HILLS BANCORPORATION Material Event - What Happened

Hey there! Let's break down some recent news about HILLS BANCORPORATION so you can understand what's going on without needing a finance degree. Think of this as me explaining it to you over a cup of coffee.

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1. What happened? (in plain English)

Okay, so here's the scoop: HILLS BANCORPORATION just announced a significant change in who checks their financial books. They've decided to switch their independent accounting firm, which is the company responsible for auditing their financial statements and making sure everything is accurate and reliable. They're letting go of their current auditor, Forvis Mazars, LLP, and bringing in a new firm, Crowe LLP, to take over.

2. When did it happen?

This news broke on January 5, 2026. On that day, the company's Audit Committee officially notified Forvis Mazars, LLP, of their dismissal and approved the engagement of Crowe LLP.

3. Why did it happen? (context and background)

Why did they do this? The company stated they conducted a "comprehensive, competitive process" to find the best fit for their auditing needs, inviting six national accounting firms to participate. So, it sounds like they were actively looking for a change.

Now, here's an important detail: While the company said there were no disagreements with Forvis Mazars on accounting principles or audit procedures, they did mention some serious issues with their internal financial controls. These are called "material weaknesses" and they were reported for the fiscal years ending December 31, 2023, and December 31, 2024, as well as interim periods in 2025.

These "material weaknesses" basically mean there were some significant problems in how the company manages and checks its financial information. Specifically, these issues related to:

• How they review and control their financial reporting at the end of each period. For the quarter ended September 30, 2025, this also included making sure the correct financial reports were filed and that their auditor had completed its review.
• How they separate duties, review, post, and approve manual journal entries. This is about making sure no single person has too much control over financial records without oversight.
• How they identify, approve, and disclose transactions with related parties. These are transactions with individuals or companies closely connected to HILLS BANCORPORATION, which need extra scrutiny.

So, while the company frames the change as a competitive process, it's likely that these ongoing issues with internal controls played a role in their decision to seek a new auditor. A new auditor might bring a fresh perspective and help address these weaknesses.

4. Why does this matter? (impact and significance)

So, why should you care? An independent auditor is like a financial watchdog. Their job is to give investors confidence that a company's financial statements are accurate and trustworthy. When a company changes auditors, especially when there have been "material weaknesses" in financial controls, it's a pretty big deal.

This change could signal the company's commitment to improving its financial reporting and internal controls. It's a significant step that could shape how reliable their future financial statements are perceived, which in turn affects investor confidence and the company's overall value. The new auditor, Crowe LLP, will now be responsible for ensuring the integrity of HILLS BANCORPORATION's financial information starting with the 2026 fiscal year.

5. Who is affected?

• For their customers: You probably won't notice any direct changes. This is an internal financial matter.
• For their employees: Employees in the finance and accounting departments might experience changes in procedures or work with the new auditing firm. Other employees are unlikely to be directly affected.
• For people who own shares (investors): This is most relevant to you. The reliability of financial statements is crucial for making informed investment decisions. The change, especially in light of the previously reported "material weaknesses," means you'll want to pay close attention to how the company addresses these issues and how the new auditor's reports look in the future. It could impact how the market views the company's financial health.
• For the local community: This change is unlikely to have any direct impact on the local community.

6. What happens next? (immediate and future implications)

What's the next chapter in this story? Forvis Mazars, LLP, will complete their audit of the company's financial statements for the fiscal year ending December 31, 2025. After that, Crowe LLP will officially take over as the independent auditor for the fiscal year ending December 31, 2026, once their client acceptance procedures and engagement letter are finalized.

We can expect to hear more about how the company is addressing those "material weaknesses" in their upcoming financial reports. The new auditor will also be looking closely at these areas. It's not an overnight fix; improving internal controls and establishing a new auditor relationship takes time.

7. What should investors/traders know? (practical takeaways)

If you're someone who trades stocks or has invested in HILLS BANCORPORATION, here are a few things to keep in mind:

• Keep an eye on: The company's future financial reports, especially the footnotes and management's discussion and analysis, for updates on the "material weaknesses" and how they are being resolved. Also, watch for Crowe LLP's first audit report for the 2026 fiscal year.
• Consider: A change in auditors, especially after reported internal control issues, could be a positive step towards stronger financial governance and more reliable reporting in the long run. If the company successfully addresses the weaknesses, it could boost investor confidence.
• Also be aware of: The existence of "material weaknesses" is a serious concern. While the company is changing auditors, the underlying issues with internal controls still need to be fixed. If these issues persist or new ones arise, it could negatively impact the company's credibility and stock performance.
• Remember: Big news can make stock prices jump around, so it's always smart to do your own homework, understand what you're investing in, and not just react to headlines. This is just one piece of the puzzle, but an important one regarding the integrity of their financial reporting.