HILLS BANCORPORATION

Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, provides only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, notwithstanding substantial progress as a result of the Company’s remediation efforts during 2025 to correct material weaknesses disclosed in the Company’s prior year Annual Report on Form 10-K (“2024 10-K”), as a result of the material weaknesses in internal control over financial reporting described below, the Company's disclosure controls and procedures were not effective as of June 30, 2026.

Update on Internal Control over Financial Reporting

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 10-K"), the Company identified material weaknesses in its internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.

As of June 30, 2026, the following material weaknesses, which were disclosed in the 2025 10-K, have not been fully remediated:

•Management review and activity-level controls over the period-end financial reporting process and controls to ensure that i) period-end financial statements to be filed are correct, and ii) our independent auditor has completed its procedures prior to the filing of period end financial statements;

•The review, posting, and approval of manual journal entries;

•The identification and disclosure of related party transactions;

•Related to the allowance for credit losses on loans ("ACL"), the design of controls over the framework used to determine the qualitative component of the ACL and the review process to ensure qualitative adjustments are accurately determined and applied;

•Related to property and equipment, the design of controls over the determination of estimated useful lives and the timely identification and recording of dispositions of property and equipment; and

•Management lacks sufficient depth and structure in the oversight of the financial reporting function and insufficient staffing levels with specialized technical accounting and internal control expertise to effectively design controls and perform an adequate level of review over the period‑end financial reporting process.

Notwithstanding the material weaknesses, the Company’s management, including the CEO and CFO, has concluded that the consolidated financial statements, included in this Quarterly Report on Form 10-Q, for the period ended June 30, 2026, fairly present, in all material respects, the Company's financial condition, results of operations and cash-flows for the periods presented in conformity with U.S. generally accepted accounting principles.

Remediation Plan and Status

Throughout 2025 the Company invested substantial resources in remedial measures to strengthen its financial reporting controls and procedures as a result of the material weaknesses disclosed in its 2024 10-K and those disclosed above in its 2025 10-K. These include (i) enhancing the design and documentation of key internal controls, (ii) strengthening management review controls, (iii) engagement of third parties with specialized accounting expertise, and (iv) retention of additional managerial resources with accounting and financial reporting experience and expertise. Management achieved substantial improvements to its financial reporting controls and procedures during 2025 as a result of these changes.

During the six month period ended June 30, 2026, management continued to execute its remediation plan and implemented several enhancements to the Company's internal control over financial reporting. These activities included the continued

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development and implementation of controls designed to address property and equipment accounting and asset disposition tracking, the identification, evaluation and disclosure of related-party transactions, the Allowance for Credit Losses ("ACL") policy and methodology framework, review process supporting ACL qualitative factor adjustments, formalization of journal entry review and approval workflows, and further improvements to period-end financial reporting processes and management review controls. Additionally, the Company enhanced governance oversight of its financial reporting and remediation activities through the election of a director with significant public company auditing and financial reporting experience at the 2026 Annual Meeting of Shareholders. The Company expects to leverage this experience through the Board's oversight of management's remediation efforts, including the evaluation of remediation plans, progress monitoring, control design enhancements, and financial reporting governance initiatives.

The actions the Company is taking under its remediation plan are subject to ongoing management review and are also subject to Audit Committee oversight. Management remains committed to the full remediation of the identified material weaknesses and will continue to devote significant time, attention, training and resources to these efforts. Management expects to complete the remediation of these material weaknesses by December 31, 2026. However, each material weakness will not be considered remediated until the related controls have operated for a sufficient period of time and management has concluded, through testing, that such controls are operating effectively.

Each material weakness identified above cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Therefore, management believes these actions have strengthened the Company's control environment and financial reporting processes, the Company has not yet completed sufficient testing of the newly implemented or enhanced controls to conclude that they are operating effectively. Accordingly, the material weaknesses described above continue to exist as of June 30, 2026.

Changes in Internal Control over Financial Reporting

During the quarter ended June 30, 2026, the Company implemented and enhanced certain controls as part of its ongoing remediation efforts to address the material weaknesses described above. These actions included implementing additional controls over property and equipment accounting, finalizing controls related to the identification and disclosure of related-party transactions, implementing an updated ACL policy and methodology framework and related review controls, formalizing journal entry review and approval workflows, and enhancing management review procedures within the period-end financial reporting process.

The newly implemented and enhanced controls have not operated for a sufficient period of time and have not yet been fully tested to determine whether they are operating effectively. Accordingly, management has not concluded that the related material weaknesses have been remediated.

While remediation efforts continued as noted above, there were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION