Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
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, could provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgement 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 as a result of the material weaknesses in internal control over financial reporting described below in “Management’s Report on Internal Control over Financial Reporting” the Company’s internal controls over financial reporting as of December 31, 2024, were not effective.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Securities Exchange Act of 1934). Internal control over financial reporting of the Company includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. Important features of the Company’s system of internal control over financial reporting include the adoption and implementation of written policies and procedures, careful selection and training of financial management personnel, a continuing management commitment to the integrity of the system and through examinations by an internal audit function that coordinates its activities with the Company’s Independent Registered Public Accounting Firm.
All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
The Company’s management conducted an evaluation of the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2024. Management’s assessment is based on the criteria described in “Internal Control – Integrated Framework” issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company’s management concluded that the Company’s internal controls over financial reporting were not effective as of December 31, 2024. A material weakness is a control deficiency, or combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Material weaknesses were identified in the following areas:
• management review and activity-level controls over the period-end financial reporting process;
• the segregation of duties, review, posting, and approval of manual journal entries; and
• the identification, prior approval, and disclosure of related party transactions.
Notwithstanding the material weaknesses, the Company’s management, including the CEO and CFO, has concluded that the consolidated financial statements, included in this Annual Report on Form 10-K, for the year ended December 31, 2024, fairly present, in all material respects, the Company's financial condition, results of operations and cash-flows for the periods presented in conformity with generally accepted accounting principles.
Attestation Report of the Registered Public Accounting Firm
Our independent auditor, Forvis Mazars, LLP, a registered public accounting firm, has issued its report on its audit of our internal control over financial reporting. Forvis Mazars, LLP’s attestation report contains an adverse opinion on the effectiveness of the Company’s internal control over financial reporting. This report appears on pages 59-60.
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Reference is made to the Report of Independent Registered Public Accounting Firm included in this Annual Report.
Remediation Plan
The Company has initiated certain remedial measures to strengthen its controls as a result of the material weaknesses noted above. These include continued review of the overall design of its internal control environment, as well as the design and implementation of additional internal controls over the specific areas where material weaknesses were identified as detailed above.
The actions the Company is taking under its remediation plan are subject to ongoing management review and are also subject to Audit Committee oversight.
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.
Changes in Internal Control over Financial Reporting
Except as otherwise discussed above, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, including any corrective actions with regard to the control deficiencies that led to the material weaknesses in the Company’s internal controls over financial reporting identified above.
Item 9B. Other Information
10b5-1 Securities Trading Plans
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Item 10 of Part III is presented under the items entitled “Information Concerning Nominees for Election as Directors,” "Information Concerning Directors other than Nominees," "Corporate Governance and Board of Directors," and “Delinquent Section 16(a) Reports” in the Company’s Definitive Proxy Statement dated March 21, 2025 for the Annual Meeting of Stockholders on April 21, 2025. Such information is incorporated herein by reference.
The Company has a Code of Ethics in place covering its Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. A copy of the Company’s Code of Ethics will be provided free of charge, upon written request to:
Anthony Roetlin
Treasurer
Hills Bancorporation
131 Main Street
PO Box 160
Hills, Iowa 52235
Information about our Executive Officers is incorporated into this section by reference to Part I, Item 1 of this Form 10-K.
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Item 11. Executive Compensation
The information required by Item 11 of Part III is presented under the items entitled “Compensation Discussion and Analysis,” “Summary of Cash and Certain Other Compensation Paid to the Named Executive Officers,” "Risk Management and Compensation Policies and Practices," “Compensation and Incentive Stock Committee Interlocks and Insider Participation,” "Schedule of Director Fees," "Director Compensation Table," and “Compensation and Incentive Stock Committee Report” in the Company’s Definitive Proxy Statement dated March 21, 2025 for the Annual Meeting of Stockholders on April 21, 2025. Such information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 12 of Part III is presented under the item entitled “Security Ownership of Certain Beneficial Owners and Management” in the Company’s Definitive Proxy Statement dated March 21, 2025 for the Annual Meeting of Stockholders on April 21, 2025. Such information is incorporated herein by reference.
The following table sets forth information regarding the Company’s equity compensation plan as of December 31, 2024, all of which relates to stock options issued under stock option plans approved by stockholders of the Company.
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights Weighted-average
exercise price of
outstanding options,
warrants and rights Number of securities
remaining available for future
issuance under equity
compensation plans
[excluding securities
reflected in column (a)]
Plan Category (a) (b) (c)
Equity compensation plans approved by security holders 9,333 $ 64.27 162,144
Equity compensation plans not approved by security holders — — —
Total 9,333 $ 64.27 162,144
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 of Part III is presented under the items entitled “Corporate Governance and the Boards of Directors,” and “Compensation and Incentive Stock Committee Interlocks and Insider Participation” in the Company’s Definitive Proxy Statement dated March 21, 2025 for the Annual Meeting of Stockholders on April 21, 2025. Such information is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
Information required by this item is contained in the Company’s Definitive Proxy Statement dated March 21, 2025 for the Annual Meeting of Shareholders on April 21, 2025, under the heading “Audit Committee,” which information is incorporated herein by this reference.
The three additional data elements required to be tagged by a registrant that files financial statements using Inline XBRL are as follows:
• Forvis Mazars, LLP
• Springfield, Missouri
• PCAOB ID: 686
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PART IV
Item 15. Exhibits, Consolidated Financial Statement Schedules
Form 10-K
(a) 1 Financial Statements Reference
Independent registered public accounting firm's report on the financial statements Page 57-60
Consolidated balance sheets as of December 31, 2024 and 2023 Page 61
Consolidated statements of income for the years ended December 31, 2024, 2023, and 2022 Page 62
Consolidated statements of comprehensive income for the years ended December 31, 2024, 2023, and 2022 Page 63
Consolidated statements of stockholders' equity for the years ended December 31, 2024, 2023, and 2022 Page 64
Consolidated statements of cash flows for the years ended December 31, 2024, 2023, and 2022 Page 65
Notes to consolidated financial statements Page 67
2 Financial Statements Schedules
All schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statements or notes thereto.
(b) 3 Exhibits
3.1 Restated Articles of Incorporation incorporated by reference from the Company's Form 10-K (Exhibit 3.1) filed March 5, 2024.
3.2 Amended and Restated ByLaws incorporated by reference from the Company's Form 10-K (Exhibit 3.2) filed March 5, 2024.
4.1 Description of Registered Securities, incorporated by reference from the Company's Form 10-K (Exhibit 4.1) filed with the Commission on March 6, 2020.
10.1 2010 Stock Option and Incentive Plan, incorporated by reference from Registrant’s Form S-8 filed June 29, 2012.
10.2 2020 Stock Option and Incentive Plan, incorporated by reference from Registrant’s Form 10-Q filed with the Commission on May 4, 2020.
10.3 Form of non-employee Director Stock Option Grant Agreement (Used for 2010 and 2020 Stock Option and Incentive Plan Awards).
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10.4 Form of Restricted Stock Award Agreement use for Company NEOs under the 2010 and 2020 Stock Option and Incentive Plans – 5 Year vesting provision, incorporated by reference from Registrant’s Annual Report on Form 10-K (Exhibit 10.4) filed March 5, 2019.
10.5 Form of Restricted Stock Award Agreement use for Company NEOs under the 2010 and 2020 Stock Option and Incentive Plans – 8 Year vesting provision, incorporated by reference from Registrant’s Annual Report on Form 10-K (Exhibit 10.5) filed March 5, 2019.
10.6 Form of Director Deferred Compensation Plan Agreement is attached on Page 131.
11 Statement Regarding Computation of Basic and Diluted Earnings Per Share. (Note: Statement included in Note 1 under Item 8 of Part II above)
19 Insider Trading Policies and Procedures is attached on Page 138.
21 Subsidiary of the Registrant is attached on Page 152.
23.1 Consent of Independent Registered Public Accounting Firm is attached on Page 153. Forvis Mazars, LLP
31.1 Certification under Section 302 of the Sarbanes-Oxley Act of 2002 on Page 154.
31.2 Certification under Section 302 of the Sarbanes-Oxley Act of 2002 on Page 155.
32 Certifications under Section 906 of the Sarbanes-Oxley Act of 2002 on Page 156.
101.INS XBRL Instance Document (1)
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DED XBRL Taxonomy Extension Definitions Linkbase Document
(1) The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HILLS BANCORPORATION
Date: March 14, 2025 By: /s/Lisa A. Shileny
Lisa A. Shileny, Director, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: March 14, 2025 By: /s/Lisa A. Shileny
Lisa A. Shileny, Director, President and Chief Executive Officer
Date: March 14, 2025 By: /s/Anthony V. Roetlin
Anthony V. Roetlin, Treasurer, Chief Financial Officer and Chief Accounting Officer
Date: March 14, 2025 By: /s/Dwight O. Seegmiller
Dwight O. Seegmiller, Director, President and Chief Executive Officer Emeritus
Date: March 14, 2025 By: /s/Michael S. Donovan
Michael S. Donovan, Director
Date: March 14, 2025 By: /s/Kirsten H. Frey
Kirsten H. Frey, Director
Date: March 14, 2025 By: /s/Michael E. Hodge
Michael E. Hodge, Director
Date: March 14, 2025 By: /s/Emily A. Hughes
Emily A. Hughes, Director
Date: March 14, 2025 By: /s/Casey L. Peck
Casey L. Peck, Director
Date: March 14, 2025 By: /s/John W. Phelan
John W. Phelan, Director
Date: March 14, 2025 By: /s/Ann M. Rhodes
Ann M. Rhodes, Director
Date: March 14, 2025 By: /s/James C. Schmitt
James C. Schmitt, Director
Date: March 14, 2025 By: /s/Amy E. T. Sparks
Amy E. T. Sparks, Director
Date: March 14, 2025 By: /s/William A. Wever II
William A. Wever II, Director
Date: March 14, 2025 By: /s/Thomas R. Wiele
Thomas R. Wiele, Director
Date: March 14, 2025 By: /s/Sheldon E. Yoder
Sheldon E. Yoder, Director
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