 55,428
Accumulated other comprehensive income,
unrealized gains (losses) on investment securities, net (420) 1,185
--------- ---------
$ 69,468 $ 65,753
Less, maximum cash obligation related to
ESOP shares ........................................... 10,911 9,301
--------- ---------
$ 58,557 $ 56,452
--------- ---------
$ 738,568 $ 689,787
========= =========
</TABLE>
* Derived from audited financial statements.
See Notes to Financial Statements.
<PAGE>
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Months Ended September 30, 1999 and 1998
(In Thousands, Except Per Share Data)
<TABLE>
Three Months Ended Nine Months Ended
1999 1998 1999 1998
-------------------- -------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans ........................ $ 10,746 $ 9,566 $ 30,624 $ 28,108
Interest on investment securities:
Taxable ......................................... 1,788 1,698 5,315 5,064
Non-taxable ..................................... 394 354 1,157 1,019
Interest on federal funds sold .................... 78 350 435 893
-------- -------- -------- --------
Total interest income ............................. $ 13,006 $ 11,968 $ 37,531 $ 35,084
-------- -------- -------- --------
Interest Expense:
Interest on deposits .............................. $ 5,220 $ 5,185 $ 15,498 $ 15,253
Interest on securities sold under
Interest on FHLB borrowings ....................... 1,296 1,106 3,415 3,277
-------- -------- -------- --------
Total interest expense ............................ $ 6,629 $ 6,379 $ 19,221 $ 18,787
-------- -------- -------- --------
Net interest income ............................... $ 6,377 $ 5,589 $ 18,310 $ 16,297
Provision for loan losses ............................ 204 304 612 712
-------- -------- -------- --------
Net interest income after provision
for loan losses ................................. 6,173 5,285 17,698 15,585
-------- -------- -------- --------
Other income:
Loan origination fees ............................. $ 121 $ 166 $ 525 $ 500
Trust fees ........................................ 457 403 1,483 1,266
Deposit account charges and fees .................. 605 458 1,589 1,351
Net gains (losses) on sale of investment securities (214) (214) --
Other fees and charges ............................ 464 348 1,382 1,079
-------- -------- -------- --------
$ 1,433 $ 1,375 $ 4,765 $ 4,196
-------- -------- -------- --------
Other expenses:
Salaries and employee benefits .................... $ 2,429 $ 2,133 $ 7,244 $ 6,366
Occupancy ......................................... 330 284 920 859
Furniture and equipment ........................... 453 421 1,363 1,249
Office supplies and postage ....................... 290 293 814 882
Other operating ................................... 1,045 954 3,050 2,792
-------- -------- -------- --------
$ 4,547 $ 4,085 $ 13,391 $ 12,148
-------- -------- -------- --------
Income before income taxes ........................ $ 3,059 $ 2,575 $ 9,072 $ 7,633
Federal and state income taxes ....................... 941 756 2,794 2,237
-------- -------- -------- --------
Net income ........................................ $ 2,118 $ 1,819 $ 6,278 $ 5,396
======== ======== ======== ========
Earning per common share:
Basic ............................................ $ 1.41 $ 1.24 $ 4.20 $ 3.68
Diluted ......................................... 1.40 1.22 4.17 3.62
</TABLE>
<PAGE>
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three and Nine Months Ended September 30, 1999 and 1998
(In Thousands, Except Per Share Data)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1999 1998 1999 1998
------------------ ------------------
<S> <C> <C> <C> <C>
Net Income ...................................... $ 2,118 $ 1,819 $ 6,278 $ 5,396
Other comprehensive income:
Unrealized gains (losses) on debt securities . (371) 1,147 (2,527) 1,209
Income tax effect of unrealized gains (losses) 138 (426) 922 (450)
------- ------- ------- -------
Comprehensive Income ............................ $ 1,885 $ 2,540 $ 4,673 $ 6,155
======= ======= ======= =======
</TABLE>
<PAGE>
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 1999 and 1998
(In Thousands)
<TABLE>
Less
Maximum
Accumulated Cash
Other Obligation
Capital Retained Comprehensive To ESOP
Stock Earnings Income Shares Total
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1999 ................ $ 9,140 $55,428 $ 1,185 $ (9,301) $ 56,452
Net income .............................. - - - 6,278 - - - - - - 6,278
Change related to ESOP shares ........... - - - - - - - - - (1,610) (1,610)
Cash dividends ($1.30 per share) ........ - - - (1,911) - - - - - - (1,911)
Other comprehensive income .............. - - - - - - (1,605) - - - (1,605)
Issuance of 24,424 shares of common stock 645 - - - - - - - - - 645
Income tax benefit related to
stock options exercised .............. - - - 308 - - - - - - 308
-------------------------------------------------------
Balance, September 30, 1999 ............. $ 9,785 $60,103 $ (420) $(10,911) $ 58,557
=======================================================
Balance, January 1, 1998 ................ $ 9,070 $49,627 $ 485 $ (7,682) $ 51,500
Net income .............................. - - - 5,396 - - - - - - 5,396
Change related to ESOP shares ........... - - - - - - - - - (1,120) (1,120)
Cash dividends ($1.20 per share) ........ - - - (1,763) - - - - - - (1,763)
Other comprehensive income .............. - - - - - - 759 - - - 759
Tax savings on restricted stock issued .. - - - 78 - - - - - - 78
-------------------------------------------------------
Balance, September 30, 1998 ............. $ 9,070 $ 53,338 $ 1,244 $ (8,802) $ 54,850
=======================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
HILLS BANCORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1999 and 1998
(In Thousands)
<TABLE>
1999 1998
--------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..................................................................... $ 6,278 $ 5,396
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ............................................................... 1,071 987
Provision for loan losses .................................................. 612 712
Net gains (losses) on disposition of investment securities ................. 214 - - -
Deferred income taxes ...................................................... (56) - - -
Compensation paid by issuance of common stock .............................. 20 - - -
(Increase) decrease in accrued interest receivable ......................... (699) (500)
Amortization of bond discount .............................................. 339 216
(Increase) in other assets ................................................. (1,401) (910)
Amortization of intangibles ................................................ 258 258
Increase in accrued interest and other liabilities ......................... 1,291 (106)
--------------------
Net cash provided by operating activities .................................. $ 7,927 $ 6,053
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturities of investment
securities:
Available for sale ......................................................... $ 26,837 $ 19,599
Held to maturity ........................................................... 2,055 2,286
Proceeds from sale of available-for-sale securities ............................ 9,003 - - -
Purchase of investment securities, available for sale .......................... (46,726) (29,785)
Federal funds sold, net ........................................................ 36,605 (17,349)
Loans made to customers, net of collections .................................... (76,098) (24,968)
Purchases of property and equipment ............................................ (1,483) (2,173)
--------------------
Net cash (used in) investing activities .................................... $(49,807) $(52,390)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits ........................................ $ 14,672 $ 22,478
Net increase (decrease) in fed funds purchased and
securities sold under agreements to repurchase .......................... 16,135 (682)
Borrowings from FHLB ....................................................... 25,000 40,000
Payments on FHLB notes ......................................................... (12,032) (15,032)
Stock options exercised .................................................... 625 - - -
Income tax benefits on stock options exercised ............................. 308 78
Dividends paid ............................................................. (1,911) (1,762)
--------------------
Net cash provided by financing activities ............................... $ 42,797 $ 45,080
--------------------
(Decrease) in cash and due from banks ................................... $ 917 $ (1,257)
CASH AND DUE FROM BANKS
Beginning .................................................................. 16,427 15,508
--------------------
Ending ..................................................................... $ 17,344 $ 14,251
====================
SUPPLEMENTAL DISCLOSURES Cash payments for:
Interest paid to depositors and others .................................. $ 15,568 $ 15,309
Interest paid on other obligations ...................................... 3,723 3,534
Non-cash financing transactions:
Increase in maximum cash obligation related
to ESOP shares ......................................................... 1,610 1,120
Net unrealized gains (losses) on debt securities ........................ (2,557) 1,209
</TABLE>
See Notes to Financial Statements.
<PAGE>
HILLS BANCORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. nterim 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)
September 30
---------------------------
1999 1998
---------------------------
Agricultural ............................... $ 29,394 $ 33,946
Commercial and financial ................... 40,046 36,523
Real estate, construction .................. 39,706 24,512
Real estate, mortgage ...................... 406,420 330,525
Loans to individuals ....................... 30,058 29,994
--------- ---------
$ 545,624 $ 455,500
Less allowance for loan losses ............. (9,227) (8,483)
--------- ---------
$ 536,397 $ 447,017
========= =========
Transactions in the allowance for loan losses are as follows:
(In thousands)
Nine Months
Ended September 30
------------------------
1999 1998
------------------------
Balance, beginning ........................... $ 8,856 $ 8,010
Provision charged to expense ............... 612 712
Net charge-offs ............................ (241) (239)
------- -------
Balance, ending .............................. $ 9,227 $ 8,483
======= =======
The following summarizes the Company's nonaccrual, past due, restructured and
impaired loans:
(In thousands)
September 30
----------------
1999 1998
----------------
Nonaccrual .................................... $- - - $- - -
Accruing loans, past due 90 days or more ...... 1,083 1,825
Restructured loan ............................. - - - - - -
Impaired loans ................................ 9,343 7,996
<PAGE>
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.
<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 September 30, 1999
reflects total assets of $738.6 million, which is an increase of $48.8 million
from December 31, 1998 and $84.3 million from September 40, 1998. Net loans as
of September 30, 1998 totaled $536.4 million, which represents an increase of
$75.5 million from December 31, 1998 and $89.4 million from September 30, 1998.
The major portion of the loan increase was in real estate loans secured by 1-4
family properties. The local and national economy continues to be strong which,
coupled with moderate interest rates, have aided in the increase in loans
outstanding. Investment securities as of September 30, 1999 totaled $155.1
million, an increase of $5.1 million from December 31, 1998 and $8.2 million
from September 30, 1998.
The growth in loans and investment securities since December 31, 1998 was funded
by a combination of an increase in total deposits, securities sold under
agreements to repurchase, federal funds purchased, and Federal Home Loan Bank
borrowings. In addition, federal funds sold as of December 31, 1998 decreased
$36.6 million and these funds were used to fund loan growth. 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 1999, Hills Bancorporation paid a dividend of $1.30 per share, a
8.33% increase from the $1.20 paid in January 1998. The total dividend of
$1,911,000 is deducted from stockholders' equity and is reflected in the
resulting stockholders' equity as of September 30, 1999 of $58,557,000.
Stockholders' equity at September 30, 1999 and December 31, 1998 reflects an
adjustment for unrealized gain (losses) on debt securities, net of income taxes.
The total stockholders' equity of Hills Bancorporation as of September 30, 1999
before the reduction for the ESOP shares, as a percent of total assets is 9.40%.
Under risk-based capital rules, total capital is 14.52% of risk adjusted assets,
compared to the current 8% requirement.
Net income for the quarter and nine months ended September 30, 1999 increased
$299,000 and $882,000, respectively, from the prior year periods. For both
periods the changes were primarily the result of significant increases in net
interest income resulting primarily from increases in average earning assets.
Average earning assets were approximately $66.4 million higher for the nine
months ended September 30, 1999 compared to the same period in 1998. Other
income increased over the prior year by $58,000 for the three months ended
September 30, 1999 and $569,000 for the nine month period shown. Loan
origination fees were $45,000 less in the third quarter and are $525,000 for the
nine months of 1999 compared to $500,000 in 1998. The decrease in origination
fees is due primarily to reduced loan originations for the secondary market.
Trust fees increased $217,000 for the nine months to $1,483,000, primarily
attributable to growth of trust assets under management. Deposit account charges
and fees increased $147,000 and $238,000 for the three and nine months ended
September 30, 1999 compared to the same periods one year ago. Also other income
was reduced for the quarter by $214,000, which represented investments
securities losses taken to replace lower yielding securities with higher
yielding securities of similar risk and maturity.
Other expenses for the nine months ended September 30, 1999 were $13,391,000 or
an increase of $1,243,000 from the period ended September 30, 1998. Salaries and
employee benefits accounted for $878,000 of the increase, attributable to new
staff additions in 1999, salary adjustments in January 1999, and increases in
medical insurance claims over 1998 claims. All other expenses increased from
$5,782,000 at September 30, 1998 to $6,147,000 at September 30, 1999 or
$365,000, which was an increase of 6.31%. The major category that increased was
furniture and equipment, which was $1,249,000 in 1998 and $1,363,000 in 1999 and
was the result of major computer hardware and software additions in 1998.
<PAGE>
Earnings per share, both basic and diluted, increased for both the quarter and
the nine months ending September 30, 1999 compared to 1998. For the period
ending September 30, 1999 basic and diluted earnings per share were $1.41 and
$1.40 in comparison to $1.24 and $1.22 for the quarter ending September 30,
1998. The earnings per share for the nine months ended September 30, 1999 and
September 30, 1998 were $4.20 and $3.68 for basic earnings per share and $4.17
and $3.62 for diluted earnings per share, respectively.
The Company's principal sources of funds continue 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.
Year 2000
The Year 2000 poses an important business issue regarding how existing
application software programs and operating systems can accommodate this date
value. Many computer programs that can only distinguish the final two digits of
the year entered are expected to read entries for the Year 2000 as the Year
1900. Like most financial service providers, the Company may be significantly
affected by the Year 2000 issues due to the nature of financial information.
Software, hardware and equipment both within and outside the Company's direct
control and with whom the Company electronically or operationally interfaces are
likely to be affected. If computer systems are not adequately changed to
identify the Year 2000, many computer applications could fail or create
erroneous results. As a result, may calculations that rely on the data field
information, such as interest, payment or due dates and other operating
functions, may generate results that could be significantly misstated, and the
Company could experience a temporary inability to process transactions and
engage in normal business activities.
All of the significant computer programs of the Company that could be affected
by this issue are provided by major third-party vendors. In 1998, the Company
completed the replacement/upgrading of most of its computer systems and
programs, as well as most equipment, in order to provide cost-effective and
efficient delivery of services to customers, information to management, and to
provide additional capacity for processing information and transactions due to
acquisitions. The third-party vendors have advised the Company that all such
computer systems and programs either are or shortly will be Year 2000 compliant.
The Company completed off-site testing of its major applications in 1998.
The total cost of the Company's Year 2000 efforts over a two year period was
approximately $1,180,000 for capitalized hardware and software and an additional
$88,000 in expenses charged to earnings in 1998. A substantial portion of the
costs capitalized were normal upgrades, and all abandoned hardware and software
had previously been fully depreciated. Management estimates the expenses of the
remediation effort to make the Company's systems Year 2000 ready will total
approximately $40,000 in 1999, and an estimated $105,000 to be capitalized in
the last quarter of 1999. In addition, it is estimated that 2,000 man hours will
be incurred by Company personnel in 1999 related to Year 2000 issues at an
approximate cost of $40,000. The Company has completed a Year 2000 contingency
plan that addresses, among other issues, critical operations and potential
failures thereof, and strategies for business continuation. The contingency plan
includes back up power sources, off-site processing of data and a detailed
listing of responsibilities among various employees of their contingency plan
duties. The plan was finalized during the third quarter of 1999.
The Company could incur losses if loan payments are delayed due to Year 2000
problems affecting significant borrowers. The Company is communicating with such
parties to assess their progress in evaluating and implementing any corrective
measures required by them to be Year 2000 ready. To date, the Company has been
advised by such parties that they have plans in place to address and correct the
issues associated with the Year 2000 problem; however, no assurance can be given
as to the adequacy of such plans or to the timeliness of their implementation.
As part of the current credit approval process, new and renewed loans are
evaluated as to the borrower's Year 2000 readiness. Management does not
anticipate significant loan losses related to this issue.
<PAGE>
Although management believes the Company's computer systems and service
providers will be Year 2000 ready, there can be no assurance that these systems,
or those systems of other companies on which the Company's systems rely, will be
fully functional in the Year 2000. Such failure could have a significant adverse
impact on the financial condition and results of operations of the Company. In
addition, there could be a material effect to the financial statements if there
are significant interruptions in basic services, such as the electric power
grid, telephone services or the banking system. These risks cannot be estimated.
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.
<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 September 30, 1999.
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 September 30, 1999.
<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)
11/12/1999 /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)
HILLS BANCORPORATION
EXHIBIT II
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
Three months ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
1999 1998 1999 1998
-------------------- ---------------------
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding
(basic) ....................................... 1,493,867 1,467,754 1,492,905 1,467,754
Weighted average of potential dilutive shares
attributable to stock options granted
computed under the treasury stock method ...... 12,011 23,270 12,154 22,854
--------------------- ---------------------
Weighted average number of shares (diluted) ..... 1,505,878 1,490,984 1,505,059 1,490,608
===================== =====================
Earnings Per Share:
Net income (in thousands) .................... $ 2,118 $ 1,819 $ 6,278 $ 5,396
===================== =====================
Earnings per common share:
Basic ...................................... $ 1.41 $ 1.24 $ 4.20 $ 3.68
=============================================
Diluted .................................... 1.40 1.22 4.17 3.62
=============================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1999 FORM 10-Q OF HILLS BANCORPORATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 17,344
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 206
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 131,036
<INVESTMENTS-CARRYING> 24,045
<INVESTMENTS-MARKET> 24,204
<LOANS> 545,624
<ALLOWANCE> 9,227
<TOTAL-ASSETS> 738,568
<DEPOSITS> 548,843
<SHORT-TERM> 26,689
<LIABILITIES-OTHER> 4,888
<LONG-TERM> 88,700
10,911
0
<COMMON> 9,785
<OTHER-SE> 48,772
<TOTAL-LIABILITIES-AND-EQUITY> 738,568
<INTEREST-LOAN> 30,624
<INTEREST-INVEST> 6,472
<INTEREST-OTHER> 435
<INTEREST-TOTAL> 37,531
<INTEREST-DEPOSIT> 15,498
<INTEREST-EXPENSE> 19,221
<INTEREST-INCOME-NET> 18,310
<LOAN-LOSSES> 612
<SECURITIES-GAINS> (214)
<EXPENSE-OTHER> 13,391
<INCOME-PRETAX> 9,072
<INCOME-PRE-EXTRAORDINARY> 6,278
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,278
<EPS-BASIC> 4.20
<EPS-DILUTED> 4.17
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 1,083
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 9,343
<ALLOWANCE-OPEN> 8,856
<CHARGE-OFFS> 241
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 9,227
<ALLOWANCE-DOMESTIC> 9,227
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
